Official Report 598KB pdf
Welcome back. Agenda item 3 is an evidence session on the Scottish Government’s priorities for energy. I refer members to papers 4 and 5. I welcome to the meeting Stephen Gethins, Minister for Europe, External Affairs and Energy, and his officials: Catherine Williams, deputy director, onshore electricity and strategy; Ragne Lowe, deputy director, offshore wind programme and investment; and Frances Murphy, head of the heat in buildings delivery unit.
I invite the minister to make some opening remarks, after which we will move to questions.
Good morning, and thank you for having me along to the committee this morning.
I have sat on the other side of the table at committee meetings, so it is good to experience the view from this side. I know from that experience what good work committees can do, and I am very much looking forward to working with all of you.
The Scottish Government was elected on a manifesto that clearly set out our commitment to ending Scotland’s impact on climate change by 2045 in a just and fair way that protects jobs and livelihoods. The Government’s priorities were set out in the programme for government. I will summarise them in four themes, if that would be helpful.
First, energy bills are too high. Energy must become more affordable for people and businesses. It is estimated that around 32 per cent of households in Scotland will be in fuel poverty this winter. It is a priority for me to work with colleagues in the UK Government to push for action to address that. Obviously, the issue is primarily one for the UK Government, but I will also take action where we have the powers—for example, by supporting investment in energy efficiency for homes.
Secondly, we must deliver economic growth and ensure that Scotland benefits from our energy resources. Scotland is an attractive place for investment—that is the clear message that I have been receiving from business—and it is essential that we deliver on Scotland’s offshore wind potential. I want to ensure that workers across Scotland can benefit through high-quality jobs and access to training and that we support Scotland’s highly skilled existing oil and gas workforce during the energy transition. I also want community and local ownership of energy to increase, and we have committed to supporting that through additional funding via the community and renewable energy scheme and through community benefit.
Thirdly, we need to decarbonise where decarbonisation makes a difference and matters. I have started early scoping for a new heat in buildings delivery plan and preparations for a heat in buildings bill, and I recognise that parliamentary and stakeholder engagement will be key to refreshing delivery actions and accelerating progress towards Scotland’s heat decarbonisation targets. That is backed by the provision of more than £330 million this year, which is expected to support around 20,000 households annually, with around 60 per cent of that support being targeted at those who are most at risk of fuel poverty.
Fourthly, we need to have secure, resilient energy supplies. I want to place Scotland at the heart of the solution to Europe’s energy security. We need to think about the issue in a global context. Events in the middle east and in Russia’s war in Ukraine are putting upward price pressure on the global energy market, and we must ensure that Scotland’s interests and needs in relation to energy security continue to be met in an ever-changing world.
Scotland already generates more than 73 per cent of its electricity from renewables, but, of course, we generate more than that, which we export. That is providing secure, home-grown energy supplies that will protect us from future energy shocks. We need to have a diverse range of technologies, including long-duration energy storage, such as pumped hydro storage. I also recognise that oil and gas have an ongoing role to play in our energy mix, and that will remain the case for some time to come. I have had very good meetings with business in that regard as well.
Key levers across much of energy policy are currently reserved, so my objective is to work closely with the UK Government to push for action. In particular, it is essential that the UK Government’s upcoming decision on the strategic spatial energy plan recognises Scotland’s energy priorities.
Finally, I have committed to delivering an energy strategy for Scotland that will reflect those priorities, and I look forward to engaging with the committee on that and on other issues.
Thank you for giving me the opportunity to make some opening remarks.
Thank you for those remarks. I appreciate the themes that you set out. Colleagues have a range of questions, which are perhaps not quite organised according to those themes, but we will try to get through as best we can.
You made a good point about the oil and gas industry and how we will need oil and gas, which you recognised as still being a key part of the energy mix across the UK and Scotland, for the foreseeable future. However, in the programme for government, you still take what I would call a very cautious approach, whereby you call on the UK Government
“to take an evidence-led and case-by-case approach to decisions on North Sea projects, with climate compatibility and energy security as primary considerations.”
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Given the statement that you just made, what more do you need to wait for to be a bit bolder on that? We are facing high prices due to lack of supply—of gas, in particular—in Europe and across Asia. Emissions are lower for the domestic production of oil and, especially, gas. We have an oil and gas industry that is desperate to push on with these projects and maintain its supply chain and employability. Is there a case for the Scottish Government just unambiguously backing the projects and being bolder in its programme for government?
Thank you for the question. It is not an unfair one, but I want to make a couple of points on it. I will first note—you will be well aware of this, convener, given your past—the work that is going on across the energy sector; the skills and expertise in the oil and gas sector that give us a competitive advantage when it comes to the onshore sector; and the fact that we still have a significant oil and gas sector that is producing.
I think that the projects that you are referring to are Jackdaw and Rosebank, as those are the decisions that are coming up. I wish that I had all the powers on energy, but I do not. The secretary of state at the UK level has to make a quasi-judicial decision. You have highlighted issues such as climate compatibility and energy security, and the UK Government previously got itself into a bit of a pickle with a judicial review and the Finch judgment, so we need to let the process take its course. I do not have all the information at my disposal, because I do not have the quasi-judicial authority over it, and it is entirely appropriate to let that take its course.
Given the high-level facts that we have, there is an opportunity for the Scottish Government to be unambiguously supportive of those and future projects. At the moment, it is being too cautious, yet there is an opportunity to move forward.
In the areas where we have responsibility, such as training, engaging with the renewable sector and putting in place infrastructure, there is a lot of work that we can do. I just fear that going down the route of pre-judging the decisions will not be entirely helpful to anybody, given the nature of the decisions that are coming. We saw the challenges that the Finch judgment led to previously, and I know from speaking to UK ministers that they will be taking the decision-making process incredibly seriously. It is no great mystery to tell you that they are not giving me any information that will not be available to members of this committee, because we do not have responsibility for oil and gas.
What I would say is that I would like them to take a slightly different approach when it comes to where the finances go. Over the past 12 years of the energy profits levy, which we have concerns about, it has raised something like £12 billion or £13 billion. One of the great tragedies of oil and gas policy as a whole, regardless of these two particular projects, has been that the Treasury has taken more than £400 billion and we have not had a long-term benefit from that finite resource. The UK is one of the few countries in the world that has done that. Many years ago, I worked in Azerbaijan, where, even under Heydar Aliyev, they established an intergenerational fund. Depending on the decision that is made on the projects, which is not for me to make, that is an area in which taking a long-term approach to the energy sector is crucial, because short-termism has been extraordinarily damaging in recent years.
Thank you for coming to give evidence today. I just want to clear something up, because it is a question that many people are asking about the draft energy strategy that was published in 2023. I realise that that was before your time as minister, but perhaps you have a different stance. Do you support the Government’s presumption against drilling for oil and gas, or can you explain to the public what the position is?
I think that I have just set out the position, which is that we have the two projects and that a quasi-judicial decision has to be made.
I have said that I would look at a refreshed energy strategy. Before I make any presumptions about that, I would make a presumption in favour of engaging with this committee, and with other parliamentarians, around it.
We are in a very different set of circumstances with regard to energy security. In addition, climate compatibility rules are pivotal, and that is where the previous UK Administration found itself in some difficulty.
As much as I would like to jump into this, I think that, where quasi-judicial decisions are to be made around those two projects, it is important that I follow the process and the rule of law.
If you had the power, would you remove that presumption?
If I had the power, I would have the full range of information available to me with regard to climate compatibility and energy security, which I do not currently have.
Okay. That has not really answered my question about being clear with the public.
Before I open up the discussion to colleagues, I have one further, connected question. It is kind of on the positive side as well. Last week, we heard evidence from Professor Paul de Leeuw of the Robert Gordon University Energy Transition Institute who highlighted the job destruction that we are seeing in the oil and gas industry. It is fairly well known that that is on a certain trajectory. Some of the projects that are being discussed would help, but the trajectory remains downward.
It is a case of “A bird in hand is worth two in the bush.” The minister foresees jobs coming through from renewables, but the scale, timing and location of those jobs is not clear. It is subject to forecasts and perhaps variability, especially in the case of floating offshore wind, which has cost challenges.
How do you see those challenges, and what are your comments on that?
There is no question but that there is a challenge. I had a wee read through Paul de Leeuw’s evidence to the committee, and I had a sit-down with him myself at Robert Gordon University, which was very useful. He has worked in the sector for decades and provides valuable insight.
We know that the oil and gas sector is a maturing basin; at the same time, we are, where we can, bringing forward projects. Just yesterday, the First Minister was in Montrose—in your constituency, convener—where he announced a £5 million investment in one of the biggest offshore harbour projects in the world. That is exciting for Angus and Montrose, and it is good for Scotland. We are seeing investment going in. There are challenges, however, and the situation is not entirely within our gift. I am sure that we will talk about issues such as transmission charging, which is consistently raised with me by the renewables sector. There is also the energy profits levy, which will have been raised with the committee and which is raised with us. Those areas are outwith our control and have a significant impact.
Although there are challenges, there is also an exciting opportunity. However, one of the reasons why I talk about energy security in a broader sense is that I think we need to look forward in the broader sense, at the longer term. I know that we sit here and debate and discuss the politics as they are today, but in this job I have to look 20, 30, 40 and 50 years in advance, because that is exactly what industry is currently doing.
Paul de Leeuw talks about the extraordinary role that Scotland can have in the broader North Sea offshore cluster of renewables. Some of his writing is very interesting, so it was good to see him giving evidence to the committee on that.
I will open up the discussion to colleagues. Kristopher, do you want to come in?
I am happy to come in on a slightly different theme—it is something that you can actually affect, minister. It is good to see you—good morning. I will start at quite a high level, if that is okay, and then we can perhaps move into the delivery in more detail.
A few weeks ago, Parliament agreed—and Government, I was glad to see, supported—the principle that we need to diversify the ownership of our energy system. We have discussed that on multiple occasions—very productively, I think—and there are a lot of shared priorities. However, it would be useful, in this space, to hear about how you see Government taking that forward and delivering diversification of ownership in our energy system. I know that you have mentioned CARES, but perhaps you can look at the picture more broadly.
Thank you, Mr Leask—that is really informative. I will zero in on the local level where that is delivered and then zoom out to the national level. First, I want to put on the record that I think that community benefit and ownership is really important. We have seen that elsewhere, and we see it in Scotland. The example that I keep using is Scalloway Youth and Community Centre. I am sorry for using a Shetland example—I will talk about Orkney in a minute—but I have been asked a question, and it is still in your region.
When I was up at Scalloway youth centre, I learned that something like 99 per cent of its electricity needs on the day that I was there were met by CARES, from its own generation. I know that that is not the be-all and end-all, but it illustrates where community benefit is being delivered locally, and the local community was seeing that decarbonisation. It was also quite impressive to see some of the work that is being done at the European Marine Energy Centre, and in households through Warmworks in Orkney. Some of that work is ongoing, and that is one of the reasons why we are putting more money into CARES.
Over the summer, the First Minister was in the Western Isles—these examples are very islands focused, but that reflects the innovative work that is being done by communities—announcing an extension of CARES. Local communities have a pivotal role to play. We also have to talk about the need to take communities with us, which has a role to play. With regard to community benefit, there has to be an ongoing discussion. I think that the committee will have a role in that, and we can discuss that in the future with regard to how we ensure that those community benefits are as wide ranging as possible.
There are some really good case studies—I am just having a look at what is happening elsewhere. I picked up on the example in Scalloway, but there is also some exciting work going on at the Wallacetown community energy project in Ayrshire. At the individual level, these projects can be exciting and really good.
With regard to the good practice principles, we are working through those just now.
When it comes to mass diversification, however, where do you think the opportunities lie to actually deliver that?
The convener was right to talk about some of the challenges that we have with the change in energy, but the transformation also gives us an opportunity. It gives different communities an opportunity to be involved, and we see the benefits of that. We see it in the area where you live, Mr Leask, and we also see the mix of battery storage and renewables in different parts of the country, which I have talked about. So much of it is dependent on grid—you will be mindful of that more than most. I am consistently bending the ear of my UK colleagues on these particular issues.
The transformation also gives us an opportunity to do things slightly differently. Let us look at oil and gas—I know that I have talked about this already, but it is important. The Zetland County Council Act 1974 was the direct result of a community getting actively engaged at a local level. I ask members to imagine if we had replicated the local wherewithal that was seen in Shetland in the 1970s elsewhere in Scotland. Of course, there is a smaller fund in Orkney as well.
What that tells me about what comes next is that all the good ideas are not in Edinburgh or London. Being out and about over the summer has provided a good opportunity for me to speak to communities and to businesses that are leading on this. We have an opportunity—that is what any change does. It is difficult and we know that it is challenging, but we are at a transformative moment for the energy sector, which is what makes the current session of Parliament, and the job that I have just stepped into, exciting.
I agree with the minister; I think that there is an opportunity for Government to outline where it sees growth areas in other sectors in the energy generation portfolios—not just in small domestic solar or wind but in other generation technologies. Where can we see growth, and how can we best strategically support that growth in community or public ownership, be it through a community group, local government or central Government? That is where we need to be heading towards.
Moving more towards delivery, I note that you mentioned CARES. I am pleased to see the uplift in the CARES budget, which you confirmed to me in a written answer.
I have heard from community groups over the years—and in the past few months, as I have engaged with them across the Highlands and Islands—about the challenges that they come across with the funding windows. It can be challenging for a community group, within a narrow funding window—I am sorry, convener; my laptop screen has just gone off, and it had a figure that I was about to cite.
The funding window can make it difficult to plan, recruit, obtain the consents and deliver projects within the required timescales. Have you considered allocating CARES on a multiyear basis? That would allow communities to fund a development post and progress larger projects through planning and consenting. It would avoid unnecessary winter installation premiums—they often exist for certain technologies—and reduce the risk of funds being decommitted because they cannot be delivered before the March deadline.
In this financial year, Great British Energy has already committed to such a multiyear approach. It is quite right that we should continue to try to lead the way, as we have done with the CARES programme, and match that multiyear commitment. I am interested in the consideration that you have given to that.
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It is a fair point. I am not the Minister for Public Finance, but she comes from the same part of the world as you do and has been an enthusiastic proponent of communities being involved in the energy sector. I will certainly pick this up with colleagues.
Any funding mechanism on a multiyear basis will always be challenging, but you raise a number of good points on other challenges that local communities face. I am really happy to continue to engage on that with you and other committee members. We have already written within the first 100 days about the use of public land, for example, which has been undertaken, but this is very much a work in progress.
As we get the transformation from an industry perspective, it is really important that we do that at a community level, too, by ensuring that communities have ownership and are involved, because this approach does not work if we do not take them with us.
I will make one other point. As you will know from your constituency, some communities do this work really well, and that is impressive. I want to make sure that that benefit is as widespread as it can be, and we need to continually work on that. How we engage and empower communities will be a work in progress.
I very much welcome that and I thank you for the commitment to go away and look at the issue. I am sure that we will return to it at budget time.
I thank everybody who engaged with me when I was out and about over the summer; I was so impressed by some of the work that was done. I am keen to continue to do that, so I would be grateful for any ideas that committee members have.
Kate Campbell has a supplementary question.
I want to go from the Highlands community down to the central belt, because some fantastic work is happening in East Lothian, and it is also about the switch from renewables. I was going to ask about this separately, but I feel as if it fits into this theme quite well.
In East Lothian, we have onshore wind generation, but there are a lot of heat sources, too, and the local community is taking forward really ambitious plans for a heat network that links into Edinburgh. Those plans are ambitious and on quite a large scale, so the sums of money that are allocated for community projects probably would not touch the sides.
I accept that investment from elsewhere would probably need to be brought in, but what can the Scottish Government do to support that large-scale, ambitious community planning? Paul McLennan put an energy conference together on Friday, and one of the questions that came from the community was about how we enable community or shared ownership on such a large scale. It is a big challenge.
With regard to heat networks, I was at a presentation on my patch in Dundee recently, which was really interesting in relation to the scope. The benefit that all of us from any political party always have is that we are out chapping doors and speaking to people about various things, and certainly my experience—and, I suspect, that of other colleagues here—has been that fuel bills and heating homes are pretty high on the agenda.
When we talk about bringing folks’ bills down, I think that a lot can be done on heat networks. Under the heat network fund, there is up to 50 per cent funding, plus feasibility development support, but it is always good to get feedback on that.
I have been out to East Lothian and spoken to Paul McLennan, and some of the work that he is doing at a local and community level is really impressive. I know that he is a member of the same party as you and me but, regardless of the party, he is doing a good and worthwhile bit of work at a local level. I am due to meet him there again and learn a bit more about that work. We are continuing to consider heat networks as we look at the decarbonisation of heat over the coming decades, and we are keen to continue to work with communities.
I apologise for having focused a little bit on the northern isles in answer to Mr Leask’s question. I had a very good visit to Orkney and Shetland, but I also recognise the fantastic work that is going on across the central belt. We are certainly taking an awful lot of lessons from the project down in Wallacetown in Ayrshire.
I have a supplementary question on heat networks. I am aware of a heat network operating in Aberdeen. How do we get behind the sheer scale of capital investment that is required? That will involve entering homes and massive retrofit costs in places such as Edinburgh, which has a significant number of tenements, and Aberdeen, where there are old granite buildings.
It is very difficult to do these retrofit jobs. How do you see heat networks interacting with that? How are you getting your arms around the sheer capital costs that are required?
Getting my arms around this is a job of work, so I am grateful to be joined by a number of colleagues. If she wants to contribute, I might bring in Frances Murphy if there is anything that I do not cover.
It is a huge job of work. That is why, when I talked about some of our decarbonisation, I was talking about a budget of £330 million, as I mentioned in my opening remarks a short time ago. We are constantly looking at how we can get value for money and how we can help people bring down their bills, with a target of 60 per cent for those in lower-income households. That is a big budget, and I am consistently looking at how we can get value for money.
I talked earlier about fuel bills being a big thing that is raised by constituents. I am sure that they get raised with you, Mr Massey. I know that it is always a frustration. Half of my family is from Aberdeen—
Just the good half.
For people in Aberdeen, there was always a frustration over the years about the price on the pumps when they were producing the oil and gas offshore. Of course, that is a level of frustration that we take really seriously. I am keen to engage with Parliament on the heat in buildings legislation and plan that I mentioned earlier, but it is a big job of work.
Frances, do you want to add anything on heat networks?
Through Scotland’s heat network funding, £14.5 million has been committed to projects so far. As the minister said, that can be up to 50 per cent of capital funding. There is also a support fund, which has already supported around 55 projects on early-stage feasibility and development work. A lot of work is going into building the pipeline, although there are multiple challenges and barriers, as I am sure that you know, around getting a heat network from the initial stage right through to development on the ground. That takes quite some time, so we try to support the pipeline through that.
As Kate Campbell mentioned, the concern is that the funding might not touch the sides.
Kristopher Leask has a supplementary question.
It is a really important point, and it is one of the questions that hang over our national ambitions to decarbonise heat and develop networks that can—frankly—provide that security, take people out of the market to a degree and allow them to access lower-cost heat.
It is worth making a point about the development of the bill, which you are beginning to work on, as you said, minister. Do you recognise that the financial requirements to develop the network are likely to mean leveraging money for investment in infrastructure not just from the private sector but from individuals to some degree? It is still to be determined how we finance that work and what support we can give, so the bill needs a clear path for the future direction of travel.
Over the past few months, I have been speaking to heat, building and housing stakeholders, who keep telling me that there is no point in us doing this unless it delivers real action. Folks need confidence and certainty in order to invest and start to plan, and I hope that the bill can give them that. I also hope that you are holding that in mind.
It is a fair point. On the point about real action, we are going to help something like 20,000 homes this year. That is real action and real work that is being undertaken.
No one is disputing that. It is the longer-term transformation that we are talking about.
Sorry—I was agreeing with you, Mr Leask.
Even though I talk about the long-term goals and benefits—they always have to be in my mind in this job and will be in your mind, too—people want to see action now. We are now speaking to officials, and I am always keen to talk, about what will be going on in the future, because the heat in buildings delivery plan is not for a year—we are talking about decades. We will not have a heat in buildings bill for the next year or two—we will have it as a long-term project. Any of us in politics will get wound up on what might be happening in the future, but people want to know what is happening now.
You raise a really good point. There is expertise, and you have to bring in additional resourcing from elsewhere. You would want to bring together things such as the climate change plan, the fuel poverty plan and other plans so that those things are being done together, because there is no point in going off on different tangents—in government, we have to be as concise and connected as we possibly can be.
You raise a really good point. I am hearing things about how we can benefit from the use of waste. I have seen conversations about how to use data centre waste with heat in it. There are so many ideas that challenge me—and, to be fair, officials and all of us as parliamentarians—to think a bit differently and innovatively. It is clear that that thinking is happening not just in the communities that you represent but across Scotland.
Rachael Hamilton has a supplementary.
In listening to the conversation, I am reflecting on the increase in household bills, which you have mentioned, minister. You are in charge of energy policies. Do you believe that it is transparent to households how much Government policies are attempting to bring down household bills, when the rhetoric is that Scotland is an energy-wealthy country?
That is a fair point. I have been talking about the northern isles, but you represent the Borders, which is an enormous constituency, and you will see the situation every day. I do not want to tell you your business, but I suspect that you are hearing a huge amount of concern from people at your surgeries and elsewhere.
We are being as transparent as we can be. This meeting is just an opening session to look at our priorities, but I am keen to work with the committee going forward. I mentioned having been on a committee previously. It was a bit of the job that I always enjoyed, because we got into the guts of an issue in a way that is not always possible for other things. This committee has a good range of parliamentarians.
On issues such as the £330 million and the 20,000 households, in the areas for which we have responsibility, of course we want to make sure that that makes a difference. It is in my interest and your interest to make sure that it makes a difference, and I have set that as a challenge to the officials I am working with. However, we do not have all the powers at our disposal.
Daniel Johnson is not here just now, so it is a bit unfair of me to raise this, but I will do so anyway. The current UK Government has a wide range of powers that I could only dream of. When it came in, it promised to bring down energy bills by £300, but those bills are steadily increasing. Some of the areas involved in that are outwith its control, and I know that the Prime Minister will be addressing that issue today at his conference, but I have raised that significant issue at the UK level. Diesel is about to hit £2 per litre, and I can understand why that is a bit frustrating.
That is why it is important, given that the committee concentrates on the devolved powers that are available to the Scottish Government so that we can scrutinise them, that you have made a commitment to accelerating planning and consenting. It would be useful if we could have a transparent explanation for the public so that they can understand how those policies, along with the suite of powers that you do not have control over, will bring household bills down.
If I go back to oil and gas—
Talking of things that we do not have power over.
You have said that, if the licences are granted for Jackdaw and Rosebank, the Scottish Government will have responsibility for the planning infrastructure. Leaving aside the quasi-judicial responsibilities, do you support ensuring that the planning infrastructure is there and accelerated, if those licences are granted?
Of course I support a good planning infrastructure. It is obviously something for Mr McKee—
On those specific projects.
—rather than me when it comes to planning decisions, and I would not want to get into his bailiwick.
I asked Mr McKee, and he said that it was your responsibility, but there we are.
We are trying to work all the time in areas. Let us dive in. We started on oil and gas. Let us—
We were talking about heat networks, so I want to go back to that. Martyn Day has a question on that.
11:00
I will briefly answer Ms Hamilton’s question—far be it from me to prevent Mr Day from coming in.
I want to make something really clear. In this area, there is a complex interplay between devolved and reserved powers. You and I might sit on opposite sides of the constitutional divide, Ms Hamilton, but I think that we can agree on that. Although I want Scotland to have the whole range of powers in this area, my job is to work within the set of restrictions that I have at the moment, and I am committed to doing that.
I sat at Westminster, and I am fortunate enough to have a good relationship with my UK colleagues across the political spectrum. I want to work with them, because we all have a responsibility to do what we can to ensure that Government is performing at its best. We can have policy disagreements—I am sure that Ms Hamilton and I will find other areas on which we can disagree—but there is a space to try to work together. There are areas—for example, transmission charging—that I think are holding back the sector and where I absolutely disagree with the approach, but I need to work within the set of restrictions that I have.
We have talked about the oil and gas sector. When I work with the energy sector, I look at where we have a competitive advantage, such as in offshore wind. We have a competitive advantage in several areas, but one is from the skills and expertise that have been developed in the oil and gas sector, which allow people to work in a marine environment and export those skills all over the world. I talked about working in Azerbaijan 25 years ago. I remember walking through Baku, before there were any of the big developments that are there today, and bumping into a succession of Aberdonians, having not met any other native English speakers for several weeks while I was out there.
There is a huge amount of work to do, and there is an interplay between the reserved and devolved spaces.
Thank you for that brief answer. [Laughter.]
You will be pleased to know that you have covered a lot of the territory that I wanted to ask about. I will go back to your comment about the £330 million that is being targeted at fuel poverty, with 60 per cent going to the households that are most at risk. Will you expand on what that will look like? What will it deliver?
Let me just have a look at my papers. We are working with a range of companies, but I do not want to just read out a big list for you. I would be happy to write with fuller detail, because writing is sometimes more helpful. However, an example is warmer homes Scotland, which is supporting an estimated 5,600 households with an average spend of £15,500 per property. We are also working on area-based schemes that include social housing and decarbonisation. We are looking at a wide range of measures to support the rise in 20,000 households in fuel poverty over the most recent period.
One job I would ask MSPs to do is to get information out to people who might benefit from it. For example, at the weekend, I visited Scarf in my constituency, which has a fantastic phone line and a website. I can sit here and outline some of the areas that the funding will actually go to, but there is a job for colleagues in the Parliament and elsewhere to spread the word a bit. We want the information to reach the people who will benefit from it, which will help us with our work in an area of consensus.
That would be helpful. How will we monitor the success of that delivery? There will obviously be carbon savings and we will hopefully be able to measure some sort of reduction in fuel bills. Might there also be a reduction in the level of ill health and pressures on the health service?
That is a fair point. Without getting into the housing side of the issue, we know the contribution that well-insulated homes can have on people’s overall wellbeing—that is regularly talked about in the work that I do on fuel poverty. We will obviously look at the contribution that the projects make to decarbonisation, and we will also have estimates on bill savings and some of the social returns on investment. Frances Murphy, is there anything that I have missed out?
No, I think that that is fair. We have different estimates for different projects. We do not generally ask households to submit energy bills in advance of an intervention and then submit them again afterwards, so it tends to be modelled savings. We have modelled savings for the different schemes.
The minister mentioned the social return on investment report, which has just been produced by Warmworks for the warmer homes Scotland scheme. As you might know, there is a methodology to magically put a number to some of the health benefits, wider community benefits and all kinds of other benefits. Warmworks came up with the figure of £2.31 of social value for every pound that we invested in this area, and there is a published report on that.
We are happy to write to the committee, if that is helpful, on the first question as well.
Before we move on to different topics, I will ask a quick supplementary question. You talked about the cost savings per capital investment. It is almost like a creaming curve that we might use in the oil industry to understand what the best investment is.
Do you try to grade and review the measures? For example, there is a lot of evidence that if people adjust their existing gas boilers to adjust to weather, so that the boiler is on at the right times or at lower temperatures, it can have a huge impact. Do you look at that versus what we are talking about here, which is capital investment to improve insulation or to move to different devices, for example? Do you have that sort of analysis?
I will pass to Frances first, then I can come back in more broadly.
We are looking at doing more specific analysis of those things. We have our Home Energy Scotland advice service, which gives advice to anybody in Scotland on the wider issues. It is not just about pointing to capital investment, although the service does that too; it can advise on how to use your boiler better, how to draft proof your home, and other interventions that do not cost very much money. That is a well-used service. Last year, 87,000 unique households contacted the service for advice, some of whom were referred through for capital support, whereas others got that lighter-touch advice.
Regarding that investment at a policy level, I am a great believer in the idea that you can tackle climate change but also try to tackle people’s bills at the same time. I do not think that it is an either/or situation—that is probably the position of most members of the committee. There are various factors that we need to take into account when we look at value for money.
I thank Frances for her more detailed response.
I appreciate that. We will move on to different topics, as I am cognisant of time. I will bring in Rachael Hamilton.
We have talked about energy prices. Britain’s industrial energy prices are some of the highest in the world—probably the highest. In the energy mix globally, many countries use nuclear. Torness is supplying around 19 per cent of the electricity generated here. The Government wants to look at progressing a number of data centres. It would be useful to understand the Government’s thinking on the lifespan limitations of Torness, which will potentially shut down by 2030, and on using small modular reactors for data centres.
The Government has been pretty straightforward on nuclear, as you know, and that is an area of disagreement among us when it comes to the cost.
I think that data centres could have a role to play. They must be in the right place, and Hannah Mary Goodlad has been quite right to look at their environmental impact. We must also be cognisant of the planning process and the community’s involvement in that. However, when it comes to constraint payments, there must be a better way of doing things so that constraints do not cost billions every year. I think that there could be a broader range.
On the global level, one thing that I am really keen on, which we have not had the chance to discuss, is how we connect into the rest of the world. The big challenge in European capitals at the moment is energy security. I mentioned the Bab al-Mandab Strait and the Strait of Hormuz, but Russia’s war in Ukraine and geopolitical shocks are also having an impact. It is not the whole story, but they are having a distinct impact on all of our constituents. My message must be that Scotland is part of the solution. In November, there will be a leadership summit involving the UK and the EU and I would like to see more alignment with the rest of Europe. I think that that makes all sorts of sense, and we have a significant contribution to make to that.
I am not sure that investing in extraordinarily expensive nuclear power is the way to go. In fact, that may not be the way to go. We have a big enough job with getting some of the fantastic renewables online.
Sir Dieter Helm made the argument that nuclear power is energy dense and low carbon. Global economies where energy bills are far lower than ours use that as part of their energy mix. I am concerned by what you just said. I understand the Scottish Government policy on nuclear power, but Torness is a really important provider of jobs in East Lothian, the Borders and elsewhere and also meets 20 per cent of our electricity demand. Where will that low-carbon, energy-dense 20 per cent of our electricity be replaced, and can that be done by 2030 if you do not support nuclear power?
First, when Dieter Helm spoke to the committee he also commented that nuclear power is extraordinarily expensive.
Yes, he did.
He supported it, but we should reflect the balance of the remarks that he made when he spoke to you.
That replacement can come from a range of areas, including battery storage, pumped hydro storage and better grid networks. We are an exporter of electricity and I want us to see an increased level of benefit from that.
We need to look at the grid. For example, 93 per cent of the electricity in the north of Scotland yesterday was coming from wind, with 6.9 per cent coming from solar power. You are right that some energy in the south of Scotland was coming from nuclear power, but we are looking at things such as pumped hydro and battery storage coming in too.
When we talk about jobs in the nuclear sector, we are talking about the 2040s and 2050s, when there will still be decommissioning work because of the expensive and very long-term obligations connected to those sites.
We have a competitive advantage in renewables. I would like to see greater connectivity with the rest of Europe, because that would make sense at the European level. I was looking at what the Irish are doing with an interconnector that is going from Ireland to France to create greater connectivity between those countries, which makes sense. Our decoupling from Europe has not been good for bills or for the energy sector and I would like to see an unpicking of some of that damage.
To be clear, is it your ambition as a Scottish Government minister to export more of Scotland’s renewable energy or to bring down household bills?
We can do both if we get it right on constraints charges. I saw a figure of about £5 billion for constraints charges, including things such as transmission charging. Scotland is part of the UK’s clean green energy solution and can be part of Europe’s clean green energy solution, too. We have the resources and the expertise, which is why I remarked on the expertise in the oil and gas sectors. I would like to see us being an exporter of renewable energy, just as we export other products, but we need to see some of the benefits here at home. We do not have the full range of powers.
As I said, when we had the grid upgrades at the UK level, I saw some frustration in the north-east of Scotland, where people were given 250 quid off their bills, which was just not enough. I expressed a sense of frustration about that.
I have a supplementary question, as does Kate Campbell.
The UK is quite reliant on interconnectors from France and Belgium, which mostly carry electricity from nuclear power. If Torness closes, that will mean that we are extremely vulnerable at times of low wind, which makes it an energy security matter. What are the Scottish Government’s thoughts on the energy baseload from nuclear power?
I just set out some thoughts on baseload to Ms Hamilton. My officials have passed me a note. A Scottish Government-commissioned report in December 2023 found that the reduction in traditional firm generation capacity in Scotland could be offset by increases in wind and solar installed capacity, along with the installation of storage technology. There is a wide range of areas where we can do that.
Some of that work has to be on hold at the moment. We have not talked about the strategic spatial energy plan yet, but we are still waiting for that to come online. I can see the benefits of the expertise that we already have. We are a major exporter of electricity and we will continue to be, and others benefit from that.
11:15
The National Energy System Operator issued various warnings over the summer to say that we were close to not having enough firm capacity and that we had to increase imports from France and Belgium. You are saying that you have no concerns about energy security in Scotland and that we can run a 100 per cent renewable system with no baseload.
I do not think that I have said that at all—I have not said that in the slightest. You are referring to the Iberian outages, which I know NESO is conducting a review of. It is not entirely within my portfolio, but it is important to learn from that.
We have a UK-wide responsibility for NESO, and there are imports in the south of England, but we need to look at the situation from a pan-European perspective. I know that that is not how you are approaching it, Mr Massey, but it makes all sorts of sense, given that we are an exporter. I have referenced the Irish interconnector, which brings huge benefits for communities as well as for generators of renewable energy, which can go into the European market.
We have a number of things coming up, including the SSEP and the reset and talks between the UK and EU. Let us not forget that, over the summer, when it became too hot, French nuclear reactors had to shut down. That is not terribly effective for anyone. We are going to experience an awful lot more hot summers because of climate change, which is a thing.
I will move on.
I feel that it would be a really good time to ask my core question.
I am conscious that we need to ask about spatial planning, which is an important issue that I hope you can bring in, Kate.
I have a further supplementary question. The UK is connected to continental Europe, and Ireland is connected to England and Scotland and is relying on imports. Are you proposing to build a significant export cable from Scotland? Where would that land in Europe?
Forgive me, but SSEN is already investing a significant £29 billion in Peterhead. Yes, we need to talk about what will happen in the future, but what we are talking about in the here and now—the investment is taking place right now—is the impressive ongoing work that you can see if you visit Peterhead. Some of the bootstraps that were spoken about years ago are now happening. Those investments are being made by a major Scottish company.
Are you planning a massive export cable to continental Europe? It sounds as though you are talking about that.
I think that we need to bring down the barriers to electricity alignment that were thrown up between us and the rest of Europe. There are places where we can contribute to pan-European energy security. We are a significant producer of electricity and there has been greater alignment across the rest of Europe in response to Russia’s war in Ukraine, which has been ongoing for a number of years. We saw the way that the Norwegians responded to that, among other things.
If we think 20, 30, or 40 years ahead of us, do you not honestly think that Europe will be more cohesive in the way that it produces its energy, just as it is cohesive on its food and drink and other products? By turning its back on that, the UK is pushing water uphill.
I think that we will see a lot more nuclear in Europe and a lot more energy reality.
I bring in Kate Campbell for a change of topic.
Maybe there will be a change in tone as well.
A couple of weeks ago, I said in the chamber that you had not seen any of the pathway options, but NESO wrote to me and told me that you had. Can I confirm whether you have seen the six pathway options that NESO is proposing for the SSEP?
Obviously, I have to be careful about what I can and cannot reveal. I am finding a challenge in this job to do with what stuff I am able to talk about. However, that is something that was true at the time and would not be true if I were to give the same answer now.
That is helpful. Without asking for too many details, do you feel that all six pathway options will allow Scotland to meet our renewable ambitions?
No.
Do you feel that any of them will allow Scotland to meet our renewable ambitions?
Yes. I am in a position, which I can remember from being a committee member previously, in which officials’ eyes are boring into the back of my head. I am sure that Ms Hamilton will not mind me saying that I remember, at one point, questioning the then foreign secretary Boris Johnson and seeing the officials from where I was sitting, so I know that I have to be very careful in what I am saying. However, I know that Catherine, Ragne and Frances will keep me absolutely right on this.
The thing that I have said—the First Minister has also put this on the record—is that, although the SSEP might have been co-commissioned, we do not co-sign it off. That is a decision for the UK secretary of state. I wish that the situation were different, and I am sure that Ms Campbell wishes it were different, but that is the set of circumstances in which we find ourselves. If I do not feel that it brings forward Scotland’s potential, I cannot agree to it—plain and simple. As Scotland’s energy minister, I cannot agree with something that does not fulfil Scotland’s potential, and I am not sure that there would be many people who would disagree with that.
No—I think that we would support that. If you do not agree to it, what happens?
It is a decision for the secretary of state. I have raised the issue. I have written to the UK Government and have engaged on a bilateral level. In a couple of weeks, during recess, I am going to London to meet Miatta Fahnbulleh, and I will raise the issue again, along with a range of other issues.
I should also ask officials—
Well, I was going to say—
Sorry. They can come in after.
For me, the concern is that some of the pathways will not allow us to meet our renewable ambition. The next step is that one of those pathways will go out to consultation, and the decision on that sits with the secretary of state.
Yes, although I would point to comments from Michael Shanks in an article in Energy Voice at the start of the week. We are happy to share that article. This is quoting—it is not me; it is the UK minister of state. Michael said that the process should not be seen as
“a binary sort of process where it is one path at the exclusion of all other options”.
He went on:
“The whole point of having the first ever strategic spatial energy plan for Britain is to try and get to a more coherent design for our overall energy system.”
With that, I have told the committee about as much as I know about his thinking on that. It is quite a useful article that I would be happy to share.
That is maybe slightly reassuring. Obviously, meeting our renewable ambition is incredibly important to our energy strategy for Scotland. Is that recognised in a UK context? Will the decisions that are taken reflect how very significant the issue is for Scotland’s economic and energy future? Is that being treated with the level of importance that it should be at the UK level?
You would have to direct that to UK ministers—I cannot speak for them. I would hope that UK ministers would come and give evidence to the committee, given the important work that you have to do.
I hope that the decisions will reflect that. I have heard the way in which Mr Shanks and Ms Fahnbulleh talk about Scotland’s offshore renewables potential and other renewables potential, so let us give them the benefit of the doubt. I have significant concerns about transmission charges, which are holding back investment, and about grid upgrades, and I am sure that that some committee members do, too. I have made those cases. I have told Mr Shanks that I will try to work with my UK colleagues in as collegiate a way as possible. That is my way of doing politics, and it always has been. However, where I disagree, I will tell them that I disagree.
There is a broader point. I have been speaking to businesses that tell me that Scotland is a good place to do business. That is really nice to hear, and it is because of things that have happened and the political certainty. However, we need to give businesses the next stage of political certainty, which I hope the SSEP will be able to give investors as we move to the next stage. I will continue to make that case to UK ministers, and I have already put on the record that I cannot endorse something that does not bring Scotland’s potential fully online, because we have fantastic potential, and I want it to be realised.
If members agree, it would be helpful to ask UK Government energy ministers to come and speak to us, particularly about the SSEP, after they have had that conversation with the minister.
Convener, may I ask how the committee can scrutinise the formal advisory process that the Scottish Government has within that process?
We can discuss that as part of our work programme budget, but there are a few technical details to iron out.
If I may, can I also ask something? It is just to confirm that I have not stepped above and beyond—forgive me.
Please do.
On the SSEP, I ask Catherine Williams whether there is anything else that we can say. I try to be nice and careful.
I will reiterate what you said. We have been very active in our engagement with the UK Government on the SSEP and have reiterated those points. I do not think that we can say how that has been received, but we can certainly say that those points have been made loud and clear.
I am reassured by Mr Shanks’s interview, in the sense that he replayed, in his words, many of the arguments that we have been making to him about the opportunity for offshore wind to re-industrialise, provide jobs and use the potential that exists in Scotland. That, for me, suggests that those messages are hitting home and being understood, but we cannot guarantee how that will play out in the decision making.
My questions are on a slightly different issue, minister, and I will cover a couple of things. I agree with you that energy bills are too high. Heat in buildings is one of the key issues, but I will come back to that with my main question.
As a Falkirk councillor, I encourage you to come to Falkirk, where the council is renewing all windows and doors, and the properties have triple glazing. That makes a massive difference—£15 million a year is being spent on it. I would be happy to let you see some of that work.
I have a quick question in relation to energy and AI data centres. There is a discount of up to £24 per megawatt hour for AI data centres, so using 500 megawatt hours could save £80 million per year. I would love to use that kind of logic with our people. If we can do it there, can we do it for other industries? Can we do it for charities? People forget that charities pay for energy as well as business.
My substantive question goes back to your energy strategy. Since members joined the committee, our learning has been fantastic. We know that 23 per cent of energy use is electricity, but heat and transport make up the majority of it, and that is one of the challenges. I totally agree that we should move to a more renewable energy system, but the challenge with that is reducing energy use from heat and transport.
If you do positively on one, you need to do positively on the other. Soon, you will not be able to put a new gas boiler in a new house, which will be a change. There will also be more electric vehicles. At the moment, we have a surplus of renewable energy, but if you push those vehicles forward and want to make a big difference—we are talking about climate change—you will remove that surplus.
I agree that consideration of the base load should include hydro. I know that Kraken 2 is coming up. In the work that I used to do, I was involved with waterproofing. The pump hydro storage system is an exciting area.
I will go back to the question about your energy strategy, which has become one of the vital pieces of the jigsaw. If we reduce the energy that is currently used for heat and transport and turn that into electricity, will we get into difficulty with not having enough renewable electricity? Will there be more constraint payments if we build up the energy side and do not reduce the heat and transport side?
I know that that is probably a big question, because it has taken me ages to say it, but I hope that you get where I am going with it.
11:30
Yes, I do. I am mindful of time, as well, convener, and we still have plenty more to talk about.
On the first point of Mr Bouse’s question, I note that I am always keen to engage with local communities and councils, so I would be happy to visit Falkirk. That would be really helpful, and my officials will pick up on that.
I take your point on savings and charities. To go back to what I said at the start of the evidence session about the work that I have seen taking place through CARES—in not just charities but community centres, which do fantastic work at the local level in all our constituencies—that is why it was good to see how CARES is playing out and benefiting people. I am always keen to learn more. Again, as you will understand, there are a number of areas in which the UK Government has responsibility.
Heat is going to be a big bit of work, as we have already talked about, and learning about community work on that, including the stuff that is going on at Falkirk Council and the communities that it is engaging with, will inform that. Mr Bouse is right on pumped hydro.
Sorry, I am being mindful of time, so my final point should be on the energy strategy. You were right to raise it, and it was in the programme for government. The strategy would be very tricky to produce this side of seeing what is in the SSEP, so, going back to Ms Campbell’s point, I do not know what the final decision will be. I can read out quotes from the comments made by the minister, Michael Shanks, and, as I have said, I have received a briefing on some elements. I am not in a position to share that at the moment, but our energy strategy will have to be informed by it, given that you are looking at a longer outlook for that sort of thing. The benefit of such strategies is that you can take a longer look.
I look forward to you coming back to the committee. Fortunately, the training that we have had has really helped us, and you can guess that you will probably be asked plenty of questions when you come back.
I will be delighted. I have another session with you right now, but I am always happy to come back to the committee.
I am cognisant of time, and we have been discussing the subject for more than an hour. As usual, it feels as though we have just scratched the surface. I thank the minister for his time and his candid answers. I thank the officials for their time, as well.
I suspend the meeting to allow for a changeover of witnesses before the next item.
11:32
Meeting suspended.
11:35
On resuming—
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