Chamber and committees

On one hand, I agree that lots can be started now, because there has been a great deal of engagement. However, throughout the morning, lots of references have been made to where there has not been movement or sufficient engagement. In fact, in the group of amendments that we are talking about, members have asked for the consultation to be even wider than it has been.

Allowing two years for the development of a strategy is reasonable. The intention would be to engage with a wide range of stakeholders in developing the strategy and assessing the likely impacts. I do not want to curtail that vital engagement; indeed, I am taking on board quite a lot of what has been said this morning about extending it.

I am sorry if you thought that I interrupted you, convener. I thought that you had finished. You had made your point, and I have taken it. The proposal of an 18-month period has been mooted, but it is in neither of the amendments that are under consideration. On amendments 2 and 3, I ask Graham Simpson not to move them, although I imagine that he will.

For similar reasons, the Scottish Government cannot support amendment 80, which is in the name of Douglas Lumsden. Section 5 requires that Scottish ministers report on progress on objectives and plans in the circular economy strategy 30 months after the publication of each strategy. In other words, there is a requirement for a progress report at the halfway point of each strategy. I think that that strikes a balance between ensuring that the Scottish Government is accountable for progress on each circular economy strategy, and our not imposing onerous reporting burdens that would distract from delivering policy. Our view is that amendment 80, by imposing annual reporting on the strategy, would go too far in that direction and should be resisted.

Yes. I would like to briefly outline what has been done to date.

The order under consideration is a minor amendment to the Renewables Obligation (Scotland) Order 2009. The renewables obligation scheme provides revenue to generators of renewable energy through the trading of renewables obligation certificates, or ROCs. Suppliers purchase ROCs, either directly or through traders, from generators. The generators are awarded ROCs by the Office of Gas and Electricity Markets in proportion to their electricity output. The cost of the scheme is recouped by suppliers through energy bills. The number of ROCs that suppliers must provide to Ofgem for the electricity that they supply is referred to as the obligation level. That level must be published by the Scottish ministers before 1 October each year, giving at least six months’ notice to suppliers before the obligation year begins.

The amendment to the 2009 order is necessary to allow the 2024-25 obligation level to be altered to reflect changes in United Kingdom Government legislation that introduce a new 100 per cent energy intensive industries exemption. It ensures that the ROS obligation level aligns with the UK legislation and the new 100 per cent energy intensive industries level. It also ensures alignment with the scheme in England and Wales, with a parallel amendment being made by the UK Government.

I believe that the amendment order is necessary and proportionate. I will, of course, be happy to take any questions that members have.

Yes. The most important thing is that we provide certainty. As I outlined in my opening remarks, we want to work in tandem with the UK Government to provide that certainty and also to do joint consultation.

There is concern that, if we do not make the exemption for energy intensive industries, particularly in the high fuel price situation that we have at the moment, they could find that they are not profitable any more and they may have to consider things such as job losses—that is everything that we want to avoid. The large manufacturing sector is particularly affected—it obviously consumes a great deal of energy—so the policy protects them to a certain extent and protects those jobs. [Gillian Martin has corrected this contribution. See end of report.]

There are about 43 in Scotland.

Obviously, everything around the decarbonisation of energy is devolved to Scotland and our economic department is looking particularly at high-energy sectors such as manufacturing.

I am not sure that this particular instrument is about incentivising anything. I think it is about protecting jobs. We have large manufacturing, such as food production and feed-stock production. The original point behind the renewables obligation was to get a subsidy for renewables, but this particular exemption is about large manufacturers that are particularly affected by inflation and high fuel costs. There are thousands of jobs associated with those manufacturers and this is about protecting them in the face of a number of pressures. [Gillian Martin has corrected this contribution. See end of report.]

The solutions to that lie in other schemes and all the work that we are doing with various sectors. There are obviously incentives for decarbonisation in the business support and procurement landscape in Scotland. We are working on a green industrial strategy and there will also be incentives in that. There is incentivisation across the piece of what the Scottish Government puts forward, particularly with our enterprise agencies.

This particular instrument, to my mind and my interpretation, is about keeping the manufacturing and energy intensive industries going and taking away one of the pressures on them, particularly given the global landscape of fluctuating energy prices that at the moment are outwith our control. As we look to the future and have more renewable electricity, in particular, in Scotland, those pressures will decrease.

No, I will not take that chance. I think that I have said everything that I need to say. Thank you.

The 100 per cent exemption will reduce eligible energy intensive industries’ electricity costs by between £5 per megawatt hour and £7 per megawatt hour. That will amount to quite a substantial sum if you think about the huge amount of fuel that is used by those particular industries. [Gillian Martin has corrected this contribution. See end of report.]

We are following UK legislation. If we did not follow it, what might be the effect of that on Scottish energy intensive industries? I imagine—and Mr Lumsden would be the first to be critical of this—that they might look at a situation where there is a 100 per cent exemption in the rest of the UK but only an 85 per cent exemption in Scotland, and they might decide to relocate their operations. I imagine that Mr Lumsden would join me in being concerned about that. That is why we are agreeing to the UK legislation.