Offshore Energy UK Conference: Acting Minister for Climate Action speech

Good morning and thank you for the opportunity to speak at such a key event for the offshore energy industry.

As my UK Government counterpart has just set out, I am mindful that this is a time of great change in the UK policy landscape and a time of great change as well for the many skilled people that the Minister [Minister Shanks] reflected on who have helped to keep the lights on for 60 years.

What I believe remains entirely clear, and what the Scottish Government is entirely committed to, is the value of a partnership model of working between industry and the government in delivering a just energy transition. Now of course, regulators have a key role to play as well and Stuart Payne will no doubt speak to this in a moment.

Events like today are  vital not just because they help us look back, but also because they help us think about the future and help us to hear directly from yourselves, as industry, on both the challenges and opportunities that lie ahead. I will be in the main hall after lunch and would welcome the chance for discussions.

September has already been a busy month for the Scottish Government. You will no doubt have seen on the 4^th that the First Minister launched his first Programme for Government. This set out the actions that we are taking, within devolved powers, to accelerate economic growth that is sustainable and fair.

As you know, if we are to transform and grow Scotland’s economy in the future, then investment now is critical and offshore energy industries have an absolutely vital part to play in this.

Just last week we published our Green Industrial Strategy. This has a clear and powerful mission: to ensure that Scotland realises the maximum possible economic benefit from the opportunities created by the global transition to net zero. We want to make certain the growth of the world’s net zero economy translates into good, well-paid jobs across Scotland – both for today and for future generations.

The energy transition is at the very heart of many of the opportunities identified in the strategy.

For example, growing the hydrogen sector is one of the five priority areas set out.  We have already demonstrated our commitment in this area, with the launch of a £7m funding call yesterday. With Scottish Enterprise as our funding delivery partner, this support will help the industry scale up as it responds to market demand.

Developers are invited to note interest in applying for up to £2 million per project of match-funding, which will help support the development of renewable green hydrogen production projects and hydrogen hubs across the country.  

The call complements a total of almost £7 million from our Hydrogen Innovation Scheme, which has supported 31 projects.

Turning now to oil and gas, the Scottish Government is clear in our support for a just transition for Scotland’s valued oil and gas sector - which recognises the declining nature of the North Sea basin and is in line with our climate change commitments.

To pick up on points made by the Minister about Grangemouth, I want to emphasize the way in which the Scottish and UK governments have been working together, I think, very effectively and certainly very determinedly, to make sure that the workers and families of workers in Grangemouth have the future that they deserve, and to make sure that whatever the activity that takes places in Grangemouth in the future, that it is supported by both governments.

I wanted to say a little about offshore oil and gas licensing and consenting, as well as the associated fiscal regime. These are, of course, currently reserved to the UK Government. The Scottish Government stands ready to work constructively on areas such as the development of rigorous and transparent Climate Compatibility Checkpoints to inform evidence-based decisions which reflect both energy security and climate considerations.

I will also speak briefly to the UK Treasury’s current process of reform to the reserved fiscal regime for North Sea oil and gas, as I know this is a subject of concern to many. The Scottish Government has consistently called – and will continue to do so in the run up to the UK Budget next month - for a fiscal regime for North Sea oil and gas that provides stability and certainty to businesses, protects jobs based in Scotland and incentivises investment in renewables. We are, however, opposed to the North Sea - and by extension the North East of Scotland - being used as a cash cow for the UK Treasury. This has been the case in the past and must not happen again.

This means that whilst we continue to support the Energy Profits Levy at its original rate and duration, we do not support the announced extension or increase. We will also continue to call on the UK Government to retain investment allowances for the North Sea in order to incentivise decarbonisation activity.  

More fundamentally, we are of the view that windfall levies must form part of a balanced approach to taxation across all sectors of the economy with excess profits, not just energy companies that are disproportionately based here in the North East of Scotland.

To conclude, the transition to net zero presents enormous opportunities for Scotland’s economy where we have areas of competitive advantage and we must capitalise on these opportunities. Energy industries, including yourselves, are at the heart of many of these.

Everyone here today knows that we need to transition. Even were the global climate emergency not a consideration, which is very much is, the declining nature of the North Sea basin means that this is inevitable.

However, for the transition to be effective and just it is equally clear that we need to draw on the expertise of the workforce and investment from the existing and valued oil and gas sector.

Thank you for your time this morning and thank you for your continued commitment in working towards net zero. I look forward to further engagement with you over the course of the day and in the future.