Scotland's National Strategy for Economic Transformation - Delivery Plans October 2022

Programme 2: New Market Opportunities

Outcomes & Objectives

Our aim is to strengthen Scotland's position in new markets and industries, generating new, well-paid jobs from a just transition to net zero.

The New Markets Programme seeks to capitalise on Scotland's strengths in areas such as renewable energy and hydrogen, financial services and fintech, space, industrial biotech and high value manufacturing to grasp new market opportunities. We will deliver on each of the individual projects and actions outlined below. However, at a Programme level our primary focus is on bringing these projects and associated work together as a coherent whole to support and accelerate Scotland's transition to net zero and to maximise the domestic and international economic opportunities and impacts arising from it.

Global supply chains are still to recover fully from disruptions due to the COVID-19 pandemic, with the war in Ukraine adding to disruptions of global supply chains. This along with disruption to established trading relationships is challenging for business but also provides opportunities for competitive Scottish businesses to enter new markets – both domestic and international, providing growth opportunities.

Projects

The New Markets Programme consists of the following projects:

Project 5: Build on Scotland's strengths to win an ever greater share of domestic and international market opportunities. Underpinned by our Vision for Trade, this focuses on (1) delivering our Export Plan by taking a targeted sector and country approach to raising the GDP share of Scotland's international exports to 25%; (2) delivering our Inward Investment Plan to attract investment in sectors and opportunities where Scotland has strong advantage and where there is potential for positive spill-over impacts to the wider economy; and (3) through the forthcoming Innovation Strategy, promoting Scotland as an innovative test bed for new technologies and markets, and increasing business Research and Development in the sectors with the greatest economic opportunity.

Project 6: Realising Scotland's potential to be a leading hydrogen nation, delivering Scotwind and wider renewable energy developments, and supporting the development of Scottish green supply chains, laying the foundations of a Net Zero Industrial Strategy. This focuses on investing to support renewable hydrogen production; delivering Scotwind and associated supply chain opportunities; and expanding our Supply Chain Development Programme to improve the capacity, capability and development of Scottish supply chains, and mitigate the impact of rising energy costs.

Project 7: Attract and deploy significant domestic and international private investment in Scotland. This focuses on delivering our Global Capital Investment Plan to stimulate investment in business growth and capital projects and, in particular, on establishing an Investor Panel; improving access to private capital for business investment and growth; expanding and enhancing our green investment Portfolio; and establishing a values-led, high-integrity market for responsible private investment in natural capital. We will also work on our strategic approach to public ownership so that public companies are managed, developed and initiated for the public good.

Measurement

Our programme management approach to the delivery of New Markets work enables us to track progress against key actions and milestones. This is supported by more detailed 'below the waterline' project management arrangements for each action.

The following targets and indicators will be used to measure success:

Project 5:

• Increase Scotland's international exports as a % of GDP from 20% in 2019 to 25% by 2029.
• Increase the £ value of international exports on each rolling 3 year basis.
• Safeguard and/or create 100,000 direct and indirect 'good jobs' over the period 2020-30 by attracting and retaining inward investment.
• Measures and targets for business Research and Development spend and innovation will be set in the forthcoming Innovation Strategy.

Project 6:

• Produce 5 GigaWatts of hydrogen by 2030 (supported by the five year £180 million Emerging Energy Technologies Fund).
• 27.6 GigaWatts of electricity coming on stream through 20 wind farm projects from 2027 over a 10 year period. Realise a minimum of £25 billion of supply chain investment through Scotwind.
• Increase the number of direct and indirect jobs in Scotland's renewables sector.

Project 7:

• Investment by and private sector leverage in early stage growth and scale-up businesses through the Enterprise Agencies and the Scottish National Investment Bank.
• Investment by and private sector leverage in capital projects by the Enterprise Agencies and Scottish National Investment Bank.
• Increase the value of Scotland's Green Investment Portfolio from £2 billion to £3 billion.
• By the end of 2025/26, the project pipeline for nature-based solutions will have increased in size and demonstrate clear models for returns.

NSET Phase: Delivered by 31 October 2022

Project 5:

Since the publication of NSET we have:

• Established a new Ministerial Trade Board with an updated remit and industry-led membership to reflect the key priority sectors in our Export Plan and NSET.
• Established with industry a Tech Export Delivery Group to oversee and drive delivery of the newly published Tech Sector Export Plan.
• Published the first Annual Report on Scotland's Vision for Trade showing how we are putting the principles of the Vision for Trade into practice through, for example, ending overseas support for fossil fuel goods and services, and taking practical action to make it easier for businesses to access international markets.
• Confirmed, through the EY International Attractiveness Survey and for the ninth year out of the last 11, Scotland's position at the best location for inward investment in the UK outside London.
• Delivered a successful Foreign Direct Investment World Forum event in Edinburgh attracting 377 international delegates and showcasing Scotland's inward investment offer on the international stage.
• Launched Phase 2 of the Inward Investment Catalyst Fund to attract businesses to invest in Scotland by establishing partnerships for research and development with universities.
• Increased the number of Trade and Investment Envoys from 6 to 11.
• Begun, with industry, academia and public sector partners, to develop a new Innovation Strategy for Scotland.
• Published progress reports on delivery of our Export and Inward Investment and Plans and an Inward Investment Values Statement.

Project 6:

Since the publication of NSET we have:

• Continued to take forward the actions set out in our November 2021 draft Hydrogen Action Plan.
• Launched a £10 million Hydrogen Innovation Scheme to support the development and demonstration of renewable hydrogen technologies and products needed to support the Scottish Government's ambition of 5 GigaWatts installed hydrogen production capacity by 2030.
• Completed with public and private partners in Scotland and Germany the Scot2Ger study which examined the German demand for zero- emission hydrogen and how it might be met by Scottish producers of green hydrogen.
• Confirmed through Crown Estate Scotland that all 17 successful ScotWind applicants have option agreements in place. This means that each project can move into the development stage.
• Published Supply Chain Development Statement Summary documents for all 17 Scotwind projects.
• Undertaken a programme of bi-lateral Ministerial engagements with all 17 successful projects.
• Announced signatories of the Scottish Offshore Wind Energy Council Collaborative Framework - 24 organisations, representing almost 25 GigaWatts of ScotWind projects with an estimated value of £1.5 billion per GigaWatt have agreed to work together in the development and delivery of the Collaborative Framework, working jointly together to review the pipeline of Scottish offshore wind projects and identify ways to maximise how they work with Scottish ports to share capacity and space and also help underpin new investment.
• Hosted the Offshore Wind Supply Chain Summit in August 2022.
• Hosted the Scottish Hydrogen Supply Chain Conference at the Edinburgh International Conference Centre in September 2022 and jointly hosted a Germany/Scotland Hydrogen Conference in Berlin in October 2022.
• Launched the £25 million Low Carbon Manufacturing Challenge Fund to help Scottish manufacturing companies develop low carbon products, processes or services.
• Published the Blue Economy Vision for Scotland which includes six outcomes for our marine environment, for people and our economy up to 2045.
• Provided consolidated energy efficiency advice to businesses on the Find Business Support website to help mitigate the impact of the energy cost crisis.
• Announced funding of more than £50 million through the Just Transition Fund to support the transition of the North East and Moray away from fossil fuels and towards a low-carbon economy. The funding will support 22 projects ranging from the production of green hydrogen, the development of wave and tidal technology to pioneering the use of waste from whisky to recycle EV batteries.

Project 7:

Since the publication of NSET we have:

• Continued to invest in business growth through our Enterprise Agencies and the Scottish National Investment Bank.
• In May, Scottish Enterprise announced that through investment of more than £770 million in early stage companies since 2003 it has unlocked more than £2 billion of private sector investment. More than 600 innovative young companies have benefitted from the growth funding activity, with many excelling in areas of future economic opportunity such as digital health and net zero.
• Established a cross-Government, cross-agency Programme Board and associated workstreams to deliver our ambition for investment in natural capital.
• Through the publication, in May 2022, of Interim Principles for Responsible Investment in Natural Capital set out our ambitions and expectations for a values-led, high-integrity market for responsible private investment in natural capital to communities, investors, land owners, public bodies and other market stakeholders.
• Engaged stakeholders on the Interim Principles including an online event hosted by the Green Finance Institute and the Scottish Forum on Natural Capital.

NSET Phase: In Delivery

Project 5:

We will:

• Deliver a programme of overseas Ministerial engagement and trade and investment events and engagement to boost exports and attract investment.
• Continue to deliver our Export Plan, A Trading Nation, including:
• Developing with industry new Sector Export Plans for Life Sciences and Renewables.
• Working with stakeholders to identify ways to increase the transport of exports directly from Scotland.
• Continue to deliver our Inward Investment Plan including:
• Refocusing resources around and delivering operating plans for each of the nine opportunity areas identified in the Plan
• Continuing a programme of Ministerial engagement with 'Top 50' Inward Investors in Scotland to understand the opportunities and challenges they face and to ensure Scotland continues to be an attractive environment for current and future investment
• Continue to develop and promote six Regional Inward Investment Propositions (Aberdeen City Region; Ayrshire; Edinburgh and South East Scotland; Forth Valley; Glasgow City Region; Tay Cities) detailing each region's unique investment assets aligned to the nine opportunity areas in the Inward Investment Plan; and complete regional propositions for the Highlands and Islands and South of Scotland.
• Benchmarking our approach and interventions against key international competitors in areas such as financial incentives and skills.
• By the end of 2022, publish metrics and evaluation reports on inward investment and export support in Scotland to inform prioritisation of next phase of delivery .
• Publish a new Innovation Strategy for Scotland.

Project 6:

• Begin to deliver the Emerging Energies Transition Fund £180 million announced in 2021 with £100 million for Green Hydrogen and £80 million for Blue Hydrogen and Carbon Capture Usage and Storage.
• Working through the Net Zero Technology Centre, complete studies into pipeline routes for hydrogen from Scottish Ports to Rotterdam and Hamburg and Hydrogen Combustion Engine/ Turbine design work (retrofitting for offshore platforms).
• Innovation and Targeted Oil and Gas lease options made (April 2023) – providing developers with the rights to build offshore wind farms specifically for the purpose of providing low carbon electricity to power oil and gas installations and help to decarbonise the sector.
• Further offshore wind lease options agreed (August 2023).
• Set out how the Blue Economy Vision (published March 2022) will be delivered.
• National Marine Plan published (December 2024).
• Design of strategic investment model to support collaborative Scotwind supply chain projects (December 2022).
• The beta launch of CarbonTracker123 produced by iSumio with Scottish Government funding is scheduled for 2023, enabling companies to manage carbon emissions across complex supply chains.
• Continue to support low carbon manufacturing projects through the Low Carbon Manufacturing Challenge Fund.
• Complete the construction of and open the £75 million National Manufacturing Institute Scotland. The Institute aims to (1) increase productivity by reducing barriers to innovation; (2) grow the economy by galvanising investment and increasing manufacturing competitiveness within Scotland and internationally; (3) catalyse job creation and strengthen supply chain links across the country; (4) provide leadership, build collaborations and enhance capability to influence adaptation and exploit manufacturing opportunities to boost Scotland's transition to a net-zero emissions economy by 2045; and (5) inspire and attract talent and equip current and future workforces with the skills they and the manufacturing and engineering community need.

Project 7:

• Take forward plans for the First Minister's Investor Panel, including appointing an expert co-chair from the investment industry.
• Announce the wider membership of the First Minister's Investor Panel and host the first meeting of the Panel by end 2022.
• Ensure a delivery plan is in place to implement the Campbell Report, which makes recommendations to government about improving the enabling conditions for private capital investment in the health innovation sector.
• Work with public and private partners to examine our approach to and interventions in the provision of business growth capital to conclude Summer 2023.
• Work with the Scottish Cities Alliance to showcase investment propositions from across the seven cities to the London investment community .
• Continue to promote our Green Investment Portfolio and increase its value to £3 billion by the end of the year.

NSET Phase: Delivery Pending

Project 5:

• Continue to promote Scotland's trade and investment strengths through customised 'Scotland is Now' and Brand Scotland promotion and marketing activity.
• Showcase Scotland at major upcoming international events such as ADIPEC (November 2022); COP28 (November 2023) and Osaka Expo (2025).
• Provide dedicated funding to existing and potential inward investors through the Digital Skills Catalyst Fund, delivered by Skills Development Scotland, to support digital skills development).
• Support the Inward Investment Catalyst Fund through Interface to target companies not yet located in Scotland but seeking to establish stronger ties with Scottish academia.

Project 6:

• Strengthen Business Energy Scotland's capacity to provide energy efficiency advice and loans to businesses seeking to reduce their energy costs and carbon footprint, thereby supporting our green supply chain and supporting our Net Zero ambitions.

NSET Phase: In Development

Project 5:

• Grow our Global Scots network from 1,200 to 1,500 by 2023.

Project 6:

• Scope and deliver collaborative projects - December 2025 (estimated).

Development to begin

Project 5:

• Develop and deliver a Hydrogen Export Plan.
• Provide specialist advice and expertise and support collaborative approaches to the establishment of accredited sector or geographical cluster building bodies.

Project 7:

• We will take forward a Cities Investment Programme aimed at understanding barriers to attracting capital investment by cities and local authorities. This work has been paused as we focus on more immediate pressures and priorities.

Working with Stakeholders & Partners

Who are we relying on for delivery of the programme?

• Enterprise Agencies
• Scottish National Investment Bank
• Industry/Business
• Environment agencies (natural capital)
• National Manufacturing Institute Scotland
• Censis
• Skills Development Scotland
• Cities Alliance
• Local Government

Who are we involving and how (partners/stakeholders)?

• Academics
• Independent experts
• Investors and the investment community
• Business and industry (including trade associations)

Who and where will benefit (people, places and sectors)?

• Various sectors right across Scotland including manufacturing, construction, energy, technology, financial services

Governance

Partners have agreed that wherever possible the Programme should be developed and delivered through existing governance and partnership working arrangements and that new structures, groups etc. should be created by exception. At present, given the scale, scope, breadth and diversity of the Programme, governance and partnership working arrangements will be delivered at the Project and Action level. A Partnership Delivery Group has been established to bring partners across all three NMO projects together on a quarterly basis.

Key governance and partnership working arrangements are as follows:

Project 5:

• Monthly meetings with Minister for Business, Trade, Tourism and Enterprise to assess progress against each of the actions set out in our Export and Inward Investment Plans.
• Quarterly meeting with industry led Trade Board to discuss and assess progress against Export Plan
• Steering Group and sub-groups in place to develop Innovation Strategy.

Project 6:

• Scottish Government Offshore Wind Programme Transformation Board.
• Scottish Offshore Wind Energy Council.
• Cabinet Secretary/Industry chaired Making Scotland's Future Strategic Leadership Group and associated sub-groups are taking forward work on manufacturing and supply chains.

Project 7:

• Monthly meetings with Minister for Business, Trade, Tourism and Enterprise to assess progress against each of the actions set out in our Global Capital Investment Plan.
• Programme Board and workstreams in place to support development of a values-led, high-integrity market for responsible private investment in natural capital.
• We are developing proposals to provide oversight of work on business investment and, separately, capital investment across Scottish Government and partner agencies.

We are developing proposals to provide strategic oversight of the export, inward investment and capital investment plans across Scottish Government and our Enterprise Agencies, including Scottish Development International.

Delivery phased timeline

This timeline provides the pipeline of activity and planned milestones as it stands. As budgets become clearer and time progresses other projects and milestones will be added and timelines updated.

Phase 01: What we have delivered to date

Mar 2022

Published Technology Sector Export Plan

Mar 2022

Published Blue Economy vision for Scotland

Mar 2022

Published first annual report on Scotland’s vision for trade

Apr 2022

Published Supply Chain Development Statement summary documents for all 17 Scotwind projects:

ScotWind developers set out multi-billion-pound supply chain commitments - News - Crown Estate Scotland

Scotwind Supply Chain Summit: First Minister’s speech - 22 August 2022

Apr 2022

Increased number of Trade and Investment Envoys from 6 to 11

May 2022

Launched phase 2 of Inward Investment Catalyst Fund

May 2022

Launched £25 million Low Carbon Manufacturing Fund

May 2022

Published Interim Principles for Responsible Investment in Natural Capital

Jun 2022

Launched £10 million Hydrogen Innovation Scheme

Sep 2022

Published progress report on delivery of Export and Investment Plans and Inward Investment Values Statement

Oct 2022

Announced funding of more than £50 million through the Just Transition Fund to support the transition of the North East and Moray towards a low carbon-economy

Phase 02: What we are already doing

Dev 2022

Publish a new Innovation Strategy for Scotland

Mar 2023

Sector Export Plans for Life Sciences and Renewables complete

Apr 2023

Targeted Oil and Gas (INTOG) lease options made available to developers

Jun 2023

NMIS HQ due to open

Aug 2023

Further offshore wind lease options agreed

Nov 2023

Showcase Scotland at COP28

Phase 03: What we are planning to deliver

Dec 2024

National Marine Plan published

Nov 2025

Showcase Scotland at Osaka Expo

Mar 2029

Scotland’s international exports targeted to reach 25% GDP

Dec 2030

Scotland aims to produce 5GW of hydrogen

Dec 2030

100,000 direct and indirect ‘good jobs’ created or safeguarded through inward investment