Energy Technologies Institute

– in the Scottish Parliament at 5:00 pm on 26th October 2006.

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Photo of Murray Tosh Murray Tosh Conservative 5:00 pm, 26th October 2006

The final item of business is a members' business debate on motion S2M-4904, in the name of Richard Baker, on Aberdeen's bid for the national energy technologies institute.

Motion debated,

That the Parliament notes the current and future importance of the energy sector to the north east's economy; recognises that Aberdeen and the north east are home to a unique cluster of skills and expertise in energy exploration and development; notes the success of the Intermediary Technology Institute for Energy which is based in Aberdeen and works closely with the network of intermediary technology institutes throughout Scotland and also sources academic research across the United Kingdom and worldwide; believes that this successful model based in Aberdeen shows that the city has a unique potential to be the hub for a Scottish bid for the UK Energy Technologies Institute; notes both the location of leading oil and gas operators and contractors in Aberdeen and the work of the Aberdeen Renewable Energy Group, and welcomes the efforts to ensure that the UK Energy Technologies Institute is located in Aberdeen so that the north east remains a global leader in the energy industry.

Photo of Richard Baker Richard Baker Labour 5:12 pm, 26th October 2006

I thank colleagues from all parties who supported the motion. Their support shows the wide recognition of the importance for the north-east of the Chancellor of the Exchequer's announcement that the Government wishes to establish a United Kingdom-based world-leading energy and environmental research institute. That is a key decision, not only for the UK industry, but for Aberdeen and the north-east, because such an institute could help to ensure that Aberdeen, which is the centre of the energy industry in the UK, continues to be Europe's energy capital. In turn, Aberdeen, as a focus for the industry and its skills and expertise, will be essential to the new institute if it is to achieve its aims and be the success that we all want it to be.

The intention is that the institute will work in partnership with and be jointly funded by business in order to place the UK at the cutting edge of energy science and engineering. The aim is to provide the UK with a pre-eminent world-class means of delivering energy technology research that will underpin eventual deployment and which will be driven by the critical need to develop long-term sustainable and secure energy solutions. Those are key strategic aims for the UK and our energy industry. Aberdeen already makes a major contribution to achieving those aims.

The city is home to a remarkable cluster of about 900 energy-related businesses from across the spectrum of the industry, as well as being home to energy-related agencies, Government bodies and research institutes. The major energy company headquarters that are located in Aberdeen are not just UK headquarters, but global ones. Companies also base their world engineering research centres in the city. No city in the world is better connected to the global energy industry than Aberdeen. It is therefore no surprise that the United Kingdom Offshore Operators Association and the Confederation of British Industry Scotland see Aberdeen as the logical location for the institute. Unions such as Amicus know that Aberdeen provides skilled workers for the energy industry throughout the world.

Aberdeen is home to the Executive-funded intermediary technology institute for energy, which already manages research and development programmes from throughout the energy spectrum—from mature oil and gas, power networks and energy storage through to renewables and clean energy. The model of the ITI, which collaborates with partners from industry, academia and the financial sector, is clearly a good one on which to base the operation of the UK institute.

Aberdeen is not just a world centre for the oil and gas industry, but is taking a lead in the developing renewables industry. The Aberdeen renewable energy group is an innovative public-private partnership that has been established to help identify and promote renewable energy opportunities for businesses in the city and its shire region. It has nearly 100 members across a range of sectors that are involved with renewable energy.

Aberdeen already has a wealth of partnership working across the whole spectrum of the energy industry. The city has academic expertise in that area through our universities; commissioning research is a central part of the proposed institute. The Robert Gordon University's energy centre offers industry-leading MSc training programs in oil and gas engineering, and houses the centre for research in energy and the environment.

Photo of Brian Adam Brian Adam Scottish National Party

Is the member aware that not only is RGU one of the leading universities in that sector but that it has recently attracted significant interest from China? Chinese postgraduate students are currently there for training in the sector, which is precisely the kind of approach that is being sought by the Department of Trade and Industry.

Photo of Richard Baker Richard Baker Labour

Brian Adam makes an excellent point that establishes that there are global connections that we have in academia and the industry, which come through to Aberdeen.

We should not forget the University of Aberdeen—its rector, who is here, would not wish us to do so. The institute for energy technologies at the university is one of the pre-eminent centres of its kind in Europe, with top-class researchers and links to, and funding from, industry. It is involved in a joint project with the UHI Millennium Institute to offer a range of courses that will be linked to the decommissioning of Dounreay. That is an important point, which was reflected in the debate last night that was led by Jamie Stone, which highlighted the research potential at Dounreay. Although I am emphasising the role that Aberdeen can play in the new institute, we are all conscious that throughout the rest of Scotland and, indeed, the United Kingdom, there are a number of centres of expertise in the energy industry.

Aberdeen's institutions are collaborating with a number of key partners in the Scottish Executive's team, and are working on maximising the involvement of our centres of excellence, such as Heriot-Watt University and the University Of Strathclyde, in the new institute. The team is keen to work with other centres of excellence in the UK, such as Imperial College. It has never been envisaged that only Aberdeen would benefit. The new institute is bound to commission research and to draw on expertise throughout Scotland, and indeed throughout the UK and the world. That is the model on which the energy ITI that is already based in Aberdeen works. Of course, we hope that our own academic institutions will be key beneficiaries, but the principle has always been that the research will be commissioned from the institution that is best placed to carry it out, wherever that institution happens to be based. It is important to recognise that Aberdeen is absolutely crucial to Scotland's efforts to play a key role in the new institute and that when we are looking for a hub and centre for the institute, where the operation is and where the strategy is developed, Aberdeen is clearly the logical place.

The Executive placed the energy ITI in Aberdeen because that is where the cluster for energy is. The same argument follows for the UK institute. As Europe's capital of energy, working with partners throughout the UK, as it already does, Aberdeen is ideally placed to make the Government's aspiration for the institute a reality. I hope that the minister can reassure us tonight that the Executive realises that. I know that the case is being made strongly by my colleagues Frank Doran and Anne Begg at Westminster, and by members from other parties, too. I hope that the minister will accept not just my view but the strongly held view of many members that the new institute should be based in Aberdeen. That is the best way of ensuring that the whole of Scotland, and all of those involved in the bid, will benefit from this exciting new initiative, which has the potential to ensure that not just Aberdeen but Scotland and the UK will be world leaders in the energy industry for decades to come.

Photo of Brian Adam Brian Adam Scottish National Party 5:19 pm, 26th October 2006

I welcome tonight's debate and I commend Mr Baker for lodging the motion that has allowed the debate to take place.

The proposed UK energy technologies institute represents an opportunity for all of Scotland, but our bid must be led by Aberdeen because that is where our expertise in energy lies. The bid will require partnership working; it should be led through our academic institutions but it will also require industry input and international input. As Mr Baker rightly pointed out, the connections between industry, our academic institutions and the international dimension exist in Aberdeen.

Because the Department of Trade and Industry has not spelled out all the detail, we have a wonderful opportunity to drive the project. We have a chance to create an institute that will work for us all—in fact, one that will work for the benefit of mankind, if members will forgive the motherhood-and-apple-pie approach. The proposed institute is not intended just to be a profit centre; it is about making the required changes to our approach to energy for the good of us all.

A key point is the fact that the bid will focus on who is to head up the institute. It will be a partnership between academic institutions, the private sector and aspects of the public sector, but the DTI is looking for a key individual to be the director. I hope that Scottish ministers will help to identify a suitable person from the great wealth of experience that we have in the field. Someone from the private sector who has an academic background might well be the individual who is needed. As I understand it, although there might be a real campus, the hub will revolve around a virtual campus, and that will depend on who is chosen as the director. I hope that the energies of the Executive and its partners are focused on identifying suitable individuals who could head up the institute.

I commend the Executive for the work that it is already doing with its partners in the field. I am aware of that work, having attended a number of meetings that have been held in Aberdeen and which involved all the interests and were focused on the efforts of Aberdeen City Council. I particularly commend its efforts in organising the groups that need to be involved in the initiative.

Yesterday, I received a written answer to one of the questions that I have lodged on the issue. It is disappointing that the Deputy Minister for Enterprise and Lifelong Learning did not go as far as his colleague Richard Baker and those of us who signed the motion would like him to go. He wrote only about attracting

"a significant proportion of the Energy Technologies Institute's research funds to centres of excellence in Scotland, including Aberdeen."—[Official Report, Written Answers, 25 October 2006; S2W-28860.]

I was looking for a dynamic approach to getting the institute here in Scotland. The sensible place for it to be is Aberdeen. Of course we should involve partners, but the minister was asked a specific question but did not particularly endorse the proposal. We need to create partnerships throughout the academic world in Scotland. That is happening now, but the minister's response did not have the enthusiastic approach to an Aberdeen-led bid that I expected.

I think that I have taken as much time as the Presiding Officer will allow. I commend the motion to the minister and hope that he will give a positive response.

Photo of Nanette Milne Nanette Milne Conservative 5:24 pm, 26th October 2006

Richard Baker is to be warmly congratulated on his timely introduction to the Scottish Parliament of a debate on a subject of immense importance to Scotland's future prosperity.

In September, when the Government announced the setting up of a UK energy technologies institute, the CBI stated that such an institute

"has the potential to establish the UK as a world leader in energy technology research. It will help build a critical mass of R&D activity in an area that has great commercial as well as environmental potential across the globe."

If the bid to locate the institute in Scotland is successful, Scotland will rightly be able to claim that it is the best small country in the world, in the energy field at least.

Aberdeen has been at the forefront of the energy industry for 30 years. From its experience of extracting oil and gas from the very difficult environment of the North sea, a wealth of knowledge and technology has been developed, exported globally, and applied to other sources of energy, so that today Aberdeen is as well known for renewables as it is for oil and gas.

As Richard Baker said, Aberdeen is home to an amazing cluster of energy-related businesses and research institutes, and collaboration among Aberdeen's two universities, other Scottish universities and possibly even Imperial College, London is already under way. As we have heard, the ITI for energy is situated in the city, and Renewables UK is based in the DTI's Aberdeen office, clearly indicating the links between renewables and the oil and gas sectors.

Technology developed by the North sea oil industry is being put to use in the developing Moray firth wind farm project, Pelamis was developed in Scotland, biomass is increasingly contributing as a source of energy in the north-east, and hydrogen capture techniques are being developed nearby.

The energy sector in Aberdeen is a major contributor to the country's economy. To put it into context, an industrial sector that employs around 40,000 people in Aberdeen is equivalent to one that employs 630,000 people in the London area—the equivalent, I am told, of nine Heathrow airports. Furthermore, this year's business gateway international study has shown that 41 per cent of exporters in the North sea oil and gas sector have international activities valued at more than £1 million and that international business accounts for at least a third of their turnover.

Getting the energy technologies institute into Scotland would provide an unparalleled opportunity for our country. Richard Baker has clearly laid out the compelling reasons why it should be situated in Aberdeen. I am delighted that his words were endorsed earlier this week by CBI Scotland, which gave its unequivocal support to Aberdeen's case when it appealed to politicians at Westminster to support the city and help it to secure its position as Europe's energy capital.

Work on preparing Scotland's final bid for the institute is well advanced. I hope that the minister will agree that there are compelling reasons for considering Aberdeen as its location. I hope that he will add his support to Aberdeen's case, as have the CBI and other significant industrial and academic players in the energy sector.

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat 5:27 pm, 26th October 2006

I add my congratulations to Richard Baker and endorse everything in his motion. I also congratulate him on lodging his motion at just the right time.

The energy technologies institute, funded jointly by the Government and business, will enable major investment in research and development and provide a significant boost at a pivotal point in the development of renewable energy. Its remit will be to deliver secure, reliable and cost-effective low-carbon energy technologies ready for commercialisation as soon as possible. I would argue that if we want to tap into the most concentrated expertise currently available across a range of relevant disciplines, it exists uniquely in Aberdeen and the north-east.

Exploration, research, operating in a marine environment, financing large and risky projects, fabrication, maintenance, communication, oil, gas, CO2 sequestration, hydrogen, offshore wind, onshore wind, wave and tidal power—you name it, Aberdeen has it. As Richard Baker said, it also has good links to and on-going collaboration with other research and academic institutes from Caithness to Cambridge, and internationally.

Brian Adam made a good point about the opportunity to shape the institute. Aberdeen has the expertise and networks to do that effectively, too.

Photo of Brian Adam Brian Adam Scottish National Party

Nora Radcliffe rightly mentions the academic and public sector contributors, but it is noticeable that, of the major private sector contributors, none of the Scottish companies has so far taken part. I am talking about some of our big electricity and oil companies—we have oil companies involved both in production and on the ancillary side. Does she think that it would be a good idea to encourage some of them to make the financial commitment to help make the project work?

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat

It would be excellent if companies did that. As the work of the institute builds up, it will become more attractive and companies will want to opt into it, rather than be left out. This development is hugely significant. The amount of investment that is being made at this pivotal time for the development of energy technologies is exciting, and it presents a huge and vital opportunity.

The skill sets that we have in Aberdeen have perhaps not been emphasised enough. We do not just have the two universities; we also have the biggest college in Scotland. They can produce the people who can do the practical things that are needed to produce the technologies. For all sorts of reasons, Aberdeen seems to be the obvious place to centre the new technologies institute. Aberdeen has a cluster of relevant expertise across the board, in practical, research and financial areas. It is all there, and we should be exploiting it. There should be a Scottish bid, based on Aberdeen. Basing the institute in Aberdeen will bring benefits throughout Scotland and the UK.

Photo of Shiona Baird Shiona Baird Green 5:30 pm, 26th October 2006

I thank Richard Baker for securing the debate. Aberdeen has a long and successful record in the energy business, even if much of it has been fundamentally unsustainable. It is surely time to turn that around and to develop energy systems that are fit for the future.

A quick look at Scotland's greenhouse gas statistics shows that energy, in all its forms, accounts for very nearly 90 per cent of our carbon emissions. If we are to achieve the reductions that are needed—some people are talking about reductions of more than 90 per cent over the next three decades—energy must be at the very heart of policy. There needs to be a fundamental shift in the way we generate, distribute and use energy. We need to raise our game and acknowledge that energy policy means more than simply the supply of electricity.

If the energy technologies institute is to go anywhere, Aberdeen is very well placed to be its home, but we need to question whether that is the best use of limited funds for moving towards a low-carbon economy. As my party pointed out in our debate this morning, transport is a significant producer of carbon emissions—it accounts for around 22 per cent of the energy sector's emissions. All along the line, in every sphere of life, in our homes and businesses, we waste more energy than we use. If we could simply cut out the waste, we would be going a long way towards an energy policy fit for the future.

We already know what we need to do and how to do it. We know that if we decentralise the generation of electricity, we can use the waste heat in homes and businesses. Our European partners do that all the time and wonder why we are so backward. We know how to build world-class renewable energy devices, but we cannot get them installed in our own country. We know how to build homes that require no heating or cooling. They are being built in Austria and Germany, where winters are far colder than anything we experience here. In the meantime, our building standards are far weaker than those of our northern European counterparts. We know how to develop fully integrated public transport networks that can cut down our car use radically, but we still have an outdated system and we persist in building houses far away from where people have to work, forcing them into cars on a daily basis. Just what is it that the energy technologies institute will tell us that we do not already know?

Photo of Richard Baker Richard Baker Labour

We need to think of the institute as an energy and environmental research institute. Some of the themes that Shiona Baird has been talking about will form part of the institute's work. Aberdeen is not just a leader in oil and gas; it is also a leader in the development of new forms of energy, including offshore wind and wave energy.

Photo of Shiona Baird Shiona Baird Green

Absolutely, but the point is that we know how to do these things; what we need is the application. The problems with our energy systems are not technical; they are structural and political. We have infrastructure that was built in the middle of the last century and a political system that refuses point-blank to face up to the realities of climate change. People are wedded to the fantasy that we can invent our way out of trouble and maintain our current lifestyles in perpetuity. We cannot do that—there is no magic bullet. Even with hyperefficient cars, passive houses and decentralised energy networks, we will need to alter the way we live our lives quite radically if we are to have lives worth living.

We need to start changing now. We do not have the luxury of being able to wait for 10 years of NETI research before we start to change our ways. I fear that this initiative is simply another method of putting off the inevitable for another few years, making it someone else's political headache. We just cannot afford to keep on procrastinating like this. We know what to do. Let us just do it, instead of talking about it.

Photo of Allan Wilson Allan Wilson Labour 5:35 pm, 26th October 2006

I join other members in thanking Richard Baker for giving us the opportunity to debate a subject that is important, not least to Aberdeen and the north-east of Scotland. I have listened with interest to and noted the views that have been expressed.

As most members have said, the energy industry has long been a mainstay of the north-east's economy. The oil and gas industry in Scotland has been and continues to be hugely successful and the knowledge base in Aberdeen extends beyond offshore exploration and production in the North sea. The industry provides expertise worldwide in exploration, decommissioning offshore resources, health and safety and project management. Companies in the north-east are succeeding in selling their expertise in oil and gas to other parts of the world. The north-east has also experienced significant investment in renewable energy, as Richard Baker and others said.

The north-east has a proven track record in research. ITI Energy, which is based in Aberdeen, is an excellent example of a relatively new organisation that has made a significant impact on the energy scene. The seven projects that it has commissioned have a potential investment of more than £30 million and show ITI Energy's ability to bring world-class teams together to create globally competitive technologies.

ITI Energy has engaged widely with the business, academic and financial communities to ensure a focus on developing energy-related technologies with commercialisation opportunities and with the potential to deliver significant economic benefit for Scotland.

Photo of Brian Adam Brian Adam Scottish National Party

Does the minister agree that ITI Energy, which is based in Aberdeen, would complement rather than compete with the energy technologies institute that the DTI proposes?

Photo of Allan Wilson Allan Wilson Labour

Very much so. I am sure that the member is familiar with the series of roadshows that ITI Energy is undertaking to promote the opportunities for Scottish organisations to become involved in the projects that it has commissioned by becoming a licensee or supply-chain provider or by investing directly, for example. ITI Energy provides opportunities, not least for the companies that Brian Adam mentioned in an intervention, such as the major electricity generators in Scotland, which are not headquartered in Aberdeen.

Another innovative partnership—the Aberdeen Renewable Energy Group—has successfully brought together energy businesses, research institutes, consultancies and economic development agencies to identify and promote new renewable energy opportunities for north-east Scotland. The group is involved in assessing the feasibility of an offshore wind farm off the coast of Aberdeen—members will be familiar with that project—and in developing the energy futures centre and accelerating the transfer of oil and gas expertise to the renewables industry. That knowledge transfer is an important part of the process.

All that activity shows why Aberdeen is—rightly—considered the energy capital of Europe. There is no doubt that considerable expertise exists in the north-east and that it has the potential to make a significant contribution to the proposed energy technologies institute.

Members—not least Shiona Baird, who I thought had a bit of a warped impression of what we propose—will probably find it helpful if I briefly explain the aims of the energy technologies institute, how it will be established, the timescales and, most important, what we are doing to ensure that Scotland is fully involved from the outset.

In partnership with the private sector, the UK Government intends to establish a world-leading scientific institute to help the UK to tackle future energy challenges. Research and development are fundamental to facing the challenges that we identified in the energy white paper and reiterated in the energy review. Those challenges are to reduce emissions of greenhouse gases—something I would have thought Shiona Baird would welcome—to address the decline in the UK's indigenous energy supplies and to modernise the UK's energy infrastructure.

The institute's remit will be to accelerate the development of secure, reliable, cost-effective, low-carbon energy technologies towards commercial deployment. That is a fundamental objective if we are to meet our wider social and economic policy objectives. The institute will support specific industrially relevant projects to develop both small-scale and large-scale energy supply technologies, projects to develop a mix of energy technologies to increase security and diversity of supply, projects to increase the efficiency of energy use, projects to develop sustainable transport fuels and transport management technologies, projects to develop energy infrastructure and supply technologies, and projects to alleviate energy poverty through the provision of secure clean energy to our poorest communities. I would have thought that we would all subscribe to those objectives, but it is obvious that not all of us do.

The institute will have £1 billion of funding for the next 10 years. Half of that money will be provided by the UK Government and half will be provided by private sector partners. The point that four of the world's largest energy companies—E.ON UK, Shell, EDF Energy and BP—have already expressed support for the initiative has been mentioned.

The institute will be established on a hub-and-spoke model. The director's office will form the hub, and the spokes will be centres of excellence located in various academic and scientific institutions in the UK. Most of the institute's research activity will take place in the spokes.

Photo of Brian Adam Brian Adam Scottish National Party

I want to be helpful to the minister. Does he agree that it is important that, in any Scottish bid, we identify at an early point a suitable director so that we can build the bid around that person and the institute?

Photo of Allan Wilson Allan Wilson Labour

I was just about to speak about timescales.

As I said, the institute will be established on a hub-and-spoke model. Its board will be appointed by the end of the year, and the director will be appointed circa January 2007. Discussions about where the director will be based will start in January 2007 and are expected to be completed by next summer. It is hoped that the institute will be up and running by the second half of 2007.

I turn to Scotland's role in the process. We fully support the establishment of the institute—I hope that that reassures members. Secure, reliable and cost-effective energy is key to the sustainable development of our economy, and it is vital that the UK accelerates and broadens research activity in the energy sector and invests in the development and deployment of a wide range of modern technologies.

Scotland has a well-developed research base in energy and a number of world-class academic institutions that have a wealth of experience in energy research. There are major energy research activities in the University of Strathclyde, the University of Edinburgh, the University of St Andrews, Heriot-Watt University and the universities in the Aberdeen area in fields such as renewable energy, hydrogen fuel cells, petroleum engineering and power systems. Those universities have a track record of commercial sector involvement and strong links with people in the energy industries, many of whom are based in Scotland.

We are confident that Scotland will play a major part in the new institute. The Deputy First Minister and Minister for Enterprise and Lifelong Learning has written to the Chancellor of the Exchequer and the Secretary of State for Trade and Industry to express our full support for Scottish involvement in the institute. Rather than focusing on individual bids, the Executive has emphasised working with Scottish universities, the economic development agencies, the Scottish Further and Higher Education Funding Council and industry to develop a comprehensive and coherent bid to attract a significant proportion of the institute's research funds to centres of excellence in Scotland. We recognise Aberdeen's key role in that process.

We believe that Scotland should be fully involved in the energy technologies institute. We have put in place a work programme—which members have referred to—to develop a bid that demonstrates Scotland's capabilities in the round. Our bid will reflect the skills and expertise in the north-east, which I have referred to. The Aberdeen city and shire economic forum is contributing to the development of the bid. We are confident that such an approach will maximise Scottish involvement in the new institute.

Meeting closed at 17:44.