THE UK Government's snub of a carbon capture project in the north east of Scotland has been described as a "real blow" for the country by a billionaire Scottish businessman.

Sir Ian Wood, the former head of Wood Group that is heavily involved in the North Sea oil industry, has said the decision not to back the Acorn Project makes "little economic or environmental sense".

Wood is now chairman of non-profit company ETZ Ltd that is working to create an energy transition zone in the north east as Scotland looks to transition away from oil and gas production with a focus on developing renewable energy sources.

It was hoped that the Acorn Project, which is to be based at the St Fergus gas terminal in Aberdeenshire, would capture around 200,000 tonnes of carbon dioxide (CO2) annually. After capture, it would then be transported to depleted North Sea gas fields through existing pipelines.

However, sites on the Humber and Liverpool were chosen in the first round of funding for the UK Government's £1 billion carbon capture, utilisation and storage (CCUS) scheme, with the Scottish site considered a "reserve".

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Saying that he was "hugely disappointed" at the decision of the UK Government to snub the Scottish cluster for carbon capture storage (CCS) and instead approve two sites in the north east of England, Wood added that the Acorn Project is a "huge opportunity" to harness the skills of the existing workforce in the industry.

Calling on the UK to add a "third cluster" to its Track 1 programme, Wood said: “This makes little economic or environmental sense and is a real blow to Scotland.

“There is also a huge opportunity for oil and gas firms, domestic supply chain companies and our wider economy to harness the skills and expertise of our current workforce to create many good, green jobs in the coming years and contribute significantly to the net-zero ambition. We have previously made clear that there is a strong case for five or six clusters to be backed now to encourage collaboration across the UK and to accelerate these efforts.

“At the very least I urge the UK Government to reconsider their decision and add a third cluster to the Track 1 programme which should undoubtedly be the excellent Scottish bid.”

One of the businesses looking to Acorn to decarbonise its operations is petrochemical giant Ineos which backed it earlier this year as part of efforts to cut emissions at its Grangemouth site.

Also calling on the UK to add a third cluster ito its first round of funding, a spokesperson for Ineos said that the snub was a "disappointing decision".

They continued: "We are committed to achieving Net Zero and delivering substantial reduction in CO2 emissions by 2030.  Our plans do rely on Government support for The Scottish Cluster which has an excellent chance of being awarded given that it is on the reserve list.

“Grangemouth is not changing its plans and we will continue with our studies and engineering.”

READ MORE: UK Government rejected Scots carbon capture project 'for political reasons'

The Climate Change Committee has said that CCS is a "necessity not an option" to acheive net-zero targets and Wood added that if the UK is serious about decarbonisation then it needs to move "much more quickly and comprehensively than we have done to date".

Scottish Energy Secretary Michael Matheson commented: “It is clear that the Acorn Project is the most cost-effective and deliverable opportunity to deploy a full chain CCS project in the UK.

"It is therefore completely illogical that the UK government has taken the decision not to award the Scottish cluster clear and definitive Track 1 status.”

The UK Government insists the Acorn Project will be considered as part of the second stage of funding which is hoped to have another two clusters up and running by 2030.

The two English sites selected in the first phase of funding to take a share of the £1bn and are expected to be up and running by 2025.