Chamber and committees

The industries that are involved have already been set and the amendment will not allow any others to come into the scheme. They are already agreed and set. The exemption was 85 per cent and it will now be 100 per cent. We have seen in the last couple of years that particular energy intensive industries have found it quite difficult to keep employing people and to keep operations from losing money.

It adds a very small amount. It is important to mention, Mr Lumsden, that this will be across the UK. Households typically account for about 40 per cent of renewables obligation costs recovered by suppliers. The average cost is currently about £77.50 per year on an electricity bill. The exemption is likely to cost just an extra pound or two.

We do not want a situation where household bills are affected by things like that, but I think the reason behind this is that there is an awful lot more at stake if we do not have an exemption. The particular sectors that are affected by this employ a large number of people, not just in Scotland but throughout the UK, particularly in manufacturing.

The UK Government has decided to increase the exemption to 100 per cent. It has historically been the case that the Scottish Government has not gone on a different path and we too want to stay on the path and have agreed to act alongside the UK Government.

Also, we do not want carbon leakage. If we have a landscape in the UK or Scotland where it is increasingly unprofitable for those industries to exist, the chances are that they will go elsewhere. It will be not just carbon leakage but economic leakage. This is a way in which we can protect those industries from their overheads being so onerous that they might have to think about taking their operations elsewhere.

The UK Government analysis suggests that the amount that would go on to a domestic bill would be 80p or £1.10 per year for the average household. You balance that—80p or £1.10 added on to a bill in a year—versus the potential for people to lose their jobs. I think that that seems to be a pretty fair balance.

I am always concerned about the effects on household bills. The UK Government’s review of electricity market arrangements and the reform of the energy markets in general are far more critical in relation to the worries that Mr Lumsden describes. Decoupling the price of gas and electricity would have more of an effect on household bills than anything that this particular instrument does.

No, I am happy to leave it as it is.

Motion agreed to.

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.