Government weighs equity stake in Acorn carbon capture project

The UK government is considering taking an equity stake in the Acorn carbon capture and storage scheme through Great British Energy. This potential investment follows recent revelations in the Budget regarding changes to the grant funding pledge of up to £200 million. A spokesman for the Department of Energy Security and Net Zero stated that an equity style investment would facilitate a closer partnership between the government and the project developers. The department argued that this approach would allow for a better outcome for both taxpayers and the scheme itself.

The proposal offers a potential lifeline for the project, which has faced significant uncertainty since its technology lead and investor, Storegga, announced plans to sell its 30 per cent stake almost a year ago. Other existing investors, including Shell UK, Harbour Energy and North Sea Midstream Partners, have declined to purchase their partner’s share. No new investors have joined the project since that announcement. The scheme has also been impacted by the closure of two major carbon-emitting facilities in Scotland, the PetroIneos oil refinery in Grangemouth and ExxonMobil’s Mossmorran ethylene plant in Fife. These sites were expected to provide the carbon dioxide required for storage at Acorn’s site in a depleted oil field in the North Sea.

The government’s stance comes amid criticism of its communications strategy following the Budget announcement by Chancellor John Healey. The funding issue has become a point of contention after it emerged that the government planned to save capital grant funding of £200 million from spending earmarked for carbon capture projects. This decision was detailed in the Budget 2026 redbook. The move prompted accusations from business groups and politicians that the project, and Scotland more broadly, had been betrayed. Scotland’s first minister, John Swinney, voiced discontent with the funding announcement. Critics also highlighted previous failed attempts to develop carbon capture technology in the region, noting that areas in the North West and North East of England and the Humber have received billions in government support, often at the expense of north-east Scotland.

Great British Energy chief executive Dan McGrail has described the body’s remit as that of an activist investor. He stated that the organisation targets areas where the UK has high levels of ambition but where private sector capital is not moving quickly enough. Earlier this year, Great British Energy invested £40 million to take an equity stake in hydrogen electrolyser firm ITM Power. It also invested £7.5 million alongside Barclays Climate Ventures into a Series B financing round for Naked Energy, a solar to heat technology firm. The organisation has since been split into three entities, including Great British Energy Nuclear and GB Grid, the latter of which focuses on ensuring the UK has capacity to connect renewables to the energy system.

A spokesperson for Great British Energy confirmed that the organisation remains open to playing a constructive role in the wider Acorn project. This would be contingent on the opportunity to work alongside an experienced and sustainable lead developer. The Acorn scheme is viewed as the anchor of a wider cluster of projects, including the proposed Peterhead Carbon Capture Power Station. It has been suggested that the project could create between 15,000 and 21,000 jobs in the region.

The Budget document outlined a priority for the delivery of mature carbon capture schemes, including HyNet in the North West of England, the Northern Endurance Partnership in Teesside, and the Viking project in the Humber. Harbour Energy, which is also an investor in Acorn, backs the Viking project. The Viking scheme is likely to be considered more mature than Acorn. Harbour has allocated a team directly to the Viking scheme, which benefits from closer proximity to industrial clusters and the Northern Endurance Partnership. The latter is one of two track one schemes supported by a 25 year, £22 billion government commitment.

Junior energy minister Martin McClusky denied accusations that the government had betrayed Acorn. He stated that claims about cuts to funding were wrong. McClusky published a letter to the Scottish Government confirming that Acorn is currently in receipt of grant funding to support project needs until the end of the year. He explained that any requirements from January onwards would be met through government loans or equity investment, subject to a business case. Energy minister Michael Shanks also stated that grant funding is already being paid out to Acorn partners. National Gas, which is building a pipeline as part of the project, told the Press and Journal it has received a small amount of the grant. The company had previously warned that delays to funding would put the project at risk. The Department of Energy Security and Net Zero did not provide a figure for how much of the grant had been paid or would be paid by the end of December.