Chamber and committees

Carbon capture and storage and negative emission technologies will be mission critical to delivering our climate change targets. That is not just my view—it is the view of the Committee on Climate Change, who are expert independent advisers on these matters. Indeed, such approaches will be critical not just to Scotland but to the whole of the UK. For the whole of the UK to achieve the UK Government’s target of net zero by 2050, it will need negative emission technologies such as carbon capture, utilisation and storage.

The Scottish cluster lost out on track 1 status, and we have continued to make representations to the UK Government on reversing that decision, simply because the UK Government’s own net zero strategy and carbon capture targets cannot be achieved without the Scottish cluster in the mix. We need to move forward with carbon capture, because it represents an important opportunity for us here to meet not just our climate targets but our energy transition, too.

As I have said, we continue to engage with the UK Government on this matter. It had been planning a track 2 process possibly this year, but perhaps into next; however, there have been ministerial changes and I do not know whether that timeline has changed.

Just last month, I met Scottish cluster representatives at St Fergus. What we need to understand is that not only is this approach mission critical, it is costing a lot of money to keep the partners together, and unless there is a very clear indication that this work will materialise soon, it will become increasingly difficult to make that happen. That is what worries me the most, and it is why we have offered £80 million of financial support. However, we need to get the regulatory agreement for it to move forward. The danger is that we lose the opportunity and the time slot to keep the partners together and ensure that we deliver on the Scottish cluster.

There is unanimous agreement on this matter across the Scottish Parliament; indeed, I know that Liam Kerr is a supporter of the Scottish cluster. We all want to see it happen but it needs to happen sooner rather than later, because it is costing money. The longer the process takes, the more difficult it will be to hold the partners together in order to make this a success.

I am happy to do that.

It will be out by the end of this year—I cannot be any more precise than that.

However, we also have our hydrogen investment proposition, which I published last week and launched at our hydrogen supply chain event for stakeholders in Edinburgh. The proposition is quite important, because a lot of the initial investment and opportunities around hydrogen will be driven largely by export potential rather than by domestic demand. There is huge interest in Scotland’s capability to produce large quantities of green hydrogen not just for our own domestic consumption but for export potential. The UK Government has an objective of producing 5GW between now and 2030; Scotland alone is looking to do 5GW, and there is a lot of interest from mainland European countries that will need to import green hydrogen and are therefore looking at import opportunities.

The investment proposition and supply chain event were important in starting to set out Scotland’s potential opportunity with regard to manufacturing and producing green hydrogen for our own needs and for export. We published the proposition last week, and I will publish the action plan by the end of this year. I cannot give you a specific date, but it will certainly be by the end of the year.

I can imagine the reaction that placing more duties on local authorities would receive. However, I think that it is a fair point. A lot of what local authorities are focused on is their direct corporate responsibility in looking to decarbonise and change their processes to make them less carbon intensive, whatever that may be. Is there a need for us to get them to think a bit wider than that? There are some local authorities that are better at it than others. If you look at some of the things that some local authorities are doing around transport issues, for example in active travel, EV charging infrastructure and the 20-minute neighbourhoods—all those things have a positive effect in the community. They are not direct corporate matters, but they have wider community and environmental benefits.

There is a fair amount being taken forward by local authorities that goes beyond just their direct corporate buildings and vehicles, but I think that there is a fair challenge there in questioning whether there is more that we could get local authorities to do. I am a bit hesitant to put more statutory targets around them at this stage, given the new statutory targets that come in in two months’ time on their own reductions targets.

We have the regional partnerships for transport planning, and taking that forward is then down to individual local authorities. Some local authorities are more proactive and better than others at pursuing transport planning. Is there more? We gave a commitment to review in this parliamentary session the structure for transport planning and to look at whether it is the optimal model to take forward. We want to do that co-productively with local authorities to make sure that the structure that we put in place reflects what they believe is the best approach, alongside what we are trying to achieve with transport planning. I would say that the model that we have now is maybe the optimal model, but there is scope for us to look at how we can improve it. Some local authorities are making good progress.

Part of the reform of the grant scheme is about that. It is about trying to help to make it more of an attractive proposition, particularly for farmers who might be considering the possibility of using existing farmland for forestry purposes.

This is an important issue. Obviously, finance is important, but having the right skills and the right people is also extremely important in being able to deliver on your net zero objectives at a local authority level. We have tried to address the issue through a variety of means and the Sustainable Scotland Network is one practical route by which we try to help to achieve that. It is about pooling and joining together expertise and experience within the public sector so that we can cascade it out to the whole of the sector and those who participate in it.

There are also some funding streams available to local authorities that can help them to do some of the pre-capital stages of plans that they are looking at. They can get funding to help to resource additional capacity to carry out some of the modelling, design and planning around net zero to support them in achieving that as well.

There is a bigger issue that we probably have to do more on. It is not necessarily about additional staff, but the skills base of the current staff, who must be upskilled. You will be well aware of the “Climate Emergency Skills Action Plan 2020-2025”, which is all about helping to develop the skills that are needed to tackle the climate emergency. Most of that plan is targeted at those who are already within the private sector to some extent, and I think that there is a need for us to look at whether there is more to do in helping to support those in our public sector.

I cannot say to you that we have a specific way in which we will do that, but I think that it is one of the issues that is becoming an increasingly important aspect. We need to work with COSLA to look at how we can address what it views as potentially a skills gap in its own staff, to help to upskill them in developing plans and proposals around net zero. I am certainly happy to take that away and look at how we can help to develop that further.

I will deal with some of the inflationary pressures and Ben Macpherson can pick up on the wider public sector finance situation and funding for pay increases.

There is no doubt that the increasing inflationary pressures that are being experienced by local authorities will have an impact. It is difficult to quantify exactly to what extent those pressures will have an impact, but the cost base for carrying out capital works has increased because of both material and labour cost increases. That will clearly put pressures on local authority budgets, as it will for the Scottish Government and other parts of the public sector. There is no doubt in my mind that inflationary pressures will have an impact, but it is difficult at this stage to quantify that impact.

It is also worth keeping it in mind that some of the pay challenges that local government has faced have resulted in additional funding being provided to local government to try to help to meet and offset some of the additional costs associated with the pay awards. That was as part of our on-going engagement with COSLA to try to help to resolve the pay disputes that were taking place. Ben Macpherson may want to say a bit more about local government financing.

Some of the progress that we wanted to make during last year was not possible. We are looking to do that as part of a whole range of other requirements. For example, more issues arose from ScotWind than had been originally expected, which meant that additional resources had to be deployed from Marine Scotland to deal with that. It is clear that highly protected marine areas will be one of the key aspects of protecting our marine environment, which has an important part to play in tackling climate change and biodiversity loss. I hope that the work that could not be taken forward last year can be taken forward in the coming year.

I want to come back to your point about the marine plan and to offer you some reassurance. When we were progressing our sectoral marine plan for offshore wind energy—that piece of work, which took place over a two-year period, predates my current ministerial role—there was extensive engagement with fishing communities and stakeholders. I hope that, given our track record in taking forward that plan, fishing communities can be reassured that we will look to undertake a similar level of engagement with them in the process.

As I said, the work that we had hoped and planned to take forward last year will be done in the coming year as we progress our work on highly protected marine areas.

Through a combination of the bill proposals and our waste route map consultation, which closed just last month, we have set out some of the measures that we look to take forward to tackle the issue that Ms Lennon has raised. Those look at how we can transition much more effectively to a circular economy, how to increase reuse and recycling rates and how to modernise and improve the way in which waste and recycling services are provided.

Our approach will be a combination of the route map, which we will take forward with local authorities to help to drive forward improvements in waste management and recycling, and the circular economy bill, through which we will look at putting in place statutory provisions on targets and approaches that should be taken to help to reduce waste and increase recycling rates.