MULTIMILLION-pound funding to develop a proposed carbon capture and storage (CCS) plant at a power station in Peterhead has been announced by the UK Government.
The project would be first of its kind in the world to take the emissions from a gas-fuelled power station and store them underground, if it gets final approval next year.
The announcement came as UK and Scottish ministers, in the north-east for Cabinet meetings barely 10 miles apart, embarked on a series of engagements which put Scotland's oil and gas industry at the heart of the referendum debate.
First Minister Alex Salmond announced £10.6 million for a new centre in Aberdeen to increase collaboration between the oil and gas industry and academia.
He also claimed the "tale of two Cabinets" yesterday showed his ministers were prepared to engage with people, after they took part in a public meeting at Portlethen Parish Church, while Prime Minister David Cameron, he said, "jets into Aberdeen and jets back out again".
Cash to take forward the CCS scheme was announced by Deputy Prime Minister Nick Clegg, Energy Secretary Ed Davey and Scots Secretary Alistair Carmichael during a visit to the SSE-run power plant yesterday.
If the Shell-led scheme proves commercially viable, the power station will generate clean energy for 500,000 homes and capture one million tonnes of environmentally harmful CO2 per year, which would be piped into a gas field under the North Sea rather than being released into the atmosphere.
A £100m fund will support the design of the Peterhead scheme and an already-announced carbon capture plant at a coal-fired power station at Drax in Yorkshire.
The UK Government has promised up to £1 billion to subsidise the construction of the schemes if they are approved when a final decision is due in late 2015 or early 2016.
Mr Davey claimed it would be harder for an independent Scotland to proceed with the scheme because of the cost. But he insisted the move was not a bribe to vote No in the independence referendum.
He said: "I am in charge of UK energy and climate-change policy. We are not preparing for independence; we are pursuing our policies as if the UK is going to stay together. And with the UK staying together, we need to tackle climate change, we need to invest in low-carbon projects.
"It is just a fact that if Scotland were to vote for independence it would be more difficult because it would be more expensive."
The move was welcomed as "imperative" by Mr Salmond, who said the Scottish Government had fought for it for over a decade. He said it would be given the go-ahead if Scotland became independent.
A spokesman for industry body Energy UK said CCS had moved closer as a result of the announcement.
Lang Banks, director of environmental pressure group WWF Scotland, said: "Demonstrating carbon capture on this existing gas power station would enable us to test the technology and cut emissions from our energy sector while we transition to a renewable future.
"Scotland is also well placed to develop and test CCS - a potentially important global technology. It's great to hear that we might be about to start turning this opportunity into a reality."
Mr Salmond, meanwhile announced funding for the new Oil and Gas Innovation Centre in Aberdeen, which will bring together engineers and university researchers to work on a range of new technologies. He also confirmed plans to part-base a Scottish energy ministry in Aberdeen if there is a Yes vote in the referendum.
Arguing the oil industry would thrive in an independent Scotland, he said: "We are seeing a massive investment in the North Sea at the present moment, it could be argued that much of this investment would have gone ahead in 2011/12 if it hadn't been for George Osborne's tax changes that caused uncertainty.
"We've had 16 tax changes in the North Sea in 10 years, we've had 14 oil ministers in the last 17 years, three in the last four years. One thing that Scottish control of oil and gas resources will offer is a much more stable, long-term policy."