Chamber and committees

Are you talking about fuel poverty in the Scottish Government?

You ask me whether I recognise the situation. We actually recognised it back in January, which is why we suggested a four-nations approach to tackling the issue as well as a four nations joint ministerial group in much the same way that we worked on a four-nations basis on issues around the pandemic. However, the UK Government has not taken up that offer.

Will we work with the UK Government? Of course we will. We will work with it where we can and highlight the actions that we think should be taken. However, we can work with parties only if they are prepared to work with us. We have not yet had a positive response to the suggestion of all four nations working on a joint ministerial basis, which I think, given the nature of the crisis, would be the right thing to do.

If you can do so, I will ensure that we take the matter up with the finance secretary.

The warm home discount scheme is a UK-based scheme. We proposed that it should be devolved, and it was agreed that it would be devolved. We proposed combining the energy company obligation and warm home discount schemes to create a more flexible and better scheme that would also increase the pot of money available to support low-income households. Despite spending probably about a year plus in trying to get the UK Government to agree to that, in February this year it finally said that it was not going to agree. We wanted to expand and invest more money in the warm home discount scheme if it was devolved to us. Our plan was to do that, but we were denied the opportunity by the UK Government.

As I mentioned, during this session of Parliament, we are putting record investment of £1.8 billion into energy efficiency and heat programmes. We have also increased the eligibility for and scope of our area-based programmes to support local authorities and low-income households. We are putting in a significant level of investment, but we remain frustrated that the UK Government did not take up the offer and opportunity to do something even better with the warm home discount scheme here in Scotland that would have benefited more households to a better level.

Again, because of the interconnected nature of the energy sector, wholesale gas prices are forcing up the price of LPG and oil gas heating. Our view is that there is a need for regulation in this sector, and we have raised that with the UK Government on a number of occasions. However, it is very clear that it has no plans to do so.

The sector is engaging with BEIS on what it can do to meet some of the spiralling costs that off-grid properties are now facing. Given the fact that 17 per cent of our population in Scotland is off-grid, it is an area that should have some regulation in order to manage some of the potential cost impacts that big price spikes can have on households. At about 12 per cent, the off-grid sector in England might not be as big, but it is still a sizeable percentage. There is a need for some market intervention, and there is a variety of different models that we could look at, but at the very least there should be some sort of engagement on different options for regulating the sector, given its impact on so many fuel-poor households in rural parts of Scotland.

I agree with Keith Anderson on that. Offshore wind energy is one of the cheapest forms of electricity production, and it could be tied closely to renewable or green hydrogen production, which could play an important part in decarbonising our natural gas networks. Again, we need clarity on the potential timescale for that.

On offshore wind, we have just completed round 1 of ScotWind, which has come in at potentially 25GW of offshore wind capacity between now and 2030. That will involve about £1 billion of investment in the supply chain for each gigawatt that is delivered. To put that in context, if we were to deliver 25GW tomorrow, which clearly Mr Kerr would like us to do, that would double Europe’s offshore wind capacity. Therefore, it is massive. I think that 11 of the 17 projects are floating offshore wind projects, which gives us the first-mover advantage in that area of technology.

It is a massive level of ambition. Just to give you more context, I point out that the USA is taking forward a programme of 30GW, for the entire USA. The fact that Scotland, with 5 million people, has a programme involving 25GW—in round 1—demonstrates the level of our ambition.

Secondly, our onshore wind policy statement sets out that we want up to an extra 12GW of onshore wind capacity to be delivered. That will help to drive down energy costs because it is a cheaper form of energy. Those projects can also be taken forward more quickly, because of the technical nature of onshore compared with offshore wind. If we can get more of our renewables online, that can help to reduce energy costs, which would directly benefit people’s energy bills. Our view is a bit like Keith Anderson’s—and in fairness, it is also the UK Government’s view—that renewables are critical to delivering energy security in future, meeting our climate change targets and helping to reduce energy costs.

Yes, onshore wind is the cheapest form of electricity production. The solar and hydro industries might argue with that, but I think that it is broadly in that sphere. The reality is that renewables are the cheapest form of energy production. Even folk that are for nuclear recognise that nuclear electricity is more expensive to produce. Renewable electricity is much cheaper to produce. That is why it is our view that that is where the focus should be, because it will help to reduce energy bills in the future.

I have a question so that I am clear about what you mean. Our investment in energy efficiency measures such as area-based programmes is largely modelled on what can be delivered in the sector, what we can take forward and what can be expanded where there are reasonable grounds to do that. You said that that means that we will not be able to meet what we intend by the end of this year—what exactly are you referring to?

There is quite a lot in there and you have covered a wide range of issues. At an international, and particularly a European, level, there is much greater focus on decarbonisation of the energy sectors and there is a clear determination to move towards renewable energy at a much faster pace than anticipated.

We need only look at the comments that the European Commission has made and the approach that it has taken—Commissioner Timmermans has highlighted the importance of renewables, and Europe’s largest economy, Germany, has set out its stall very clearly when it comes to the focus on renewables and hydrogen as its future approach—to see that there is a real step up in pace and in the desire, at European level, to decarbonise energy markets, reduce dependency on imports, particularly from Russia, to meet climate change targets, and to deliver security of supply.

In recent months, it has been interesting to see how countries in other parts of Europe are recognising that they will not be able to meet all their renewable energy challenges themselves, so they are looking at the potential of other countries to provide markets and support. I have had engagements with ministers and representatives from different parts of Europe who are looking at Scotland as a potential exporter of renewable energy, particularly in the context of green hydrogen. Scotland is seen as a potential main source of green hydrogen to support the European economy.

Let me put that in context. Germany has said that it wants a big focus on hydrogen to decarbonise industrial processes. Germany will require to import about 70 per cent—the vast majority—of its hydrogen, so it is looking for import markets in the countries that are in a position to support that activity, including Scotland.

We are talking about faster decarbonisation, a greater focus on renewable energy, and countries that are looking for import markets and export opportunities because of the focus on greater energy security at European level.

On actions that can be taken, countries that have introduced windfall taxes include Germany, Italy and Spain. I hear people making the argument that, if we introduce a windfall tax, we will not see investment in renewables, but Shell was looking to invest in offshore renewables in Scotland, in a partnership with Scottish Power, before it was making record profits. That interest is not going to change. Renewables investment is increasing in Italy, Germany and Spain despite the introduction of windfall taxes. The argument is a red herring: the reality is that investors are still moving into those markets because they want to be there, and they can see that that is how security of supply will be delivered.

The UK Government needs to act quickly. It needs to look at introducing a windfall tax and using the proceeds to support people during the cost of living crisis that millions of households are facing across the UK, and which is only going to get worse.

The Jackdaw oil field is at a different stage. I saw the motion that you lodged in Parliament on the matter; our position on Jackdaw is the same as our position on Cambo, and that position has been reinforced by the Scottish and UK Governments’ independent adviser on climate change, the Climate Change Committee, which said that there should be a compatibility checkpoint not just for new projects but for consented developments that are not yet in production. Our view on Jackdaw is exactly the same as our view on Cambo with regard to the compatibility checkpoints, and it has now been reinforced by the review and recommendation of the Climate Change Committee.