£200m Acorn CCS Grant Becomes Loans and Equity as SNP Demands Oil Money

The UK Government has converted £200 million in promised grant funding for the Acorn carbon capture project in Aberdeenshire into loans or potential equity stakes, and the SNP is demanding the money come back — funded from £5.1 billion in forecast North Sea tax receipts.

That's the operating number in this fight. The Office for Budget Responsibility expects UK oil and gas production revenue of £5.1 billion in 2026-27, and the SNP's Westminster leader, Dave Doogan, said every penny of it should be reinvested in Scotland, starting with the Acorn site at Peterhead.

Acorn is no small infrastructure bet. The project proposes storing emissions from across Scotland beneath the North Sea seabed and could support roughly 15,000 jobs at its peak. For the industrial cluster around Peterhead and the wider Scottish carbon transport-and-storage pipeline, the funding structure Westminster chooses now determines who carries the risk on future build-out.

What changed in the Budget?

Chancellor John Healey altered the original commitment in the Budget. Instead of the £200 million grant awarded at the last spending review, the UK Government will now offer the same amount in loans — or take an equity stake in the project itself.

The SNP called the move a "betrayal". First Minister John Swinney said he was "deeply concerned".

Doogan pulled no punches on the fiscal politics. He said: "The UK Labour Government has banked revenue from Scotland's resources while at the same time defunding our principal carbon capture project."

He went further: "Westminster has robbed our trillion pound future from us and this week they repeated the trick – £5 billion syphoned off for investments in England while taking a sledgehammer to Scotland's industrial future."

He also framed independence as the structural fix, arguing Scotland should control "the 80% of UK oil and gas production and the one third of UK renewable generation" directly.

One caveat on the £5.1 billion figure: the OBR forecast includes revenue from the Rosebank oil field and future discoveries that have not been approved. Ministers cleared the smaller Jackdaw field but have yet to decide on Rosebank — so the SNP's proposed funding source partly rests on barrels that may never flow.

How does the government defend the switch?

A UK Government spokesperson said the changes affect only future funding, not money already committed. "Acorn will continue to receive its existing grant funding until the end of the year," the spokesperson said. "Future support will be through loans or equity stakes that need to see the taxpayer receive a return."

The government argues an equity-style investment would actually tighten its relationship with the project — "allowing us to drive a better outcome for taxpayers and the project."

Energy minister Martin McCluskey, speaking on Sunday, filled in the fiscal backdrop. He confirmed some of the £200 million grant has already been drawn down by developers, and that money stays in place. The remainder, and any future support, shifts to loans and equity.

He gave two reasons. First, value: "loans and equities are better value for the taxpayer," potentially letting government take a stake that returns cash to the exchequer. Second, the hard constraint — defence. "We've had to make some really difficult choices to reprioritise within budgets in order to fund the defence investment plan, which is obviously a priority for the Government," McCluskey said.

He also disclosed that carbon capture programmes across the UK have faced broader reprioritisation, with some stopped outright rather than merely restructured into loans and equity. Acorn, he stressed, is not among them.

"We want that project to succeed," McCluskey said, adding that developers he planned to meet this week "will come forward with proposals, and that funding is on the table."

What happens next?

Two dates and decisions decide this. Acorn's existing grant funding runs only until the end of the year — after that, developers negotiate loan and equity terms with a government that now wants a commercial return. And the Rosebank decision, still pending, shapes whether the £5.1 billion revenue pool the SNP wants tapped actually materialises.