Scotland's Energy Strategy and Just Transition Plan: Ministerial statement

I’m pleased to inform parliament that today, the Scottish Government is publishing its draft Energy Strategy and Just Transition Plan. The draft Strategy maps out the future of our energy sector and sets out an ambitious suite of actions for the Scottish Government, along with actions for industry, the regulator and the UK Government, to realise that bright future over the next decade.

We are at a pivotal point in Scotland’s transition to Net Zero and this Strategy charts a clear course for the transformation of the energy sector, one of Scotland’s most important industries, to 2030 and beyond.

This transition must be achieved in a way that delivers for the people of Scotland to enable us to embrace the opportunities of a green economy.

This is a time of unprecedented uncertainty in global and national energy markets. High energy prices are impacting people, communities and businesses across Scotland. These uncertainties bring even more impetus to the need to deliver a decarbonised, affordable and secure energy system.

Scotland already has an enviable track-record in renewables.  The success of the ScotWind leasing round – the world’s largest floating offshore leasing round – and our long-standing commitment to onshore wind, are strong foundations on which to grow our renewables capabilities even further.

Wind power is one of the lowest cost forms of electricity and the Scottish Government is clear that this is where we should focus - reducing costs in the long term and addressing vulnerability to future energy cost crises.

This Strategy builds on that success with three overarching objectives:

First, to significantly scale up renewable energy production, helping to secure a just transition away from fossil fuels. As part of this transition, overall energy demand will also reduce.

Second, to secure continued and increased investment in the net zero energy economy. The delivery of this strategy will mean more jobs, a growing supply chain, new manufacturing capabilities, new skills, new export opportunities and thriving communities.

And third, to deliver a fairer, more secure energy system that is no longer reliant on volatile international commodity markets and delivers lower costs for consumers. That requires stronger, more targeted action from the UK Government to reform the energy market in a way that is fair, and to create the right conditions for the investment needed in infrastructure to support the expansion of renewables.

The draft Strategy sets out the very significant opportunities for Scotland in transforming our energy system.

Scotland already has 13.4 Gigawatts of renewable electricity generation capacity. It is our ambition to deliver at least 20 Gigawatts of additional low-cost renewable electricity capacity by 2030, which could generate the equivalent of about 50% of Scotland’s current total energy demand.

Scotland’s rich renewables resources means we can not only generate enough cheap, green electricity to power Scotland’s economy, but we can also generate a surplus, and open up new economic opportunities for export.

We must make these changes to our energy system in a way that is just. The transition must maximise economic benefits, ensure a fair distribution of opportunities and risks, and do so through a process that is inclusive.

The oil and gas industry has played an important role in our economy and been part of our national identity for decades. However, our previous policy position of maximum economic recovery, is no longer appropriate.

This Strategy explores the challenges of moving away from oil and gas, and the ability of low carbon and net zero energy generation to not just replace, but to build on, the employment opportunities that people, particularly in the North East, have come to rely on.

Within the Strategy are the first results of the independent research, announced in 2021, and scrutinised by a panel of experts, on the future role of North Sea oil and gas in Scotland’s energy system and economy.

This work shows that, as an increasingly mature basin, production in the North Sea is expected to be around a third of 1999 levels by 2035 and less than 3% of the 1999 peak by 2050. That projection takes account of the remaining potential development in the North Sea and is without any political decision to reduce consumption due to the climate emergency. This means that domestic production will effectively end within the next 20 years if we do nothing. The draft Strategy is consulting on whether we should act faster than this.

Whatever people’s position on the pace at which we move away from fossil fuels, a failure to act now to deliver a just transformation of our energy system would be to neglect our energy security, the future of our economy and risk the kind of damage to industrial communities we saw in the 1980s.

However, if we seize the opportunity presented by the transition, the number of low carbon jobs in the energy production sector is estimated to rise from 19,000 in 2019 to 77,000 by 2050, delivering a net gain in jobs across the energy production sector overall.

 

This Strategy shows how we can build a positive route through this transition, boosting employment in energy generation, and providing energy security. That is why today’s publication is not just a draft energy strategy, but also the first draft Just Transition Plan.  

We recognise the transition must take account of different geographies, industries and infrastructure across the country, and the draft energy strategy and Just Transition Plan will be further developed through engagement with trade unions, businesses and communities. And we are pleased to have supported the STUC to ensure that workers have the opportunity to participate.

Our £500 million Just Transition Fund is supporting Moray and the North East to become centres of excellence for the transition. Projects are already underway - such as the deployment of a new digital offshore energy skills passport to support the transition of skills and jobs across the rapidly changing industry, led by OPITO. And I hope, as we move forward, that the UK Government, which has of course has benefitted from oil and gas revenues for so long, will make a matching contribution.

Presiding Officer, the draft Strategy sets out our key ambitions for renewables deployment, bringing together clear policy positions and a route map to realise these ambitions.

In key sectors we propose:

For onshore wind, increasing from 8.78 GW as of June 2022, to over 20 GW by 2030, more than doubling our existing capacity.

For offshore wind, increasing from 1.9 GW, as of June 2022, through a pipeline of 3.8 GW already consented, to 8-11 GW by 2030. And the results of the ScotWind leasing round reflect market ambition to exceed the current planning assumptions.

For Solar, this strategy consults on what a future ambition should be, building on our current 411 Megawatts of capacity.

Tidal-stream also has vast potential and we are consulting on an ambition for tidal and wave energy.

We recognise the huge potential of pumped hydro storage power to play a significant role in our future energy system. The lack of an appropriate market mechanism from the UK Government is frustrating the realisation of this opportunity for significant economic investment,  job creation, and gigawatts of clean energy. Coire Glas, for example, represents over £1 billion in investment, with up to 1.5 Gw of capacity and 30 GWh of storage. The UK Government must take action to ensure that this potential is realised.

We will also work with communities, energy companies, and with parts of the public sector, such as Forestry and Land Scotland and Scottish Water, that already generate renewables, to expand community ownership.

We also want to hear views on these ambitions from unions, wider industry and from communities.

The draft strategy reaffirms this government’s position that we do not want or need new nuclear power. We are clear that the focus must be on developing flexible and renewable technologies rather than new nuclear fission plants, which are expensive and take decades to deliver.

Whilst we do not have the powers to influence offshore oil and gas exploration and extraction, we are seeking views on a more robust climate compatibility checkpoint, including for oil and gas fields that are already licensed but not developed, and on a presumption of no new exploration in the North Sea.

The strategy reaffirms our commitment to, and the importance of, CCUS to Scotland’s energy transition. We continue to engage with the UK Government and encourage them to make swift decisions to support the ACORN project in the North East, which is critical not just to Scotland’s transition, but to that of the wider UK.

The ACORN project is connected to the development of a hydrogen economy, but it is clear that the most significant potential in hydrogen comes from the creation of green hydrogen from surplus renewable energy.

As we set out in the Hydrogen Action Plan published in December, we will rapidly grow Scotland’s hydrogen economy to deliver a renewable and low-carbon hydrogen production ambition of 5 GW by 2030 and 25 GW by 2045. To put that in context, 5 GW could produce energy equivalent to around a sixth of Scotland’s total energy demand.

Much of that hydrogen could be generated from our offshore wind sector with the potential to create a new energy export industry for Scotland.

In the coming months, we will develop sector export plans on renewables and hydrogen, setting out how energy can continue to be a critical export growth sector as we transition to net zero.

The strategy also sets out how we will meet the challenge of reducing demand with Scotland’s main energy-using sectors - heat in buildings, transport, industry and agriculture - using energy more efficiently, and becoming largely decarbonised by 2030.

Funding this transition requires significant investment that goes beyond what a government with limited borrowing powers can deliver. 

We will scale up activity to move from a funding to a financing policy model. This will more effectively leverage private sector investment and action to better amplify the impact of public investment.

This Strategy gives certainty to investors that Scotland is a place that supports renewable energy wholeheartedly.

Our vision is that by 2045, Scotland will have a climate-friendly energy system that delivers affordable, resilient and clean energy supplies for Scotland’s households, communities and business. Clearly, the Scottish Government cannot deliver this vision alone.

Industry must accelerate investment in key sectors and infrastructure, and continue to build capacity in the Scottish supply chain and the skills of the energy workforce.

The UK Government must act on energy security, network investment and market reform which are their responsibility, as is much of the groundwork required for a thriving hydrogen economy.

To deliver on the timescales set out here, the UK Government must embrace these needs with pragmatism. A copy of this strategy has been forwarded to the Secretary of State for Energy, and I will be inviting the UK Government to join us as part of an Energy Transition delivery group to drive this forward.

Achieving this vision for Scotland’s will be a national endeavour and will require a collective effort at local and national levels across government, industry, and our communities.

The consultation on the draft Strategy opens today, and I look forward to hearing views from people across Scotland on this critical aspect of our net zero transition.