Meeting of the Parliament [Draft]

Meeting date: Thursday, September 28, 2023

Official Report 1032KB pdf

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Scotland’s Future Energy System

The next item of business is a statement by Gillian Martin on the vision for Scotland’s future energy system. The minister will take questions at the end of her statement, so there should be no interventions or interruptions.

14:58  

I will update the Parliament on the steps that we are taking to set out our vision for the future net zero energy system. Earlier this year, we consulted on the draft energy strategy and just transition plan. Today, we are publishing the responses to the consultation on the draft, along with the independent analysis report that was commissioned to examine the responses that were received.

That report confirms that there is broad support for our net zero vision and highlights the importance of providing policy certainty to enable the required investment in skills, infrastructure and technologies. The analysis report also shows the need to reach net zero in a way that fairly spreads the benefits and costs of decarbonisation across society. That is why our commitment to a just transition is so important. We are making funding of almost £5 billion available over the course of this parliamentary session in net zero energy transformation, including £1.8 billion to accelerate heat decarbonisation, with at least £465 million to support those who are least able to pay for the transition.

We are already making excellent progress in transforming our energy sector. Last week, I was delighted to launch the onshore wind sector deal, which is a great example of a shared commitment between Government and industry that will bring forward investment in skills and the supply chain. The sector deal is a key part of the Bute house agreement, and over the past two years the parties of Government have been working together to grow the renewables sector and to create economic opportunity and green jobs across Scotland.

There is still work to be done, however. Although we were pleased with the result for onshore wind in Scotland in the recent contracts for difference auction, the absence of offshore wind signals that the United Kingdom Government has failed to recognise the current market challenges that that sector faces. We urge the UK Government to address that disastrous outcome in time for the next allocation round.

As we have set out in the draft energy strategy and just transition plan, we believe that any new extraction of fossil fuels must be subject to strict climate compatibility tests. Our focus must be on meeting our energy security needs, reducing emissions and delivering affordable energy supplies, while ensuring a just transition for our oil and gas workforce as North Sea resources decline. To achieve that, we need to harness the skills, talent and experience located in the north-east to support the build-out of net zero technologies in Scotland. We are already acting, for example, through our 10-year £500 million just transition fund, but the UK Government needs to play its part to enable that transition.

The electricity network will be critical to delivering the ambitions that are set out in the draft energy strategy and just transition plan. High levels of investment in electricity transmission infrastructure in Scotland and in the wider Great Britain electricity grid are required to ensure that clean and affordable renewable electricity is available where it is needed.

A significant amount of renewable generation in Scotland is currently constrained as there is not enough space on the electricity network to transport the power. Annual constraint costs across GB could reach up to £3 billion by the late 2020s. Those costs are paid for, in large part, by consumers across GB. Many of the network projects that are currently proposed in Scotland are aimed at lowering those constraint costs, as the cost of the infrastructure will be less than the potential costs of constraints.

Although network build is vital, it must be delivered with lasting benefits for our economy and for the people of Scotland. Scotland’s natural endowment makes it an extremely attractive place to site renewable generation. We must translate that huge potential into sustainable jobs, community benefit, skills and local economic development. Investment in networks will play a crucial role in creating long-term high-quality green jobs that will attract and retain talent in communities across Scotland.

I am aware that communities in areas that may be impacted by proposed electricity network developments might have concerns about network infrastructure. As established in national planning framework 4, which was approved by the Scottish Parliament earlier this year, the views of local communities are of the utmost importance. It is vital that everyone has the opportunity to engage in decisions about future development. That engagement must happen as early as possible and should be effective, collaborative and meaningful.

NPF4 also ensures that appropriate checks and balances are in place, and that potential impacts on our environment and our natural heritage are fully assessed. I can assure Parliament that potential impacts on communities, nature, landscape and other valued natural assets are very important considerations when determining applications for consent.

Despite the fact that the powers to mandate community benefits from renewable energy and grid infrastructure developments are reserved to the UK Government, we are continuing to work with communities and a wide range of energy businesses to maximise community benefit from existing and new developments. Some developers are already leading the way, and, as part of the onshore wind sector deal, developers have committed to meet or exceed the national benchmark that is set out in the “Scottish Government Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments” document.

I want network companies to take similar steps, and I have strongly encouraged the network companies to bring forward tangible benefits to communities where infrastructure is proposed. That includes measures that can have a positive impact on household fuel costs. I have urged the network companies to be creative in those solutions, and to work closely with communities to tailor them. I welcome recent initiatives in that vein, and hope to see yet more innovation and good community engagement on how community benefit can be best deployed in a way that meets the needs of communities.

We remain committed to a net zero future, and we will use every power at our disposal to support sustainable economic growth and maximise the opportunities of the green economy. That includes ensuring that the electricity network infrastructure comes with economic and social benefits for Scotland.

By publishing the analysis report on the draft energy strategy and just transition plan today, we are demonstrating the open and transparent approach that is central to a just transition. As set out in the programme for government, we will continue to engage with a range of stakeholders across Scotland, including the just transition commission and the Scottish energy advisory board, as we work towards the final publication by summer 2024.

The minister will now take questions on the issues raised in her statement. I intend to allow around 20 minutes for questions, after which we will move on to the next item of business.

I thank the minister for the advance sight of the statement, which rightly highlights the need for a transition—but not much else.

A recent report by the Robert Gordon University states that retaining the offshore oil and gas supply chain, its workforce and associated skills over the next five years will be crucial to the UK’s successful transition to renewable energies. That is because there is limited capacity for the UK offshore renewables sector to take on board the

“skilled oil and gas workers impacted by the predicted decline in the hydrocarbon sector until later this decade.”

The approval of Rosebank will help to manage that decline until more green jobs into which the workforce can transition are available. If we apply the brakes too quickly, the workforce will be lost and we will not have the people or skills to make the transition. The First Minister has condemned the approval of Rosebank. He wants to turn his back on £8 billion of investment and more than 1,000 jobs in his latest betrayal of the north-east. Does the minister support the First Minister’s position? Would she, too, like to see the back of thousands of jobs, many of which are in her constituency?

I refute some of the language that Douglas Lumsden used in his question. No one is suggesting that any brakes be put on oil and gas. I am hugely supportive of our world-class oil and gas industry, and I agree that we should harness the substantial skills of the workers in that industry to take us to a net zero energy future.

I am concentrating my efforts on ensuring that oil and gas workers can see a sustainable future that takes us well beyond North Sea oil and gas. When a Government does not have plans for a long-term, sustainable future, what happens—[Interruption.]

Minister, please resume your seat. I do not need constant questioning from a sedentary position. Douglas Lumsden posed his questions, and the minister is responding. Let us hear the minister, please.

I very much appreciate that, Deputy Presiding Officer.

When a Government does not have plans for a long-term sustainable future, what happens is that the next generation has no job prospects, communities are hollowed out, there is a huge negative impact on the physical and mental health of those communities, and generational poverty becomes endemic. I know that because that is what Mr Lumsden’s party’s lack of a just transition and short-term ideological thinking did to the communities of Clydeside, Lanarkshire, Fife, Ayrshire, Tyneside, Liverpool, Yorkshire, south Wales and more.

Yes, there will be jobs associated with Rosebank. As a north-easter, I recognise that. However, my job as energy minister for Scotland is to ensure that there is life and there are jobs in the energy industry beyond the North Sea as it declines. The future is in an energy mix, and everything that the Tory-led UK Government does signals that it is neglecting to nurture the economic opportunities for the north-east and beyond that will rise from that.

I thank the minister for the advance sight of her statement. However, it tells us nothing about how the Scottish Government’s targets will be delivered.

The minister mentioned household fuel costs and that she hoped to see more innovation and community benefit. However, hope does not deliver. We need a route map to deliver now.

How many homes will be retrofitted this year and by the end of the parliamentary session? How many new jobs will be created across Scotland? Given the £40 million cut in university and college funding, how will the new training be delivered in our communities? Why has funding for households to access solar power been ended? What new funding will the Scottish Government provide to councils and communities so that they can deliver the engagement and the community and co-operative owned heat and renewables networks that will deliver investment to our communities and—crucially—tackle the fuel poverty that 38 per cent of our households now face?

I disagree that the statement that I just gave says nothing on those issues. I mentioned a significant development that will tackle quite a lot of that.

Sarah Boyack put quite a lot of questions to me. I point to the onshore wind strategic leadership group, which was vital in taking forward the policy aspirations for, and the development of, the onshore wind sector deal, which was published and signed last week. That deal will create pathways for long-term sustainable energy jobs and has commitments on skills provision, community benefits and helping to tackle fuel poverty across Scotland. There are many more such initiatives whereby the Government is working with industry to deliver on all the aims that will help us to get to net zero.

I also point to the impact that the new agency—heat and energy efficiency Scotland—will have: it will help householders with their fuel bills, deliver energy efficiency measures in homes and buildings and develop heat networks, as so many of our Nordic neighbours have. We will build on the initial work that has been done to make that a reality for a lot of households across Scotland.

We move to back benchers’ questions. We need to speed things up a bit, so I ask for succinct questions from members and succinct answers from the minister, please.

In her statement, the minister said:

“we believe that any new extraction of fossil fuels must be subject to strict climate compatibility tests.”

Did the UK Government apply such tests when it approved the development of Rosebank?

Mr Mason asks a question that he might have heard me ask yesterday in some of the media interviews that I did. I have no analysis from the UK Government of the climate and energy security conditions that applicants had to meet. If I had that, I would be very interested to see exactly what the conditions were. I would also be interested in seeing what details the developers provided. I would be happy to engage with the developers—I have spoken to them in the past—on what they might do above and beyond the conditions.

Equinor and Ithaca Energy have the licence. I feel optimistic because they now have a job to do to prove to civic Scotland and the wider UK that they recognise some of the criticism that came out yesterday. It would be interesting to see what they will be doing to reduce their production emissions.

Everyone recognises that the majority of what will be extracted from Rosebank will go overseas. It is 82 per cent oil—

Minister, I really need to encourage more succinct comments.

I will leave it there.

Thank you for your co-operation. I appreciate that a number of points are always put, but we have several members to get through.

We need a base load, and nuclear power should form part of the mix across the UK. The minister has not mentioned nuclear at all. What lessons has she learned from the German nuclear phase-out, as a result of which that country is burning more coal than anyone else in Europe?

I refer Graham Simpson to yesterday’s Official Report, as I gave his colleague Sandesh Gulhane a full answer about why the Scottish Government does not believe in nuclear energy. I told Dr Gulhane about the price differential between nuclear energy and offshore wind and I listed the raft of European countries that have turned their backs on nuclear energy in favour of renewables.

With an interconnector due to be in place for 2030, the Western Isles are set to host significant renewables developments over the next decade. Considering the fact that my constituency has the highest level of fuel poverty, does the minister agree that a just transition must mean that those communities see substantial benefits from hosting such developments?

I absolutely agree with that and that is one of our asks. We are working with the sector on the onshore sector deal. I was very clear that one of our asks of the industry and the sector was to improve the type of community benefits that they were putting forward. I extend that ask to all energy sectors wherever possible.

Dr Allan will be interested to know that I not only made suggestions similar to the one in his question—about working closely with communities to develop tangible benefits that would improve the situation of householders with regard to fuel poverty—but raised the suggestion of investment in local housing stock to keep young people in areas that have significant issues with young people leaving. After all, potentially it will be the young people of rural Scotland who will deliver on some of those energy infrastructure projects. As Dr Allan knows all too well, housing is a real issue for those areas.

In 2010, Alex Salmond told us that Scotland would be the Saudi Arabia of renewables, with 130,000 green jobs by 2020, but less than a fifth of those were created. No wonder the Scottish Trades Union Congress consultation response said that workers have “little faith” that their livelihoods will be protected. Can the minister tell us exactly how many green jobs will be created as a result of the Government’s energy plan? How many will be in Scotland and not offshored to overseas firms, like most of the ScotWind leases?

I thank the member for the opportunity to outline our projected model on that. The number of low-carbon jobs is modelled to rise from 19,000 in 2019 to 77,000 by 2050, with the right support and as a result of the just energy transition delivering a net gain in jobs across the energy production sector overall. Of course, we want the vast majority of those jobs to be for Scottish workers.

The UK Government’s latest contracts for difference round received no bids for offshore wind projects. Now, Rishi Sunak has pulled the rug from under the net zero ambitions of the UK and Scotland. All of the evidence tells us that we can protect and create jobs in Scotland if we ensure that we get the energy transition right and help to cut energy bills and emissions at the same time. What are the biggest barriers that are holding back that massive potential and preventing our energy future delivering for the people of Scotland?

I thank Marie McNair for outlining that, because the absence of offshore wind from the latest contracts for difference round signals that the UK Government has failed to recognise the current market conditions in the renewable energy space. The offshore wind sector is asking for a more realistic strike price. The outcome raises serious questions about the UK Government’s approach to safeguarding energy security, breaking our reliance on imported energy and, critically, doing everything possible to ensure that the energy sector can capitalise on the enormous economic and societal opportunities.

We have an ambition in Scotland for ScotWind to put 28GW of renewable electricity into our grid. Without any kind of certainty from the UK Government or recognition that that situation has to be nurtured and that the conditions have to be right for those bids, we are really running the risk that a lot of developers will walk away from offshore wind projects not just in Scotland, but across the whole of the UK.

However, I have been speaking to UK Government ministers about it and I have faith, because the sector is saying exactly the same as I am—the UK Government will look at what has happened in allocation round 5 as being a mistake and, when AR6 comes around, that situation will be rectified.

Dr Allan rightly pointed to the huge offshore wind potential of the northern isles and Western Isles. It is a huge opportunity, but questions remain about how best to realise that and who will benefit. At present, island communities that boast local experience and expert supply chains feel that they have been excluded by those who are planning the energy revolution. Will the minister agree to work with island supply chain experts, such as the Orkney Renewable Energy Forum and the European Marine Energy Centre, to bring essential local knowledge and expertise to the table and ensure that our islands are not denied the full benefits of their world-leading renewables potential?

That is an easy question to answer, because I absolutely want to work with the organisations that Liam McArthur has just outlined. I am, as they say, champing at the bit to get myself up to Orkney to visit EMEC and all the other organisations. My cabinet secretary was there in the summer, but I did not have the opportunity to go up then. As is usual when I end up visiting Orkney and Shetland, it will probably be the winter months when I am able to do so. However, if that is an invitation, I am absolutely up for accepting it.

I welcome the statement, and the onshore wind sector deal in particular, which, as the minister has alluded to, is at the heart of the Bute house agreement. It looks as though, through that deal, there will be a doubling of onshore wind capacity in Scotland, which means that many of our existing wind farms will need to be repowered or extended. That could provide the opportunity to renegotiate community benefit payments, which for many existing wind farms are at quite a low level—the payments are only around £1,000 a megawatt for many wind farms in my constituency.

Are there opportunities to maximise community benefit payments through renegotiation, so that we can get transformative investment in communities—for example, in housing, as the minister mentioned to Dr Allan—which we really need from renewable energy developments across Scotland?

That is a really good suggestion. I genuinely think that the sector will be up for negotiating on that point. One of the issues that we have had with the earlier iteration of onshore wind developments is that the community benefits have not been as substantial as they could have been. Across communities, we are seeing that the reputation of the initial developments has not been so great.

With the onshore wind sector deal, I have absolute faith that that will change. We are absolutely clear that renewable energy must benefit people across Scotland. More than £25 million of community benefits from renewables projects has been committed to Scottish communities over the past year, and that will continue to rise. Time and again, I say to the sector that the nature of the community benefits and the offers that are made must work. Communities must be engaged early in deciding what those benefits should be, and they should be tangible benefits that impact on householders.

Last week, I spoke at a conference at Our Dynamic Earth to discuss the importance of using anaerobic digestion to produce clean energy, which agriculture has huge potential to achieve. Given that the Scottish Government has committed to exploring increasing energy output from such innovations, will the minister comment on how that will be achieved and whether she will work with our agriculture sector to fulfil that huge potential for clean energy?

I met one of our colleagues from that event the next day, and we talked about that subject. Waste resources can be processed through anaerobic digestion to produce energy that can be used as a fossil fuel replacement. Biomethane for gas grid injection is becoming increasingly common. It provided 920 gigawatt hours in 2022 and is the second-largest contributor to renewable heat output.

To deliver on the ambitions that are set out in the Scottish Government’s vision for agriculture, we will have a support framework that delivers high-quality food production, climate mitigation and adaptation. I see use of anaerobic digestion to produce biogas and biomethane as part of realising that ambition.

The minister is aware that Scottish and Southern Electricity Networks intends to construct a substation in the Mearns and to install new overhead lines. There are huge implications for farming, tourism, property and wildlife habitats in the area. Does the minister agree that new energy infrastructure projects must always be completed with the consent of residents? Will the minister confirm that no attempt will be made to override the concerns of local communities in Scotland following the Scottish National Party’s failed attempt to amend the UK Government’s Energy Bill?

Tess White will understand that, as the minister who has responsibilities for consents, I cannot talk about individual applications. However, she makes a very good point. It is in the interests of developers to engage with communities early. That is what the onshore wind sector deal does with regard to onshore wind development, but, of course, that also applies to electricity infrastructure. The developers are doing themselves a disservice if they do not engage thoroughly and early with the communities that might be affected by that infrastructure.

Members will know that Scotland has an abundance of water, and there is certainly potential for more small-scale hydro power schemes. What actions will the Scottish Government undertake to assist with the delivery of more small-scale schemes?

Hydro power has the potential to play a significantly greater role in the energy transition. That is true at both the small scale—in co-operation with local communities, as part of the provision of resilient energy supplies in remote parts of Scotland—and at a larger scale for providing flexibility to the grid.

Stuart McMillan will be interested to know that I went to Scotland’s oldest hydro power station, in Cruachan, in the summer. I very much enjoyed hearing about the part that hydro plays in situations of intermittent supply and, indeed, in emergencies, when it can fill gaps in supply to the electricity grid. I think that not enough has been done—certainly not by the UK Government—to support that particular energy sector, which is crucial to security of supply. There needs to be an awful lot more assistance.

There is also a great deal of potential in small-scale schemes. That is why we have, through our community and renewable energy scheme, support for communities that want to establish their own hydro schemes.

I call Liam Kerr, and I propose then to call Stephen Kerr. I would like to have brief and succinct questions and answers with both.

The minister said yesterday that the reason why allocation round 5 of contracts for difference failed to get any offshore wind bids was that it was underpriced at £44 per megawatt hour, but she went on to suggest that such wind power could be produced in Scotland for only £37 per megawatt hour. Those statements cannot both be true, so will the minister clarify them? What CFD price she would set?

I am not going to put a value on a CFD price. In general terms, in AR5, developers stayed away from the offer that the UK Government made. It now has to work with those developers to make sure that, in AR6, it has people who want to apply for the licences and CFDs. As Liam Kerr has shown such an interest in this issue, maybe he can use any influence that he has with the UK Government and stand beside me and the sector in making that a reality.

The minister has just shown how difficult it is to set such a price.

I was heartened to hear her say—I presume that this is a Government statement of policy—that she has no willingness to put the brakes on oil and gas. Does she agree that it is pointless to oppose or object to the Rosebank oil field licence, as her party colleague Dave Doogan said on the BBC yesterday?

I have listened to quite a lot of Scottish Tories talking about this issue over the past couple of days. It has been very helpful to listen to media interviews with Scottish Tories, in which they have been called out for a lot of their ridiculous mythical claims about what Rosebank will give the UK—and, indeed, Scotland—in terms of energy security. The journalist Alex Thomson, from Channel 4, said:

“You can also ignore any politician who says Rosebank will give UK energy self-reliance. Unless the Govt nationalises oil industry the oil (developed by Norway) just gets sold on global market. Makes zero difference to your energy bill unlike home developed renewables”.

It is also a myth to say that it will bring down fuel bills. Alex Thomson also said that

“The taxpayer bill for developing the oilfield ... will be around £4billion. That cash would insulate”,

and provide heat pumps for, an awful lot of British homes.

That concludes the ministerial statement.