Hansard

I am pleased to inform Parliament that today, the Scottish Government is publishing its draft energy strategy and just transition plan. The draft strategy maps out the future of our energy sector and sets out an ambitious suite of actions for the Scottish Government, along with actions for industry, the regulator and the UK Government, to realise that bright future over the next decade.

We are at a pivotal point in Scotland’s transition to net zero and the strategy charts a clear course for the transformation of the energy sector—one of Scotland’s most important industries—to 2030 and beyond. That transition must be achieved in a way that delivers for the people of Scotland to enable us to embrace the opportunities of a green economy.

This is a time of unprecedented uncertainty in global and national energy markets. High energy prices are impacting people, communities and businesses across Scotland. Those uncertainties bring even more impetus to the need to deliver a decarbonised, affordable and secure energy system.

Scotland already has an enviable track-record in renewables. The success of the ScotWind leasing round—the world’s largest floating offshore leasing round—and our long-standing commitment to onshore wind, are strong foundations on which to grow our renewables capabilities even further. Wind power is one of the lowest cost forms of electricity and the Scottish Government is clear that that is where we should focus to reduce costs in the long term and address our vulnerability to future energy cost crises.

The strategy builds on that success with three overarching objectives. The first is to significantly scale up renewable energy production, helping to secure a just transition away from fossil fuels. As part of the transition, overall energy demand will also reduce.

The second objective is to secure continued and increasing investment in the net zero energy economy. The delivery of the strategy will mean more jobs, a growing supply chain, new manufacturing capabilities, new skills, new export opportunities and thriving communities.

The third objective is to deliver a fairer and more secure energy system that is no longer reliant on volatile international commodity markets and delivers lower costs for consumers. That requires stronger and more targeted action from the United Kingdom Government to reform the energy market in a way that is fair, and to create the right conditions for the investment needed in infrastructure to support the expansion of renewables.

The draft strategy sets out the significant opportunities for Scotland in transforming our energy system. Scotland already has 13.4GW of renewable electricity generation capacity. It is our ambition to deliver at least 20GW of additional low-cost renewable electricity capacity by 2030, which could generate the equivalent of around 50 per cent of Scotland’s current total energy demand.

Scotland’s rich renewables resource means that we can not only generate enough cheap green electricity to power Scotland’s economy, but also generate a surplus and open up new economic opportunities for export. However, we must make those changes to our energy system in a way that is just. The transition must maximise economic benefits, ensure a fair distribution of opportunities and risks, and do so through a process that is inclusive. The oil and gas industry has played an important role in our economy and been part of our national identity for decades. However, our previous policy position of maximum economic recovery is no longer appropriate.

The strategy explores the challenges of moving away from oil and gas and the ability of low-carbon and net zero energy generation to not just replace, but build on the employment opportunities that people, particularly in the north-east, have come to rely on. In the strategy are the first results of the independent research that was announced in 2021 and scrutinised by a panel of experts on the future role of North Sea oil and gas in Scotland’s energy system and economy.

That work shows that as an increasingly mature basin, production in the North Sea is expected to be around a third of 1999 levels by 2035 and less than 3 per cent of the 1999 peak by 2050. That projection takes account of the remaining potential development in the North Sea and is without any political decision to reduce consumption due to the climate emergency. That means that domestic production will effectively end within the next 20 years if we do nothing. The draft strategy is consulting on whether we should act faster than that.

Whatever people’s position on the pace at which we move away from fossil fuels, a failure to act now to deliver a just transformation of our energy system would be to neglect our energy security and the future of our economy, and risk the kind of damage to industrial communities that we saw in the 1980s. However, if we seize the opportunity that is presented by the transition, the number of low-carbon jobs in the energy production sector is estimated to rise from 19,000 in 2019 to 77,000 by 2050, delivering a net gain in jobs across the energy production sector overall.

The strategy shows how we can build a positive route through the transition, boost employment in energy generation, and provide energy security. That is why today’s publication is not just a draft energy strategy; it is also the first draft just transition plan.

We recognise that the transition must take account of different geographies, industries and infrastructure across the country. The draft energy strategy and just transition plan will be further developed through engagement with trade unions, businesses and communities. We are pleased to have supported the Scottish Trades Union Congress to ensure that workers have the opportunity to participate.

Our £500 million just transition fund is supporting Moray and the north-east to become centres of excellence for the transition. Projects such as the deployment of a new digital offshore energy skills passport to support the transition of skills and jobs across the rapidly changing industry are already under way. That work is led by OPITO. I hope that, as we move forward, the UK Government, which has, of course, benefited from oil and gas revenues for so long, will make a matching contribution.

The draft strategy sets out our key ambitions for renewables deployment and brings together clear policy positions and a route map to realise those ambitions. We have made proposals for key sectors. We propose increasing onshore wind from 8.78GW as of June 2022 to over 20GW by 2030. That would more than double our existing capacity. We propose increasing offshore wind from 1.9GW, as of June 2022, through a pipeline of 3.8GW already consented, to between 8GW and 11GW by 2030. The results of the ScotWind leasing round reflect market ambitions in excess of current planning assumptions.

The strategy consults on what a future ambition should be for solar, building on our current 411MW of capacity. Tidal stream also has potential. We are also consulting on an ambition for tidal and wave energy.

We recognise the huge potential of pumped hydro storage power to play a significant role in our future energy system. The lack of an appropriate market mechanism from the UK Government is frustrating the realisation of that opportunity for significant economic investment, job creation, and gigawatts of clean energy. Coire Glas, for example, represents more than £1 billion of investment, with up to 1.5GW of capacity and 30 gigawatt hours of storage. The UK Government must take action to ensure that that potential is realised.

We will work with communities, energy companies and parts of the public sector, such as Forestry and Land Scotland and Scottish Water, that already generate renewables to expand community ownership. We also want to hear views on those ambitions from unions, wider industry and communities.

The draft strategy reaffirms the Government’s position that we do not want or need new nuclear power. We are clear that the focus must be on developing flexible and renewable technologies rather than new nuclear fission plants, which are expensive and take decades to deliver. Although we do not have the power to influence offshore oil and gas exploration and extraction, we are seeking views on a more robust climate compatibility checkpoint, including for oil and gas fields that are already licensed but are not developed, and on a presumption of no new exploration in the North Sea.

The strategy reaffirms our commitment to, and the importance of, carbon capture, utilisation and storage to Scotland’s energy transition. We continue to engage with the UK Government to encourage it to make swift decisions to support the Acorn project in the north-east, which is critical to not just Scotland’s transition but that of the wider UK.

The Acorn project is connected to the development of a hydrogen economy, but it is clear that the most significant potential in hydrogen comes from the creation of green hydrogen from surplus renewable energy. As we set out in the “Hydrogen Action Plan”, which was published in December, we will rapidly grow Scotland’s hydrogen economy to deliver a renewable and low-carbon hydrogen production ambition of 5GW by 2030 and 25GW by 2045.

To put that in context, 5GW could produce energy that is equivalent to about a sixth of Scotland’s total energy demand. Much of that hydrogen could be generated from our offshore wind sector, with the potential to create a new energy export industry for Scotland. In the coming months, we will develop sector export plans on renewables and hydrogen to set out how energy can continue to be a critical export growth sector as we transition to net zero.

The strategy sets out how we will meet the challenges of reducing demand so that Scotland’s main energy-using sectors—heat in buildings, transport, industry and agriculture—use energy more efficiently and become largely decarbonised by 2030. That transition requires significant investment that goes beyond what a Government with limited borrowing powers can deliver. We will scale up activity to move from a funding policy model to a financing one. That will effectively leverage private sector investment and action to better amplify the impact of public investment.

The strategy gives investors certainty that Scotland is a place that supports renewable energy whole-heartedly. Our vision is that, by 2045, Scotland will have a climate-friendly energy system that delivers affordable, resilient and clean energy supplies for Scotland’s households, communities and businesses.

The Scottish Government cannot deliver that vision alone. Industry must accelerate investment in key sectors and infrastructure and must continue to build capacity in the Scottish supply chain and the skills of the energy workforce. The UK Government must act on energy security, network investment and market reform, which are its responsibility, as is much of the groundwork that is required for a thriving hydrogen economy.

To deliver on the timescales that are set out, the UK Government must embrace the needs with pragmatism. A copy of the strategy has been forwarded to the Secretary of State for Business, Energy and Industrial Strategy, and I will be inviting the UK Government to join us as part of an energy transition delivery group to deliver the plan.

Achieving the vision for Scotland will be a national endeavour and will require a collective effort at local and national levels across Government, industry and our communities. The consultation on the draft document opens today, and I look forward to hearing views from people across Scotland on critical aspects of our future net zero energy transition.