Meeting of the Parliament (Hybrid)

Meeting date: Tuesday, October 26, 2021

Official Report 1097KB pdf

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Carbon Capture, Utilisation and Storage

The next item is a statement from Michael Matheson on the development and deployment of carbon capture, utilisation and storage in Scotland. The cabinet secretary will take questions at the end of his statement, so there should be no interruptions or interventions.

16:09  

I want to update members in light of last week’s illogical and disappointing decision by the United Kingdom Government not to support one of the most significant parts of Scotland’s journey to net zero—the Scottish cluster led by the Acorn CCS project—despite a successful bid that the UK Government acknowledged had met its assessment criteria. Instead, it designated it as a “reserve” cluster.

Members will rightly be interested to understand more about what that decision means for Scotland and about our response to that UK Government failure. In providing that, it is important to set CCUS in its proper context as a crucial element of Scotland’s decarbonisation as we move towards a just transition to net zero.

We are rightly proud of our world-leading statutory emissions targets and it is anticipated that CCUS will play a vital role in helping us to reach those. We have consistently called on the UK Government to deliver on its areas of climate change responsibility. Collaborative action is particularly vital as we approach the 26th United Nations climate change conference of the parties—COP26. Although it is encouraging to see proposals in a number of areas, the recent UK net zero strategy does not go far enough. There are a number of areas where we need the UK Government to take more action and to act faster, including providing more support for areas such as renewables and CCUS.

The UK Government decision about the Scottish cluster is out of step with its own net zero strategy, which raised the ambition for the amount of carbon to be captured and stored in the UK. The strategy more than doubles the ambition for carbon capture set out in the Prime Minister’s 10-point plan, yet there is no corresponding increase in support for the required multiple CCS projects with the capacity to achieve that.

Scotland has vast potential for carbon dioxide storage in depleted oil and gas reservoirs in the North Sea. As seen with the Acorn project, the repurposing of onshore and offshore legacy oil and gas infrastructure offers us rare and cost-effective access to those storage sites. The Acorn project is expected to store more than 6 million tonnes of carbon dioxide a year by 2030—approximately 10 per cent of Scotland’s current emissions—and up to 20 million tonnes by 2040.

On that basis alone, the UK Government’s decision not to award the Scottish cluster track 1 status is wholly illogical. It shows a clear lack of ambition and leadership on climate change by the UK Government. In stark contrast, the establishment of CCS in Scotland would mean that we could support decarbonisation efforts across the UK and in other nations.

The Scottish Government has long been supportive of CCUS as a means of decarbonising our industry and underpinning negative emissions technologies, and as a vital tool in our armoury for achieving Scotland’s emissions targets. Our 2045 net zero target is based on advice from the Climate Change Committee, which described CCUS as a “necessity, not an option” and, significantly, pointed to Scotland’s CO₂ storage potential in recommending that date.

CCS offers Scotland’s mature oil and gas industry an important transition opportunity. The UK Government’s decision will materially affect the businesses and communities in the north-east of Scotland that already possess the skills and expertise that are required to transition to a low-carbon economy, while delaying the opportunity to create many good, green jobs.

A just transition must be delivered across all our communities, including those that depend on oil and gas. That is why we have announced a £500 million just transition fund for the north-east and Moray and asked the UK Government to match that ambition, and it is why we will also support people working in carbon intensive industries with a skills guarantee.

I am aware that some members might have concerns about CCUS. Let me reassure them that I am aware of their concerns, and that this Government’s support for the technology is contingent on its performance and consistency with our climate targets. As the First Minister set out in her pre-COP keynote speech yesterday, with the highest possible capture rates, CCUS could be a crucial technology for industrial decarbonisation and our energy transition, creating options and providing industry with the flexibility to transition products and services to net zero. It would mean that we could drastically reduce emissions while securing our energy supply and providing industry with early options to decarbonise. It would ensure a future for Scotland’s industrial clusters in Grangemouth and the north-east, ensuring that important domestic industries continue to provide significant employment in a net zero Scotland.

I reiterate the Scottish Government’s support for the Scottish cluster. We have long supported the Acorn project, providing funding and policy support through feasibility stages since 2017, and we continue to believe that Acorn is the most cost-effective and deliverable CCS project in the UK. The Scottish cluster estimates that its projects can support an average of 15,100 jobs between 2022 and 2050, with a peak of 20,600 jobs in 2031.

The UK Government’s confirmation that two English industrial clusters will be awarded track 1 status, overlooking the compelling case that was submitted by the Scottish cluster, is not just short sighted but a serious mistake. We engaged with the UK Government throughout the process to highlight the Scottish cluster’s role as a vital component of decarbonisation in Scotland and throughout the UK. We also offered the UK Government help in supporting the project on several occasions. Despite most people considering the Scottish cluster to be the most advanced CCS project in the UK, it was not awarded clear and definitive track 1 status. It is instead a reserve cluster, for what we can only assume to be political rather than policy reasons.

It is astonishing that the UK Government has taken that decision, as it significantly compromises our ability to take crucial near-term action to reduce emissions in Scotland and across the UK. The chancellor is expected to deliver his budget on Wednesday. He has a chance to fix this in his budget announcement and I urge him to do so.

Last week, Sir Ian Wood stated that the UK Government’s decision makes little economic or environmental sense, and he likened the approach to leaving the best player on the subs’ bench. I share those sentiments, as do many colleagues across the chamber, I am sure.

Let me be very clear: the Government believes plainly and simply that the UK Government has made a serious mistake that it needs to correct—it needs to award the Scottish cluster track 1 status. Not to recognise that the Scottish cluster presents the best opportunity to reduce emissions by the mid-2020s smacks of politics and not science. Such an inexplicable decision shows that the UK Government is guilty of empty words and broken promises on ensuring a just transition for Scotland’s communities. Members should remember that the UK Government pulled the plug on £1 billion of carbon capture investment for Peterhead in 2015, and it has now repeated the same trick. The north-east of Scotland is the home of the offshore industry and it is an obvious location for a carbon capture project. I therefore call on the UK Government to reverse the decision and to accelerate the Scottish cluster to full track 1 status without delay.

We have previously advised the UK Government that we would help to support the Scottish cluster. We stand ready to do so, but we do not hold all the necessary legislative or regulatory levers, as they are retained by the UK Government.

Earlier today, the Minister for Just Transition, Employment and Fair Work and I met with cluster representatives. We reaffirmed our continued support for CCUS in Scotland and outlined our call to the UK Government. I can also confirm that the First Minister will write to the Prime Minister to make the strong case for accelerating the Scottish cluster to track 1 status.

CCUS will play an essential role in industrial decarbonisation in Scotland and worldwide. The planned Scottish cluster would play a vital role in a just transition and in ensuring that Scotland reaches its net zero goals by 2045.

The Scottish Government will continue to press for track 1 status for the Scottish cluster and will support development and deployment of CCUS in Scotland that is compatible with our climate change targets.

The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow 20 minutes for questions. Members who wish to ask questions should press their request-to-speak button or type an R in the chat function.

We are all disappointed by the decision, but we must be clear. Far from being illogical or inexplicable, the decision was the result of an objective process that was based on objective criteria that the Scottish Government did not raise any issues about. The process judged which of the bids met the criteria.

Let us also be clear that this is not the end of Acorn but the beginning of an ambition to have four clusters running by 2030. Kwasi Kwarteng has said that Acorn will almost certainly be built in the next few years, as part of the second phase, and the UK Government continues to work with Acorn to ensure readiness. I use the word “continues” because the cabinet secretary seems to have conveniently forgotten that the UK Government has also produced an energy white paper and a £16 billion North Sea transition deal. It has established Aberdeen as an energy transition zone with £27 million worth of support, and it has already given £31 million of support to Acorn. The Acorn project partners have publicly stated that they intend to maintain the project’s timeline and to have it operational by the end of 2026, and the UK has committed to supporting Acorn in that aim, both financially and with management.

First, what has the Scottish Government officially offered the cluster to ensure that it can proceed by 2026? Secondly, one solution would be for the Scottish Government to commit to funding the project—will it do so? Thirdly, precisely how much of the proposed just transition fund is earmarked to go towards CCUS projects?

Only a few months ago, Liam Kerr was setting himself up as the champion of the Acorn project in an article in The Press and Journal. He has been sold down the river by his colleagues at Westminster.

I gently suggest that Liam Kerr should not simply be disappointed by his colleagues at Westminster; he should be angry at the way in which they have treated the people of the north-east of Scotland by making this decision. He should be speaking up more for the people of the north-east of Scotland.

If it is not illogical to double a target for the UK’s use of carbon dioxide storage in a net zero strategy but not to support the most cost-effective, largest-capacity CCUS project in the UK to deliver that, I do not know what illogical is. It is clear that there is a lack of consistency in the UK’s approach, which is why the decision smacks more of politics than of science. The member should be standing up to challenge that.

One thing that is clear from the discussion that I had today with cluster members is that they have had no clarity from the UK Government about what “reserve” status means. They have not been told what support will be available to them. There is no explanation of the funding that will be available or what “reserve” status means, and the UK Government has set no timeline for how long that funding is meant to last.

The UK Government has left the project high and dry. However, I assure the member that we are going to work with the Scottish cluster to keep the pressure on the UK Government to stick to its promise and deliver on the Acorn project and the cluster, because it is critical not just to Scotland’s net zero targets but to the UK’s net zero targets.

I thank the cabinet secretary for advance sight of his statement. It is regrettable that, on the eve of COP26, we have the UK and Scottish Governments at loggerheads when we need constructive dialogue to tackle the climate emergency.

The cabinet secretary acknowledged in his statement that there are concerns about the performance of carbon capture technologies and their consistency with climate targets. Friends of the Earth Scotland has questioned whether CCS is falsely positioned as a climate solution when the technology is largely unproven and untested. What is the Scottish Government doing to unpick those concerns and allay those fears? Can the cabinet secretary give an assurance that the technologies are not being seen as a silver bullet and that other measures that can help in the short term, including improved access to public transport and improved energy efficiency, will be continued at pace?

If there is a failure in the process, on the eve of COP26, to take the serious action that is necessary to tackle climate change, I am afraid that the responsibility for that rests at the door of 10 Downing Street, which has failed to provide the necessary support to the Scottish cluster. From Grangemouth right up to the St Fergus terminal, the project is critical not just to ensuring that we achieve our net zero targets but to the range of industries that are supporting it in order to decarbonise their industrial processes. It is mission critical to many of them being able to deliver that, and it is critical to the jobs that are dependent on it as well. On the member’s point about being at loggerheads, I am afraid that the responsibility rests fairly and squarely with the UK Government.

I assure the member that, although there are those who raise questions about the technology, we take advice on these matters from the Climate Change Committee, which has said that the use of CCS is, as I said in my statement,

“a necessity, not an option.”

The technology is in its infancy, but it has real potential to deliver real change. That is why we are very clear that deployment of net zero technology of this nature has to be compatible with achieving our net zero targets by 2045. That is our commitment, and that is why we support the Acorn project, which is so important to ensuring that we reach our statutory targets.

The decision not to back the Acorn project is another betrayal of the north-east of Scotland by the Tories, who previously cut the £1 billion of funding for the carbon capture scheme at Peterhead after a huge amount of progress and investment. As the cabinet secretary said, the Climate Change Committee has specifically said that CCUS is essential to our meeting the targets in the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019.

Does the cabinet secretary agree that the Acorn project was the obvious project to support, that the decision not to support it was absolutely a political decision, that the UK Government is yet again holding Scotland’s progress back, and that we cannot rely on it ever to stand up for Scotland’s interests?

I have spoken to many people across the industry over recent months, and there is absolutely no doubt that the Scottish cluster, and the Acorn project in particular, was viewed as being the most deliverable, cost-effective, ready-to-go project when it came to delivering on CCUS. It was the clear project.

It is not just a project that is able to deliver at an early stage, in the mid-2020s; it is also a project with other benefits. I do not decry the other two projects, because we need them as well, alongside the Scottish cluster. However, the Acorn project is the only project with the ability to allow the shipment of carbon dioxide, which was planned in order to support areas such as the south of Wales and parts of the south of England, where industries that are looking to decarbonise wanted to use the Scottish cluster, and the Acorn project in particular, as part of that process. The project would support not just Scottish jobs, but jobs well beyond Scotland, in other parts of the UK, and it was mission critical to them in that regard.

I am angry that we are in a situation in which the UK Government has let down a sector, despite significant work on the project and despite giving the impression that the project would get the green light. It has pulled the rug from under the sector’s feet at the very last moment, and the repercussions of that are significant. It is important that the UK Government recognises the implications for the sector, not just in the north-east and other parts of Scotland but in other parts of the UK, and that it revisits the matter urgently.

I am keen to get through all the questions, so I ask questioners and the cabinet secretary to be as brief as they can be.

Brian Whittle joins us remotely.

At the weekend, Michael Glackin wrote that the SNP’s “petulant manufactured row” with the Westminster Government over free ports might have contributed to the decision and that

“the SNP would create similar obstacles should Acorn have won”.

We know that the decision was actually made on the basis of objective criteria, but the SNP’s grievance approach and continual desire to create discord is well known.

Will the Scottish Government work constructively with the Westminster Government to ensure that Acorn receives the appropriate support from both Governments to proceed as soon as possible, for the benefit of the environment and the Scottish economy?

There we have it, from Brian Whittle: a “manufactured row” about free ports is the reason why the UK Government chose not to go ahead with Acorn. It is utter rubbish—there is no truth whatever in that suggestion, and it should be treated with the contempt that it deserves.

I can say to Brian Whittle that, on several occasions, we made a direct offer to the UK Government to provide support to the project and, to date, I am still waiting for the UK Government’s response to my correspondence on the matter. Sadly, the UK Government does not appear to have prioritised the issue, and clearly, given its decision last week, it has chosen not to go ahead with the project—end of.

I assure Mr Whittle that we will continue to push the case for the Scottish cluster and make sure that the UK Government hears the voices of the people of Scotland on this important issue.

Scottish business leaders, including Sir Ian Wood, wrote to the Prime Minister to argue that the Scottish cluster offers the potential to

“create, safeguard and continue to support tens of thousands of high skill jobs directly and in”

the supply chain

“of the existing energy industry in the northeast as well as throughout Scotland.”

Does the cabinet secretary agree that the UK Government should listen to those voices and not just ignore them?

I very much welcome the letter that went from Sir Ian Wood and others, which called on the Prime Minister to address the issue. In recent months I have, given his knowledge and expertise in the area, discussed with Sir Ian Wood the importance of the Acorn project and the Scottish cluster. He sees the project as being mission critical to the future of North Sea oil and gas and the transition in the sector.

It is fair to say that the general feedback that I have had from people in the sector is that they are shocked and, as someone put it, flabbergasted by the decision of the UK Government. It is important that the UK Government listens to voices of reason, such as that of Sir Ian Wood, and that it responds constructively by reversing its decision quickly.

I sincerely hope that the COP delegations are not taking lessons in diplomacy and negotiations from the minister or from some Conservative members who are sitting opposite him. We have had no answer from the minister on whether the Scottish Government will act to support the project. We must work together, in that case. The Scottish Government has a duty to make the sector work, by whatever means.

What progress has been made on investing in the skills base in north-east Scotland to ensure that the region is at the forefront of a jobs-first energy transition?

Given the importance of the work, we have provided support to the Acorn project over the past couple of years, as it carried out its feasibility work programme. Secondly, we made a clear commitment to supporting deployment of carbon capture, utilisation and storage in Scotland as part of our emerging energy technologies fund. We remain committed to doing that over the coming years.

How much we can support the project depends partly on decisions by the UK Government, because a key part of this is tied up in regulatory and other powers that the UK Government has, so we do not have the powers to intervene in that regard. However, there might be other areas in the project where we can continue to provide support and assistance, so we are actively considering that.

Now is not the time for us to start unpicking elements of the Scottish cluster. What is important is that we point out to the UK Government its failure and, because of the potential consequences, the need to address urgently the serious mistake that it has made.

On Michael Marra’s final point, I assure him that among the key actions that we want to result from our north-east and Moray transition deal is support for a skills transition and assistance for people in carbon-intensive industries to move into zero-carbon industries. That will be a key focus of the training and work of the transition deal.

The Scottish National Party Scottish Government has committed to investing £500 million in the north-east and Moray over the next 10 years to accelerate the transition to net zero and to support highly skilled jobs and livelihoods in the oil and gas sector. Does the cabinet secretary think that the UK Government should match that funding commitment, if it is serious about a just transition for the north-east?

Yes, I think that it should, and we have asked it to do so, given the economic benefits that the UK has obtained from oil and gas extraction over many decades, on the back of Scotland’s resources—the north-east’s in particular. It is about time that the UK Government stepped up and helped to support the transition. Matching us in that £500 million transition fund for the north-east and Moray, alongside going ahead with having the Scottish cluster in track 1, would be a step in the right direction by the UK Government in demonstrating leadership.

After years and years of delay, during which carbon capture was on, then off, then on again, the biggest loser has been the planet. I support the Scottish Government’s call for the decision to be reversed, but does the minister agree that what is most important is that the project actually happens this time?

Yes, I agree. We have already had a false dawn. With all due respect to Willie Rennie, I note that it was Ed Davey MP, I think, who made that promise during the referendum campaign. After the referendum result, that promise was short lived. That is why we cannot allow the UK Government to get away with pulling the same trick yet again on the people of the north-east and the rest of Scotland. I welcome the member’s support in getting behind us as we do everything that we can do to pressure the UK Government to reverse its decision and to put the Scottish cluster in track 1.

The triple whammy of the downturn in oil and gas, Covid and Brexit has been devastating for our north-east communities. We desperately needed the investment, which would have been based in my Banffshire and Buchan Coast constituency and would have helped to deliver the just transition.

The Scottish Conservatives have described the move by the UK Government as a lukewarm “disappointing”. My constituents are not disappointed; they are once again feeling betrayed, angry and overlooked. Will the cabinet secretary join me in urging Conservative MSPs in this Parliament, particularly those who represent the north-east, to stand up for their constituents and urge their colleagues in the UK Government to reverse the decision and support the vital project?

As I understand it, the desire among Conservative members is to give the impression that everything will be okay with the Acorn project and the Scottish cluster if we just give it time. The problem with that approach is that significant investment decisions have to be made by companies on where they will support the development of CCS technology. Those decisions are being made now—not in two, three, four or five years, or over the indefinite timeframe for which reserved status provides. There is a lack of clarity for the whole cluster. Because of the project’s importance, we should not allow the fundamentals of the project to be lost. I hope that Conservative members will get behind us in supporting the project, and that they will put pressure on their colleagues at Westminster to reverse the decision.

Three more members wish to ask questions. I intend to allow all of them in, but the questions and responses will need to be brief.

The cabinet secretary is aware that our parties do not have a shared vision for the role of CCS, which is a technology that is repeatedly overpromised on and underdelivered around the world. Relying on CCS to cut a quarter of Scotland’s emissions is risky. All the parties in the previous session of Parliament agreed that there needs to be a plan B for meeting our climate targets and delivering a just transition that does not rely on CCS. Does the cabinet secretary recognise the importance of working out that plan B now, rather than pinning all our hopes on a technology that might turn out to be neither credible nor ready in time?

The advice from the UK Climate Change Committee is that zero-emissions technologies will play an important role in helping to meet our statutory climate change targets; the committee has directly referenced that. I respect the fact that we have different views on use and deployment of CCUS. The Scottish Government continues to be supportive of CCUS, including the Scottish cluster and the Acorn project.

We must recognise that CCUS will likely play an important part in meeting Scotland’s statutory climate targets. We will continue to take that approach. It is important that we recognise the role that the technology will play in supporting us in becoming a net zero nation by 2045.

Earlier this year, Stuart Haszeldine, who is a professor of carbon capture and storage at the University of Edinburgh, gave evidence to the Economy, Energy and Fair Work Committee. In response to being asked what was needed to make CCS a success, he said:

“in Scotland we do not have a clear industrial road map for the circularity of our heat or carbon and for putting that back where it came from.”—[Official Report, Economy, Energy and Fair Work Committee, 2 February 2021; c 23.]

Will the cabinet secretary agree to develop a clear industrial road map for Scotland?

Let us not lose sight of the critical issue, which is the development of CCUS technology. One of the benefits from the Acorn project and the Scottish cluster of being a first mover in development of the technology is that it can be utilised and deployed in areas that are different from that for which it was originally developed. That is why the project is so important. It will help to develop the route map and to create the opportunities that the new technology can develop in several areas, as well as being utilised to meet our statutory climate change targets. I assure Maurice Golden that our support for Acorn and CCUS is to ensure that we get the benefits of developing the technology and its deployment in sectors other than the oil and gas sector.

Does the cabinet secretary—[Interruption.] I am sorry, can you hear me, Presiding Officer?

It might be my fault for not announcing you, Ms Hyslop. Your microphone is on now.

Does the cabinet secretary agree that the advanced stage of capability of the Acorn project should not only underpin the just transition that is needed in the north-east of Scotland, but could and should be the fastest way of sharing that knowledge and deployment on a global stage, so that the world can move more quickly to decarbonising, given the global interest over the past decade in the work in Scotland? Does the cabinet secretary think that the UK Government does not care about its responsibilities to the north-east and globally?

Please be as brief as possible, cabinet secretary.

There is absolutely no doubt that the Scottish cluster is a key part of delivering a just transition. We have seen the failures of UK Governments in the past in relation to deindustrialisation without ensuring a just transition. We cannot allow that mistake to be repeated, particularly in the north-east of Scotland. There is no doubt that one of the benefits of the project, given its ability to move at an early stage, is the knowledge and skills that have been built up, which can be exported to and deployed in other parts of the world in order to support other nations to become net zero nations.