Meeting of the Parliament 20 December 2017
Today’s publication of “Scottish Energy Strategy: The Future of Energy in Scotland” marks a significant advance in Scottish Government energy policy and, indeed, energy policy for the Parliament. It follows a major process of consultation, which covered not only the draft energy strategy but detailed matters relating to onshore wind, Scotland’s energy efficiency programme, the development of local heat and energy efficiency strategies and district heat regulation.
The strategy that we are publishing today is fully in line with our draft climate change plan. It also supports our programme for government commitments and our ambitions for sustainable growth. It sends a series of clear messages about our determination to decarbonise; our commitment to support the innovation and evolution of our energy system; and our focus on inclusion and economic benefit and the development of supply chain opportunities. We also make plain to the wider world that Scotland is an open, modern and excellent location for energy investment and collaboration. The strategy is accompanied by the “Onshore Wind Policy Statement”, which confirms the value of onshore wind to Scotland’s energy system and our economy and communities.
This year, 2017, has been an important year for the energy sector. We have seen dramatic reductions in the cost of offshore wind and more success for Scottish projects in securing long-term contracts at auction. Those developments and others in sectors such as floating wind energy and wave and tidal power generation provide a huge opportunity for the Scottish supply chain. Our programme for government, which was announced by the First Minister, contained new commitments on electric and other low-emission vehicles and our intention to support up to £60 million of new innovation funding under the low-carbon innovation fund, setting Scotland apart as a country at the vanguard of the global move to low-carbon energy systems.
Scotland is also leading the way in promoting community and locally owned renewable energy. We are well ahead of the rest of the UK on that approach, which gives people a genuine stake in the nature and operation of their energy systems. I can announce today that the latest figures from the Energy Saving Trust show that an estimated 666MW of community and locally owned renewable capacity is now operating in Scotland, which is an increase of 12 per cent from last year’s figure. I firmly believe that people want more of such opportunities and we will continue to work with industry and communities to make that a reality.
Our local heat and energy efficiency strategies will set out a long-term prospectus for investment in new energy efficiency, district heating and other heat decarbonisation programmes. Indeed, a second consultation is now under way on the detail of those proposals.
The energy strategy includes our vision for 2050 of a flourishing competitive energy sector delivering secure, affordable and clean energy for Scotland’s households, communities and businesses.? Scotland’s social and economic well-being and the sustainable productivity and competitiveness of our economy depend on secure, affordable and reliable energy supplies.
We can build on Scotland’s existing industrial strengths, including harnessing the capabilities of our world-class oil and gas sector, and leading industrial clusters such as Grangemouth, as well as the growing strength that we have in all areas of renewable energy. Scotland’s businesses are also well placed to capture the economic benefits of developing and pioneering new approaches. Smarter ways to generate and store renewable energy, and to monitor energy use, can open up fresh opportunities for consumers, with applications and technologies that can reduce both carbon emissions and energy bills.
The move to electric and ultra-low-emission vehicles will create both opportunities and challenges for our electricity and transport systems. A co-ordinated approach involving all stakeholders will help us to understand and tackle those opportunities and challenges in the best way possible. Scotland’s energy efficiency programme places a renewed emphasis on reducing the energy consumption of our buildings and decarbonising their heat. Our earlier designation of energy efficiency as a national infrastructure priority underlines the economic benefits of that kind of investment.
We are determined to make our energy system as inclusive as possible, protecting and informing, but also involving and empowering Scotland’s consumers. However, for far too many households, energy is still unaffordable and the market is failing many Scottish consumers. Many of those fuel-poor households are part of a significant group of consumers who do not switch suppliers and are therefore on some of the most expensive energy tariffs. Although recent moves by the United Kingdom Government to cap tariffs for certain consumers may help to reduce bills, that may be insufficient in isolation, and such tariff reductions must form part of wider efforts to ensure a fairer market for all.
That is why the First Minister announced in October the ambition to establish a new energy company. The aim is that the company will support economic development and contribute to tackling fuel poverty, as well as being owned by the people of Scotland and run on a not-for-profit basis. It is important to seek views and expertise as we further develop that proposal.
Early feedback on the strategy consultation has been constructive, and we are grateful for that input. In one of those responses, the University of Edinburgh’s department for social responsibility and sustainability said that it would
“welcome exploration of a place for a government-owned energy company to act on a non-profit basis, addressing market failures to assist in lessening instances of fuel poverty.”
Following the announcement of our aim in October, Dermot Nolan, the chief executive of the Office of Gas and Electricity Markets, was widely quoted as saying that Ofgem would
“welcome any form of potential new entry”
into the energy market. Today, we commit to a formal process of public consultation in the later part of 2018.
Scotland has always set a high bar when it comes to our energy potential and goals, and we are internationally recognised for the strength of our commitment to the development of renewable energy, particularly in electricity. I can confirm today that we are building on that progress by adopting two new and ambitious targets for 2030. The first target is for the equivalent of 50 per cent of Scotland’s total energy consumption for heat, transport and electricity to be supplied from renewable sources. That demonstrates our commitment to a low-carbon energy system and to underpinning the continued successful growth of the renewable energy sector in Scotland. The second target is for an increase of 30 per cent in the productivity of our energy use across the Scottish economy. That means delivering more economic output for each unit of energy that is consumed across the economy.
Alongside those important targets, we have developed six new strategic priorities, which I will summarise briefly. First, we will make greater efforts than ever to protect consumers from excessive costs while helping them to take advantage of new opportunities arising from energy. Secondly, we will continue to prioritise energy efficiency, supporting and improving the efficient use of energy in Scotland’s homes, buildings, industrial processes and manufacturing. Thirdly, we will continue to champion Scotland’s renewable energy potential, with an ever greater focus on creating new jobs and supply chain opportunities. Fourthly, we will ensure that Scotland’s homes and businesses can continue to depend on secure, resilient and flexible energy supplies. Fifthly, we will empower our communities by supporting innovative and integrated local energy systems and networks to drive both local community and economic regeneration. Finally, we will continue to support investment and innovation across our oil and gas sector, including in exploration, innovation, subsea engineering, decommissioning and carbon capture, utilisation and storage.
The strategy includes a range of actions to deliver our goals. We have committed up to £20 million, through an energy investment fund, to support and stimulate renewable and low-carbon energy investments in 2018-19. That will build on the success of the renewable energy investment fund. Expansion of the funding support to include low-carbon technologies alongside renewables will ensure that future investment reflects the wider systems approach and local energy ambitions that are being encouraged in the strategy.
Today, we are also publishing our onshore wind policy statement. We expect onshore wind to play a growing and invaluable role in our transition to a low-carbon future. The support and investment frameworks for onshore wind have fundamentally changed, just as the technology is also changing, with moves towards larger, more efficient turbines that have made onshore wind highly cost effective.
We are determined to secure a route to market for new developments through policy changes at a UK level and through actions of our own. Our planning system already makes positive and practical provision for onshore wind, protecting our landscapes and ensuring that development goes ahead only in the right places. That will remain the case, which will ensure that onshore wind can continue to power Scotland’s low-carbon future while involving, regenerating and benefiting local communities.
Today’s publications mark the next stage of a process rather than a full stop. We are determined to increase public and business engagement on our energy future. People are much more aware, interested and informed about energy issues—not just policy, but the ways in which technological and other changes can give households, businesses and communities more options and control. As we move ahead, we will need to take all of society with us.
Together with the final climate change plan and Scotland’s energy efficiency programme, we will develop a new approach, drawing on experts from a range of backgrounds. We will monitor the strategy annually, working closely with the Scottish energy advisory board and its industry leadership groups. We expect to publish the first annual statement in 2019.
Scotland has world-class skills, expertise and knowledge from the North Sea oil and gas industry to our growing renewable energy sector and from academic institutions to small start-ups. The strategy recognises and builds on our past, our achievements to date and Scotland’s capacity for innovation. It confirms the vital role of energy efficiency and our renewables potential as well as our desire to create new, local energy systems and develop the Scottish supply chain to deliver a sustainable energy future. It places consumers and their interests more firmly than ever at the heart of everything that we do. I commend Scotland’s energy strategy to the Parliament.