A Trading Nation – framework to grow Scotland's renewables exports

1. Background: Scotland's renewables sector

In alignment with A Trading Nation (ATN): a plan for growing Scotland's exports, we are publishing a framework to grow Scotland's renewables exports, as a first step towards developing a more detailed action plan to realise the scale and opportunities to grow Scotland's renewables exports.

At the point ATN was published, energy exports were identified as a key sectoral strength for Scotland, comprising 11% of Scotland's exports with the rest of the world.

Since 2019, much has changed. The Scottish Government's ambitious climate change legislation sets a target date for net zero emissions of all greenhouse gases by 2045. Our contribution to climate change will end, definitively, within one generation. To meet our targets, a rapid transformation across all sectors of our economy and society is now underway.

This framework will provide a strong foundation on which we can scope Scotland's renewable export opportunity. Building on our assessment of our domestic strengths and our ability to compete internationally, we will work with businesses through a coordination of government, agencies, and industries.

Scotland benefits from having a strong oil and gas industry and heritage, building upon decades worth of skills and technology innovation, and critically, the experience to embrace and build on the key opportunities offered by the energy transition. These strengths are a huge asset in helping us to achieve our target of net zero emissions by 2045 and supporting the growth of the renewables sector in Scotland. It is noted that many of the incumbent companies within the oil and gas sector today are, and have been, actively pursuing pivot activities in the energy transition. In addition, we have seen technology start-ups both from industry and from Scotland's own excellent university network, commence work on technologies for the transition.

This framework seeks to map and encourage opportunities for both existing energy players, new incumbents, and domestic technology start-ups. The emphasis of the future use of digital technologies further enhances Scotland's position. As well as our ability to transition skills and technology, and therefore talent from the oil and gas sector, our proven network of skills provision and higher education delivery (apprenticeships, training and development programmes, universities, and colleges) place Scotland at the centre of developing the future workforce.

For the purposes of the export framework, renewables exports from Scotland will be defined as: international sales of goods and the provision of services to customers outwith the UK from Scotland, with a focus on the following renewable sources: onshore wind, offshore wind, marine and renewable heat (such as geothermal).

International sales relating to hydrogen are not included in this export plan but are being developed as part of the Scottish Government's Hydrogen Action Plan.

The Fraser of Allander Institute recently published The Economic Impact of Scotland's Renewable Energy Sector. Using the latest available data (2020), they calculated that Scotland's renewable energy sector had a turnover of £3.06 billion and approximately 8,450 FTE jobs. This is based on the definition of direct renewable energy activity used within the Office for National Statistics (ONS) Low Carbon and Renewable Energy Economy (LCREE) survey.

The ONS LCREE survey is the main source of official data on exports for this sector. This shows that since 2014, the value of Scotland's LCREE exports have increased by 30% (UK up 37%). Scotland's LCREE exports were estimated to value £384.5 million in 2020, with no statistically significant change from 2019, whereas LCREE exports for the UK decreased by 16% over the same period.

We recognise that the definition of the low carbon and renewable energy economy used by ONS is broader than the description and focus of sectors applied within this framework. In addition, the disaggregation of traditional and renewable energy exports within existing export data sets is both complex and emerging.

Therefore, to develop our understanding of current Scottish renewables exports as defined within the framework, we worked with Scottish Renewables and our enterprise agencies to both survey and engage with companies in the sector.

Thirty-five exporters responded to our initial survey, indicating Scottish renewables businesses are exporting to 39 countries, and those companies demonstrated a growth in their exports from 2019 to 2020. We held workshops with a wide range of industry representatives in each of the four sub-sectors to assess the survey results; the key themes which arose have been used to guide the development of this export plan.

• The importance of domestic growth and sales is important to developing international sales.
• We should use Scotland's existing reputation in energy exports to build our reputation for renewables exports.
• Existing skills and experience within the energy sector in Scotland can be re- harnessed and re-used to build that reputation.
• The need to define critical international markets more clearly for Scotland, based on our internationally competitive strengths and emerging areas of strength whilst establishing the opportunities.

1.1 Policy context and enablers

To create a clear and centralised framework view for the internationalisation of Scotland's renewables energy transition, this framework is underpinned by a number of existing Scottish Government policies and strategies. These create key dependencies to help maximise the sector's contribution to our overarching National Strategy for Economic Transformation (NSET), such as Scotland's Vision for Trade, which identifies opportunities to improve the trading environment and ended all Scottish Government overseas trade support and promotion activities solely focused on fossil fuel goods and services. These important levers and key principles are key to supporting our energy transition to net zero following the release of the Draft Energy Strategy and Just Transition Plan. (See Figure 1.)

Figure 1: Strategic Connections for Delivering Renewables Exports

Scotland's National Strategy for Economic Transformation

A Trading Nation: A framework to grow Scotland's renewables exports

• Scotland's Vision for Trade
• Inward Investment Plan
• Hydrogen Action Plan
• Scotland's Global Capital Investment Plan
• Energy Just Transition Plan
• Climate Emergency Skills Actions Plan