New Scottish Government in race to build support for Scottish carbon capture cluster as hopes for renewables boom fade
The SNP Government has suffered a fresh blow to its credibility as claims that Scotland is set for a carbon capture boom have been undermined by the firm ministers have counted on to lead the country’s effort.
Storegga highlighted concerns about how firms would fund investment in carbon capture within minutes of new energy secretary Stephen Gethins using his first address to underline official confidence that the technology will power growth in Scotland while helping solve the emissions problem.
“Carbon capture and storage is important not just for our climate goals but crucially also for our economy,” Mr Gethins told industry leaders as he insisted the case for the controversial technology was firmly established.
“It’s great taking on this portfolio as the conversation shifts from if CCS happens to how quickly we can deliver it,” the Dundee East MSP crowed.
He made the claim at a summit organised by oil and gas trade body Offshore Energies UK to help boost support for carbon capture and the flagging drive to develop hydrogen as a major source of clean energy.
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The attendees at the summit reflected the range of businesses that hope to capitalise on the official carbon capture drive but their comments underlined the scale of the challenges facing ministers.
While SNP Governments have claimed hydrogen could help power Scotland to prosperity, production and usage levels for the fuel remain much lower than hoped.
Champions still insist that hydrogen could play a big part in the drive to decarbonise industry. They highlight the potential to use carbon capture facilities to deal with emissions resulting from the production of so-called blue hydrogen from natural gas.
But environmentalists oppose carbon capture on the grounds it is an excuse to keep using oil and gas and have expressed concerns about the safety of the technology.
Scientist Andrew Boswell of the Scrap Carbon Capture campaign has told the Scottish Government it would be much cheaper to electrify industries such as steel-making to decarbonise them, than rely on emissions storage technologies developed years ago.
However, Mr Gethins’s comments reflected the new administration’s continued commitment to a plan to develop a Scottish carbon capture cluster that it claims could support thousands of jobs.
The plan centres on the Storrega-led Acorn project, which will involve repurposing oil and gas infrastructure to collect carbon dioxide emissions from industries across Scotland for storage in depleted North Sea oil and gas reservoirs.
Support for the plan has served a political purpose for SNP Governments.
Former first minister Nicola Sturgeon used the rhetorical backing she provided for the cluster and the promise it would generate big economic benefits to defuse criticism of the decision to oppose oil and gas developments she made to appease greens.
She also used the cluster issue to support claims the UK Government was letting Scotland down after rival projects won priority support in the Track One programme announced in 2021. The Scottish Cluster was allocated to the secondary Track Two.
The decision reflected the fact that there is a greater concentration of industries in the areas covered by the Track One projects than in Scotland.
The closure of the Grangemouth refinery last year removed a major source of emissions although champions of the Scottish Cluster have insisted the move did not undermine the case for it.
However, Mr Gethins’s bullishness appeared to ignore the fact that the case for the Scottish Cluster was weakened in December by the firm that has been leading work on it.
Storegga put its stake in the Acorn project up for sale after highlighting the scale of the investment that would be required.
North Sea oil giants Shell and Harbour Energy appear not to have taken the opportunity presented by Storrega’s move to increase their stakes in Acorn.
Storegga’s economics manager Moira Kennedy shed light on the company’s thinking at the carbon capture summit in a way that underlined the scale of the challenges facing Mr Gethins and colleagues.
Supporters reckon the case for the Scottish cluster was boosted in recent months after Track One projects agreed funding deals with the UK Government. These included mechanisms to cover the massive costs involved in developing transportation and storage networks.
In October 2024 the UK Government said it had made £22bn funding available for the first CCS projects in the country.
However, Ms Kennedy poured cold water on hopes that the Track One models could simply be adopted for use on the Scottish cluster project.
She told the summit: “I think we probably expected to inherit a business model that had developed through the Track One process and would be nice and smooth … It appears that that is not necessarily going to be the case.”
She noted: “There is some uncertainty as to how the business model will apply to Track Two projects which obviously creates uncertainty.”
The comments reflect the fact that enthusiasts have yet to come up with a way of funding CCS projects which won’t leave taxpayers facing enormous bills for years.
The hope is that the industry will eventually operate on a ‘merchant’ model under which emitters will cover the costs of carbon capture projects in various ways.
For example, the summit was told firms cement firms would be glad to invest in carbon stores as they could then charge a a premium for their 'green' output.
But as things stand, there would be little financial incentive for emitters to invest in CCS.
The price they pay for emitting carbon dioxide under the official trading scheme is too low to encourage them to commit to paying to use storage facilities instead.
Mr Gethins ignored the fact that all this means that the Scottish cluster will probably not happen unless the UK Government covers the vast bulk of the related bills. The cluster is expected to cost around £12 billion to develop.
The SNP Government has generated plenty of hot air about CCS but its financial contribution to the cluster drive has been piffling.
In June climate action minister Gillian Martin told MSPs the Scottish Government had provided £3m grant funding for the Acorn project. In the next breath she noted that the UK Government had agreed to provide £200m development funding in June last year and said the money should be spent as fast as possible.
But while the UK Government has given enthusiastic support for the carbon capture drive under Sir Keir Starmer, the position may change if he is replaced as Prime Minister by Andy Burnham as expected on July 20.
Mr Burnham has indicated that he will look to reduce the huge cost of the support provided for the energy industry.
As a result the onus will be on the SNP Government to make the case for the Scottish cluster ahead of the Spending Review that is expected to be held next year.
That may be a tough task unless Mr Burnham feels there is widespread support for the CCS drive. Even enthusiasts recognise that may not be the case.
Offshore Energies UK’s policy director Enrique Cornejo told the summit: “This is no longer a power point industry. There are real projects in progress.”
However, he cautioned: “Progress is real but not yet guaranteed. How to get buy in from society is absolutely critical.”
Against that backdrop, supporters say the industry must demonstrate that projects can generate real value for communities.
But that could leave the SNP Government facing a chicken and egg problem unless it is prepared to increase the support it provides for Acorn.
The case for public investment in CCS depends on it being seen to create jobs. However, those jobs won’t be created until investments are made.
Meanwhile opposition to carbon capture seems to be as strong as ever among environmentalists, on whom the SNP is counting for support in its drive to secure independence for Scotland.
Friends of the Earth Scotland has made life awkward for the Scottish Government by pressing it to deny SSE planning consent for a new gas-fired power station at Peterhead, which will be linked to a carbon capture facility.
On the day of the summit, the organisation’s Rosie Hampton claimed: “Stephen Gethins risks repeating the mistakes of his predecessors by falling for the oil industry’s lobbying and hype around carbon capture. This technology has decades of global failures, blowing through budgets and constantly missing deadlines.”
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