The Scottish government said that the decision had been made by a panel of academics set up by the previous regime.
"I am deeply saddened and astonished by this decision. It is a huge opportunity lost for the long-term prosperity of the city and frankly a betrayal of Aberdeen by the SNP executive," north-east Labour MSP Richard Baker told the BBC.
"No objective judgement can see Glasgow as being a better place to host the new technology institute.
"This is a bad decision for Aberdeen and for Scotland, as this would have been the logical home for what will be a crucial development in the future of the UK energy industry."
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