All Energy Conference: First Minister’s speech – 10 May 2023

This is one of the most important gatherings in Scotland’s business calendar. I’m delighted that during my first weeks I’ve been able to come here to speak to you, and after my speech I’ll be meeting some of the exhibitors and the delegates. But just to give you an idea of how important this event is to the Scottish Government, we have four Ministers in total coming to the conference in order to take part, participate, listen and to engage.

It’s also very timely, we had a consultation, as many of you know, for the Scottish Government’s draft energy strategy and Just Transition plan. I’m delighted we had over 1500 responses to that, we'll analyse them before we finalise that plan. As I say, I’m delighted to be here.

When I became First Minister round about six weeks ago I set a clear direction of the government, and made it clear what our defining missions would be. I set out our key priorities for the remaining three years of this parliamentary term, and they are interdependent missions. And they are missions that I want the Government to be very firmly judged upon.

The first of them is tackling poverty, substantially reducing poverty, and in particular child poverty. That is clearly and directly relevant to everybody in this room, for all the reasons that Keith Anderson spoke about, and seizing the opportunities presented by a Just Transition can undoubtedly help tackle poverty, and of course it helps us with our other mission, which is to invest in public services.

I've never felt there was a conflict at all between trying to tackle poverty, being progressive in our policies, and in the same time ensuring that we grow our economy, increase that tax base, that revenue base, then reinvest those profits back into our public services, back into of course tackling poverty. And there can be no growth without unlocking and fully unleashing the potential of the green economy. We all know the stats, we all know the figures of potential job creation, but it is potential and turning that potential into reality is why we're all in this.

One of my earliest visits as First Minister, in the first couple of weeks, was a visit to the North East, to Aberdeen. I didn’t go there by coincidence. It was a deliberate visit for me to emphasise, and reemphasise and reiterate, my personal commitment to achieving that Just Transition – for the North East of Scotland, but also for the country as a whole.

I know that economic change can often bring uncertainties, in many parts of the country, but the North East in particular.

I understand the impact that deindustrialisation had on many parts of Scotland in the 1970s and 1980s, and that impact is still felt by many former mining and steel communities to this very day. 

So I’m certainly determined that, from the government perspective, from the government that I lead, we will not abandon those in the oil and gas industry now, in the way that I’m afraid UK Governments abandoned coalminers and industrial workers in the seventies and eighties.

There is a reason we call it a Just Transition. There is nothing just, nothing progressive, about throwing workers on the scrapheap, plunging them and their families potentially into poverty. And that’s why the work that a number of our key partners are doing, a number of those in the offshore industry, a number of those in the oil and gas sector, in relation to decarbonising, to ensuring we have the skills to shift from fossil fuels, to of course the green economy, is work that we fully support in it’s entirety.

And we are committed as partners. In government we see ourselves as partners working closely with those in the private sector, with those who are leading the change, driving towards that we see ourselves as partners, and that Scotland's success.

It’s maybe also worth reassuring you - in the light of some recent press coverage – although I have numerous differences with the UK Government, we of course have much in common.

And I believe that if we work together, we can truly unlock and unleash that potential which is in the best interests of Scotland, the UK as a whole and Europe, certainly as well as the rest of the world. And so, for me, I'm very determined to work closely with the UK Government. I’ve had a couple of conversations already with the Prime Minister. And in both of those conversations, unlocking and unleashing Scotland's green energy potential has been a topic of conversation. There’s some clear asks that we’ve got from the UK Government and again I’m absolutely determined to work in close collaboration with them.

So where can we be willing partners?

The UK Government can certainly work with us to address the flaws in the current transmission network charging system. The current methodology, after all, charges offshore wind generators, while gas generators in the rest of the UK receive network credits. It doesn’t properly support our renewables sector.

Secondly, the UK Government can announce a timetable for the Acorn Carbon Capture, Utilisation and Storage scheme – so that we can take advantage of Scotland’s existing oil and gas infrastructure, to adopt a technology which will be essential in meeting our net zero targets. 

The UK Government can also work with us to secure a Just Transition for the North East of Scotland. You’ll be well aware of the Scottish Government’s commitment to create a £500 million Just Transition Fund for Scotland, for the North East in particular. The UK Government – which has benefited to the tune of hundreds of billions over decades, at today’s prices, from North Sea oil and gas - should at least match that £500 million if not go further as well so we can accelerate at pace that Just Transition.

And going back to an important point, while me may not be able to meet or match some of the fiscal leverage that the US has, or indeed the EU has, in relation to the Inflation Reduction Act - or the EU’s Green Deal Industrial Plan, what we can do, working with the UK Government is ensure that we have a strategy for incentivising green investment. That’s something that we have to do, absolutely. As it stands the Scottish Government must use every single lever at our disposal, within the constraints of devolution, with our partners, and local government as well, to make sure we're incentivising that green economy and the renewables industry. The UK Government has many more levers that can also help with that incentivisation. So let me make it clear that where we work with UK Government in that regard, we are absolutely willing partners to do that.

And that must be based on what are the priorities, the opportunities, for us here in Scotland. Over the course of this conference you'll be discussing many of the strengths and many of the priorities that Scotland has. The sessions that cover hydro power, solar power, wave and tidal power, onshore wind, and also many other potential opportunities. In fact, as I've said before, other Scottish Government Ministers will be here to be able to engage in those important conversations and keep getting around the challenges, around the scale of the investment, and the pace we have to do, that has to influence with urgency, given the threat of the climate emergency we are currently facing.  

And it's not simply the reduction of our emission targets that we have to see. We have to ensure that we as a government, are making sure that we are investing alongside our partners, sharing some of the risks with our partners, to make the most of the green opportunities, the job opportunities that absolutely exist.

I'll finish by focusing perhaps on two areas. The first is offshore wind.

Our installed offshore wind capacity has already increased significantly in the last five years, to 2.2 gigawatts. It now accounts for around 1/6 of our total renewable electricity production.

However if you add this existing capacity to the projects which are under construction, or indeed awaiting construction or in planning – including Scotwind licenses - we have a potential offshore wind capacity of 40 gigawatts or more.

Two weeks ago, we saw one of the most encouraging examples yet, of the economic benefits of this expansion. The Japanese company Sumitomo announced that it plans to establish a new factory in the Highlands, to supply power cables for offshore wind farms and further grid connections.

We also already know that Scotwind developers have made commitments, which could see £28 billion of supply chain work come to Scotland.

However we need to ensure that these potential benefits become reality. We keep talking about potential, we have to convert potential into reality. That’s why, at last year’s conference, my predecessor announced the establishment of a collaborative charter, which was signed by 24 of the Scotwind developers.

Since then, a Strategic Investment Model has been developed. It will help the government - and I hope the sector - to make the right investment decisions at the right time in areas such as infrastructure improvements. It’s a further example of our commitment to collaborating with offshore wind developers.

Let me say in my contribution that when I talk about partnership, I mean doing everything you possibly can, within the devolved levers that we have. Again, responding to these challenges and looking at matters such as planning, for example. It’s all about sharing the risk. Private companies are willing to invest in those key services, there’s certainly no shortage of money globally that is looking to invest. We also know the back office is taking some risks. We are prepared in the Scottish Government, and certainly the Scottish National Investment Bank is an example of this. We are willing, ready, prepared to be partners in helping to share that risk.

One of the reasons why offshore wind is such an exciting opportunity for Scotland is the availability of that low cost renewable energy that it can give us in relation to that competitive advantage in creating green hydrogen.

Ursula von der Leyen, the President of the European Commission, recently described hydrogen as a potential “game changer for Europe”. So developing a hydrogen sector in Scotland won’t simply help us to decarbonise transport, as important as that is - it could also become a major source of exports.

Scotland, I believe, has a unique opportunity to collaborate with our friends, our neighbours in Europe who given particular geopolitical circumstances are desperate to diversify their energy source and move away from reliance on Russian gas.

This was a theme of discussion when I was recently invited to meet the European Ambassadors in London. It was the number one issue they wanted to talk about. And they can absolutely see the potential that Scotland has in collaborating with our European partners to help diversify away from that reliance on Russian energy. That’s why we’ve committed £100 million, over the rest of this parliamentary session, to supporting the green hydrogen sector.

Part of that funding has been allocated to the Hydrogen Innovation Scheme - that supports feasibility studies, technical demonstrations and testing facilities that are so important for new ideas to be tested, and of course hopefully be scaled up in the future. They’re focused on production but of course the storage and distribution of hydrogen. We’re confirming today that through this scheme, grants worth a total of £7 million have been allocated to 32 different projects.

Those projects cover a wide range of different areas - such as how to produce and store hydrogen on floating windfarms, and how to decarbonise agriculture and forestry work in rural areas as well. Together, they show the range of possible ways in which hydrogen can be produced, used and stored. They highlight the expertise and innovation that is already such an important part of the sector. And of course they demonstrate the scale of the opportunities that hydrogen can create.

To conclude, at the start of my remarks this morning, I mentioned my recent visit to Aberdeen. I want to close by reflecting on that visit, since the opportunities presented by hydrogen and indeed by offshore wind were an important feature of the visit.

While I was in Aberdeen, I visited the £400 million expansion project – partly supported by the Scottish National Investment Bank – which is underway at the South Harbour.

The expansion will help the harbour to continue serving the oil and gas industry - including by playing a significant role in the decommissioning of oil rigs, while also supporting our offshore wind sector. We have the opportunities to continue to support our oil and gas sector, who are crucial partners in that Just Transition to net zero.

The project provides physical evidence of how a city which has been the oil and gas capital of Europe for decades, is very much transforming itself into one of the the net zero capitals of the world. It demonstrates the jobs which a Just Transition can help to create. It shows the opportunities that renewable energy is bringing, not just to the North East, but to all of Scotland.

Making the most of those opportunities will not be straightforward. Decarbonisation at the pace and scale we need to see is not something that can be easily done.

But we are absolutely committed to rising to that challenge. To work with others, whether it’s local government, the UK Government, our partners here, all of you.

Through all the challenges we face – and the very real financial constraints that we face as a government – I can promise to you that there is absolutely no lack of commitment from me as the First Minister, or indeed from the government that I lead, or indeed lack of ambition in order to ensure success.

I often say that as First Minister, first and foremost, my most important job is that I want to leave this planet in a much better state than it currently is. I want to ensure there is a sustainable future for my children and for their children to come. So we are committed to that Just Transition not just as a government policy, but frankly, as a moral imperative.

We are as enthusiastic about that as we are about the economic opportunity. And we see progress, making progress towards it, as one of those defined dimensions of the government that I spoke about. So everybody has a role to play, everybody in this room has a role to play in that. In helping us towards that Just Transition, your expertise, your innovation, your hard work, you're willing, you are ready, and we are partners in that effort. So I’m delighted to be here today and I wish you well for the next couple of days of the conference.