Green Energy Potential: Scotland

Kirsten Oswald Excerpts

Tuesday 31st January 2023 Commons Chamber

[Ian Blackford]

The hon. Gentleman is correct. There is a significant opportunity for hydrogen in the distilleries in his own constituency, in mine and right through the industry. I will go on to talk about the Skilling report that I published on behalf of the SNP a few months ago. It mentions the ability to generate five times as much green energy by 2050 as we are doing today and to grow from just over 12 GW up to 80 GW. There is an enormous opportunity within all that for hydrogen in the domestic economy and for exports.

When we talk about the domestic economy, it is important to dwell on the fact that, if we have the ability to upscale our energy production to the extent that that report has indicated, there ought to be a competitive advantage for industry. We must ensure that we get to net zero and reduce our carbon footprint but we must also create a competitive advantage. The holy grail is to ensure that we can strengthen sustainable economic growth and ensure that that ability to generate green energy creates a competitive advantage for industry that drives up investment and productivity and improves living standards.

But my goodness, let us think about the economies of scale in doing that in the context of the cost of living crisis that we are suffering from today. I say to the hon. Member for Caisthness, Sutherland and Easter Ross, whose constituency is in the highlands, that it is an absolute disgrace that so many of our constituents, and our pensioners in particular, are living in fuel poverty when the highlands and islands are generating so much green energy potential, never mind the impact of the cost of living crisis. I say to the Minister that we need to look at the mechanisms of setting a price in the energy market, which has been a considerable factor in putting so many of our constituents in the peril they are in. In the context of Scotland, we are producing six times as much gas as we need, yet suffering from the mechanisms of the market that are forcing our people to pay for energy to an extent that they should not be.

[Kirsten Oswald (East Renfrewshire) (SNP)]

My right hon. Friend is making an incredibly important point. From the perspective of people outside, looking in here, who cannot afford to pay their fuel bills, does he agree that it is galling and inexplicable to them that, although Scotland is such an energy-rich country, it has so little control over the prices that people have to pay?

[Ian Blackford]

Absolutely. I hope the Minister appreciates that I am trying to do this in as consensual a manner as I can, but we have to learn from the mistakes in setting energy policy. We have to recognise that, to a large extent, the bounty of North sea oil is now in the rear-view mirror, but we did not benefit from that bounty or from the £350 billion-plus of tax receipts that the UK Government have taken from it. Of course it is galling for people in Scotland to be paying a price for the failure of energy policy in the UK, whether that relates to fossil fuels in the past or green energy in our future.

I will make some progress so that I can leave the Minister some time to respond. On hydrogen specifically, the plan maps out how we can develop 5 GW of power by 2030 and a further 25 GW by 2045. This would provide a clean and sustainable alternative to fossil fuels and would help us to decarbonise heavy industry and transportation.

As some in the Chamber might know, Scotland is already a leader in innovative hydrogen energy solutions. The world’s first hydrogen-powered double-decker bus fleet is already operating in Aberdeen, and the world’s first hydrogen-powered heating network is currently being developed in Fife. If we continue to grow that hydrogen base, not only can we hope to provide energy at home but we can export it abroad, too.

It is estimated that there will be £48 billion of annual green hydrogen exports to Europe by 2050. We talked about the potential of North sea oil in the 1970s but, my goodness, Scotland’s green energy potential is enormous. Scotland can become a substantial green hydrogen exporter, delivering thousands of jobs. That hydrogen potential is also a priority in supporting the fastest just transition for workers, communities and businesses in the oil and gas sector.

The latest plan builds on the £0.5 billion just transition fund that is already being rolled out by the Scottish Government. Just transition funding has already been allocated to support the development of a skills passport, to create an advanced manufacturing skills hub in Aberdeen and to develop a pilot scheme with the national energy skills accelerator to determine the skills required for an energy transition. This includes transitioning skilled offshore workers into jobs in carbon capture and storage, and decommissioning or diversifying oil and gas business models into renewable energy portfolios, including the offshore wind, carbon capture and hydrogen sectors.

All of this good work is under way, but I am afraid it does not tell the whole story because, although many good initiatives are powering ahead, another reality has been evident for far too long. I am sorry to say that, when it comes to green energy, both Scotland and the UK in general are being held back by the UK Government’s toxic mix of lack of action and lack of ambition. It is fair to say that Members are used to hearing me criticise the UK Government in such terms, so they might be tempted to dismiss the criticism as predictable or standard fare. But if they will not listen to me on this, maybe, just maybe, they will listen to the head of the CBI. I am conscious that this debate comes after weeks of heavy and pointed criticism from Tony Danker, and those criticisms are worth repeating in full for the record. Tony Danker said he is

“genuinely worried the current government is losing the race on green growth… The UK is falling behind rapidly—to the Americans and the Europeans, who are outspending and outsmarting us. We’re behind the Germans on heat-pumps, insulation and building retrofits, the French on EV charging infrastructure, and the US on operational carbon capture and storage projects—despite the UK’s North Sea advantage. We’re lagging all three on hydrogen funding. This is stunning to many who rightly felt clean energy was ours to own.”

Those words are from only a matter of days ago, and I suggest that few could argue with any of them.

Tony Danker is describing what SNP Members have been saying for years. I will give a few examples. The UK energy market is completely unfit for purpose, as it is linked to the price of gas rather than the price of renewables, which has painfully punished consumers during this cost of living crisis. We have also constantly said that Scotland’s energy producers continue to be put at a financial disadvantage by Westminster’s disastrous pricing system. Only recently, Scottish Renewables said this system makes

“Scottish offshore wind farms 20% more expensive than those in English waters.”

The very same shortcomings are true of carbon capture, on which this UK Government are failing to live up to their previous promises to Peterhead and the Acorn Project.

When will carbon capture and storage be given the go-ahead in Scotland? Let us show that we are determined to deliver on net zero, and for us in Scotland that means 2045 at the latest. Will the Minister take this opportunity to deliver on the UK Government’s past promises?

We even see this with the good news story I mentioned earlier, Nova and tidal energy in Shetland, as behind that is unfortunately another story of a lack of ambition by the UK Government. We know that a Royal Society report from October 2021 found that tidal is now capable of generating 11 GW of power by 2050—that is 50% greater than current nuclear capacity—and would provide the baseload of energy that we need. Ultimately, it would do so at a cheaper price than nuclear energy could do. Yet, instead of providing the ringfenced £50 million in the CfD—contracts for difference—round that would unleash this industry in full, the Government are only providing £20 million. Minister, that is not nearly enough to kick-start its full potential.

What assessment has the Minister made of the Royal Society report? When can we expect the delivery of a ringfenced pot of £50 million so that we can deliver on the potential for tidal energy to the fullest extent, right around the coast of these islands, including in the Irish sea, which was mentioned by the hon. Member for Strangford (Jim Shannon)? We must allow manufacturers such as Nova to compete, not just from export markets, but from a thriving domestic market. We have technological leadership today and we must not lose that advantage. We must make sure that that domestic demand is there to power our innovation.

When it comes to carbon capture and storage, transmission charges or tidal, the story is the same: opportunity lost again and again because of the inaction of this Government. From Scotland’s point of view, we cannot afford to be held back any longer, because there is very little doubt that the new, green economy will form the foundation of Scotland’s future—all the evidence is pointing in that direction. Only last year, I commissioned a report by the eminent economist Dr David Skilling. It shows that Scotland has the potential to boost our output by more than five times. By expanding Scotland’s renewable capacity and by becoming a green hydrogen exporter, we have the chance to pump £34 billion into Scotland’s economy every single year. That is an investment that could sustain 385,000 jobs. That would dwarf the number of jobs we have in oil and gas today. This is a real plan for growth: green, sustainable growth for the long term, driving higher productivity, driving an industrial green strategy and driving our economy into the future. For me and my party, it is obviously the template upon which an independent Scotland can be built and can succeed.

Obviously, we will continue to have that debate on Scotland’s future and our independence, but in the here and now I would make this plea to the Government tonight: whatever the constitutional future holds, the opportunity of this green industrial future is something that we can and should be working on together. This is in Scotland’s interest, it is in the UK’s interest and it is in this planet’s interest. But if this Government are willing to work together, they need to change course urgently. They need to start to listen to people such as Tony Danker at the CBI. A good start would be ending the unfair transmission charges in Scotland, investing properly in tidal and, finally, green-lighting the Acorn Project. If we can agree to work together on that agenda, not only can we share all the benefits that green energy provides, we can protect this planet that we all call home.