MPs have been warned there is a risk investors may “withdraw” from the Acorn carbon capture and storage (CCS) project in Aberdeenshire as timeline delays continue to rumble on.
Acorn, based at St Fergus gas plant, near Peterhead, is reliant on UK Government funding.
The aim is to deliver industrial-scale CCS, a process of storing industrial emissions underground, and create more than 20,000 jobs in the project’s first phase.
I’ve heard various timescales that are quite concerning.”
Michael Matheson, Scottish energy secretary.
North Sea oil and gas company Harbour Energy recently warned the windfall tax risks “undermining” its CCS investments.
Harbour is a partner in Acorn, alongside Shell, North Sea Midstream Partners and project leader Storegga.
But the Track 2 process – the next tranche of a £1 billion CCS development fund from Westminster – has been delayed. An announcement was expected last year.
Repercussions
Scottish energy secretary Michael Matheson has now told a Scottish affairs committee meeting continued delays to progress may have repercussions.
Mr Matheson said: “When I was up in St Fergus in August of last year and met all of the partners at the site, it was becoming increasingly apparent to me there was anxiety.”
Further delays could result in “partners who are already investing in this process starting to withdraw from it if there isn’t clarity going forward,” the minister added.
The UK Government repeatedly pledged an update last year on Track 2 during 2022.
But projects in Track 1 are themselves facing delays that are apparently knocking back the overall timeline.
Storegga and its partners in Acorn have been asked to reply to Mr Matheson’s comments.
The UK’s offshore industry will be hit hard by the chancellor’s latest tax changes, which threaten to drive out investors, drive up imports and leave consumers increasingly exposed to global shortages. Read more on our reaction to today's budget 👇https://t.co/vCXNdOwt1Y
— Offshore Energies UK (@OEUK_) November 17, 2022
Last November, before the UK Government raised the North Sea windfall tax, Harbour’s chief executive wrote to the chancellor to highlight the firm’s “material investments” in CCS and UK energy security.
Additional taxes would “run the risk of undermining our ability to do either”, he warned.
Acorn is the flagship project of the Scottish “cluster” that was chosen as a reserve scheme for CCS in the UK.
Westminster is expected to pick four projects, to be up and running by the mid 2020s.
The Scottish cluster is widely seen as a vital component of meeting interim carbon emissions targets.
UK Energy Minister Graham Stuart told Scottish affairs committee members an update on Track 2 would be announced this spring.
Update in spring for Track 2
Mr Matheson said he had previously been told the update may not come for several years.
“I’ve heard various timescales that are quite concerning,” the SNP MSP said, adding: “I was told there could potentially be a delay up to 2027. I don’t believe that’ll be the case.
“Any update in the spring would need to be meaningful and also very clear about the timeline for taking forward the Track 2 sequencing process.”
Scottish cluster investors need to be given a “clear understanding” of this timeline in order to make decisions, he said.
Scottish cluster ‘in a pretty good position’
Mr Stuart would not be drawn on whether there would be any news of funding for Acorn.
The UK minister added: “The Scottish cluster is in a pretty good position.
“We’re going to need multiple clusters to get to 2030 (the target date for net-zero in the UK). I can’t pre-judge that announcement, however much you might tempt me.
“I would absolutely be looking for colleagues to hold us to account, make sure we’re on the critical path and managing (it) as swiftly as we can.
“It’s hard to imagine, given our ambitions, there wouldn’t be a place for well-developed, well-thought-through programmes.”
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