Chamber and committees

I will use the example of the licence conditions for the ScotWind contracts. The companies and the consortia that bid for those licences have to sign up to the conditions, which include local content with regard to the supply chain. As a result, there is a huge economic benefit to the whole of Scotland—not just the north-east and the Highlands—because we will have companies that are setting up and growing as a result of realising that the supply chain capacity will have to increase. That will not be done by any one region but by the whole of Scotland. By local content, we mean the content of the supply chain in Scotland. Those who were putting the licence conditions together made sure of that. I am looking at Mr Matheson, who was instrumental in that.

The devolution settlement had not happened when most oil and gas was discovered, so we did not have those conditions in place previously. As a result of the devolution of the Crown Estate, we have been able to work with the Crown Estate on licensing the sea bed for offshore wind power generation to ensure that licences come with conditions. However, there will also be conditions around some of the grants and loans that are associated with SNIB and with some of the support that companies get from our enterprise agencies. Some of that is to ensure that there is local content.

You talked about golden handcuffs. The approach is quite light touch, because it is obvious that the supply chain will be anchored in Scotland, as that is where the skills already are. If we get the conditions right, we will have a supply chain that is not just anchored in Scotland; we will potentially have orders from the oil and gas supply chain and orders for ScotWind, so the supply chain will have to vastly increase capacity to be able to serve those two industries. The term “handcuffs” may be overstating it, because it is a no-brainer that the supply chain will be in Scotland, as we already have a very healthy energy supply chain in Scotland, which will have to increase its capacity to serve both sides of the energy sector.

Diarmuid O’Neill has some additional information on that.

As Mr Matheson will know intricately, Scottish Government ministers have powers to consent to developments of all types in the Crown estate, the sea bed and the landmass of Scotland. If we were to merely be consulted on things that were happening with GB Energy, that would take away from that power. A requirement for consent would dovetail with the consents that come to us.

The issue is really important when it comes to the strategic goals of GB Energy. Initially, when GB Energy was floated as an idea before the election, we all asked about what it would be. I am keen that we are an equal partner in the strategic actions that GB Energy takes. It is not there as a competitor to other operations; it must add to what we already have in Scotland. Having “consult” instead of “consent” means that, whatever those strategic priorities end up being, we would be consenting to them.

As the company develops, I want to see those strategic priorities provide additionality to what is already in the energy sector in Scotland and increase capacity in areas where required. For example, I am keen that whatever GB Energy is doing in the community energy space does not reinvent the wheel. We already have Local Energy Scotland, which is an organisation that was set up by the Scottish Government. I do not want to see another body—it would be confusing for the public and I do not think that there is any need for it. I was able to discuss with Michael Shanks how we could work together so that, if we already have vehicles in Scotland for activity that GB Energy is carrying out, we would be able to use those organisations and add the funding to their capacity, rather than have separate entities set up and badged with GB Energy. Those are a couple of examples.

If the strategic priorities require our consent, it means that, as it develops—I do not think that GB Energy is fully developed yet, but that is the point—we have the proving part in place such that, whatever direction it goes in, it must be with the consent of the Scottish ministers. It is very early days in relation to what GB Energy will achieve.

I am being careful, because I do not want to pre-empt anything. It is important that we see the wording of the amendments before we can say that we are absolutely satisfied.

As Mr Matheson will know intricately, Scottish Government ministers have powers to consent to developments of all types in the Crown estate, the sea bed and the landmass of Scotland. If we were to merely be consulted on things that were happening with GB Energy, that would take away from that power. A requirement for consent would dovetail with the consents that come to us.

The issue is really important when it comes to the strategic goals of GB Energy. Initially, when GB Energy was floated as an idea before the election, we all asked about what it would be. I am keen that we are an equal partner in the strategic actions that GB Energy takes. It is not there as a competitor to other operations; it must add to what we already have in Scotland. Having “consent” instead of “consult” would mean that, whatever those strategic priorities end up being, we would be consenting to them.

As the company develops, I want to see those strategic priorities provide additionality to what is already in the energy sector in Scotland and increase capacity in areas where required. For example, I am keen that whatever GB Energy is doing in the community energy space does not reinvent the wheel. We already have Local Energy Scotland, which is an organisation that was set up by the Scottish Government. I do not want to see another body—it would be confusing for the public and I do not think that there is any need for it. I was able to discuss with Michael Shanks how we could work together so that, if we already have vehicles in Scotland for activity that GB Energy is carrying out, we would be able to use those organisations and add the funding to their capacity, rather than have separate entities set up and badged with GB Energy. Those are a couple of examples.

If the strategic priorities require our consent, it means that, as it develops—I do not think that GB Energy is fully developed yet, but that is the point—we have the proving part in place such that, whatever direction it goes in, it must be with the consent of the Scottish ministers. It is very early days in relation to what GB Energy will achieve.

That is effectively what I mean by future proofing. GB Energy will be a publicly owned company. It has highlighted its five strategic priorities, but they are very wide, and we want to give our consent to them as they evolve.

Clause 6 enables the secretary of state to give direction to GB Energy. At the moment, clause 6 says that the secretary of state should consult GB Energy and

“such other persons as the Secretary of State considers appropriate.”

We have asked for an assurance that the Scottish Government will be specifically included in that list, so that is another area where we have reached agreement.

No. I wrote to Minister Shanks on 16 December, and we have sought agreement from the UK Government on the wording of clause 6. Discussions on that are still taking place but are very positive. At the moment, clause 5 is pretty much nailed down; we are still in discussion on clause 6, but I am hopeful.

The Crown Estate in Scotland is a separate legal entity, so, as you know very well, Mr Ruskell, there would be a separate bill associated with that. The UK Government is looking to modernise the Crown Estate in England and Wales so that it can be in a position to act, I imagine, more like the Scottish Crown Estate. The UK Government has presumably looked at what we have done with ScotWind in that respect, and at what the Crown Estate in England and Wales needs.

My understanding is that the Deputy First Minister has been negotiating with the UK Government on the Crown Estate Bill, and the Crown Estate has asked us to ensure that there is parity. However, we need to look very carefully at what ends up being in the Crown Estate Bill for England and Wales in terms of borrowing powers, because that would have implications for the limit on our borrowing powers. The Deputy First Minister is working on that.

We always look to see whether the Crown Estate legislation in Scotland is fit for purpose, and we review the governance and the operating model to make sure that it is fit for purpose as things progress. We optimise that role in value creation.

At the moment, our view is that we should keep an eye on the legislation on the Crown Estate in England and Wales and see if there is anything in that bill that we would like to adopt when we look to our legislation, but at the moment, we do not know. I think that it is getting a reading tomorrow—is that right? It is definitely upcoming. The Deputy First Minister is leading on that.

In the summer, the Secretary of State for Energy Security and Net Zero and I signed a joint vision statement, which is in the public domain, specifically about engagement with Scottish public bodies. Work has also been done by the Department for Energy Security and Net Zero on working with Scottish bodies. It does not want to be in a situation where, going back to what Mr Matheson said, anything butts up against any of the priorities or processes of Crown Estate Scotland or SNIB, for example.

The Crown Estate Bill for England and Wales is currently going through the UK Parliament. We passed our own legislation for Scotland—the Scottish Crown Estate Act 2019—about five years ago, so our Crown Estate is a separate entity, but we would expect that GB Energy will be working with it. We are also keen to make progress on ensuring that there is parity between the Crown Estate in Scotland and the Crown Estate in England in their relationships with GB Energy.

The recognition that GB Energy will interact with Scottish public bodies, and that we will be kept aware of what those interactions are, was set out in the vision statement.

That has not been mentioned in my discussions. Again, I think that CCUS is separate; I have not had those discussions about CCUS. My discussions have been around the priorities that have been laid out, which are about energy generation.

I am glad that you have brought up that point, however, because it gives me the opportunity to say yet again, on record, that carbon capture, utilisation and storage in Scotland has huge potential but we need that track status. CCUS is another real area of economic growth. In addition, it has always been said in all the reports that have come from the UK Climate Change Committee that CCUS is a fundamental part of helping us to get to net zero.