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Green Energy Potential: Scotland

Volume 727: debated on Tuesday 31 January 2023

Motion made, and Question proposed, That this House do now adjourn.—(Mike Wood.)

Let me begin by thanking you, Madam Deputy Speaker, for granting this Adjournment debate.

I think it right that in any debate concerning green energy, we should begin by mapping out exactly what is at stake for all of us. As we know, this is not just about the economy; this is existential. As has been said before,

“We are the first generation to feel the effect of climate change and the last generation who can do something about it.”

The clock is ticking for humanity, and every year that clock is ticking faster and faster. Unless we act immediately—unless we change our energy supply and demand right now—this planet of ours will soon choke us to death. It falls on all of us to ensure that that is not allowed to happen.

By now we should all know the very real threat of climate change, but we also need to know about the opportunity that can come if we make the transition away from fossil fuels and that is what I intend to talk about this evening. Meeting the challenge of climate change is in our self-interest, if we are even to survive, but it is equally in our self-interest to reap the rewards of the economic opportunities that new, green technologies offer us in Scotland and across these islands. We in Scotland know those opportunities more than most, because the industries of the future are already putting down strong and sustainable roots.

The last Adjournment debate that I secured concerned the potential of tidal energy, and I am therefore delighted that, just today, Nova Innovation of Edinburgh has doubled the size of its Shetland tidal array. The installation of the fifth and sixth turbines means that it is now the array with the largest number of turbines anywhere in the world. That level of innovation and industry shows what can be achieved, and that scale of opportunity is probably most evident in our offshore wind sector. ScotWind will deliver a new era in Scotland’s offshore wind industry. It also represents the world’s largest commercial round for floating offshore wind. Fundamentally, it breaks new ground in putting large-scale floating wind technology on the map at gigawatt scale.

Once operational, this will provide several billion pounds more in rental revenues, and every single penny can then be invested for the benefit of the people of Scotland. There will be a green energy windfall for Scotland from the natural bounty that is our green energy potential. In the middle of a cost of living crisis, that vision and that outcome simply cannot come quickly enough. At the heart of the agenda is a very simple truth: this is Scotland’s energy, and it needs finally to be used for the benefit of Scotland’s people.

As well as the production, use and ownership of this green energy, there is another crucial element that must not be lost, and that is securing the full economic and industrial benefit from it. I am glad to say that each ScotWind application was required to include a supply chain development statement setting out its supply chain goals and committing developers to meet them during the various stages of their projects. Through those statements, developers have now pledged an investment of £28 billion in the Scottish supply chain. This is the crucial point: in every single area of green growth, this has to be the model that we all pursue. It is not nearly enough just to produce the energy; it is every bit as important to stimulate and grow the industrial base and the jobs that flow from that energy resource.

I commend the right hon. Gentleman for raising this issue. I spoke to him before the debate.

As the right hon. Gentleman will know very well, the Irish sea divides Scotland from Northern Ireland, but it also unites Scotland and Northern Ireland in respect of the tidal and wave energy that we can use. Does he agree that my own Strangford Lough, in particular, offers a possible solution to our energy problems, and that this warrants investment and investigation that might be best served by a dedicated climate office headed by someone in the Minister’s Department? Scotland and Northern Ireland can do it better through the Minister and his Department.

I entirely agree with the hon. Gentleman. There is enormous potential in tidal energy, and I will say more about that later in my speech when I issue specific requests to the Minister.

The only way in which we can generate the appropriate return in gross value added for the whole Scottish economy and ensure that we feel the benefits in the short, medium and long terms is by controlling the supply chain, in offshore wind and tidal energy as in so many other areas.

Offshore wind may have the most momentum, but it is only one of the many opportunities that have the potential to grow. I am delighted that, only in the last number of weeks, my friend and colleague in the Scottish Government, our net zero Cabinet Minister Michael Matheson, has published our draft energy strategy and just transition plan. That plan contains the ambition to grow the full range of green energy opportunities, including pump storage, tidal, solar and of course green hydrogen. The ambition is to create an additional 20 GW of capacity by 2030—enough to power around 6 million homes, which is far more than the number of households in Scotland. This increased capacity would account for the equivalent of nearly 50% of all current energy demand of households and businesses.

The right hon. Gentleman mentions green hydrogen. The fact is that distilleries in the highlands—Clynelish, Glenmorangie and Dalmore are three examples—are particularly keen to heat and make their whisky using hydrogen rather than fossil fuels. There is a great opportunity here, and I believe it would be of great benefit to His Majesty’s Government and the Scottish Government to have a green hydrogen check to see which businesses could go over to that. It is easy: we take the electricity from the offshore windfarms, we make the hydrogen, it burns and it is dead clean.

The hon. Gentleman is correct. There is a significant opportunity for hydrogen in the distilleries in his own constituency, in mine and right through the industry. I will go on to talk about the Skilling report that I published on behalf of the SNP a few months ago. It mentions the ability to generate five times as much green energy by 2050 as we are doing today and to grow from just over 12 GW up to 80 GW. There is an enormous opportunity within all that for hydrogen in the domestic economy and for exports.

When we talk about the domestic economy, it is important to dwell on the fact that, if we have the ability to upscale our energy production to the extent that that report has indicated, there ought to be a competitive advantage for industry. We must ensure that we get to net zero and reduce our carbon footprint but we must also create a competitive advantage. The holy grail is to ensure that we can strengthen sustainable economic growth and ensure that that ability to generate green energy creates a competitive advantage for industry that drives up investment and productivity and improves living standards.

But my goodness, let us think about the economies of scale in doing that in the context of the cost of living crisis that we are suffering from today. I say to the hon. Member for Caisthness, Sutherland and Easter Ross, whose constituency is in the highlands, that it is an absolute disgrace that so many of our constituents, and our pensioners in particular, are living in fuel poverty when the highlands and islands are generating so much green energy potential, never mind the impact of the cost of living crisis. I say to the Minister that we need to look at the mechanisms of setting a price in the energy market, which has been a considerable factor in putting so many of our constituents in the peril they are in. In the context of Scotland, we are producing six times as much gas as we need, yet suffering from the mechanisms of the market that are forcing our people to pay for energy to an extent that they should not be.

My right hon. Friend is making an incredibly important point. From the perspective of people outside, looking in here, who cannot afford to pay their fuel bills, does he agree that it is galling and inexplicable to them that, although Scotland is such an energy-rich country, it has so little control over the prices that people have to pay?

Absolutely. I hope the Minister appreciates that I am trying to do this in as consensual a manner as I can, but we have to learn from the mistakes in setting energy policy. We have to recognise that, to a large extent, the bounty of North sea oil is now in the rear-view mirror, but we did not benefit from that bounty or from the £350 billion-plus of tax receipts that the UK Government have taken from it. Of course it is galling for people in Scotland to be paying a price for the failure of energy policy in the UK, whether that relates to fossil fuels in the past or green energy in our future.

I will make some progress so that I can leave the Minister some time to respond. On hydrogen specifically, the plan maps out how we can develop 5 GW of power by 2030 and a further 25 GW by 2045. This would provide a clean and sustainable alternative to fossil fuels and would help us to decarbonise heavy industry and transportation.

As some in the Chamber might know, Scotland is already a leader in innovative hydrogen energy solutions. The world’s first hydrogen-powered double-decker bus fleet is already operating in Aberdeen, and the world’s first hydrogen-powered heating network is currently being developed in Fife. If we continue to grow that hydrogen base, not only can we hope to provide energy at home but we can export it abroad, too.

It is estimated that there will be £48 billion of annual green hydrogen exports to Europe by 2050. We talked about the potential of North sea oil in the 1970s but, my goodness, Scotland’s green energy potential is enormous. Scotland can become a substantial green hydrogen exporter, delivering thousands of jobs. That hydrogen potential is also a priority in supporting the fastest just transition for workers, communities and businesses in the oil and gas sector.

The latest plan builds on the £0.5 billion just transition fund that is already being rolled out by the Scottish Government. Just transition funding has already been allocated to support the development of a skills passport, to create an advanced manufacturing skills hub in Aberdeen and to develop a pilot scheme with the national energy skills accelerator to determine the skills required for an energy transition. This includes transitioning skilled offshore workers into jobs in carbon capture and storage, and decommissioning or diversifying oil and gas business models into renewable energy portfolios, including the offshore wind, carbon capture and hydrogen sectors.

All of this good work is under way, but I am afraid it does not tell the whole story because, although many good initiatives are powering ahead, another reality has been evident for far too long. I am sorry to say that, when it comes to green energy, both Scotland and the UK in general are being held back by the UK Government’s toxic mix of lack of action and lack of ambition. It is fair to say that Members are used to hearing me criticise the UK Government in such terms, so they might be tempted to dismiss the criticism as predictable or standard fare. But if they will not listen to me on this, maybe, just maybe, they will listen to the head of the CBI. I am conscious that this debate comes after weeks of heavy and pointed criticism from Tony Danker, and those criticisms are worth repeating in full for the record. Tony Danker said he is

“genuinely worried the current government is losing the race on green growth… The UK is falling behind rapidly—to the Americans and the Europeans, who are outspending and outsmarting us. We’re behind the Germans on heat-pumps, insulation and building retrofits, the French on EV charging infrastructure, and the US on operational carbon capture and storage projects—despite the UK’s North Sea advantage. We’re lagging all three on hydrogen funding. This is stunning to many who rightly felt clean energy was ours to own.”

Those words are from only a matter of days ago, and I suggest that few could argue with any of them.

Tony Danker is describing what SNP Members have been saying for years. I will give a few examples. The UK energy market is completely unfit for purpose, as it is linked to the price of gas rather than the price of renewables, which has painfully punished consumers during this cost of living crisis. We have also constantly said that Scotland’s energy producers continue to be put at a financial disadvantage by Westminster’s disastrous pricing system. Only recently, Scottish Renewables said this system makes

“Scottish offshore wind farms 20% more expensive than those in English waters.”

The very same shortcomings are true of carbon capture, on which this UK Government are failing to live up to their previous promises to Peterhead and the Acorn Project.

When will carbon capture and storage be given the go-ahead in Scotland? Let us show that we are determined to deliver on net zero, and for us in Scotland that means 2045 at the latest. Will the Minister take this opportunity to deliver on the UK Government’s past promises?

We even see this with the good news story I mentioned earlier, Nova and tidal energy in Shetland, as behind that is unfortunately another story of a lack of ambition by the UK Government. We know that a Royal Society report from October 2021 found that tidal is now capable of generating 11 GW of power by 2050—that is 50% greater than current nuclear capacity—and would provide the baseload of energy that we need. Ultimately, it would do so at a cheaper price than nuclear energy could do. Yet, instead of providing the ringfenced £50 million in the CfD—contracts for difference—round that would unleash this industry in full, the Government are only providing £20 million. Minister, that is not nearly enough to kick-start its full potential.

What assessment has the Minister made of the Royal Society report? When can we expect the delivery of a ringfenced pot of £50 million so that we can deliver on the potential for tidal energy to the fullest extent, right around the coast of these islands, including in the Irish sea, which was mentioned by the hon. Member for Strangford (Jim Shannon)? We must allow manufacturers such as Nova to compete, not just from export markets, but from a thriving domestic market. We have technological leadership today and we must not lose that advantage. We must make sure that that domestic demand is there to power our innovation.

When it comes to carbon capture and storage, transmission charges or tidal, the story is the same: opportunity lost again and again because of the inaction of this Government. From Scotland’s point of view, we cannot afford to be held back any longer, because there is very little doubt that the new, green economy will form the foundation of Scotland’s future—all the evidence is pointing in that direction. Only last year, I commissioned a report by the eminent economist Dr David Skilling. It shows that Scotland has the potential to boost our output by more than five times. By expanding Scotland’s renewable capacity and by becoming a green hydrogen exporter, we have the chance to pump £34 billion into Scotland’s economy every single year. That is an investment that could sustain 385,000 jobs. That would dwarf the number of jobs we have in oil and gas today. This is a real plan for growth: green, sustainable growth for the long term, driving higher productivity, driving an industrial green strategy and driving our economy into the future. For me and my party, it is obviously the template upon which an independent Scotland can be built and can succeed.

Obviously, we will continue to have that debate on Scotland’s future and our independence, but in the here and now I would make this plea to the Government tonight: whatever the constitutional future holds, the opportunity of this green industrial future is something that we can and should be working on together. This is in Scotland’s interest, it is in the UK’s interest and it is in this planet’s interest. But if this Government are willing to work together, they need to change course urgently. They need to start to listen to people such as Tony Danker at the CBI. A good start would be ending the unfair transmission charges in Scotland, investing properly in tidal and, finally, green-lighting the Acorn Project. If we can agree to work together on that agenda, not only can we share all the benefits that green energy provides, we can protect this planet that we all call home.

Let me begin by congratulating the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing this Adjournment debate. I agree with him that green energy in Scotland has a great future, and it plays a key role in bolstering the UK’s energy security and driving greater energy security for the nation as a whole. That will be important in ensuring a cost-efficient energy system consistent with net zero, while creating value for money for consumers and taxpayers. I am also grateful to the other Members who have contributed, through interventions, to the debate.

The right hon. Gentleman has made some interesting points. There was precious little praise from him for any Government policy. He said that some might regard him as taking normal trite separatist lines, which is true. The truth is that Scotland, which has a population lower than that of Yorkshire, disproportionately, per capita, is able to invest in green energy through the CfD system. It is able to do so because of the levy, effectively paid through the CfD, which is from all the bill payers of Great Britain. That is allowing the transformation of Scottish energy. Without that—without the base of all the electricity and gas bill payers across this country—Scotland would not be able to deliver the huge potential that it has. If the right hon. Gentleman thinks that green energy is an argument for independence, I would say to him and his separatist colleagues that the absolute opposite is true. It is access to the whole of Great Britain, the integration with all the bill payers of Great Britain, that is allowing Scotland, as part of this United Kingdom, to lead the world. Of course, he talks in the way that, sadly, he and his separatist colleagues always have done. They are always talking down what we are doing. We have done more on offshore wind than any other country in Europe. We are second only to China in the world now and we transformed the economics of it. That was this UK Government, this Conservative Government.

If the right hon. Gentleman wants to sway others, rather than just playing to the Gallery of his own supporters, which ultimately he did not succeed in doing and thus his change in position, he should make a more balanced argument, otherwise, he looks incredible.

I am grateful to the Minister for giving way. I really encourage him not to use pejorative language such as separatism, but be that as it may. When he reflects on the contribution that oil and gas has made to the UK Exchequer, and indeed, the windfall tax that has come in now, he will see that that could have been used to make sure that we were getting the investment in tidal that has been called for not just by me, but by the Royal Society. I am trying to encourage the Government to do the right thing to make sure that we speed up. Let us not have any of this nonsense about having to accept what is given to us by the UK Exchequer.

Again, the right hon. Gentleman said in his speech—this is what is incredible—that the Scottish people had not benefited from the bounty in the North sea. Has he looked at the accounts of the Scottish Government? Has he looked at the black hole that would open up in their accounts were his separatist agenda to be delivered? [Interruption.] It is a separatist agenda. Calling someone a separatist if they are in favour of independence is not pejorative; it is simply descriptive. The truth is that the Scottish Government today enjoy bounty from the UK Treasury on a daily basis and it is thanks to our being able to work together as one United Kingdom that we can support each other, and support the transformation of the energy system in Scotland. Without being a member of the United Kingdom, without access to the support from all GB bill payers, Scotland would not be able to develop the industry that it has done in the way that it has done.

In April last year, we published the British energy security strategy, which set out plans to deliver a secure, affordable energy system, and reduce our vulnerability to international energy prices by accelerating the deployment of renewable and low carbon technologies, supercharging our production of low-carbon hydrogen, and supporting North sea oil and gas in the nearer term for security of supply.

The right hon. Gentleman suggested in some way that the UK Government lacked ambition. This is a Government who hosted COP26, who led the world from 30% of GDP covered by net zero pledges to 90%, who were the first of any major economy to legislate through the Climate Change Act 2008 and to move to put net zero into law. Ambition is not something that this country lacks at all. The right hon. Gentleman did not reflect any of that progress. We have led Europe and we have led the world and people would not know that if they listened to the right hon. Gentleman.

The Government have committed fully to decarbonise the electricity system by 2035 subject to security of supply. Our carbon budget 6 trajectory suggests that we will need to build all low-carbon technologies at or close to their maximum technical limit to meet the twin challenge of accelerating decarbonisation and servicing increased demand.

We are absolutely committed as a Government to the renewables industry across the UK. Scotland has benefited from, and will continue to benefit from, UK investment in energy and energy efficiency. The Secretary of State has received a letter from the Scottish Cabinet Secretary for Net Zero, Energy and Transport outlining Scotland’s energy strategy proposals. The Secretary of State is considering those and will respond in due course.

Since we are talking about ambition, I note that this is about not just ambition, but delivery. The Climate Change Committee reported in December:

“Scotland’s lead in decarbonising over the rest of the UK has now been lost. Progress is now broadly the same as the UK as a whole. There are now glaring gaps in the Scottish Government’s climate plan and particular concerns about the achievement of the 2030 goal to cut emissions by 75%”.

It is a challenging situation, but this Government lack neither ambition, nor the will and determination to deliver.

Our investment in the contracts for difference scheme, the Government’s flagship scheme for incentivising the deployment of renewable technologies, has proved extremely successful for Scotland. Some 44 of the 161 projects awarded CfDs by the UK Government to date are in Scotland. They represent 27% of all CfD projects and around 23% of total CfD capacity—around 6.3 GW of nearly 26.6 GW awarded contracts to date.

Adding to the offshore wind successes, as a result of the scheme—to return to a point made by both the hon. Member for Strangford (Jim Shannon) and the right hon. Member for Ross, Skye and Lochaber—over 30 MW of new tidal stream power has been secured in Scotland. Anyone not familiar with tidal power and the global record and positioning of it would not know from the right hon. Gentleman’s speech that that is a world-leading deployment—the first time that tidal stream power has been procured at this scale. Scottish projects will be crucial to delivering more wind as well as tidal. Nowhere else in the world has invested in the way that the UK Government have facilitated the investment into tidal stream in Scotland.

I find this quite extraordinary, because I asked the Minister specifically to reflect on the Royal Society report that called for a ring-fenced pot of £50 million so that we can get up to 11 GW. I also asked specifically about the assessment he made on the £20 million that is there. The simple fact of the matter is that we are being held back. We have the windfall tax on oil and gas producers, which could be used to step up that investment to make sure that we get to net zero by the target dates. The Government can do more.

We are leading the world on tidal stream. That is indisputable. It has never been procured anywhere in the world on this scale, and we plan to go forward now with annual CfD auctions. None of that features in the right hon. Gentleman’s speech. It is no wonder that, despite all the rhetoric, he makes so little progress in persuading the Scottish people of his separatist intents.

Hydrogen and carbon capture utilisation and storage will be critical to delivering UK energy security, highly-skilled jobs and economic growth, and will help the UK to reach net zero. That is why we have set an ambition of up to 10 GW of low-carbon hydrogen production capacity by 2030, including four—yes, four—CCUS clusters by 2030. Scotland has a key role to play in that and other areas. I must now come to a close, but I thank the right hon. Gentleman for securing this debate.

On a point of order, Madam Deputy Speaker, earlier today, by mistake, I walked through the voting Lobby during a Division on a devolved matter. I did not tap my pass and advised a teller that I was not voting, but I have since been advised that the vote will be counted and that the only way to potentially correct that would be by raising a point of order. I am hoping that you can advise me on how I may correct it. Thank you.

I thank the hon. Lady for that point of order. She has explained what has happened and the House will have heard that. I will undertake to consider whether there is anything further that should be done in light of what she has raised.

Question put and agreed to.

House adjourned.