The government has invested in plans for the world’s first gas CCS plant at Peterhead.
Energy secretary Ed Davey said: “This project envisions a cleaner, greener future for the North Sea and will support thousands of green jobs.”
Mr Davey was accompanied at the signing of the contract for the Peterhead project by prime minister David Cameron and deputy prime minister Nick Clegg.
Mr Cameron said: “For many years the UK has supported the North Sea oil and gas industry and we have worked together to make this an economic success the whole country can be proud of.
“I promise we will continue to use the UK’s broad shoulders to invest in this vital industry so we can attract businesses, create jobs, develop new skills in our young people and ensure we can compete in the global race.”
According to the DECC, the Peterhead and White Rose CCS projects are the EU’s largest commercially sized projects with this phase supported by around £100m from the UK Government.
The DECC say the project could provide more than 2,000 jobs during construction clean electricity for more than a million homes once built.