Chamber and committees

We used to have gas storage capacity, but when the sector was privatised, it was all got rid of. Interestingly, some European countries are putting in gas storage capacity. Germany is doing that, and the Netherlands might be doing the same, with a view to future proofing in relation to hydrogen.

As things stand, as I understand it, gas production in the UK basins is already at capacity. There is no residual or spare capacity to produce more, and it would probably take several years to bring additional capacity in from other fields. That would not help us in the here and now.

Even though there is additional gas in the UK sector at the moment, gas is traded on the international markets and it is those markets that determine the price. At times, we bring in gas from Norway and we also export some to mainland Europe. It is all traded—-it is a commodity that is traded internationally. The price of gas is set by the international wholesale price.

Even if we could bring on 50 per cent extra capacity in the UK sector, that would not have much of an effect on the international markets, because the UK sector is too small a part of the international sector. At the same time, the price will be determined by the international markets that trade in it.

We are not seeing the benefit of the additional gas that we have in the UK at the moment because gas is a commodity that is traded internationally, and the price is set by the international wholesale price.

I am happy to take the matter away and look at whether there is a way of capturing that information. We have the rurality aspect, so we know that those in rural communities are at greater risk, but as I have said, I am happy to take the issue away and see whether we can do something.

I can assure you that we are not experiencing underspends in my portfolio budget, and there is certainly no underspend as far as the Scottish Government itself is concerned. We ensure that we utilise every aspect of our resource to our maximum ability.

Of course, we have a fixed budget, and we do not have borrowing powers or the ability to implement, say, a windfall tax to bring in additional resource to meet the crisis that households are facing. If we take money from one area and put it into another, we have to stop doing things. With a fixed budget, we have to shift money around in the same way that most households have to.

The UK Government benefits from having many more levers to bring in the level of money and funding that is necessary to deal with this crisis, including the ability to introduce a windfall tax to tackle issues such as fuel poverty and to provide the Scottish Government with funding that would allow us to make even faster progress in tackling these matters. If we had greater financial flexibility, we would have much more effective means of tackling those issues than we have.

On your first question, however, I am more than happy to come back to you with a more detailed explanation if you give me the details.

Are you talking about fuel poverty in the Scottish Government?

You ask me whether I recognise the situation. We actually recognised it back in January, which is why we suggested a four-nations approach to tackling the issue as well as a four nations joint ministerial group in much the same way that we worked on a four-nations basis on issues around the pandemic. However, the UK Government has not taken up that offer.

Will we work with the UK Government? Of course we will. We will work with it where we can and highlight the actions that we think should be taken. However, we can work with parties only if they are prepared to work with us. We have not yet had a positive response to the suggestion of all four nations working on a joint ministerial basis, which I think, given the nature of the crisis, would be the right thing to do.

If you can do so, I will ensure that we take the matter up with the finance secretary.

The warm home discount scheme is a UK-based scheme. We proposed that it should be devolved, and it was agreed that it would be devolved. We proposed combining the energy company obligation and warm home discount schemes to create a more flexible and better scheme that would also increase the pot of money available to support low-income households. Despite spending probably about a year plus in trying to get the UK Government to agree to that, in February this year it finally said that it was not going to agree. We wanted to expand and invest more money in the warm home discount scheme if it was devolved to us. Our plan was to do that, but we were denied the opportunity by the UK Government.

As I mentioned, during this session of Parliament, we are putting record investment of £1.8 billion into energy efficiency and heat programmes. We have also increased the eligibility for and scope of our area-based programmes to support local authorities and low-income households. We are putting in a significant level of investment, but we remain frustrated that the UK Government did not take up the offer and opportunity to do something even better with the warm home discount scheme here in Scotland that would have benefited more households to a better level.

Again, because of the interconnected nature of the energy sector, wholesale gas prices are forcing up the price of LPG and oil gas heating. Our view is that there is a need for regulation in this sector, and we have raised that with the UK Government on a number of occasions. However, it is very clear that it has no plans to do so.

The sector is engaging with BEIS on what it can do to meet some of the spiralling costs that off-grid properties are now facing. Given the fact that 17 per cent of our population in Scotland is off-grid, it is an area that should have some regulation in order to manage some of the potential cost impacts that big price spikes can have on households. At about 12 per cent, the off-grid sector in England might not be as big, but it is still a sizeable percentage. There is a need for some market intervention, and there is a variety of different models that we could look at, but at the very least there should be some sort of engagement on different options for regulating the sector, given its impact on so many fuel-poor households in rural parts of Scotland.

I agree with Keith Anderson on that. Offshore wind energy is one of the cheapest forms of electricity production, and it could be tied closely to renewable or green hydrogen production, which could play an important part in decarbonising our natural gas networks. Again, we need clarity on the potential timescale for that.

On offshore wind, we have just completed round 1 of ScotWind, which has come in at potentially 25GW of offshore wind capacity between now and 2030. That will involve about £1 billion of investment in the supply chain for each gigawatt that is delivered. To put that in context, if we were to deliver 25GW tomorrow, which clearly Mr Kerr would like us to do, that would double Europe’s offshore wind capacity. Therefore, it is massive. I think that 11 of the 17 projects are floating offshore wind projects, which gives us the first-mover advantage in that area of technology.

It is a massive level of ambition. Just to give you more context, I point out that the USA is taking forward a programme of 30GW, for the entire USA. The fact that Scotland, with 5 million people, has a programme involving 25GW—in round 1—demonstrates the level of our ambition.

Secondly, our onshore wind policy statement sets out that we want up to an extra 12GW of onshore wind capacity to be delivered. That will help to drive down energy costs because it is a cheaper form of energy. Those projects can also be taken forward more quickly, because of the technical nature of onshore compared with offshore wind. If we can get more of our renewables online, that can help to reduce energy costs, which would directly benefit people’s energy bills. Our view is a bit like Keith Anderson’s—and in fairness, it is also the UK Government’s view—that renewables are critical to delivering energy security in future, meeting our climate change targets and helping to reduce energy costs.

Yes, onshore wind is the cheapest form of electricity production. The solar and hydro industries might argue with that, but I think that it is broadly in that sphere. The reality is that renewables are the cheapest form of energy production. Even folk that are for nuclear recognise that nuclear electricity is more expensive to produce. Renewable electricity is much cheaper to produce. That is why it is our view that that is where the focus should be, because it will help to reduce energy bills in the future.