Energy
The next item of business is a debate on motion S4M-06407, in the name of Murdo Fraser, on Scotland needs a balanced energy policy. We are extremely tight for time. Mr Fraser has up to 10 minutes.
15:51
After listening to the previous, very consensual debate, I am filled with optimism and confidence that this debate will be equally consensual as we agree that Scotland needs a balanced energy policy, for the Scottish Government’s current fixation with onshore wind is not only causing consternation in our rural communities but driving up consumers’ bills.
I believe that it is time for a new approach to energy policy. I will set out why that policy should be based on the principles of affordability, security of supply and increasing decarbonisation, and why it would be a better way forward for our country and for this vital sector.
I start on a note of consensus by welcoming the progress that we already seem to be making. For quite some time, the Scottish Conservatives have been calling for a review of planning guidance for onshore wind farms to better protect scenic areas. Within hours of my motion appearing in the Business Bulletin yesterday, the Scottish Government published proposals to do just that.
I warmly welcome the adoption of a Conservative policy and the Scottish National Party’s acceptance of the very important principle that wind turbines are incompatible with scenic areas—a principle that it has vigorously resisted until now. However, the new policy does not go far enough, and without other changes there is a danger that it will just increase development pressure on non-protected areas, but who knows what other aspects of Conservative energy policy the Scottish Government will adopt? Perhaps that will become clear in the course of the afternoon.
Scotland has always been a world leader in energy, which is today a key strength of the Scottish economy. One only has to visit Aberdeen to see how well the communities there have coped with the general economic downturn over the past five years, thanks to the vibrancy of the oil and gas sector, the success of which is underpinned by a favourable United Kingdom tax regime.
There is also growing potential from offshore renewables. The latest opportunity comes in the development of carbon capture and storage, with the very welcome decision from the Department of Energy and Climate Change at Westminster to shortlist the Peterhead project as one of two schemes in the final round.
I very much welcome the inclusion of Peterhead in the Conservatives’ motion, and even more so its inclusion in national planning framework 3.
In the light of Danny Alexander’s remarks some 18 months ago that the money for the project had been reallocated to other projects under the Treasury’s control, can Murdo Fraser tell us whether he has had the necessary assurances from his colleagues in Government at Westminster that this time—unlike in 2007—we might see some real progress?
I welcome Mr Stevenson’s welcome—what a note of consensus we are striking already in this debate. I have many functions in life, but I am not a spokesman for Mr Danny Alexander, although I am very encouraged by the progress that DECC is making. I am delighted that one of the two shortlisted CCS projects is in Scotland, and I am sure that we will see that progress.
All that is good news, but we should not be fooled into thinking that high energy prices, which sustain a vibrant energy sector, are a good thing in themselves. They may be good for the energy industry, but they are bad for consumers and bad for business. Families across Scotland have seen energy bills to soar in recent years, which has put pressure on household budgets, and now nearly 40 per cent of Scottish households are in fuel poverty—a figure that would have been unimaginable a few years ago.
There is also an impact on business, particularly heavy consumers of energy. Just last week, I visited the O-I glass factory in Alloa, which is a major local employer with more than 400 workers on the books. That company spends £20 million per year on energy, and rising costs are always a concern.
Elsewhere in my constituency, in Fife, even a decade ago the paper-making industry was a major component of the local economy and employed many thousands of people. Today, there is just one paper maker left: Tullis Russell in Markinch. Paper making is a heavily energy-intensive process and Tullis Russell has a forward plan to survive by developing its own energy source, with a biomass plant on site. The pattern is repeated in other energy-intensive industries such as the metal production and chemical industries, where we see steady decline, plant closures and jobs lost.
Undoubtedly, part of the historic rise in energy prices comes from increases in the cost of fossil fuels. But today the fastest-rising component of energy bills is not the wholesale cost, but various Government levies to subsidise renewable energy and other projects.
It would be wrong to see rising fossil fuels costs as a one-way bet. Last week, we had the very sad news of the Scottish Coal Company going into liquidation as a result of a fall in world coal prices. However, across in the US, we have seen a cut of some 50 per cent in wholesale energy costs as a result of the exploitation of shale gas reserves.
Will Murdo Fraser take an intervention?
I ask the member to let me finish this point, and then I will give way.
That is having a hugely beneficial impact on the US economy, with large-scale manufacturing jobs coming back to the country, whereas in previous decades they had been offshored to China and elsewhere. I am sure that Mr Gibson will welcome that opportunity.
Wholesale gas and electricity costs make up the largest proportion of the average household bill and amount to 47 per cent. That is a very big difference from the cost of renewables obligation certificates, which add about 2 per cent to the average energy bill. How does 47 per cent end up anywhere near the 2 per cent that is a result of the balanced policy on renewables?
If Rob Gibson had listened to what I said, he would have heard that I said that the fastest-rising element was renewables subsidies. If he listens carefully to what I will say shortly, he will hear why renewable energy is costing so much.
Renewables are not just wind power. Hydro, solar, biomass and the emergent offshore technologies play a part, but if the Scottish Government is to meet its 2020 target, the primary component will be onshore wind. It is worth asking whether we need to subsidise a technology such as onshore wind to the current extent. Subsidies should be there to address market failure, but nobody could seriously suggest that there is market failure today in Scotland in onshore wind, when planning departments across rural Scotland complain of being deluged with applications, so attractive is the subsidy regime. In the past five years, there have been more than 44,000 individual objections to wind turbine applications across Scotland; the figure increases year on year, such is the level of public concern. That is why we are calling for a 50 per cent cut in the subsidy to onshore wind.
I gently remind those who would argue that that would destroy the industry that exactly the same forecasts of doom were made about the solar photovoltaics sector when its subsidies were cut, nearly 18 months ago. That sector has never been healthier than it is today.
Murdo Fraser may be aware that fossil fuels and nuclear are massively subsidised. For example, annual United Kingdom Government support for nuclear decommissioning is greater than £2 billion. Will he comment on those subsidies?
Of course there is a cost in nuclear decommissioning. The projects that are being decommissioned at the moment, particularly at Dounreay, were experimental. They are from very early in the life of the technology and as such they will be very expensive to clean up. New nuclear is nothing like as expensive to decommission. In fact, even the Scottish Government’s own officials told the Economy, Energy and Tourism Committee that the lifetime costs of new nuclear, including the costs of decommissioning, were comparable to the lifetime costs of offshore wind. Even the Scottish Government says that there is not a problem with the cost of nuclear.
We certainly see a limited amount of onshore wind having a part to play in the energy mix, but we must be aware that that comes at a high cost. The latest research by Professor Gordon Hughes of the University of Edinburgh—a man so well respected by the Scottish Government that it appointed him the chairman of the Water Industry Commission for Scotland—demonstrates a degradation in output from wind turbines over time. The Scottish Government claims that Professor Hughes’s research is flawed—indeed, it has said that it is “fundamentally flawed”—but it has not produced a single piece of scientific evidence to back up that opinion. Professor Hughes’s damning conclusion is that the levelled costs of onshore wind come out at £183 per megawatt hour, not the £86 per megawatt hour that the Scottish Government quotes. That is double the comparable cost of gas. Given the latest figures, surely it is time for us to stop this madcap rush for onshore wind development and think again.
As with so much in life, energy policy is an area in which we need moderation and balance. There is a part for renewables to play, a limited role for onshore wind, a role for hydro, a role for biomass, a role for solar and the exciting potential of offshore technologies. However, we also need to take advantage of the cost benefits of utilising fossil fuels, with carbon abatement where that is practical. This week, Westminster’s Energy and Climate Change Committee published an encouraging report on the opportunities for unconventional gas extraction in the UK and what that might mean for energy prices and security of supply. We should embrace those opportunities and make maximum use of the clean, low-carbon technology that is nuclear power, not close our minds—as the Scottish Government has done—to the prospect of a new nuclear plant in Scotland.
Scotland needs a balanced energy policy. The Scottish Conservatives’ approach to energy is good for industry, good for jobs, good for the environment and good for consumers, and I commend it to Parliament. I am pleased to move the motion in my name.
I move,
That the Parliament welcomes the strength of Scotland’s energy sector; acknowledges the vibrancy of the oil and gas industry, which is underpinned by a favourable UK tax regime; recognises the potential of offshore renewables; welcomes the recent decision by the Department of Energy and Climate Change to shortlist the Peterhead Carbon Capture and Storage (CCS) Project to progress to the next stage of the UK Government’s CCS commercialisation competition funding, with a final investment decision to be taken in 2015; appreciates concern from consumers and businesses regarding the rising cost of energy impacting on household budgets and economic growth; understands that the volume of onshore wind farm planning applications is causing concern for many across Scotland; calls on the Scottish Government to end its fixation with onshore wind as an energy source to the exclusion of other more efficient technologies, and further urges it to develop a balanced energy policy, based on the principles of affordability, security of supply and increasing decarbonisation, which draws energy from a mix of sources.
16:02
I welcome the opportunity to debate the Scottish Government’s energy policy. Energy plays a central role in the life of the nation. Its generation and the economic and environmental benefits that could arise from a shift from fossil fuel generation to a portfolio comprising renewable and cleaner thermal generation are matters of considerable importance to the Scottish Government.
The Scottish Government’s electricity policy recognises that we need a mixed portfolio of energy generation, including renewables and thermal sources of electricity. Our draft electricity generation policy statement sets out that, although renewable energy plays a predominant role in our future energy mix, that will be backed up by a minimum of 2.5GW of thermal generation.
Over the past few years, we have seen real, tangible investment confidence in the energy sector in Scotland. Our clear commitment to renewables and our ambitious targets have played a key part in creating and sustaining that confidence. However, not all the Government’s energy policy is focused on the renewables sector. It is a balanced energy strategy that takes into account the opportunities that exist for us to develop other sources of energy generation.
The Scottish energy sector lies at the heart of the Government’s economic strategy, which resulted in the Government producing the oil and gas strategy in conjunction with the industry. That has already created the climate that has brought in predicted investment, rising from £11.4 billion in 2012 to more than £13 billion in 2013. That is a clear demonstration of the confidence that investors in the industry have in the environment that has been created in Scotland.
The Scottish Government has created a similar environment to encourage investment in renewable energy. The Scottish Government’s target is for renewables to generate the equivalent of 100 per cent of gross electricity consumption by 2020. In 2002, our renewables generation, as a proportion of demand, was around 12 per cent; in 2012, it was almost 39 per cent—well ahead of our 2011 interim target of 31 per cent. We remain on track to meet our new interim target of 50 per cent by 2015.
Scotland has frequently led the way in its use of the renewables obligation certificates support system to generate a positive and stable investment climate for renewables generators. Our introduction of higher support levels for wave and tidal generation in 2007 has attracted investment and established Scotland as a marine renewables hub. Six years later, the United Kingdom has followed our lead and has introduced higher support levels for wave and tidal generation.
The renewables obligation Scotland has led to renewables capacity more than tripling across Scotland in the decade since its introduction. We reduced onshore wind support by 10 per cent to 0.9 ROCs from April this year, based on levelised cost data and modelling aimed at delivering only the most cost-effective capacity. The Conservative calls that were reiterated this afternoon to halve ROC support for onshore wind are arbitrary: they are based on politics, not economics, and they will scare renewables investors from investing in the Scottish market.
What is the cabinet secretary’s answer to the scientific study by Professor Gordon Hughes on wind turbines’ decline in output over their life and the consequent increase in costs? Surely the Scottish Government needs to take that extremely seriously.
We have done so. We have explained in parliamentary answers to—I think—Mr Fraser the basis of the Government’s view of the weaknesses and flaws in Professor Hughes’s arguments.
The scale of generation and transmission investment needed to move to a sustainable, low-carbon generating future is significant. Estimates suggest that up to £110 billion is likely to be required by 2020—more than double the rate of investment. That is why setting out a clear investment strategy and a stable investment climate is important, and why we engage so thoroughly with the United Kingdom Government on electricity market reform issues to ensure that a regime is created that is in the interests of the development of the renewables market in Scotland.
A recent Pinsent Masons report recognises Scotland as the place to invest in renewables in the UK, thereby recognising the clarity and the certainty that are implicit in Scottish Government policy. However, it also highlights concerns that the speed of progress on UK Government energy policy has caused delays in investment decisions. I echo the concerns raised in that survey.
Mr Fraser mentioned that national planning framework 3 was yesterday set out by the Minister for Local Government and Planning. The NPF3 main issues report notes the strong future for the oil and gas sector and suggests that, while the framework should focus on the transition to the low-carbon economy, our natural and economic assets include those associated with the oil and gas sector, whose technology and skills are readily transferable to the development of renewable energy.
We have included in NPF3 the opportunities in Peterhead for carbon capture, and we would simply encourage an intensification of the United Kingdom Government’s pace to secure progress on the Peterhead project. I remember that project being on the agenda in 2007. It was moved off the agenda and it is now back on it again. I appeal for consistency to ensure that the United Kingdom Government makes urgent progress on the project.
The national planning framework also sets out further information on the protection of our national parks and scenic areas in relation to onshore wind. I am delighted with the positive reaction that there has been to the steps that the Government has taken to listen carefully to the concerns that have been expressed by a number of organisations that have the care and stewardship of our magnificent natural environment close to their hearts. Our environment remains close to the heart of the Scottish Government, too, and we will progress our planning and energy policies in the context of what is in the best interests of all the people of Scotland.
I move amendment S4M-06407.4, to leave out from “, which is underpinned” to end and insert:
“and the estimated 24 billion barrels of reserves that remain in the North Sea; recognises the potential of offshore renewables and the continued role of onshore wind in Scotland; further welcomes proposals set out in the draft Scottish Planning Policy consultation to balance meeting Scotland’s renewables targets while ensuring protection of core wild land and scenic areas; further welcomes the Main Issues Report and Draft Framework for the National Planning Framework 3, which focuses on the transition to a low-carbon economy and proposes a number of national developments including thermal generation with carbon capture and storage; notes the recent Pinsent Masons’ report, Scotland’s Place in the Renewable Energy World, which recognises Scotland as the place to invest in renewables in the UK, but highlights the concerns that the speed of progress on UK Government energy policy has caused delay in investment decisions.”
Before I call Ken Macintosh, I note that the debate is heavily oversubscribed. If all members were to take three minutes rather than four minutes for their speeches, I might just fit in all members. Otherwise, I am afraid that some members will probably not be called.
16:09
In two weeks’ time, the residents of East Renfrewshire will have the good fortune to welcome the Cabinet Secretary for Infrastructure, Investment and Cities to open the Neilston community wind farm—they are probably cutting the bunting as I speak.
On the face of it, the Neilston community wind farm is just a small, four-turbine wind farm on the outskirts of the village but, to my mind, it is a hugely significant and hugely encouraging project, as the venture will be jointly owned by the local community and the private company that will operate and manage it.
Community ownership of renewables offers us the chance to make a real difference not just to our carbon reduction targets, but to our relationship with the big six power companies and to the needs of those people in this rich country of ours who are suffering from fuel poverty. It is an approach that I believe can help us to address some of the conflicts that exist in the planning system. Significantly, it offers local communities an income stream of an entirely different magnitude from that which is provided by even the most generous community benefit agreement.
I will return to the Neilston example, but first I welcome this Conservative Party debate. Although I will move an amendment on behalf of Scottish Labour, there is much in the motion with which we can agree. The multibillion-pound investment in our oil and gas industry is already bringing huge benefits to our economy, and although the costs of developing offshore renewables are still commercially daunting, the potential is clearly there.
The motion also alludes to one of the more worrying developments in recent years—the increasing number of Scots who are suffering from fuel poverty. Families across the country are feeling the squeeze. Energy Action Scotland estimates that, this year, up to 900,000 households could be in fuel poverty and could struggle to afford adequate warmth. It is particularly galling that the hike in our heating bills has been accompanied by the posting of 11 per cent and 14 per cent increases in profits by Scottish Gas and Centrica respectively.
Leaving aside the rather unconvincing assertion that the Tory Government has deliberately put in place a tax regime that is favourable to the oil and gas industry, I believe that all parties are agreed on the need for a balanced energy policy. The disagreement at the heart of the motion seems to be on the issue of how renewables can help us to strike that balance. On the face of it, we all agree that support for renewables is a good thing, but the Tory motion contains a carefully worded expression of concern about the dash for wind farms and the reaction that it has provoked.
I recognise that, across Scotland, there have been some pretty badly planned and executed wind farm projects. We know of some where the turbines are too close to people’s houses and some where they cause flicker, noise and disruption. We also have examples of cases in which the initial approval of small wind farms has been seen by some communities as a Trojan horse for the addition of more turbines. However, the trouble is that I get the impression that, instead of trying to address those genuine concerns, the Tories are riding on the back of that political reaction.
Mr Macintosh said that there were some badly planned wind farms. Can he name them?
I refer Mr Gibson to the consultation on the Government’s planning guidance. The point is that objections are coming in all the time. I make it clear that I am not against wind farms, but I recognise that some communities have genuine concerns about them, which we must address. I hope that the new guidance will do that.
On the other hand, the Government’s language is sometimes highly gung-ho. The First Minister makes it sound as if the country is awash with renewables. We have plenty of potential, but so far the cost of developing offshore wind has been extremely prohibitive. We have very little offshore wind—of the 2.3GW of electricity that is generated by offshore wind farms in the UK, only 180MW is generated in Scotland. I mention that not only as a gentle reminder that the wind does not stop blowing at the border, but to flag up the gap between what is planned or promised in the way of renewables and what is being achieved, which in Scotland is almost entirely reliant on onshore wind.
I am pleased to see the Government’s new guidance. That is a positive sign. It is clear that we need a more strategic approach that balances our need and desire to continue to develop onshore wind with a mechanism that allows communities to express themselves. That is where community ownership has a clear role to play—and I mean community ownership, not simply community benefit. Even at £5,000 per megawatt, community benefit can sometimes have the feel of a trade-off.
Community ownership is a completely different approach. When a joint ownership approach is adopted, as is happening in Neilston, communities have far more control and are far less likely to feel exploited by commercial organisations. Such an approach fundamentally alters the perceived them-and-us relationship. From the point of view of the income that is generated, there is a world of difference. For example, the four turbines in Neilston are expected to generate for the local community an income of hundreds of thousands of pounds—or the same amount as is generated by the massive Whitelee wind farm.
Unwanted wind farms that are owned by remote multinationals that enjoy huge profits while we struggle to keep our houses warm is not a model that will sit comfortably with the Scottish people.
You must conclude.
Community ownership offers us the chance to control and share in the benefits that stem from our natural resources.
I move amendment S4M-06407.3, to leave out from “, which is underpinned” to end and insert:
“and the potential of offshore renewables; recognises the importance of developing a balanced energy policy using a mixed supply of energy sources; supports the further expansion of the renewables sector, with greater focus on achieving Scotland’s decarbonisation targets, and believes that the growth in renewables offers a once in a lifetime opportunity to develop community ownership, with all the benefits that brings to towns and villages across Scotland in terms of tackling fuel poverty, creating green jobs, addressing tensions in the planning process and generating substantial income streams for local communities.”
As I said, if members take three minutes, we might just fit in everyone who wants to speak.
16:14
The Conservative motion pays lip service, or no service, to climate change, but the reason for the subsidy regimes and other matters that we are talking about is to tackle that issue. In “Reducing emissions in Scotland: 2013 Progress Report”, the UK Committee on Climate Change says that Scotland leads on installed capacity and that there is a “healthy pipeline” of projects. The report states that the Scottish Government provides
“longer-term certainty for industry by setting a 2030 decarbonisation target”,
but warns that
“uncertainty over post-2020 support at the UK level may feed back to current investment decisions.”
The certainty comes from the Scottish Government, and the uncertainty comes from the British position.
The question of how we tackle climate change is absolutely central to the argument. We have heard nothing, and we are likely to hear nothing, from the Conservatives about that. They present us with a motion that is a bit of a lucky bag—it contains a variety of sweets, but what flavours are they offering and whom are they aimed at? The Conservatives are aiming at a narrow base of people who do not want a balanced energy policy in Scotland.
I come from the area that is covered by Highlands and Islands Enterprise, and I have with me its advert from The Times from a couple of days ago. It points out that the area is home to more than 10 per cent of Europe’s wave energy resource, more than 25 per cent of Europe’s tidal energy resource and more than 25 per cent of Europe’s wind energy resource, as well as being home to more than 50 bio-energy related companies and more than 70 per cent of Scotland’s hydroelectric power, with investment of more than £80 million in ports and harbours since 2010.
That balance in the area that I represent is the an approach that will allow us to make progress. However, I am afraid that there is an awful lot of imbalance at present. First, on community schemes, which Mr Macintosh mentioned a moment ago, I have direct evidence that landlords such as the Applecross Trust and the Mount Stuart Trust on Bute have a policy of refusing tenants and crofters who seek to erect a wind turbine or other renewable scheme. Of course, landlords always seek their share of the profits if they give such schemes the go-ahead. Many small landholders can be severely disadvantaged in comparison with their owner-occupier neighbours. I see nothing in the Tory motion about a shift in the balance towards crofters and tenant farmers.
We have the Scottish Natural Heritage map of wild land areas and a planning policy that recognises high nature value and so on. I can only interpret the grudging criticisms of that move, published alongside the careful planning rules, as another shot at the campaign by a tiny vocal minority who want to shun clean energy opportunities entirely. They want to hunt wind farms out of Scotland. They dismiss the climate change crisis while ignoring the blessings of Scotland’s uniquely favourable natural resource, which is a boon to our country, not a blight. In fact, the Conservatives’ lucky bag is full of acid drops and soor plooms.
I give a warning that some members might have to drop out of the debate.
16:18
I am pleased that the Conservatives have chosen energy as a topic for one of their debates this afternoon, even if the Labour Party is unable to subscribe to the entire content of the motion.
Energy production has been and still is important to Dumfriesshire, which allows me to be parochial. Members who have known me over the past 14 years in the Parliament will know that I have consistently supported a balanced energy policy, even when that was not the policy of the Scottish Executive in the first two sessions of Parliament. Chapelcross nuclear power station was an important employer in Annandale for more than 50 years. I regret that, because of the Scottish Government’s policy, there was no opportunity to consider whether it could be replaced by a new and cleaner alternative.
As Murdo Fraser said, coal production is in troubled times. I am grateful to the Minister for Energy, Enterprise and Tourism for inviting me and others on to his opencast mining task force. I was even more pleased that all members of the task force believe that the preservation of employment in that industry over the medium and long term is a priority, and that they see the coal industry in Scotland as having a future.
I have to say a bit about wind farms, because the view of many of my constituents is that there will be too many of them in Dumfries and Galloway if all the proposals go through. I give the example of the development of 71 213MW turbines at Harestanes, which Dumfries and Galloway Council and most of the local community opposed but which the Scottish Government nevertheless consented to in late 2007. Even though that development is only under construction, Scottish Power, which is, of course, a subsidiary of the large multinational company Iberdrola, is already proposing an extension and a further 19 turbines on an adjoining site.
I am perfectly happy to have some wind farms and I like seeing some of them as I drive up to Edinburgh, but an alarming number of potential sites is being proposed all the way up the A76 and the A701. My constituents feel that Dumfries and Galloway is doing its bit.
The member is in her final minute.
Dumfries and Galloway Council approved an interim planning policy more than a year ago, but its decisions are too often overruled on appeal or when applications are referred to the Scottish ministers.
Will the member take an intervention?
I do not have enough time.
Way back in 2004, the Enterprise and Culture Committee recommended in a report on renewable energy in Scotland that the Scottish Executive should develop a national strategic framework for wind farm applications. In October 2004, Richard Lochhead said that he was “almost begging” ministers to bring forward a framework; indeed, John Swinney urged the ministers of the time not to
“kick the issue into the long grass of 2006.”—[Official Report, 6 October 2004; c 11038.]
After six years of this Government—after all that time—on the eve of a debate that was prompted by the Conservative group, a planning framework and a Scottish planning policy came forward with some reference to wind farms. That offers some protection for scenic areas in some parts of Scotland, but it does not offer protection to any scenic parts of Dumfries and Galloway other than a part of Merrick. Indeed, there is concern in my area that the Government’s proposals may increase the likelihood of developers focusing on Dumfries and Galloway as they are excluded from developing elsewhere.
16:21
I know that my time is short.
The one thing that disappoints me is that Murdo Fraser did not base his motion on the evidence in the Economy, Energy and Tourism Committee’s energy report. That may have given members something to support.
I come from a constituency in which oil and gas and renewables work hand in hand. My constituency of Aberdeenshire West, where I am based, is next-door neighbour to Aberdeen, and the north-east corner of Scotland is the hub for energy. The sector works to establish a mixed energy programme for the future, and it provides skills, jobs and opportunities for the future.
I was interested in the reference in Murdo Fraser’s motion to the tax incentives for the oil and gas industry. Of course those exist, but they do so because, in 2011, George Osborne introduced a tax hike on the oil and gas industry but, after pressure from Malcolm Webb, Sir Ian Wood and others in the industry, he felt that he had to make a U-turn. That was because he got it absolutely wrong. The industry suffered from that and did not take it lying down.
At the end of the day, the industry is looking for confidence, and that is what we are looking for from the UK Government with electricity market reform. The Government needs to decide where it is going with EMR. The industry is looking for confidence, and our young people in Scotland are looking for confidence in the industry.
I remember when young people were basically told, “Don’t go into oil and gas—it doesn’t have a future.” It had a future and it has a future; indeed, it has a long future. Renewables also have a long future. We have more than 11,000 people currently working in the renewables sector, and it has been projected that the figure will be 28,000 by 2020. There are opportunities for our young people for the future.
The motion does not address the carbon issue at all, and it does not consider climate change or take into account that we need to address it in a responsible manner. The way in which we can move forward involves renewables. There is a fantastic opportunity for our young people and Scotland to develop offshore wind and tidal power. Let us take that opportunity and have an energy mix that will keep the lights on—even for Murdo Fraser.
16:24
As a number of members have already said, the economy of the north-east of Scotland is currently buoyant. That rides on the back of a North Sea oil and gas industry that has led the way both at home and across the world. However, it sometimes worries me that, if North Sea oil was discovered now, there might be people—even members—who would suggest that we should simply leave it where it is and not exploit it.
The Scottish National Party Government and the SNP as a whole have shown themselves time and again to be only too willing to take a luddite attitude to new ideas and new technologies. The irrational fear of what they do not understand has been manifest with regard to sectors of the biotechnology industry, and of course it will soon lead to the death knell of Scotland’s once buoyant nuclear energy sector.
The opportunity that comes our way now is that of unconventional gas extraction. The opportunities of shale gas and coal-bed methane extraction have a chance of bringing success and wealth and of giving the technology and the companies that have shown the way in the north-east of Scotland and in the North Sea the opportunity to come to other parts of Scotland and bring wealth and know-how with them. The opportunity exists for us to take advantage of those new gas sources to underpin the new thermal capacity that John Swinney has spoken about during this debate.
Of course, we have to balance the fear and the facts. What are the facts on unconventional gas extraction? The experience in the United States is that it can lower the cost of energy and can fuel growth. That kind of affordability and economic growth is vital in Scotland, particularly in the areas where the new industry could be developed. Of course, there is a downside. There is apparently a fear of earthquakes. However, the limited experience of those that have happened in the United Kingdom shows that they may have shaken Blackpool tower a little, but those of us who live in areas of Scotland that are near our notorious fault lines are used to the fact that the ground will shake occasionally, which does not seem to do any harm.
More appropriate for this discussion is to raise the subject of those who are concerned about pollution. I have to point to the North Sea oil and gas industry, whose record on the environment is second to none. It produces oil and gas in deep water, bringing up oil that is often substantially water and requires to be separated on site, and discharging the water back into the sea. We have an environmental record that is second to none, and we can bring that to unconventional gas extraction.
Given this new opportunity for growth, I ask the cabinet secretary to take the opportunity to show some courage, leadership and vision, and take this forward—do it for Scotland!
16:27
How do I follow that? Believe it or not, what follows is the line that I was going to start with even before that contribution.
There is a scepticism, a paranoia and a crazed zeal in many of the opponents of renewable energy—I think that we have just seen that demonstrated—particularly when it comes to the supposed costs, which are referenced in the motion.
We had evidence from the Office of Gas and Electricity Markets just in January in “Household Bills Explained” that puts forward two important figures. One is £27, which is the annual sum that goes from a household bill to the green schemes of the renewables obligation certificate and the feed-in tariff—ROC and FIT. The other figure is £52. The schemes that are linked to the two sums are often put together as environmental schemes, but they approach from the matter from two fundamentally different angles. The £52 is for boosting energy efficiency and tackling fuel poverty, thereby providing affordability.
I hope that no one in the chamber would begrudge that fuel poverty funding, not least because the Economy, Energy and Tourism Committee has heard repeated calls for more of it, for more surety and, indeed, for a complete absence of the convener’s trademark raised hand of dissent—any comparison to Tommy Sheridan is not intended.
We should also remember the advice from the UK Committee on Climate Change, which is that green policies will lead by 2020 to bills that are £500 lower than would be the case if we depended solely on gas. Of course, we could go even lower by doing nothing at all, but doing nothing is not an option—or at least it is only an option for those who deny that anything at all is happening. The motion commits to decarbonisation, so I guess that that category does not include the Tories. If they believe that decarbonisation is necessary and their advisers say that green policies are cheaper in that context, I simply cannot understand how they can come to any doubt about affordability.
Scotland has, by any reasonable definition, a balanced energy policy. For example, the 2020 renewables route map highlights offshore wind, wave and tidal, and growth in hydro and biomass as key parts of achieving our 100 per cent target. If that is not a balanced energy policy, I wonder what is. Is it nuclear, with all its costs to the taxpayer? The UK Parliament’s Public Accounts Committee identified costs of £67.5 billion in relation to Sellafield, and £12 billion to £14 billion will go to Hinkley Point, according to the nuclear industrial strategy document.
Of course, there is the interesting sight of the UK Government and EDF Energy in negotiations about just how much public subsidy is needed. It is rather odd to see a Tory Government negotiating with a nuclear energy company that is owned primarily by the French Government and the French taxpayer, about how much British tax will go to the French—[Interruption.]
Order. The member must close now.
That is a testament to our close relations in the European Union on energy throughout Europe. I support the Government amendment.
Thank you. The final three speakers must be sharp with their three minutes.
16:30
It is right that we acknowledge the strength of Scotland’s energy sector, the potential of renewable energy sources in Scotland and the challenges that are associated with renewable energy.
The renewable energy sector’s potential is well documented, as is the Government’s commitment to meeting the equivalent of 100 per cent of electricity demand from renewable sources. The challenge is how we tap into resources and ensure that they are best utilised. The Government’s targets on decarbonisation of the economy contribute to the challenge.
The challenge for the renewables industry and the Government is how to match supply with demand for electricity while using an intermittent source. Will the Government simply export surplus electricity at times of high supply and import Russian gas or electricity from French nuclear reactors when the supply falls, or will there be investment in a much more independent solution to the problem?
Investment in the right electricity storage technology could equip Scotland much better to manage the unpredictable peaks and troughs in the renewable electricity supply and to match supply to the far more predictable peaks and troughs in electricity demand.
One such technology is pump storage, and there is a proposal for an £800 million project at the west end of the great glen. It would be interesting to hear from the minister what stage discussions on the project with SSE have reached, particularly now that the Highland Council has decided not to object to the proposal. Perhaps the minister will also say whether the Scottish Government is focusing on other storage technologies.
There is a growing perception that the renewable energy agenda benefits only the big energy companies and wealthy landowners and that local people suffer the consequences. Communities often see little or no benefit from large-scale wind developments, for example. People are also becoming more and more concerned—many people say that this is unfair—that the renewables agenda is pushing up their electricity bills. One in three people is affected by fuel poverty, so an issue that is already massive will get worse as earnings remain static and energy prices continue to rise.
I would be grateful if you could begin to conclude.
This has been a short but good debate. I look forward to hearing from the minister how we can overcome the challenges that come with the tremendous potential of Scotland’s energy sector, in particular renewable energy, in a way that benefits the communities that we represent.
Three members still want to speak. If members take two and a half minutes, I will be able to call everyone—otherwise I can call only two members.
16:34
If we are to place Scotland’s energy future in context, we must look at the world energy situation overall. World energy consumption is set to rise sharply over the coming years. The World Energy Council has said that
“Even with improvements in energy efficiency, we expect global energy demand to double by 2050”,
and the International Energy Agency suggests that demand might have doubled by as soon as 2035.
It is against that background that we can say that Scotland’s oil reserves of 24 billion barrels can comfortably be valued at £1.5 trillion, at least, and that the assumption of a price of $113 a barrel might be very conservative.
It is against that background that we can say that Scotland’s renewables opportunity, which could ultimately see us generating as much as 10 times our own energy needs, is a hugely valuable resource, and that Scotland’s economic and energy future will be clean, green and very bright.
The most significant risk that we face to achieving that potential is presented by the London Government. We have seen that with the oil and gas industry and George Osborne’s tax grab in the 2011 budget. That industry’s prospects only recovered after Mr Osborne saw the error of his ways. We are seeing the same thing with the prevarication over the UK Energy Bill, which is causing huge uncertainty. As a result of that, we are witnessing a hiatus in renewable energy investment in a situation that parallels that experienced by the oil and gas sector two years ago. It seems that Mr Osborne has a compulsion to squeeze the life out of Scotland’s golden geese—the sooner that we can prise his greedy fingers from around their necks, the better.
I am deeply concerned—as, I am sure, Mr McArthur is—that Mr Osborne will also kill off the fledgling wave and tidal industry in a failure to provide interconnectors to our islands soon enough, and in failing to end the punitive island transmission charging regime.
I travel the length and breadth of the Highlands and Islands over a large proportion of Scotland’s land mass, and I have seen little evidence of poorly sited wind farms. Indeed, across much of the Highlands and Islands, we barely see them at all. That is a great pity because they could bring much-needed jobs and income to communities that would otherwise die.
Mr MacKenzie, is it possible for you to conclude?
I will conclude on a positive point by noting that we have recently achieved 40 per cent of our community energy targets of 500MW.
16:36
I agree with the title of Murdo Fraser’s debate but precious little else. Marco Biagi was absolutely right to debunk Mr Fraser’s assertions about the impact of renewables on household bills. Although a free-for-all in onshore wind is neither necessary nor desirable, we cannot simply wish away onshore wind or pretend that we can leapfrog technologies. That would derail our efforts to meet our emissions reduction targets and undermine investor confidence in the sector as a whole.
It is a question of achieving an appropriate mix that obviously involves the oil and gas sector. We can have a debate about what that can or should be in the future, but it will undoubtedly make a significant contribution. It is a mix that has already seen the extension of the lifespan of existing nuclear plants and which involves a mix of renewable technologies, including CCS. I am delighted that we have had confirmation that Peterhead is the front runner in the CCS commercialisation funding process.
On that mix of renewables, I have a particular interest in wave and tidal technology because Orkney is at the heart of Scotland’s efforts to lead the way. Good progress has been made in the islands but things need to step up a gear. Unfortunately, delays in grid and related infrastructure and high transmission charges are holding back progress and affecting confidence. I commend Fergus Ewing for his efforts in collaborating with Ed Davey and local islands councils in seeking a resolution to that, and I hope that the consultants’ report to the governmental working group can provide a key to unlocking the impasse.
We are not just talking about a mix of renewables technologies. We also need a mix of various sizes of renewables development and models of ownership, as Ken Macintosh highlighted. That can empower local communities and offer opportunities for tackling the scourge of fuel poverty in more innovative and effective ways.
I will conclude by talking about the issue of uncertainty that was highlighted by Mr Swinney and others. I certainly accept that the EMR and other changes that are taking place are difficult for the whole energy sector. Given the significance of those reforms, it is essential that we get them right, but it is also important that delays in coming to final decisions are minimised.
However, if Mr Swinney is asking us to accept that uncertainty is a bad thing—and it is—then he must accept that his plans to break up the UK are scarcely an answer to the maiden’s prayer. If EMR is the latest part of the UK state that he insists will be left untouched by the SNP’s separatist proposals, he must be mightily relieved that the process of reform is in the hands of my Liberal Democrat colleague, Ed Davey, and not Mr Fraser’s colleagues, who I suspect would be a good deal less sympathetic to his renewables ambitions.
With those caveats and apologies for all the issues that I ignored because of the time constraints, I confirm that Scottish Liberal Democrats will support the Government and Labour amendments to the motion.
Finally, Alison Johnstone, whom I can give only a very strict two minutes.
16:40
Lord Stern told us six and a half years ago that it is much cheaper to deal with climate change than with its consequences. Last month, the carbon tracker initiative and the Grantham institute, of which he is chair, calculated that there are more fossil fuels held in reserve around the world than we can afford to burn. Between 60 and 80 per cent of the coal, oil and gas reserves of public listed companies must be left in the ground if the world is to have a chance of not warming by more than 2°C.
A balanced energy policy needs to recognise the difficult fact that we cannot burn all the fossil fuels we have and we need to plan a rapid transition away from fossil fuels. It does not make the oil in the North Sea redundant; we will continue to need oil to produce chemicals and for a whole host of other industrial purposes. In fact, using our irreplaceable fossil fuels by burning them starts to seem extremely inefficient when there are safer renewable alternatives available for power. Balanced energy supply is a nice phrase, but it is actually security of supply, affordability and environmental impact, including decarbonisation, that should remain the core outcomes that we seek in any energy policy, not just a balance of sources for balance’s sake.
The Green amendment was not selected for debate, but it can be read in the Business Bulletin. We identify the cost of energy for households and business to be of key concern and the need for Scottish and UK Governments to place demand reduction at the top of the agenda for energy policy as the clearest way to reduce energy bills and environmental impact.
I am happy to support the Labour amendment, which supports community ownership of renewables. Publicly owned renewables are important, too. The DECC attitudes survey that was published yesterday shows that support for renewables in the UK is at an all-time high: 82 per cent of people say that they support the use of renewable energy sources. Evidence heard by the Economy, Energy and Tourism Committee suggests that non-conventional gas extraction is not the fix that Alex Johnstone would have us believe. Let us not be distracted. Let us focus on the proven and real benefits of renewable energy.
I apologise for the tight time.
16:42
This has been a good debate, albeit a short one. We must underpin our energy policy with two principles. One is to have a balanced energy strategy that meets our energy needs and the other must be to cut greenhouse gases. It must be a priority of ours to address climate change. We see poverty and famine in developing countries caused by climate change. We also see the differences to our own climate, with snowstorms in April and floods and storms where we would not have expected them. Our landscape will change beyond all recognition if those changes keep occurring. We need to stop them now. We must reinforce our commitment to renewable energy and ensure that our energy policy leads on cutting carbon emissions and thereby stopping climate change.
The Labour amendment focuses on community ownership because we have a real opportunity to build communities by allowing them to own renewable resources rather than just attracting community funding from them. Once communities are in control of renewable energy resources in their areas, they can decide how those are built and use them to build their local economy. One idea is that communities could use them to tackle fuel poverty. If they are generating their own electricity, they can sell it more cheaply to the surrounding community and make the inroads into fuel poverty that we are unable to make at the moment. In a way, I am disappointed that the Government amendment has not renewed a commitment to community ownership. I would very much hope that the Government would re-examine the issue and ensure that it is given priority. Should we miss this opportunity, it will not come again and all our renewable energy will be in the hands of big business.
I turn to onshore wind energy generation because I think that it is really what this debate is about. Onshore wind generation is an established technology and the most cost-effective renewables technology that we have. We should remember that wind farms can be taken down as well as built, but climate change cannot be reversed. The Government has published a document protecting our scenic areas. Planning policy may give those scenic areas protection from having wind farms built on them, but they will be changed beyond all recognition by climate change.
However, communities have genuine concerns about the siting of wind farms. Elaine Murray talked about having a strategic policy, and that is missing, even though information about protection for some of our wilder areas was published yesterday. We need to address community concerns that are often drowned out by the lobby that just does not want onshore wind farms anywhere at any cost. We must consider ways of doing that.
We must also think about how we store the energy that is provided by onshore wind farms—Mark Griffin talked about pump storage in that regard. We need to do a lot more to cut the peaks and troughs of renewable power generation, because we do not have battery technology that is as advanced as we would like it to be.
We need a balanced energy mix that focuses on decarbonising our power generation. That means that we need to develop new technologies and move away from traditional generation. We have a once-in-a-lifetime opportunity to involve our communities and provide them with economic benefits that will help them well into the future. I ask that the Scottish Government consider that.
16:46
I will begin by responding to a specific point that Mr Griffin made about the SSE hydraulic pump storage project in the great glen. That is currently a live planning application under section 36 of the Electricity Act 1989, which will be determined by Scottish ministers. I hope that Mr Griffin will forgive me for not saying any more on that, but we are unable to comment on live planning applications.
I am not quite sure whether Dr Murray accused the Scottish Government of publishing the national planning framework and the Scottish planning policy specifically in advance of this debate. I am sure that, from her ministerial experience, Dr Murray realises that Governments do not produce documents of this intensity and magnitude with four days’ notice of a Conservative Party debate. A listening Government, such as we are at all times, puts a considerable amount of thought into such documents.
A rather unfortunate juxtaposition of comments occurred in the first sentence of Mr Biagi’s speech, when he started talking about “crazed zeal” shortly after Alex Johnstone had given a good demonstration of what crazed zeal looks like. I hope that that has not failed the test of courtesy towards other members of the Parliament, but I think that Mr Johnstone managed to exceed even his own capacity for hyperbole. I also thought that the way in which he was manoeuvring around might create an earthquake in the parliamentary chamber, but we will leave that until he undertakes the innovative means of energy generation that he was talking about.
As I conclude the debate on the Government’s behalf, I will address a couple of key points that were raised. On the point about the contribution of renewables to household bills, I simply say that material that was published by the UK’s Department of Energy and Climate Change forecast that renewable energy, energy efficiency and climate change policies will result in an average household energy bill being £166 less by 2020 than it would be if we continued to rely on fossil fuels. That is the justification for the steps that we are taking. The point that Mr Gibson made was an important one in that respect.
There has been a great deal of focus on the nuclear sector. That was at the heart of Mr Fraser's contribution. I will share with Parliament a couple of points concerning the nuclear industry. On 3 December, EDF in France published an update on the construction costs at Flamanville, which is the site of the first new nuclear power station to be built in France for 15 years. The cost has increased from €3.3 billion to €8.5 billion. That is even worse than the cost increases on the Edinburgh tram project, which is saying something. Further, other investors are refusing to take part in nuclear investments. After investing £1 billion in developing projects, Centrica said that
“uncertainty about overall project costs and the construction schedule”
had led it to withdraw from the UK’s nuclear rebuilding programme. Before Mr Fraser takes us on a dash to nuclear, we must bear in mind the significant obstacles that he must overcome in sustaining that argument.
Mr Swinney will be aware that, as I said earlier, his own officials told the Economy, Energy and Tourism Committee that the lifetime cost of new nuclear, including decommissioning, is no more than the lifetime cost of offshore wind. The advantage of nuclear is that it provides base-load and a degree of efficiency and certainty that does not come with renewables. Surely, if we want low-carbon power, nuclear is a better bet.
There is not much certainty in a cost that goes from €3.3 billion to €8.5 billion at a time when offshore wind costs are reducing, which is a significant advantage to the development of the offshore renewables sector.
We have also talked about oil and gas. One of the reasons why we are seeing such welcome growth in the oil and gas sector in Scotland today is that the UK Government has realised the folly of the tax grab that it made on the sector as part of its budget proposals. The delivery of a strong and stable climate for investment is essential.
That brings me to the point on renewables and the constitutional debate that Mr McArthur raised in his speech. The fact that the UK has now signed an agreement with the Republic of Ireland to obtain access to renewable energy resources in Ireland demonstrates the necessity of cross-border co-operation between countries such as Scotland, the Republic of Ireland and the rest of the UK to satisfy the renewables targets that are obligatory on the rest of the UK.
That is why we see such investment in the Scottish renewables sector, driven by the policy certainty that this Government has offered and by this Government’s determination to establish a leading position in the renewable energy sector in the world. That is why Mr McArthur’s constituency is an epicentre for wave and tidal developments. We have demonstrated the leadership that is necessary to take the sector forward.
16:52
I remind members that I have an interest in the debate, as my son is a project manager who builds wind farms in Aberdeenshire—indeed, in Dennis Robertson’s and Maureen Watt’s constituencies.
I am pleased to close this wide-ranging debate entitled “Scotland needs a balanced energy policy”. It has mainly been a constructive debate. It has been almost consensual at times. It has been adversarial at other times and interspersed with references to soor plooms—members can decide for themselves who that may refer to.
I thank Elaine Murray in particular for a thoughtful and balanced speech. I also say to Rhoda Grant, Alison Johnstone and Ken Macintosh that we are comfortable with community ownership and welcome the points that they made.
In particular, I thank Mark Griffin—as Rhoda Grant did—for a well-researched and considered speech. He raised the necessity for electricity storage, which has been highlighted by the Institution of Mechanical Engineers, as well as the need to reduce our dependency on gas imported from Russia.
The first part of our motion
“welcomes the strength of Scotland’s energy sector”
and
“the vibrancy of the oil and gas industry, which is underpinned by a favourable UK tax regime”.
Despite the fact that the Government and the Labour Party amendments both delete
“which is underpinned by a favourable UK tax regime”,
it was noticeable—I listened carefully—that neither party informed the Parliament what tax regime it would apply to the North Sea oil and gas sector, what changes it would make or what part of the tax regime it would reject and why. They could have graciously acknowledged the current tax regime, particularly given the extent of their criticisms in the past.
The question that I was trying to ask was simply whether the Government made the decision to introduce that favourable regime out of choice or whether it was forced to introduce it after the outcry and outrage that followed the previous year’s tax increases.
Given what Gordon Brown did—what a cheek!
One of my colleagues refers to what Gordon Brown did, but we are looking forward, rather than back. I would have thought that Ken Macintosh would welcome the fiscal forum that was set up between the Treasury and the oil industry. As a regular attender at the cross-party group on oil and gas, I know that the industry has welcomed the new fiscal forum on many occasions.
It is worth putting on record again the fact that oil is a volatile commodity, which would provide up to 20 per cent of revenue in a separate Scotland but less than 2 per cent of United Kingdom revenue. For that reason, oil is central to debates in this Parliament. In 2011, almost 52 million tonnes of crude oil was extracted from the North Sea, compared with 1999, when 137 million tonnes was produced. In 2011, oil extraction was at its lowest level since 1978. Since the SNP came to power, the production of crude oil has fallen by one third.
As Murdo Fraser said in his opening speech, there is no doubt that the vibrancy and confidence of investment in the sector are as a result of the closer working and understanding between the industry and the Treasury. The brownfield and small-field allowances, along with other reliefs, are now targeted to respond to the needs of the industry and to ensure optimum extraction. The price of oil was $18 a barrel in 2002 and $141 a barrel in 2008. Last year alone, it fluctuated between $91 and $126 a barrel. For all those reasons, it is difficult to predict with any certainty the revenues from this volatile commodity, which depend on production, price, sterling-dollar exchange rates, capital and operating expenditure and tax rules and rates.
The second part of the motion relates to the rising cost of energy. I commend Ofgem’s approach in fining SSE £10 million for prolonged and extensive misselling at every stage of the process and for misleading customers into believing that they could save money. I hope that we all agree that that is unacceptable practice, which justified that significant fine. Unfortunately, however, that has meant a loss of reputation for one of Scotland’s leading companies.
Ofgem is now introducing a simpler, clearer and fairer energy market by reducing the confusing array of tariffs so that consumers are put on their supplier’s lowest variable rate. Even more measures are being introduced as a result of the UK Energy Bill. I am sure that everyone would agree with that.
Demand reduction is critical, as was highlighted in the Royal Society of Edinburgh briefing paper. I was pleased to note that Scottish Enterprise is now helping firms to reduce overhead costs by reducing energy—a sensible approach to help businesses compete and reduce overheads.
The volume of onshore wind farms is undoubtedly causing concern, of which Fergus Ewing is fully aware. We have long said that wind turbines are not compatible with scenic areas, and we welcome the fact that the Government and its highly competent Minister for Local Government and Planning have reached that conclusion, with the protection that has been outlined this week. We have waited a long time for Derek Mackay but, now that he is here, he is doing the job that the Parliament is looking for.
Will the member take an intervention?
The member is now in her last minute, Mr Stevenson.
Finally, I will use a local example from Moray. A section 36 application for Brown Muir wind farm received more than 2,000 objections, and the council unanimously agreed to object to it. Local people have called for the company to withdraw the application, given the level of opposition and the unanimous vote in the council, as well as the fact that it is against local policy.
I ask you to start winding up.
The matter continues to be pursued, despite the cost to the council and so on.
We have set out a paper on a balanced energy policy that is based on the principles of affordability, security of supply, increasing decarbonisation and drawing energy from a mix of sources, set against a background that provides a favourable and stable tax regime, which I trust will be supported by all members.