Chamber and committees

Yes; there is no point to having a bus pass if you cannot get access to a bus. I recognise the challenges that communities have. Our rural communities are probably more adversely impacted than some of our urban communities, where there are alternative options. I recognise that.

I made the point that I do not think that the existing model is sustainable, and Covid has brought that into even sharper relief. That is why an alternative approach is necessary, and I think that the powers in the Transport (Scotland) Act 2019 can deliver a much more sustainable and consistent form of public transport.

If we are to make public transport attractive to people, it needs to be safe, reliable and priced at a level that people feel is affordable. Over the next couple of years, there will be a big opportunity to reset the way in which bus services are provided in the country. From engagement with local authorities, I am encouraged to learn that some of them are increasingly determined to consider how they can change the model that is operating in their area. I think that there is the potential to change quite considerably the way in which services are operating.

Earlier last year, we ran a public information campaign about the range of help and support that is available to people having challenges with their energy bills. Within that, there was provision for energy efficiency measures. It was part of a wider Government programme. What we ran in November was very specifically about trying to create greater awareness of this particular programme, because the level of demand was not in line with what we expected it to be. I do not know why that was the case. It is not that we were doing nothing about making people aware of the help that was available, but we did even more in November and we will do more this year.

I do not know whether it was partly about the timeline between people thinking about the impact and then getting their bills and seeing the impact. In my personal circumstances, there was almost a lag, in that you knew that things were going to become much more expensive before the costs actually hit you. That might have had a bit of an impact, in that people were thinking about it before it happened and then it was possibly not as bad as they thought it would be—I do not know.

However, we had a public information campaign last year, including the website that Shona Robison developed, about the help and support that were available to people in relation to that wider cost challenge on the community side. However, what happened in November was very bespoke and specific in relation to trying to get more people to understand what was available on the energy efficiency side. I hope that that reassures you that it was not a case of doing nothing; it was just that we did something much more bespoke in November because we had not seen the level of uptick that we had hoped for.

We have gone through a period in which, because it is a demand-led budget, demand has not quite kept pace with budget allocation, which meant that the level of demand was not quite using all the budget that was available, whether in the warmer homes programme or the area-based schemes. There are a number of reasons for that. The sector has highlighted to us that a combination of skills and materials had an impact on delivering some of the programmes.

We have tried to raise public awareness. In November last year, we started a publicity campaign to highlight the schemes and increase awareness of how people can access them. Since then, we have seen a bit of an uptick in demand and the industry is trying to develop the breadth of skills that it needs to drive forward some of the programmes. We also plan a further public information programme later this year to highlight to people the scope of the programmes.

The purpose behind the policy is to reduce fuel poverty. The cheapest form of fuel that you can get is the fuel that you do not use, so greater efficiencies are a key part of the policy. Warmer homes Scotland, which is the Home Energy Scotland programme, the Business Energy Scotland programme and the area-based schemes are all about reducing energy demand and making properties more heat efficient. That will continue to be a priority during the coming years, not just this financial year, given the need to reduce fuel poverty and the demand for energy.

I have made broad mention of skills and materials. Part of the issue around materials is a result of the closedown in some areas during the pandemic and, as demand has started to increase, there have been challenges in accessing some material. However, that is not so much of an issue now.

The other issue is access to skills. There is no doubt that there is a real constraint on labour in the sector. I think that I might have told the committee before that, from a discussion that I had with one of the companies that are involved in the area-based scheme in the central belt, it is clear that it is really struggling to recruit the staff that it needs to roll out the programme even faster. The principal reason for that is because the company lost access to a significant number of staff from eastern Europe.

The company has an apprenticeship-based scheme through which it trains people, and the hope is that they will stay in the industry. However, the company flagged to me—I will paraphrase what I was told—that, even were the budget to be doubled, the company would not be able to utilise that as it does not have access to skills, despite the training that it is doing and its work with industry, because it has lost access to labour from eastern Europe. That constraint has had a direct impact on the company. That is a fact; there is no getting away from that.

We must work with the training organisations, the industry and our colleges to make sure that we are focusing on the skills that are necessary to support those industries. However, labour constraints is still a significant issue.

It depends. If a local authority is looking to develop an ownership-model municipal bus service, there are all the capital costs that are associated with that, such as purchasing buses, running garages for maintenance and so on. That is why a number of local authorities are looking at the franchising model, where the authority would enter into a franchise agreement with a bus operator to provide the services in its area and the authority would specify the services that it wants—their frequency and timetable. That is similar to the way in which the system has operated in relation to rail.

It is £30 million that is coming from the public sector budget.

What timeline is it over? Do you know, Kerry?

In the past, we have been able to reallocate an underspend and re-utilise that budget, so it is not lost in that sense. However, through greater public awareness and understanding, we can promote the schemes and the programmes to encourage more people to take up the options that are available to them, whether they are for domestic or business premises.

I have flagged up to a number of businesses in my constituency that are experiencing significant energy challenges as a result of the big price increases that there might be loans available to them through the Business Energy Scotland programme, to enable them to invest. One company—I will not mention it by name—is at an advanced stage in that process. It is looking at putting in solar panel systems, which is part of the programme, to reduce its energy costs as it is an energy-intensive business.

Continuing to improve the awareness of the public and business is important. I think that it would be fair to say that the situation during the past year has meant that people now focus on their energy costs in a way that they did not previously—their focus is much greater. There is an opportunity to ensure that we are driving forward energy efficiency as part of reducing future energy demand.

It is important to understand that it is not as though nothing is happening. Although it is in-house at present, a considerable amount of work is being done by officials, working with local authorities, housing associations and other organisations on how we can look at collectively working together to deliver not only some of these energy efficiency programmes but alternative heating systems.

We have created the heat networks unit within the directorate, which is playing an important part in helping to bring together expertise around local authorities and housing associations, which are looking at heat networks as well. The national agency will be able to take that up on to a much more national scale through dedicated resources, staff and expertise, to support local authorities and housing associations in taking forward these policy areas.

We are trying to avoid getting into situations where local authorities have to reinvent the wheel each time they try to design a heat network or where housing associations have to reinvent the wheel to get heating efficiencies. We want to bring together the expertise and skills base that can support them to bring that work forward.

Can we do that quicker? We have ambitious targets on heating buildings. The Climate Change Committee’s report from the end of last year showed the need for us to ramp up our action in that area. If there are areas where we can speed up that process, we will not be slow in making sure that we do that.

I hope that that reassures you that a considerable amount of work is going on; we are not waiting for the standalone agency to be created before we drive that work forward.

That area has changed dramatically over the past year. If we were having this discussion last year, I would be saying that blue hydrogen would probably play a big part in the early development of the hydrogen economy. What has significantly changed over the past year is that, because of gas prices and so on, there has been a big switch in the sector to being much more focused on green hydrogen, because its potential production costs have dropped significantly. Companies that previously focused on blue hydrogen are now looking at going straight to green hydrogen, because the cost base has dropped sufficiently.

Blue hydrogen will continue to play a role in the energy transition in some of our big energy intensive sectors—for example, grey hydrogen is used in Grangemouth, but Ineos has plans to move towards blue hydrogen, which is aligned with the Acorn Scottish cluster project. For some companies, blue hydrogen will be a bridging technology before they move to green hydrogen.

The focus over the coming years will be much more on green hydrogen, not only because that is what is happening here but because that is what is happening on a Europe-wide basis. For example, the REPowerEU programme has a big focus on low carbon and on green hydrogen being the future priority; blue hydrogen is seen as being a bridging technology in some energy intensive sectors.

That is the pattern of travel, which is why you can see in the hydrogen action plan that our focus is much more on green hydrogen, particularly because of its export potential. There is significant potential for us to be a major exporter of green hydrogen and hydrogen derivatives such as ammonia and methanol and to develop liquid organic hydrogen carriers. We are involved in work on that with partners in Rotterdam and the Net Zero Technology Centre. I see green hydrogen becoming more of a focus and playing a bigger part than I would have said this time last year.

You mentioned three areas: skills, companies at a domestic level, and planning. Planning is not so much of an issue, because planning elements will rest largely with us. Quite a number of the big offshore developments that are planned over the course of the next 10 years have potential hydrogen projects associated with them. I am very conscious of the need to make sure that we have the right support in place for that. Some changes are taking place within my directorate to facilitate that, including recruiting additional staff and bringing in a strategic lead at director level to drive that forward. That is happening just now and the budget provides an additional £5 million to support the development of that element. Those are the planning aspects that sit within my portfolio.

There is a challenge around skills, not just here in Scotland but globally. During the past year to 18 months, in countries across the globe, particularly in Europe, the scaling up of offshore and onshore wind has been quite marked. It became more of a priority during the energy security issues of last year.

There will be a number of challenges here. There will be a skills challenge because of the restrictions on access to labour. There will also be a materials challenge in that access to some of the raw materials that are needed for the manufacturing of these products will become constrained because of the level of global demand. There will be a capacity constraint in relation to industry manufacturing some of the components, given the level of demand that might be experienced. That is why, in my view, having a clear and effective consenting process is extremely important to give the industry confidence that the process that we have here in Scotland for rolling out these projects is a priority area, which means that they can be taken forward in a timely fashion.

I do not want to speak for Ivan McKee on this, but it would be fair to say that I am also doing a lot of trade work because, during the past year to 18 months, the area of energy has just increased dramatically. We are receiving demands from ministers of overseas Governments to meet us, and the number of businesses in Scotland that are looking to invest overseas has increased dramatically. When I was in Japan in November last year, a lot of the talk was about accommodation of inward investment from Japanese companies here, but also Scottish companies investing in south-east Asia and renewable energy as well. That has scaled up significantly. I know that Mr McKee has found that challenging because of the demands that it is placing on him, which is why I am doing some of that work, and other ministers have also been involved in picking up some of that demand.

On the budget provision, at this stage I am comfortable that we have sufficient budget provision to meet demand. We need to refocus some of the staff who are involved in some of the broader energy work on the areas that we need to prioritise rather than looking for any extra resource. The work that we are doing just now to bring together the trade, investment and energy aspects is all about trying to knit them together much more effectively to be more focused and more efficient in the use of resources.