Scottish Affairs Committee inquiry

GB Energy and the net zero transition

Written evidence submitted by Storegga (NRG0044)

Written evidence submitted by Storegga

About Storegga

Storegga is an investor in the Acorn project and a key partner in the Scottish Cluster. This submission focuses on the following areas:
 

• Policy clarity and funding frameworks: The urgent need for commitment to funding frameworks, process and timelines for carbon capture and decarbonisation projects
• Economic opportunity: The potential benefits for supply chains, job creation and investment in local communities
• Sector confidence and growth: The importance of inbound investment to drive economic growth and the risks of missed opportunities.

The importance of Acorn and the Scottish Cluster in achieving a low-carbon future

Acorn and the Scottish Cluster are critical to decarbonising Scotland’s largest industrial and power emitters. Together they have the potential to create thousands of jobs, safeguard skills and drive community and supply chain opportunities while supporting net zero targets.

The Cluster will also help to secure the future of industrial hubs like Grangemouth, aligning with initiatives like Project Willow, which aims to establish a sustainable low-carbon energy hub at the refinery site, leveraging its skilled workforce, local expertise and industrial heritage.

Without urgent government commitment to the development of CCS infrastructure, a range of nationally significant projects are in jeopardy. These include:

• Acorn and the Scottish Cluster
• Project Willow at Grangemouth
• Peterhead Power Station (aligned with the UK’s Clean Power Mission by 2030)
• Other energy-from-waste, biomass and cement projects critical to jobs and communities across Scotland.

These developments and their associated benefits are interdependent on CCS infrastructure being built in Scotland to decarbonise operations.

Globally, the scientific community recognises CCS as essential to reducing emissions in key sectors, enabling their transition to net zero and creating the low carbon industry of the future. The Climate Change Committee reiterated this in its July 2024 call for rapid initial deployment and scale-up of CCS technologies following on from the Sixth Carbon Budget, where it concluded that “CCS is essential to achieving net zero, at lowest cost, in the UK.” [1]

Acorn, a CO2 transportation and storage (T&S) system, will provide a permanent solution for diverse emitters across Scotland and beyond, committed to timely and cost-effective decarbonisation.

Located at St Fergus, Aberdeenshire, Acorn will use world-class geological stores beneath the North Sea, connected to the Scottish mainland by repurposing oil and gas pipelines to safely and permanently store CO₂. These existing pipelines could transport up to 20 million tonnes per annum (Mtpa) of CO2 to the Acorn stores – double the volume of Scotland’s industrial emissions in 2021 - during peak operations. [2]

In July 2023, Acorn entered the Track-2 Cluster sequencing process for carbon capture, usage and storage, having retained Track-1 reserve status since late 2021. Throughout this period, we have continued to progress the project from a technical, engineering, planning, consenting and supply chain perspective with considerable financial support from our partners.

Supply chain and the skills transition

Key topics addressed:

• The pace of oil and gas decline vs. growth in transition industries
• Interventions for redeploying skills and workers from oil and gas to clean energy
• Transitioning the supply chain to new energy & decarbonisation projects
• A just transition for communities.

A 2023 report by Biggar Economics, commissioned by the Scottish Cluster, highlighted the development’s economic potential[3].:

• £17.7bn contribution to UK economic output (GVA) to 2050
• 10,000 development and construction jobs and 4,000 operational jobs.
• 18,000 safeguarded jobs across the UK, that may otherwise be lost

A vibrant CCS, decarbonisation and renewables sector offers a natural pathway for redeploying skilled workers and growing the supply chain, minimising the need for government intervention or retraining.

With North Sea oil and gas production in decline, projects like Acorn and those in the Scottish Cluster provide a vital opportunity to sustain the UK’s energy expertise, supply chain and workforce.

There are thousands of skilled workers in the energy industry with decades of expertise across technical, professional and operational fields. There is strong overlap between the skills needed for CCS and those developed in oil and gas, such as engineering, subsea technology and maintenance.

Projects like Acorn and the Scottish Cluster will need workers with these skills. Additionally, these projects can attract younger talent to the energy sector supporting long-term workforce sustainability.

The existing supply chain, grown by the oil and gas sector over the last 50 years, can support the delivery of new projects, including Acorn. It has in fact been preparing for carbon capture developments since 2021 when the Cluster sequencing process began, and as far back as the proposed CCS facility at Longannet in Fife c.2011. However, supply chain capacity and skills must be retained and developed through steady investment.

Research from Robert Gordon University’s Energy Transition Institute showed that there is a workforce ‘goldilocks zone’ during the period 2024-2028, where UK supply chain capacity and capability can be sustained and developed, including the transfer of skills.[4]

In the wider CCS market, a supply chain for design, manufacturing, project execution and operations exists, but to underpin it we need long term certainty in investment. Without this, skills will atrophy. Staff will not transfer to new energy sectors and younger workers will not be attracted to a career in the energy transition. Similarly, the supply chain will not invest in retaining capacity in the UK but will relocate elsewhere.

As an example, through the development, construction and operational phases of Acorn, there will be manufacturing opportunities. The UK manufacturing sector has world class suppliers based in Scotland in fields such as subsea equipment and well testing. Without investment and a steady supply of work coming in, these facilities may close and instead follow investment and contracts internationally. This has already happened in some cases, with oil and gas services companies moving testing sites and centres of excellence from the UK to Europe and Asia.

This means that if projects are then subsequently sanctioned, goods and services will be sourced from overseas and the benefits of these projects for communities is lost. The key to a just transition is that local communities feel the benefit of investment and government support. The energy transition must not be viewed as a ‘green cost’ associated with decarbonising, but as a sector that brings additional benefits including investment, employment and job security. In the longer term, costs will also fall as we move to cheaper energy sources.

The key to supporting skills and supply chain retention and development is therefore long-term investment and commitment – and the window of opportunity is closing. If positive investment decisions are not taken soon, then jobs, skills and supply chain capacity will be irrevocably lost. Projects must be sanctioned to stimulate growth and deliver the economic and social benefits to communities and the nation.

Inbound investment

This section will provide some perspectives on TOR issues relating to:

• How GB Energy can support employment, economic growth and supply chain development
• How the UK can learn lessons from international examples

Certainty in government policy is the key enabler to drive investor confidence, create jobs and support the energy transition.

We welcome the recent support announced for Track-1 carbon capture projects, including the £21.7bn support package from the UK Government and the progression toward final investment decision for the first tranche of projects. This creates important investor confidence in the sector and has enabled the UK to position itself as a future global leader in the carbon capture, transport and storage market.

The Scottish Cluster partners are credible, experienced organisations including Ineos, Shell, Harbour Energy, ExxonMobil, SSE and National Gas, who have invested significantly to develop this major project. However, to achieve the carbon emissions reductions required to meet the UK’s legislated net zero targets, Track-2 projects need urgent clarity on timelines, policy, process and funding to progress further.

The UK has the potential to become a thriving, globally relevant carbon capture market, supporting ambitions for clean energy and green prosperity, using the skills, supply chain and innovation from the oil and gas and renewables sector.

Continued delay and uncertainty is blocking further investment in projects. Without certainty, investors are unable to commit capital, resources and critical pre-investment activity to get projects off the ground, leaving the UK behind.

Investors in the project and adjacent supply chain need certainty over an extended period to justify large scale investment. Other countries including Norway have been better than the UK in providing long term confidence.

Without investment and steady growth in CCS projects, the rationale and aims of GB Energy as a national, clean energy company will not be achieved.

Therefore, GB Energy has two vital roles to play:

a)      To bridge the gap in early-stage funding and commitment, providing confidence that the UK is a place to do business when it comes to the next chapter of energy

b)     Providing continuity and certainty around government policy, and commitment to projects and sectors to assist investors in making long term investments.

Enabling growth through the transition – the Track-2 opportunity

Acorn and the Scottish Cluster, can drive clean industrial and power market development, supporting the UK’s ambition to lead in clean energy. Key opportunities include:

• Clean hydrogen production.
• Negative emissions technologies such as bioenergy with carbon capture and storage (BECCS).
• Decarbonisation of the St Fergus gas terminal, a critical asset for UK energy security.

Through National Gas’s SCO2T Connect Project, Scotland’s largest industrial emitters will have an opportunity to link to Acorn, with additional expansion opportunities across the Central Belt via pipeline or further afield via non-pipeline transportation.

With 90% of Scotland’s largest emitters within 50km of Acorn or SCO2T Connect infrastructure, this creates a route to rapid decarbonisation of Scotland’s major emitters and hard to abate sectors, whilst protecting and creating jobs.

It is now critical that Track-2 projects receive clarity from the UK government on policy, process and timelines to ensure sustained investment, including:

• Confirmation of the funding envelope for Track-2
• Collaborative development of a clear, streamlined and accelerated end-to-end process for delivery
• Insight into the parameters for the Cluster programme and emitter selection process, balancing competing priorities of affordability, value for money, delivery timescales and scale of ambition.

We continue to work closely with DESNZ and relevant government departments on progress for Track-2 ahead of the Comprehensive Spending Review in Spring.

As a sector, we must move forward at pace to seize the momentum around carbon capture for the UK to meet its climate targets and create sustainable industries, supporting jobs and local communities.

January 2025