Grangemouth closure: Acorn Project's future in doubt if Grangemouth refinery shuts, Scottish academic warns

The Acorn Project would take carbon dioxide (CO2) emissions and store it under the North Sea

The economic viability of the landmark Acorn carbon capture and storage (CCS) project could need to be “reassessed” if the Grangemouth refinery closes down, a leading academic has warned.

Alex Kemp, professor of oil and gas at Aberdeen University, said "economies of scale" mean that without the requirement to store emissions from the refinery, the project, in Aberdeenshire, could struggle and more jobs could be lost.

The warning comes less than 48 hours after the owners of the refinery at Grangemouth said the facility could close from 2025 and be turned into a an import terminal.

Workers picket during a past strike at the Grangemouth oil refinery. Picture: Jeff J Mitchell/Getty Images

Energy secretary Neil Gray said on Thursday he had written to the UK Government calling for talks on the long-term future of the Grangemouth site. He said he wanted the refinery to “remain open for as long as possible”.

It was hoped the Acorn project, based at the St Fergus gas terminal in Aberdeenshire, would capture around 200,000 tonnes of carbon dioxide (CO2) a year and transport it, using existing pipelines, for storage in one of three depleted North Sea gas fields. Prime Minister Rishi Sunak has claimed the project could generate 21,000 jobs.

The project, a joint venture between carbon reduction company Storegga, Shell UK, Harbour Energy and North Sea Midstream Partners, re-uses legacy oil and gas infrastructure to transport captured industrial CO2 emissions from the Scottish cluster, to permanent storage 1.5 miles under the North Sea.

Prof Kemp said there would be a “knock-on effect” on Scotland’s carbon capture and storage industry – and specifically on the Acorn project – from the closure of the refinery.

Prime Minister Rishi Sunak at Shell St Fergus Gas Plant in Peterhead in July.

"The economics of the carbon capture project at St Fergus would have to be reassessed,” he said. "The Acorn project requires quite a lot of CO2, there are economies of scale in these plants. Because the emissions from Grangemouth are very big, losing that would certainly affect the economics of the project.”

He added: "The economics are quite difficult for these projects in general and losing a big supplier could cause a problem.”

Politicians also warned the viability of the Acorn project was in doubt due to the closure.

Douglas Lumsden, energy and net zero secretary for the Scottish Conservatives, said: “The closure of Grangemouth as a refinery is an indictment, and probably a consequence, of the hardline SNP-Green, and Scottish Labour, positions on oil and gas. But it also exposes how unrealistic and ill thought-out they are.

“The viability of the Acorn carbon capture project is now certainly in doubt, with the potential loss of a huge environmental benefit. Just as importing oil and gas is less green than using our own resources, shutting Grangemouth may actually make the journey to net zero more difficult.”

In July, Mr Sunak announced multi-million pound funding for the Acorn project on a visit to St Fergus. The money is set to be handed out to Acorn over the next few years as part of a £20 billion CCS investment package announced in the spring budget in March.

Scotland’s Just Transition Commission said it was “deeply concerned” the closure of Grangemouth refinery would mirror that of the shutdown of Scotland’s coal and steel industries in the past, with “devastating” impacts for the economy. Hundreds of jobs at the site could be at risk, with many more under threat further down the supply chain.

The commission – an independent expert advisory group – said it was not clear how a transition of skills from the refinery would take place.

"The Just Transition Commission is deeply concerned that we will see a repeat of previous unmanaged industrial transitions in coal and steel whose harmful effects are still felt by communities across the country,” a statement said.

"In this case there appears to have been minimal engagement with workers, the community or government ministers.”

The comission added: "We urgently need to understand what plans, if any, have been made to support a transition for workers impacted by these changes beyond redundancies, as well as what steps will be taken to ensure we are not effectively off-shoring emissions currently associated with the Grangemouth site.

"The announcement underlines clearly the need for government to play an active role in safeguarding workers and communities through the transition, since the market alone will not deliver a just transition.”

In a letter to Claire Coutinho, secretary of state for energy security at Westminster, Holyrood energy secretary Mr Gray said: “The Grangemouth refinery is a strategically important asset both for Scotland and for the United Kingdom. Its critical role in maintaining security of fuel supplies across Scotland [also serving markets in North of England and Northern Ireland] must be safeguarded.”

He requested a meeting with Ms Coutinho in the coming days.

The Scottish Greens called for an “urgent summit” over the proposed closure.

MSP Gillian Mackay, who represents Grangemouth, said: “Workers and the community are rightly concerned about what yesterday's sudden announcement means for Grangemouth.

“The community needs us all to pull together to ensure a sustainable future for the site can be found that guarantees well-paid jobs with good terms and conditions. We urgently need a proper multi-agency process that involves workers from the outset.

“I am calling for the First Minister to convene an urgent summit to involve the community and workers in what comes next.”

Ms Mackay added: "I grew up right next to the plant. I know how this will impact local people. We urgently need to provide clarity and security for the community and for the hundreds of workers who will be impacted by this announcement.”

A spokeswoman for Acorn said: "Acorn Transport and Storage is focused on the decarbonisation of Scotland, including the Central Belt. We are continuing to work closely with INEOS on the decarbonisation opportunity for their multiple businesses at Grangemouth."