Acorn project funding uncertainty as 'final decision' still to be made by Chancellor Rachel Reeves

North Sea bosses have welcomed the UK government finally pledging to back Scotland’s carbon capture project after years of delay - but concerns have been raised after it emerged a final investment decision is still to be made.

Chancellor Rachel Reeves confirmed in her spending review that the Acorn carbon capture and storage project, based at St Fergus near Peterhead, will receive funding from the Treasury.

Keir Starmer's government has finally pledged funding for the Acorn project at the St Fergus gas terminal hear Peterhead (Photo by Jeff J Mitchell/Getty Images) | Getty Images

But buried in the detail, the Treasury has confirmed that “a final investment decision will be taken later this parliament, subject to project readiness and affordability”.

This has led to a warning over “investor uncertainty” if a final decision for the Acorn project is not taken “urgently”.

READ MORE: Labour minister warns North Sea to 'plan for future' without oil and gas amid Government carbon capture rift

The Acorn project, made up of several firms including Shell, Harbour Energy and Storegga, will, in theory, take harmful carbon emissions and prevent them from being released into the atmosphere and instead buried under the seabed off the Aberdeenshire coast.

There are also plans to repurpose an existing oil and gas pipeline to potential transport carbon from Grangemouth to the offshore storage sites. The Scottish Government has commissioned a report into whether this is possible, but has not yet published that work.

READ MORE: SNP ministers accused of secrecy over £2m Grangemouth carbon capture study as Rachel Reeves to rule on funds

The previous Conservative UK government had only granted the Acorn project ‘reserved’ status and favoured projects south of the Border for full early funding.

But the Chancellor told the House of Commons she was announcing “support for the Acorn project”, adding that it will “support Scotland’s transition from oil and gas to low-carbon technology".

Pressed over how much investment will be allocated by the UK government, Ms Reeves simply said that “we are putting money into Acorn”.

As well as indicating support for the Acorn project, the Chancellor also pledged to back the Viking project south of the Border.

David Whitehouse, Offshore Energies UK (OEUK) CEO, said: “The support for the next phase of carbon storage projects in Scotland and Humberside is welcome, and an important step towards final investment decisions later in this parliament.

OEUK's chief executive, David Whitehouse | OEUK

“Together Viking and Acorn have the potential to unlock over £25 billion of investment by 2035, creating over 30,000 jobs at peak construction.”

He added: “These projects will provide the pathway to support the decarbonisation of UK industries and are critical to the government's clean power objectives. We will continue to work with government to detail the long-term support required to deliver these projects and unlock the UK's wider CCS ambitions.”

Trade unions have also welcomed the vow to back the Acorn project.

STUC general secretary, Roz Foyer, said: “Following years of Tory failure to invest in carbon capture and storage, this funding is welcome.

STUC general secretary Roz Foyer | Andrew Milligan/PA Wire

“The UK and Scottish governments must now work with the relevant unions to ensure that the project maximises the opportunity to create and retain high quality, unionised jobs.”

Sara Thiam, chief executive of development body, Prosper, said that “advancing development” in the Acorn project was “a welcome step”, but she warned that “final confirmation for the project is urgently required to reduce investor uncertainty”.

Environmental campaigners have repeatedly raised concerns about the reliance on carbon capture to meet emissions goals, despite independent watchdogs, the Climate Change Committee, suggesting net zero targets cannot be hit without the technology.

There are concerns about the reliability of carbon capture technology which is yet to be proven at commercial scale.

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Friends of the Earth Scotland’s climate campaigner, Alex Lee, branded the project “a fossil fuel polluters pipe dream” that “will never live up to the hype”.

They added: “Carbon capture has received billions in funding around the world and it has never worked properly.

“Politicians should be backing climate solutions that can improve people’s lives such as upgrading public transport, ensuring people live in warm homes and creating green jobs for the long term.”