By Dr Liz Cameron CBE, Chief Executive of the Scottish Chambers of Commerce
In the landscape of global energy, Scotland stands as a beacon of innovation and ambition.
Nestled amidst stunning natural beauty, our nation possesses vast potential for renewable energy generation that can power the drive to our ambitious net zero targets.
However, realising this potential requires a carefully orchestrated transition towards sustainable energy sources while still prioritising the sources that are currently powering our homes and businesses.
The importance of such a transition cannot be overstated, as it not only addresses pressing environmental concerns but also promises economic growth and jobs if done correctly.
It must take along the offshore energy industry which still has a major part to play in our economy and workforce for years to come.
A report by Robert Gordon University has found that the offshore energy industry currently represents close to one in every two hundred jobs in the UK and around one in every thirty jobs in Scotland.
Moreover, 43 per cent of UK oil and gas jobs are located in Scotland, with a particularly high concentration in the North East.
That same report by RGU report highlights that Scotland’s offshore energy workforce could be disproportionately impacted if progress towards net zero does not happen in the energy sector by 2030.
This is because a more rapid decline in the oil and gas industry combined with a slower energy transition will mean a reduction in the workforce involved in offshore energy.
Last month’s Spring Budget saw the Chancellor see fit to extend the sunset clause on the Energy Profits Levy to 2029. This will only further slow the energy transition and exacerbate the already heavily suppressed levels of investment currently seen in the North Sea.
The UK energy system requires massive investment to accelerate the transition to Net Zero.
However, this is not being encouraged by the windfall tax. In fact, it is making it increasingly difficult for companies to make long-term investment commitments to Scotland.
Offshore Energies UK estimates that £200bn of investment in oil and gas and the UK’s wider energy transition is awaiting the green light but will not happen with the current windfall tax in place.
This places thousands of jobs and billions of pounds of revenue at risk in the coming years as well as stalling the energy transition.
We can – and must – do better, by providing stability for the offshore energy sector and in turn reap the benefits that investment will bring to accelerating the transition to Net Zero.
A properly managed energy transition presents significant economic opportunities for Scotland.
The renewable energy sector has already emerged as a key driver of economic growth, job creation, and investment in the country. From manufacturing wind turbines to installing solar panels and maintaining offshore wind farms, transitioning to renewables can spur innovation and foster a diverse range of skilled employment opportunities.
A report by the Fraser of Allander Institute at the end of 2023 found that Scotland’s renewable energy industry and its supply chain supported more than 42,000 jobs and generated over £10.1 billion of output in 2021.
Offshore wind also powered the most activity across the Scottish economy, generating more than £4 billion, followed by onshore wind with £3.4 billion and hydropower with £1.2 billion.
This is a sector with immense potential to be at the heart of a net zero economy if the right conditions for investing and operating are met.
However, the various challenges facing the industry need to be tackled now.
From grid infrastructure that is not fit for purpose to lengthy planning decisions, a lack of resources for government departments and skills shortages across the board, these challenges remain significant.
Government, industry and regulators all have a role to play in overcoming these barriers.
The grid challenges faced in rural areas of Scotland continue to create issues in the timely deployment of renewable energy and the potential for new developments.
We need investment in education to equip the current and next generation with the skills necessary to advance technology and allow the renewables industry to thrive.
Scottish Government has an important role to play in communicating the need for more transmission capacity to the National Grid ESO and Ofgem.
Planning policy and guidance does not always support the most up-to-date and efficient turbine designs with higher tip heights, used as standard internationally, which would deliver even better value for consumers in suitable high-wind UK sites.
Resourcing and capacity by local planning departments and statutory consultees is one area which has stilted applications progressing through the system and needs to be better supported if we want to meet our net zero targets and tackle climate change.
While renewables continue to be the cheapest way of generating electricity, it is important to note that the costs of key components for renewable technologies have risen significantly over the last year.
From mitigating climate change and enhancing energy security to stimulating economic growth and promoting social justice, the benefits of transitioning to renewable energy are manifold.
The transition also has the potential to revitalise rural communities, particularly those in remote areas where renewable energy projects are often located. By generating local employment and providing opportunities for community ownership of energy assets, renewables can stem depopulation trends and promote sustainable development across the country.
By harnessing its natural resources, technological expertise, and spirit of innovation, Scotland can lead the way towards a sustainable and prosperous future for generations to come.
