Annual energy statement 2019

2. Executive Summary

This Annual Energy Statement contains:

• a summary of the key statistics from the Annual Compendium of Scottish Energy Statistics (ACSES), and progress against our energy targets;
• an overview of key developments in the energy sector;
• a summary of key achievements and plans under each of the six Strategic Priorities; and
• an update on external monitoring and engagement activity.

Targets

50% of all Energy to come from renewables by 2030 - 20% in 2017.

30% increase in energy productivity by 2030 - 0.3% increase 2015-2017.

Key Messages

• We are putting consumers' interests and needs at the heart of Scotland's transition to a carbon neutral economy - our Energy Consumer Action Plan, published alongside this Statement, sets out the ways in which consumers can shape and benefit from the evolving energy system.
• By 2040, Energy Efficient Scotland will have transformed our buildings so that they are warmer, greener and more efficient - we are on track to deliver on our commitment to make £0.5 billion available over the 4 years to 2021 to tackle fuel poverty and improve energy efficiency.
• 2018 was another record year for renewable electricity in Scotland - with the equivalent of 74.6% of gross electricity consumption generated from renewable sources. The offshore wind industry in Scotland has made major steps forward, with the announcement of the Offshore Wind Sector Deal. We continue to work closely with all renewable technology developers on innovation and development challenges, route to market issues and the importance of local economic benefits across Scotland - the subject of a ministerial summit on 2 May, and a focus for the new Scottish Offshore Wind Energy Council (SOWEC).
• The Low Carbon Heat sector continues to grow; the importance of this is highlighted by the current reliance on hydrocarbons for heating, and given that some 54% of Scotland's energy consumption relates to the provision of heating and cooling. We are pursuing low-regrets solutions to the decarbonisation of heat, and have launched a Call for Evidence to inform our approach. Transformative change at the scale already seen in the electricity sector will require decisive action at a UK level about the future of the gas network.
• Scotland now has one of Europe's most comprehensive charge point networks, and 2018 saw 39% growth in the number of registrations of ultra-low emission cars; a faster growth rate than for the UK. We are considering the network implications of this acceleration in registrations, and of the evolution of Scotland's electricity and gas networks as a whole - building on our Electricity and Gas Networks Vision Statement, published in March 2019.
• We are working with established industries across the energy sector to ensure that the benefits of our transition to a carbon neutral economy are maximised - increasing the total economic value of the North Sea, capitalising on the economic opportunity that decommissioning represents, securing the establishment of CCUS systems in Scotland, and identifying the potential roles for hydrogen in the future energy system in Scotland.
• There has been a positive trend of increasing energy productivity and falling emissions intensity in the Energy Intensive Industries sector since 2005. We are working with stakeholders to increase investment in industrial decarbonisation and energy efficiency, recognising the substantial socio-economic benefits to be gained and potential contribution to emissions reduction across the economy.
• We are committed to ensuring that we capture the long lasting value that our transition to a carbon neutral economy can bring to the Scottish economy; creating the conditions for significant inward investment, maximising the total economic value of the generation and supply of clean energy in Scotland, and growing our export capability.
• Scotland's Energy Strategy is ambitious about what we can achieve in Scotland, but the social, environmental, economic and commercial benefits of our approach will depend on the involvement of all stakeholders in the transition.
• A Just Transition to a carbon neutral future will be one that creates jobs through new sustainable industries, is good for communities, and helps to tackle inequalities and poverty. Our ambition is for a balanced transition that enables leverage of resources and expertise in the Scottish energy sector, including oil and gas. The benefits of transitioning to a low carbon economy need to be shared widely - and we must be very mindful to not leave anyone behind.
• Achieving our aims will involve a variety of policy levers, and a combination of reserved and devolved powers. It will require us to collaborate across public, community and private sectors - building upon our existing partnership approach.
• We are focusing on those areas we are able to affect and support with the powers that we have. We will also continue to work collaboratively with, and encourage greater ambition and co-operative action from, the UK Government, vital if we are to collectively achieve our climate change targets, in line with the latest advice from the Committee on Climate Change, and realise our vision for the future of the energy system.
• The delivery of the Energy Strategy will almost certainly be influenced to some degree by the effects of EU Exit. We are working to manage the significant risks an EU Exit presents for the Scottish economy, energy sector and consumers as far as possible. The Scottish Government remains committed to international cooperation on energy, and to combined collective efforts with our European partners.

Strategic Priorities - Achievements and Plans

We have published:

• Energy Consumer Action Plan.
• Networks Vision Statement.
• Energy Efficient Scotland Routemap.
• Energy Intensive Industries Discussion Paper.

We have consulted on:

• Energy Efficient Scotland, upon publication and again on impacts of potential acceleration.
• Low Carbon Heat in off-gas areas (Call for Evidence).
• Local Heat and Energy Efficiency Strategies.
• Review of Good Practice Principles for Community Benefits and Shared Ownership.

We have supported:

• Decommissioning Challenge Fund - £5.4 million in 2018/19.
• Low Carbon Innovation Fund - £13.5 million development and capital funding awarded.
• A number of world-leading hydrogen demonstration projects - £6.3 million for the Aberdeen Hydrogen Bus Project, and £1.3 million for Orkney's Surf N Turf Project.
• Oil and Gas Technology Centre (OGTC) - which has co-invested over £100 million in 188 industry led projects.
• Oil and Gas Innovation Centre (OGIC) - as part of £120 million committed by the Scottish Funding Council towards Scotland's eight Innovation Centres.
• Low Carbon Transport Loan scheme - increased budget of £20 million to support the take up of low carbon vehicles, and a new 'Switched on Towns and Cities Challenge Fund'.
• Saltire Tidal Energy Challenge Fund launched - a £10 million fund to drive innovation and incentivise investment in the Scottish tidal energy sector.
• Wave Energy Scotland - £7.7 million to two Scottish wave energy devices which will take to the sea in 2020, within annual funding of £10 million in 2019/20.

In the next year we plan to:

• Implement the Energy Consumer Action plan - ensuring that consumers' voices are heard.
• Finalise the Outline Business Case for a Public Energy Company for Scotland and consult on this.
• Introduce further regulation and minimum standards for energy efficiency as part of Energy Efficient Scotland.
• Work with Energy Intensive Industries (EII) stakeholders to increase investment in industrial decarbonisation and energy efficiency.
• Make £20 million through our Energy Innovation Fund to support the delivery of energy projects in Scotland that will facilitate, catalyse and accelerate Scotland's transition to a carbon neutral economy.
• Publish a Local Energy Systems Policy Statement, and a Bioenergy Action Plan.
• Progress low regret, low carbon heat solutions reflecting upon the results of our Call for Evidence, whilst engaging with the UK Government on the long-term future of the UK gas network, with a view to publishing a Heat Decarbonisation Policy Statement in summer 2020.
• Reiterate the strategic case for a route to market for renewable technologies in Scotland, and for network investments and regulatory outcomes which support our strategic priorities.
• Review our application process, identifying levers we can use to secure a sustainable future for our indigenous supply chain across the energy sector.
• Building upon investment to date, establish a comprehensive electric vehicle charging network across Scotland.
• Build on our Networks Vision Statement - hosting a Networks Summit, creating a Scottish Energy Networks Group, and engaging with Ofgem and the UK Government on key networks issues.
• Progress the establishment of an ultra deep water port in Scotland by developing the business case for investment.
• Press UK Government to maintain a stable economic framework for the oil and gas industry's Vision 2035 ambitions.
• Work with stakeholders to identify the potential economic, social and strategic value of hydrogen to Scotland - building a strong evidence base on the potential roles for hydrogen in the energy transition.
• Work with UK Government on the policy framework necessary for delivery of the UK CCUS Deployment Action Plan and work with Scottish stakeholders, to develop the case for the establishment of a CCUS cluster in Scotland.

Monitoring and Engagement

We have:

• consulted with SEAB on our Energy Strategy progress and plan, and are working towards agreeing a new structure of expert advisory groups;
• established a Just Transition Commission, to provide Scottish Ministers with independent advice on the opportunities and challenges of the transition to a carbon neutral economy;
• committed to consulting widely and effectively on Energy and on Climate Change - taking a major step towards improving our approach to public engagement on Scotland's transition to a carbon neutral economy; and
• developed new international partnerships and deepened existing relationships to support the global transition to a carbon neutral economy.