Hansard

I am pleased to have the opportunity to make a statement on the UK energy white paper. It is important to be clear about a number of issues. We need to be clear whether the proposals that will have a specific impact on Scotland will be helpful in meeting our environmental and economic objectives; and we need to be clear about the issues on which we will seek to persuade the UK Government on the need for a change of approach, the issues on which we will use our own powers in different ways to achieve more for Scotland, and the issues on which we will use our own powers to complement UK measures.

First, let me reflect on our overarching objectives. There are some key goals for energy policy on which we all need to agree. Those include the need to reduce carbon emissions and so tackle climate change; the need to ensure security of energy supplies by fostering a vibrant, diverse and competitive energy sector that is rooted here in Scotland; and the need to deliver energy at a price that is affordable for individuals and businesses, so that we ensure that energy policy allows the energy sector to continue to make its vital contribution to economic growth.

Those goals are entirely consistent with our overarching core purpose of perpetually strengthening the economy, brand and social fabric of Scotland. In achieving those goals, we can and must exploit the opportunities that are offered by Scotland's abundant natural energy resources and related expertise, but we must do so in a way that respects and protects Scotland's environment. I believe that colleagues—and, indeed, the UK Government—will agree that those objectives are reasonable and balanced. Where we may have different views is on how the objectives should be delivered and the steps that Government should take to ensure their delivery.

The UK Government has been conducting its energy review for some 18 months now. Last week's energy white paper is the result of that lengthy deliberation. However, I suggest that the delayed energy white paper fails on many counts.

The white paper's commitment to combating climate change is clear and welcome. In due course, we will introduce our own climate change bill for Scotland, which will set targets that will provide the context for the whole policy spectrum, in particular in energy, transport and energy efficiency. We know that our emissions reduction targets are ambitious, but putting climate change at the heart of our core economic decision making will give us the best basis for meeting those challenges. By introducing a climate change bill in the Scottish Parliament, we will set a clear long-term statutory framework so that businesses, organisations and individuals can invest in low-carbon technologies with certainty. Climate change is a global issue requiring collective action. I look forward to constructive work with every party in the chamber so that Scotland can take and retain a global lead.

By way of contrast, the UK Government's big idea for combating climate change—nuclear power—is the hole in the middle of the white paper. The white paper is now without its intended nuclear core because, as members will be aware, the courts have backed Greenpeace and forced the UK Government to consult properly on the future role of nuclear power. We will respond to that by making it clear that we do not want and do not need nuclear power in Scotland. If an application for a new nuclear power station were to be submitted, the issue would be for Scottish ministers to decide. We would be obliged to consider the application but—given our policy position, our generating capacity, our multiplicity of energy resources and our strong alternative strategies—it would be unlikely to find favour with this Administration. In any case, we are confident that no operator could justify such an application to its shareholders or customers.

The UK white paper recognises that other options are open to Scotland and the rest of the UK, but we believe that it underplays their potential. We do not believe that there is an energy gap that only nuclear can fill. Scotland has other resources that we are determined to exploit. Those resources are so abundant that we should be planning for export and for offshore grids instead of giving into the negativity about Scotland's burgeoning energy sector. Those resources can provide the base-load and diversity that security of supply demands. We can have clean energy from fossil fuels. We can have more renewable energy from diverse sources and the means to maximise energy output from a given energy source through combined heat and power plants. Those are concrete opportunities.

The opportunity for harnessing clean energy from fossil fuels must be better understood, including here in Scotland. We can continue to use gas and coal if we can capture and store the carbon dioxide that would otherwise be released into the atmosphere.

Although carbon capture presents an enormous opportunity both for the environment and for the UK in exporting advanced technology, the UK Government has fallen at the first hurdle. For a start, we have had a drip feed of announcements. Support has been promised, but the details are to be set out later. Now, with the publication of this white paper, we are being told that the criteria against which projects will be judged will be set out in November, with decisions made after that. Given what has happened to the Peterhead Miller field project, such a slow response appears already to have cost Scotland and the UK. Alistair Darling's announcement that the competition for UK's carbon capture and storage project will begin in November 2007 has resulted in the withdrawal of BP, the key partner in the consortium.

In February, the Secretary of State for Scotland and the energy minister gave the clear impression that a decision would be taken this year. Now we find that it is a decision about taking a decision. Both know full well that, given the obligations and costs relating to decommissioning, BP needed to have that decision this summer. As a result, we face the loss of or a further delay in a real and technically viable CCS project, in which two of Europe's largest companies are ready and willing to invest hundreds of millions of pounds. This is simply a case of bureaucratic timetables ignoring commercial reality.

The project would give Scotland a world lead in CCS technologies because, unlike most other projects, it seeks to extract CO2 pre-combustion. It would make use of the infrastructure and expertise that is Scotland's North Sea oil legacy and would generate sufficient low-carbon electricity to supply 750,000 homes and store 1.8 million tonnes of carbon every year. That is roughly equivalent to the CO2 savings achieved by all of Scotland's wind farms.

Since the white paper announcement, the First Minister and I have worked to bring the Peterhead project back on track. The First Minister has spoken and written to Alistair Darling, pressing for a change in the UK Government's position, and I very much hope that Mr Darling will respond to our constructive ideas. I assure the chamber that we are continuing to match the admirable best efforts of Aberdeenshire Council to secure the implementation of this crucial project.

The white paper is silent on another matter that will affect the viability both of our coal-fired stations and of our renewables capacity—the regulatory framework within which our generating companies operate. Liberalised markets have brought benefits to the consumer. For example, competition between suppliers and their ability to buy from a range of generators has had a beneficial effect on prices, even if that effect has recently been masked by the price of inputs such as gas. However, the approach taken by the Office of Gas and Electricity Markets to transmission charges has not been helpful.

Renewable energy sources are, by their very nature, often distant from the markets that they need to serve, yet the transmission charging regime actively works against the development of those resources. Moreover, I am talking not just about renewables generators. Given that a power station in central Scotland pays £25 million more than similar power stations in Yorkshire, it is clear that transmission charging threatens future investment in clean coal technologies. Overall the current transmission charging regime heavily penalises Scottish generators, resulting in additional charges of about £100 million per annum for the 10,000MW generated in Scotland. Indeed, Scottish companies have told us that transmission charges in Scotland are six times higher than those in England and Wales.

I hope that the UK Government will think again and ensure that Ofgem takes more account of climate change objectives and, as a result, sets charging regimes that support rather than work against environmental objectives. The First Minister has committed to work with companies here in Scotland to achieve that end. If it appears necessary, we will press the UK government to change Ofgem's remit to ensure that more account is taken of medium-term investment needs and the case for investment in renewable technologies. Such steps are necessary if Scotland and the UK are to get maximum benefit from the white paper's other proposals, particularly those with regard to the prospects for renewable energy.

Nevertheless, the white paper contains welcome proposals for easing access to the electricity grid and I hope that the proposed review can be carried out swiftly and effectively. In addition, the restructuring of support for renewable energy takes us in a helpful direction.

Studies have shown that our demand for heat and electricity can be met several times over by the power of the wind, waves and tides, by our forestry resources and by our long-established hydro stations. It is vital that support for those technologies is sufficient, proportionate and effective.

The early advances in renewables capacity have relied almost entirely on onshore wind. The contribution from that technology is and will continue to be important. We want to see more projects, but they should be good ones and not projects anywhere and at any price to the environment.

We need to look beyond the next few years and take a more strategic view of support structures. The principle that emerging technologies need more assistance is enshrined in Scottish renewables legislation, which allows increased support for wave and tidal power. I acknowledge the actions of the previous Administration in going down that route. It is interesting to see that the UK Government is now ready to take similar steps.

It is right and strategically sound to promote as diverse as possible a range of renewables technologies. It is right that the returns that are available under the renewables obligation mechanism should be redistributed away from competitive, lower-cost technologies and towards offshore wind, biomass, wave and tidal power. I believe that such changes can benefit the renewables sector and are capable of leading to increases in renewable output. However, the devil is in the detail, so we will monitor developments closely.

I am not convinced that the measures that are aimed at supporting wave and tidal power are sufficient. There is a sizeable gap between what the UK Government is proposing and what is currently available for wave and tidal power under the renewables obligation in Scotland. That gap might be bridged by the provision of capital support on a large scale, but the white paper is short of detail on that aspect. Once that is clear, whether the same or similar changes are made to Scotland's renewables legislation will be a question for this Parliament.

Those potential changes need to be considered alongside our own strategic priorities and vision for renewables development in Scotland—a vision that includes not only marine and tidal energy but biomass and offshore wind power. I intend to listen carefully to the views of our own stakeholders before making any decisions or recommendations.

I also welcome the white paper's acknowledgment of the importance of renewable heat. There is a lack of firm proposals for action, but I accept that we are all not far past the starting blocks here. I know that Executive officials have been working hard with stakeholders to examine how we promote renewable heat and I believe that this is an area where we can make genuine progress and a real difference in Scotland.

We must not focus exclusively on generating heat and power. We all know that we can be more efficient in our use of energy. We support the steps set out in the white paper that impact on Scotland. Essentially, those are the requirements that are placed on the utility companies, regulation in relation to consumer products and the carbon reduction commitment for large commercial organisations. We have our own powers and measures sitting alongside, such as the opportunity to use building standards to improve energy efficiency further and the ability to provide advice to business, the public sector and individuals on changing their practices and behaviour.

Energy policy must be a coherent whole, embracing power and heat, new technologies for generation and reduced consumption, and sustainable growth and community benefit and engagement. That is why we will set out our own approach to energy, the actions that we will take here in Scotland and the issues on which we need dialogue with the UK Government. Many people have called for an energy policy for Scotland, so we will work with all interested parties to develop that. We will start by bringing together voices from across the energy sector—including users—to establish for the sector a single unifying goal that is in line with the core purpose of this Government. Those voices will have the opportunity to work with the Government to identify potential, to identify inhibitors and constraints and to work together to move forward in line with our national goal.

There are things to welcome in the white paper, but there are also proposals for nuclear power that have no place in Scotland. There are also disappointments, such as the lack of commitment—indeed, the lack of energy—in taking forward issues such as carbon capture, especially given the promises that have been broken, the timescales that have been extended and the options to go the extra mile and take advantage of legislation that have been ignored.

I look forward to working with the people of Scotland, with the energy industry and with the Parliament to achieve a more ambitious approach and an optimal outcome for Scotland.