Chamber and committees

I do not think that I said that, because I do not have the numbers on how much CO₂ venting is going on in Scotland. I am sorry if I misspoke. I was just saying that the instrument will put the venting of CO₂ on the list of actions that will be part of the ETS.

To come back on your ScotWind comment, ScotWind was designed for four reasons: to decarbonise the electricity that we supply to the whole of the UK; to provide an opportunity for Scotland to have a thriving energy sector; to fund net zero work, which I wish it to do—however, I will not pre-empt anything in the budget—and to encourage investment in Scotland, which it is absolutely doing.

My comments about anything that is done on funding from big emitters apply to the whole UK. That is certainly my view of what should happen. However, it is also my view that ScotWind should address those four aspirations. However, I do not want to pre-empt anything that is said in the budget.

I do not quite see the correlation between the ETS costing businesses money and carbon capture, utilisation and storage not going ahead. However, your mention of the possibility of CCUS not going ahead gives me the opportunity to say that it must go ahead. We must get action on the Acorn project’s track status. The Climate Change Committee has made it clear on many occasions that we will not reach our 2045 net zero target if carbon capture and storage does not happen in Scotland. We would also be missing a massive economic opportunity for Scotland, which might align more to your question.

Now I get you. With regard to a CCUS scheme—we were just talking about oil and gas and particularly about venting—the ability to capture and store carbon will reduce businesses’ costs. If those schemes are not available to the Scottish cluster and all the industries that want to be part of the Scottish cluster, that is a real problem. However, the biggest issue is that we are missing out on a major opportunity to take carbon out of our processes and our atmosphere, which puts 2045 on a bit of a shoogly nail, as the Climate Change Committee has said time and again. Therefore, I will use this opportunity to say that we need track 1 status for the Acorn project as soon as possible.

I will just move the motion.

I move,

That the Net Zero, Energy and Transport Committee recommends that the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024 [draft] be approved.

It would not be an extra burden.

First, I do not know much about the Norwegian sector. If what you are saying is true, obviously the order will bring us in line with that. At the moment there is a kind of loophole, in that operators would have to use their ETS allocations to make up for flaring activities, but not for their venting of any CO₂.

It might not stop there, however. We might also look at methane emissions, which might happen in the next couple of years. I am not entirely sure whether the Norwegian sector includes methane as well as CO₂. It would be interesting to see whether it does—I will look into that after the meeting. However, from what you are saying, if your understanding of what the Norwegian sector does is correct, the order will bring us more in line with them.

It is slightly beyond my ken. There was a great emphasis on reducing the amount of flaring—that was the real focus. I would have to look into why venting was missed out, but the order is about correcting that and, as I say, closing that loophole so that we do not have CO₂ emissions being vented and going into the atmosphere that do not need to be.

I hope so.

The regime would be the same one that we have in relation to penalties now. There will be penalties in relation to operating without a permit. There will also be a penalty associated with underreporting, and a deficit penalty if an operator fails to surrender allowances to cover its emissions.

Another important point is that the penalties will change in line with inflation, so there will be an increase in the value associated with them. There are therefore more incentives for people not to breach any of the rules and incur any penalties; it is also about tightening up the penalty regime.

There will certainly be plenty of warning that the ETS is coming into place. We would hope that breaches would be very rare.

I will be upfront: in the three months that I have been cabinet secretary, I have not had any discussions about a carbon tax. The UK Government has obviously set out its budget, and no carbon tax was mentioned in that, either.

I note that we have the extended producer liability, which I would say is, in fact, a carbon tax on the oil and gas industry.

Given that Mark Ruskell has given me the opportunity to do so, I also note that any money or funds that are gleaned from those kinds of taxes should be used for net zero activities. It is my view that, if emitters are taxed, that money should come back to the Treasury and be allocated to net zero efforts—to the big, expensive things such as decarbonising heat in buildings or decarbonising the gas grid. That is for the UK Government to decide, but, again, I have not had any conversations about a carbon tax.

The carbon border adjustment mechanism goes alongside this. We are working with our UK counterparts, as well as the Treasury, to design the UK carbon border adjustment mechanism, so that it works alongside the UK ETS and does not have any negative impacts or additional costs on Scotland’s exporters. We are still looking at alignment with the EU ETS, and conversations about alignment with the EU are still happening.

A lot is happening in that space, but I have not had a discussion with the UK Government specifically about a carbon tax.

In fairness to the oil and gas industry, it is working hard to reduce production emissions. The order is therefore helpful, because those who are reducing their production emissions will save money as a result.