UK government insists it is 'honouring' Acorn pledge after converting £200m carbon capture grant into loans

Chief Secretary to the Treasury Emma Reynolds this morning declared the government is "honouring" its commitment to the Acorn carbon capture project, even as Treasury documents revealed the £200m has been converted from a capital grant into loans or equity stakes. Scottish Secretary Douglas Alexander had already conceded that the St Fergus, Aberdeenshire scheme faces "significant challenges," while critics branded the reversal a 'spectacular shambles.' The shift comes just 14 months after Ed Miliband announced the original grant alongside promises of 15,000 jobs.

Business leaders warned the funding uncertainty is "yet another hammer blow for the north-east Scotland economy," with Russell Borthwick, chief of Aberdeen and Grampian Chamber of Commerce, among the most prominent voices of criticism.

Treasury documents indicate the £200m was redirected to cover higher defence spending, with the government's focus now on carbon capture schemes in Teesside, Merseyside and Wales.

Scottish Deputy First Minister Jenny Gilruth called on Westminster to provide "certainty and clarity," cautioning that investors require firm commitments before the wider Scottish cluster can advance.