The Labour Party can clearly make common cause with the Scottish Government on the UK Government’s decision to close the renewables obligation certificate scheme a year earlier than planned. Although we wish to press the UK Government to rethink its position or at least to negotiate the transition period, will the minister consider using the Scottish Government’s power to extend the ROCs over the transition period? Until the ROC scheme is closed—in other words, for the next year—the Scottish Government has the power to issue its own renewables obligation certificates, paid for not by the UK consumer but by Scotland. Has the Government considered using its power to do just that?
As Ken Mackintosh acknowledges, we have pressed the UK Government hard on this matter. We know that the UK Government has a mandate, based on its manifesto, to bring about a situation in which there are no new subsidies. However, I would argue that the decision that was taken to curtail an existing subsidy scheme does not accord with the wording of that manifesto, because it concerns not a new provision but the curtailment of an existing one.
Secondly I have pressed that matter not only by writing letters; I also met Amber Rudd in the summer to press our concerns. That had no impact whatsoever on the UK Government.
In response to Ken Macintosh’s specific question, I say that we do not have the budget that would enable us to pay for reserved matters that are the responsibility of the UK Government.
Our overall vision will be to reduce overall energy demand in the system in the first place, by focusing on heat-demand reduction, further addressing household fuel poverty and helping to reduce costs to improve the competitiveness of our businesses and energy-intensive industries and the efficiency of the public sector. We need more local heat generation and supply. We need more energy storage at transmission, distribution and household levels.
We have many of the building blocks in place. In June, the Scottish ministers designated energy efficiency as a national infrastructure priority. I will say more about that when I sum up the debate, as I have run out of time to deliver the next part of my speech because I took an intervention.
In all our work, we will draw on advice from experts across the sector, including members of the Scottish energy advisory board, for the purposes that I set out clearly earlier. That will underpin our work over the coming months towards an overarching energy strategy for Scotland, setting out what we can do to optimise the benefits of Scotland’s significant energy resources and expertise through to 2030.
That the Parliament welcomes that the updated 2020 Routemap for Renewable Energy in Scotland, published by the Scottish Government, records a significant increase in the generation of electricity from renewable sources; considers that UK Government policy prevents Scotland from achieving its full renewable and low-carbon energy potential, and is damaging to investor confidence, employment, energy security, consumers’ energy bills and emission reduction; recognises that the further powers in the Scotland Bill cannot deliver Scotland’s energy ambitions, and agrees that the UK Government must engage with Scotland and the other devolved administrations on energy policy.
The Scottish Conservatives have always believed that renewable energy has a part to play as a component in Scotland’s energy mix. We do not share the single-minded focus of some other parties on onshore wind as a technology, but we want a balanced portfolio of renewable energy to make a contribution. There are a great many success stories in Scotland that we can all celebrate, whether they are in hydro, wind, biomass, air-source and ground-source heat pumps, solar, wave or tidal.
We know, and we have heard again today, that the Scottish Government is critical of the UK Government’s plans to cut subsidies for wind power. I remind members that those plans were signalled well in advance of the general election. It was back in April 2014 that the then Minister of State for Energy, Michael Fallon, made it crystal clear that any wind projects that did not have planning consent and grid connection by the date of the general election would not be eligible for subsidies thereafter. He was simply reiterating what had been stated previously. All that the Conservative Party has done is hold true to its manifesto commitments and keep its promises.
Why have we taken that approach? It is simply because the costs have been spiralling too high.
No—I need to make progress.
The respected Scottish economist Tony Mackay, who is a specialist in energy, has calculated that wind farm subsidies in Scotland were between 2.5 and 3 times what was required for wind farms to be built. He puts his best estimate at 2.8 times. In his words, that means that developers have been making “super-normal” profits from those projects, all at the expense of the electricity bill payer.
Does Mr Fraser not realise that it is perverse that the UK decided, with the objective of reducing costs, not to reduce the cost of the most expensive form of renewables but to reduce the cost of the most efficient and least expensive, as it is £80 per megawatt hour for onshore wind as opposed to in excess of £110 per megawatt hour for offshore wind? Does he at least acknowledge that there is irrationality in his argument?
The minister represents the Highlands. I would have thought that he would be concerned about fuel poverty. According to Tony Mackay—who I think lives in the minister’s constituency—electricity bill payers are paying 2.8 times more than they should for onshore wind. I would have thought that the minister would welcome a reduction in the subsidy that his constituents pay for that technology.
We need to remember that, if we add together all the projects already constructed, all those under construction and all those that have planning consent, we will have exceeded our target of having 100 per cent of our electricity needs from renewable energy by 2020. We cannot go on pouring public subsidy into one technology when our targets are already being met.
The president of the British Photovoltaic Association, Greg Barker, has called on the sector to avoid the hysteria and self-damaging doom-mongering that we saw in 2011. He added:
“Around the world, the solar industry is already operating without subsidy and there are still further opportunities to create additional value and extract further efficiency savings in the UK sector ... It is time to muster up an optimistic ‘can do’ ethic and talk up the huge success and enormous potential of UK solar, not plead for years more subsidy.”
Pleading for more subsidy is what the minister is doing this very afternoon.
Renewable energy still has a bright future, despite all the doom-mongering that we have heard from members of other parties today. The UK Government is taking the right decisions to protect consumers and should be commended for doing so.
I move amendment S4M-14272.1, to leave out from “welcomes” to end and insert:
“recognises the need for a balanced energy policy for Scotland in which renewable energy is a component; understands that, with projects constructed, under construction or with consent, the Scottish Government’s target of generating an equivalent of 100% of Scotland’s electricity demand from renewable sources will be met by 2020; welcomes steps by the UK Government to relieve pressure on consumer bills by reducing subsidies to mature technologies such as onshore wind power, and believes that renewable energy in all its forms will continue to have a healthy future across the UK.”
As colleagues will know, I am always delighted to have an opportunity to debate the issue of renewable energy and ways in which we can harness the enormous potential in Scotland, given our world lead in natural resources, research capability and skills base.
As the update report that was published today makes clear, we are seeing good progress, albeit we could and should be doing more and better in a number of areas, as Sarah Boyack indicated.
I agreed with pretty much everything that the minister said in his speech, but I was a bit disappointed by some of the wording in the motion. Arguing that Scotland’s energy ambitions cannot be delivered is a counsel of despair, and that is untrue. Sarah Boyack’s amendment makes that and other highly relevant points very well. The minister has an excellent track record in trying to build consensus and on focusing on areas of agreement. I wish that he would continue to do that and avoid lapsing into finding excuses to rerun the referendum, rewrite the Smith commission report or, indeed, reignite political differences that the sector is desperate for us to avoid.
That said, I welcome the confirmation of the significant increase in the generation of electricity from renewable resources. That is encouraging with regard to our interim target and laying the foundation for reaching the 100 per cent target in due course. The Scottish Liberal Democrats strongly support that, having been responsible in the previous Executive for setting some of the early stage targets on the journey towards decarbonising our energy system. As I said earlier, the political continuity and consensus that we have seen are important. They have helped to remove some of the political risk for the sector.
There were differences under the previous UK coalition Government—Sarah Boyack alluded to some of those differences—but I know that Fergus Ewing enjoyed a good working relationship with successive Lib Dem energy secretaries, particularly my good friend and the strongest possible advocate of the renewables sector, Ed Davey. Sadly, since the election in May, we have seen a different approach. Like the minister, I am dismayed by what seems to be a cavalier attitude that has been adopted by the current Conservative Government. Its plans to close the renewables obligation were signposted, as Murdo Fraser indicated, but the decision to accelerate those plans by a year was irresponsible and in bad faith.
I am afraid that I do not really have time to do so.
That has not only undermined a great many projects, including around £100 million-worth of community projects; along with the other measures that the minister referred to, it has knocked confidence in the wider renewables sector beyond the onshore wind sector. Even the Tories may come to regret that.
To look at the overall picture, obviously I have a specific interest in marine renewables, on which Orkney has led the way. Things have not been easy since the previous 2020 update. The challenges that the wave sector in particular faces are significant, although I still firmly believe that it and tidal energy have a key role to play in our renewables future.
As well as the technical challenges, the greatest risk is posed by the continued lack of grid infrastructure. I know that that is not an easy nut to crack. If that were the case, it would have been sorted already. However, without a clear and urgent timetable for delivering that key strategic asset, the threat to the development of renewables in the islands that I represent should not be underestimated. That is not just a concern for Orkney, with the potential loss of jobs and wealth creation; it matters for Scotland and the UK, which will struggle to meet their renewables and climate change targets without Orkney playing its full part.
As I said in Tuesday’s debate, innovative solutions are being identified to better use the resources that we have available. The surf ’n’ turf project is looking at how hydrogen can be used to run our ferries. Installed renewables can and should be used to heat and power the replacement Balfour hospital in Kirkwall, and there are opportunities to use renewables and special tariffs to deliver affordable warmth and help, with energy efficiency measures, to reduce the scandalous levels of fuel poverty that blight my constituency and many like it.
The minister can count on my support in helping to deliver those changes and other changes that demonstrate what our renewables future should be about.
In the lead-up to the Paris summit, climate justice in Scotland is vitally important as an example of inclusive action on the global stage, and communities and workers must be at the heart of a just transition. As I have said in recent speeches, it is essential for the Scottish Government to have a strategy to develop transferable skills for the future in response to the challenges that are being faced by the oil industry in the North Sea.
In the lead-up to the summit and beyond, we must ensure that rural Scotland is not left behind in a just transition to a low-carbon economy. We must support our communities, thereby signalling that rural communities around the globe must not be marginalised. There are some fine examples of transition at community level. Some of those have been supported by the Scottish Government’s climate challenge fund—for example, the Lanark Community Development Trust and Peebles CAN.
In travelling around my region, I have seen cause for optimism. I have spotted the van of a company called Eco Edge, tucked in a driveway in a small village. The company installs biomass boilers. I have witnessed the installation of a wood-pellet boiler by a resident in the village of Douglas. However, how many residents in isolated rural areas and in off-grid dwellings can afford to do that? In some parts of South Scotland, people cannot even find a plumber, let alone someone to fit a biomass boiler, air-source heat pump or solar panels.
What is the Scottish Government doing to support the start-up of small rural businesses so that they can take up the opportunities that are offered by the transition? What is being done to support transferable skills for small rural businesses, and how are those opportunities being promoted? Can the minister reassure us today that the rural fuel poverty task force will offer truly inclusive solutions? What is the timescale for its recommendations?
We must lend support abroad through the climate justice fund—for example, to women in Malawi and Bangladesh. We must also look at the position of women in Scotland and the contribution that they are making to renewable energy action. There is a significant opportunity to stabilise the gender imbalance in the energy sector. Without the barrier of entrenched inequality in a long-standing industry, women are making a valuable contribution to ensuring that our emerging renewables industry is globally competitive.
I am pleased that the Scottish Government is ensuring that policy development is adapted to helping women to reach their full potential, given that progress has increased by 28 per cent. Continued research and monitoring is key to ensuring fair funding and skills development opportunities, particularly for women in rural areas.
In the lead-up to the summit, we must be able to show clearly that renewable energy must be connected and combined with energy efficiency for success to be achieved. Some councils have been brave despite the challenges that my colleague Sarah Boyack highlighted. That includes my council area of South Lanarkshire. The council has, through its investment programme in its housing stock, moved on to improving energy efficiency in the properties that it owns.
In Clydesdale, the council has started a programme of works for rural off-grid areas such as Douglas and Forth, where it is replacing old heating systems with air-source heat pumps. In addition, the council has, using Government funding, been putting external cladding on to older wooden houses in places such as Lanark and Carstairs on a universal basis so that the cladding can act as insulation where there is no cavity wall.
If we can lead by example, by being inclusive in our actions to develop renewable energy and energy efficiency in Scotland, we can truly be an inspiration to the rest of the world in the lead-up to the Paris summit.
Jobs are being lost, investment is being lost and climate change targets are being threatened. It is time for this Parliament and the Scottish Government to have full powers over energy so that we can reverse the UK Government’s misguided decisions. Otherwise, we all face a future of energy prices that are much, much higher than they need to be.
Earlier this week, I set out the Scottish Government’s views on what is needed to sustain the oil and gas sector. That sector’s continued health is important in its own terms and particularly as we transition to a low-carbon economy. We have already achieved much as part of that transition. Today, I wish to update members on our success in delivering a marked increase in renewable electricity generation, as described in the updated “2020 Routemap for Renewable Energy in Scotland”. Provisional figures show that we generated a record 49.8 per cent of Scotland’s gross electricity consumption in 2014 from renewables, so we are well on course to meet our interim target of 50 per cent by 2015.
We are committed to increasing community and locally owned generation towards a target of 500MW by 2020. I have heard just this morning that we have now passed our target, with nearly 12,000 individual installations across Scotland; 61MW of generation is wholly owned by community groups, and there are now 45 examples of shared ownership, nearly quadrupling last year’s figure of 12.
Given our continuing support for the work that is being done on carbon capture and storage, it is extremely exciting that the world’s first full-scale gas carbon capture and storage project is moving closer to being built in Peterhead. We are also supporting Summit Power’s Caledonia clean energy project, with the Scottish Government providing £2.5 million to support the development of the CCS clean energy project at Grangemouth.
We continue to champion wave and tidal energy technologies through the creation of Wave Energy Scotland and our investment in MeyGen, which is the world’s largest planned tidal stream energy project. The onshore construction phase of the Pentland Firth tidal project is well under way, and I was delighted to hear this week that the project owner, Atlantis Resources, is relocating its corporate head office from Singapore to Edinburgh.
We are also making progress in other areas. We have achieved an 11.8 per cent reduction in energy demand against a 2005 to 2007 baseline; in other words, we have almost achieved our 12 per cent target figure well in advance of the target date of 2020.
Moreover, through the publication of our heat policy statement in June, we have set a clear framework to support the delivery of low-carbon affordable heat and to focus and drive the pace of change. The statement also sets out a framework for investment in a low-carbon heat sector.
We have supplemented our support with the establishment of the £76 million low-carbon infrastructure transition programme, which is a Scotland-wide cross-sector project development unit to support the development and acceleration of low-carbon infrastructure projects over the next three years. Under that programme, I launched the geothermal challenge fund earlier this year, and today I am pleased to announce that we are turning our attention to accelerating large-scale water-source heat pump projects to support low-carbon district heating schemes in Scotland. We are making £375,000 available to help with the development of business proposals, and a further £2 million will be available to support a commercially viable demonstrator project.
However, despite our success, we now face significant challenges. First, security of electricity supply is now under threat across the United Kingdom. Across Great Britain, spare capacity in the system could be as low as 1.2 per cent this winter.
Secondly, UK charges are preventing the creation of new thermal plants in Scotland, which is what we called for in 2013. In Scotland, Scottish Power has confirmed not only that Longannet will close on 31 March 2016 as a result of discriminatory transmission charges but that it will
“not be progressing with the development of a CCGT plant at Cockenzie (due to the same economic conditions affecting all thermal plant in Scotland).”
Thirdly, the UK Government has carried out what can only be described as an assault on renewables, which includes the early closure of the renewables obligation for onshore wind and solar photovoltaic projects, the review of the feed-in tariff scheme, the proposed removal of FIT accreditation and, bizarrely, the removal from renewables of exemption from the climate change levy. Such moves have caused widespread uncertainty and concern. Indeed, a report by the chartered accountants Ernst & Young that was published earlier this week shows that investment in onshore wind energy is already being hit. Chartered accountants are not necessarily known for their use of extravagant or colourful language, but EY has said that the UK Government has sentenced the renewables industry to
“death by a thousand cuts.”
Fourthly, we wait to see whether the United Kingdom Government and the Prime Minister will honour their promise to connect the northern isles and the Western Isles to the UK grid or whether those islands will remain separated therefrom.
Those decisions cut to the heart of a major Scottish interest and yet were made without meaningful consultation, despite the recommendation of the Smith commission on just that subject. That raises questions about the extent to which Scottish energy issues are, and will ever be, given appropriate consideration by the UK Government.
Without the appropriate recognition of our role in setting the policy framework, Scotland risks missing the opportunity to cement the growth of our renewable electricity industry, with significant supply chain benefits, while decarbonising our energy supply.
Our ambitions, which are set out in the electricity generation policy statement, to largely decarbonise the electricity grid by 2030, to greatly enhance community renewables and to have a balanced generation mix are unchanged. However, within this context of future UK policy uncertainty and a lack of clarity on whether it will serve Scotland’s interest, I inform members today of my intention to begin a process to ensure that we have the best suite of policies to address the future challenges of delivering affordable, secure, low-carbon energy supplies—not just electricity but heat, given that heat is by far the largest source of our energy demand in Scotland, at over 50 per cent.
Predictably, we have been asked to welcome the Scottish National Party’s new strategy, which we had not seen. Charmingly, Fergus Ewing said that it probably was not that important that we had not seen the strategy before today’s debate and implied that it was not that radical.
The Parliament can agree on a lot regarding renewables. I am proud that I set the first target, which was seen then as bold and brave. It was not what the officials thought that we would just achieve anyway. There is a danger that targets will be targets just to do what we were going to do anyway. We need more stretching targets now. When the Parliament was set up, the power of setting stretching targets, together with political leadership, work with business and the higher education sector on innovation and design, and a degree of consensus across the chamber—although not among all members all the time—let Scotland do something different. There was much to be proud of, and that has continued over the Parliament’s first 16 years.
We are appalled at how the UK Government is scuppering developments and projects into which companies have put tens upon tens of millions of pounds in good faith. That is unacceptable. It is all right for the UK Government and the Scottish Government to disagree now and again—that is the nature of government—but it is unacceptable to put at risk such developments when we need long-term certainty on investment in renewables and infrastructure. On that issue we are as one with the SNP Government.
The Ernst & Young report that Fergus Ewing quoted is a massive blow to investor confidence and will have an immediate impact on jobs and the supply chain. The figures that Scottish Renewables has given us today highlight the fact that 1.25 million homes could have been served by renewables and there could have been £3 billion of investment—and then there is the community impact. The figures highlight a hugely retrograde step.
I highlight the threat from the feed-in tariff scheme review, which could have a massive impact on community projects. Such projects have always been slower to get going and many are only now coming into their own. I hope that the minister will look at whether tying in energy storage and heat batteries might make it possible for some projects to go ahead—particularly those that involve solar PV on domestic and commercial rooftops.
We must think creatively about how we will move forward in the long run. We have uncertainty on the contract for difference—currently there is no commitment beyond March 2016. That is a critical issue for banks and big investors. We need high-level—and public—engagement with the UK Government and UK ministers.
Although Governments across the UK might have differences in tone, emphasis, style and substance, we have a UK energy market with UK consumers. Those differences must be respected. The precipitate withdrawal of support for the feed-in tariff and ROCs is unacceptable, and UK ministers must exercise political humility and a bit of leadership with other Administrations across the country. That withdrawal of support is bad for jobs and investment, and it is appalling that it comes in advance of the climate talks that we will have in December.
Our amendment focuses on the need for a long-term strategy, stable finances and a better planning regime. Around the globe, countries are looking at low-carbon economies and preparing for the transition that we need to cleaner energy and industry. We must be part of that, and not behind it.
When I prepared my amendment, I thought about whether I should put something that would be acceptable to the minister. However, I wanted to go further than he would go and further than his officials would advise him to go, because we need to be more ambitious. What is happening at the UK level makes me even more convinced of that.
I ask the minister to look properly at the points that Ken Macintosh made. In 2005 we supplemented the marine ROC. A higher level of support is needed. It is a UK issue, but I ask the minister to look at all options. He should think about how the money that is there needs to be spent in the next year to 18 months, given the loss of investment and jobs.
Our amendment highlights other work that is needed, including much better integration of renewables and the energy efficiency strategy in both domestic and non-domestic sectors. We need to give energy efficiency political priority, particularly in the business sector. There are massive savings to be made. When I met companies last night, I was struck by how all the big opportunities in which they are investing are not in Scotland. We need to fix that.
We need to look at domestic fuel. No matter how many times ministers reannounce the budget, we will not meet our target next year for the abolition of fuel poverty. We need a more radical approach. We need more to be done on community and co-operative schemes, which means a more joined-up approach with our local authorities. The staffing and expertise impact on local authorities as a result of the underfunded council tax freeze means that local authorities are understandably cautious. South of the border, local authorities are doing much more radical and practical stuff now.
We need political leadership and determination. The minister will have our support for that, but he also needs to raise his game, particularly on the local targets, which are nowhere near radical enough to drive the change that we need now. That is difficult and we will need to work together on that.
I am incredibly disappointed with the Conservative amendment, which could have been more constructive and could have acknowledged the impact that the UK Government’s changes will have on Scottish industry.
One simple thing that the Scottish Government could do is accelerate consideration of the permitted development rights issue. I have called for that for a decade. It is great that we will get air-source heat pumps. What about non-domestic solar power, too? We have to raise our game, and everybody needs to be part of that process.
I move amendment S4M-14272.3, to leave out from “considers” to end and insert:
“notes the growth in onshore wind energy in Scotland, which has been enabled due to investment by consumers across the UK; calls for a UK energy summit with the UK and devolved administrations to deliver urgent and constructive dialogue to secure the progress of projects under the Renewables Obligation; considers that the Scottish Government should also use the powers that it retains under the Renewables Obligation; believes that there is much more that should be done by the Scottish Government to integrate its renewables and energy efficiency strategies to tackle fuel poverty, create jobs and reduce emissions and to include the promotion of marine renewables, community, cooperative and householder renewables and community heat and transport networks; considers that a new, more stretching target should be set for community renewables delivered through stronger planning policy support, for example on permitted development rights, and calls on the UK Government to reconsider its current proposals on Feed-in Tariff and support for small-scale and community renewables in light of the benefits that have been demonstrated in terms of energy supply, job creation and emission reductions across Scotland from community-led projects.”
No—I need to make some progress. I have only five minutes.
“The UK Government’s proposed changes may not be ideal but at least they are a sensible way forward. They will not result in a reduction in wind energy capacity in Scotland but may slow down future growth. Hopefully they will result in lower electricity prices for consumers in Scotland”.
We have heard an awful lot of doom and gloom about what the subsidy changes will mean for the renewable energy sector. Fortunately, not everyone who is involved takes such a pessimistic view. Brian Galloway, who is the energy policy director at Scottish Power, wrote in July:
“My view is that once the dust settles we will come to understand that onshore wind still has a vital role to play. ... I remain optimistic on the prospects for Scotland’s onshore wind industry.”
In August, the Canadian company Brookfield Renewable Energy Partners said that it plans to build wind farms that will generate up to 200MW in Scotland before the end of the decade. The company’s president commented that such a project
“really can stand on its own two feet without the need for significant subsidies”.
We see a similar picture in relation to solar power.
Back in 2011, when there were previous subsidy changes, SNP members predicted the industry’s demise. Mike MacKenzie MSP said of the changes:
“This could have a devastating impact for households and businesses and housing associations across Scotland.”
Of course, it had nothing of the sort. The solar PV industry went from strength to strength.
In the limited time that I have, I want to focus on the all-too-real impact that UK Government actions are having in Scotland on our efforts as a nation to green our energy generation, on some of our communities and on an agricultural sector that is seeking to diversify. I will offer a few examples by way of illustration.
Fifteen kilometres off the coast of my constituency is the planned location for the Inch Cape wind farm, which has the potential to power up to half a million homes. However, it was unsuccessful in its bid for a contracts for difference earlier this year. The developers will try again in the next round, but of course there is absolutely no guarantee of success at the second time of asking. These are unsettling times, which are made even more unsettling by the fact that Inch Cape, along with three other proposed offshore developments—including Alpha and Bravo Seagreen, which are planned for a little further off the Angus coast—await the outcome of an RSPB Scotland-instigated judicial review, which is expected within the next couple of weeks.
We cannot blame Westminster for the actions of the RSPB, but we can blame the UK Government for its approach to offshore wind, and to solar and onshore wind, for that matter. It seems that eye-watering subsidies for Hinkley Point—with all the concerns over whether or when it might begin generating—are fine and it seems that pushing fracking is fine. However, supporting renewables in all their guises and in any meaningful way is, at very best, on the wane—so much for Mr Cameron’s pledge that he would lead the greenest Government ever.
It is not just in an up-front way that Westminster is undermining our drive to become a renewables powerhouse. A farmer on the coastal strip of my constituency has spent in excess of £60,000 thus far to secure conditional planning permission for a single 800kW wind turbine. The consent is conditional on Ministry of Defence radar interference mitigation measures, a solution for which was accepted by Defence Estates back in 2013. The farmer has secured a grid connection at a cost of a further £120,000, on which he must pay a £10,000 deposit by 9 October. However, despite the fact that RAF Leuchars is now closed as an air base, the MOD is now demanding that further radar mitigation field work be carried out at a cost of £1.2 million—the cost to be shared amongst a group of farmers, another three of whom I understand to be constituents of mine. The total number of turbines involved in Angus runs into double figures.
The farmer who came to me has been told that his phase 1 share of what is termed the “continuing development” of the measures—there would be three phases all told—would be £12,000, which must be paid now if his turbine is to be retained within the project. He would face a similar charge at phase 2. No estimate for a figure at the final phase is available and nor is there a timescale for when deployment of the system could be anticipated.
Proposals by the Department of Energy and Climate Change to reduce tariffs drastically for that scale of turbine next January and the decision to remove the ability to tie into current rates by pre-registering a project mean that the proposal, unless it is commissioned within 12 months—which is not possible—is no longer viable. The farmer has been advised that, rather than commit another £22,000 to the project just to keep it alive, he should quit now and write off the money that he has spent thus far.
Many others—individuals and groups—face similar choices now. While on Rural Affairs, Climate Change and Environment Committee business earlier this week, I heard of a community turbine proposal in the Callander area that is supported by a £145,000 community renewables Scotland grant. It aimed to provide an income stream for a variety of local projects over the next 20 years, but is now at significant risk because of the changes to the feed-in tariff regime.
As those examples demonstrate, there are painful economic consequences for individuals and communities of the UK Government’s retreat from supporting renewable generation. The environmental consequences will be even more serious. In advance of Paris, the UK Government needs to rethink its approach.
Ever since Margaret Thatcher began the privatisation of our energy system in the early 1980s, UK Government energy policy has been progressively failing. Back then, we had a robust system with inbuilt resilience and spare capacity. The term “fuel poverty” had not yet been coined. Now, the Office of Gas and Electricity Markets has warned repeatedly about the lights going out. Spare capacity is down to 2 per cent and National Grid is buying in spare capacity generation at absurdly high prices. When energy is in short supply, the price goes up. It is as simple as that.
The UK Government’s energy plan is to build more interconnectors to Europe. It is hoping to buy in energy from elsewhere, but at who knows what price? The other part of the plan is to spend £35 billion on the new nuclear reactor at Hinkley Point, with—I hope that Mr Fraser is listening carefully—a subsidy of more than twice the wholesale price of energy for 35 years. A further £10 billion is to be spent on necessary infrastructure. Huge amounts of money have been delivered straight into the hands of Chinese investors and a French state-owned company that is already asking for more.
No EPR reactor has yet been successfully built. The Finnish and French EPRs will cost at least twice as much as they were supposed to, and the two Finnish EPR reactors are already five years behind schedule. Who knows what the decommissioning costs will be? Sellafield’s are approaching £70 billion and the job is by no means finished.
The UK Government plans to buy in energy from anywhere it can except, it seems, Scotland’s renewable energy, yet we were told during the referendum campaign that, if we voted yes, the broad shoulders of the UK Government would not support Scotland’s renewable energy sector. The trust of many people in Scotland is now severely strained because the UK Government—Mr Fraser’s Government—is in the process of rapidly withdrawing support from our renewables sector.
This is by no means just about onshore wind. Wave energy companies such as Seatricity have relocated from Orkney to Cornwall because they lacked a grid connection. I am sure that Mr McArthur would be pleased to confirm that. The European Marine Energy Centre in Orkney, which was 10 years ahead of the rest of the world in wave and tidal research, recently made 25 per cent of its workforce redundant, and the green deal is being withdrawn because it is not fit for purpose—although I have said that from the start—with its unworkable golden rule.
However, it is not just about what is being done. It is also about how it is being done. Subsidies are being withdrawn with undue haste and investor confidence is severely shaken. Trust is easily lost but difficult to win back. In the investors’ world, that means very much higher returns on investments that are perceived as risky not because of the technical challenges, but because of an inconsistent and incoherent energy policy on the part of the UK Government.
Thank you, Presiding Officer. I am grateful for the two minutes that you have given me. I apologise for my oversight in not submitting in advance a request to speak in the debate.
It is not every day that I find myself coming to the chamber and being on the same side of a debate as Fergus Ewing. What a rare pleasure. I am sure that there will be many other opportunities for us to disagree on fossil fuel policy and aviation taxes, but on this occasion we have some common ground. I imagine that my reaction was much the same as his when we heard Murdo Fraser tell us that we should be talking up renewables at the same time as his party colleagues are pulling the rug from under the industry. That is a completely untenable position.
Let us make no mistake—that is what the UK Government’s recent decisions have been about. A slew of them came out at the beginning of our summer recess, which left us without the opportunity even to challenge the issues on the record at the beginning of the summer, whether in relation to the subsidies for solar and wind power, which we have heard about this afternoon, or the policies on reducing our demand, which is the other part of the sustainable energy future that we need.
In the that is time available to me, I want to make a case for just one additional policy change from the Scottish Government. It should be commended for having reached, or almost reached, ahead of time the target for community and locally owned renewables. However, community and locally owned renewables are not the same thing, although they are both good. A small business or a farmer investing in some renewables and community ownership are both good, but the challenges that face those two different forms of renewables ownership are different. I make the case for the Scottish Government to accept that the target has been reached and to set two more stretching targets—one for community ownership, including local authorities, and another for local private ownership.
This has been an interesting but, I suspect, predictable debate. We have heard from the minister something that we have become used to in recent weeks. Once again, he has wheeled out the begging-bowl mentality and complained that the United Kingdom Government has, by the withdrawal of subsidy, somehow undermined what he claims repeatedly to be a highly efficient form of energy production, and that that has been done without any warning. As my colleague pointed out earlier in the debate, Michael Fallon, the then energy minister, made it clear as long ago as April 2014 that the Government intended to withdraw the subsidies for onshore wind.
No, thank you.
The truth is that Scotland has a huge number of wind turbines and that such a high-cost form of energy has resulted in energy prices across Scotland being pushed up. At a time when we should have sought ways of increasing diversity in the energy market, we have chosen an expensive option and we have, in many respects, pushed fuel poverty upwards.
I say that onshore wind is an expensive option. Occasionally, we hear the minister—and even at times the First Minister—telling us that onshore wind is one of the cheapest and most efficient ways of generating electricity. Why, then, do we have to subsidise it? We must remember that it is important to target resources at new and diverse ways of encouraging additional environment-based renewable energy sources. Therefore, we have to ensure that the most efficient sources are paying their way and are not in receipt of subsidy payments that should be going to other sectors.
The Scottish Government has become obsessed with onshore wind. It has interfered in the planning process to ensure that many onshore wind turbines have been built in areas where local authorities sought to prevent that. Planning has become a lottery because of that interference. Over large areas of Scotland, people are genuinely upset by the way in which that process has been conducted.
I took the opportunity to go to the top of the Garvock hill near Laurencekirk last weekend and was able to count more than 100 industrial-scale wind turbines from a single standing point. That is an indication of what the Government has done to Scotland, and it must be held to account for it.
We have huge opportunities for a diverse and well-developed energy policy in Scotland. We have huge opportunities to bring in additional resource from offshore wind, solar photovoltaics, wave and tidal power. If those opportunities are to be taken, we must not make the mistake of pursuing a single method of power production to the exclusion of all others.
That single act by the UK Government, which was predicted and flagged up more than a year in advance, was a courageous move to ensure movement in the energy market, particularly with the support for offshore wind. I support the amendment in the name of my colleague, Murdo Fraser.
There is, of course, broad agreement in theory on the objectives of energy policy: ensuring security of supply, producing affordable energy and tackling climate change. Today, we have heard about some very different approaches to how all those things can be done at the same time and about the priorities that we should set.
Onshore wind is today’s headline issue. Successive Scottish Governments have followed the lead given by Sarah Boyack as Minister for Transport and the Environment in the first session of Parliament in setting ever more demanding targets for renewable energy. By their investments, the private sector, the industry and communities have helped those targets to be met.
The British Labour Government of 1997 to 2010 played an important role, creating a single Great Britain energy market that covers Scotland, England and Wales, and devolving the system of renewable obligation certificates to provide public support to private developers. Together, single-market renewable obligation certificates and ambitious Scottish targets have stimulated a dynamic and successful wind energy sector that was so successful that the need for public subsidy was coming to an end. The industry was clearly gearing up to move to the next phase of its development over the next couple of years. What a pity that the Conservative Government lacked the wisdom and judgment to allow that maturing to take its course, instead choosing to rip up the subsidy regime and deny support to some very good projects that were not quite ready to go. An extra 12 months of support could have made all the difference.
The details of how the subsidy schemes will come to an end are still up for discussion. The Scottish Government can, and I think should, play a strong role in negotiating with the Department of Energy and Climate Change on cut-off dates and grace periods to determine which projects in the pipeline will or will not qualify for a subsidy. That is clearly of great urgency and importance to project developers large and small, as the minister indicated when he referred to the EY report. We have been asking for clarity on the matter for some time, and I hope that he will make clear what he expects to be able to achieve with the powers and influence that he has.
As Ken Macintosh pointed out, the Scottish Government has powers to address the issue not through additional public expenditure, as the minister’s response to Mr Macintosh implied, but by directing existing renewable obligation certificates to sustaining good projects that are currently at risk. We simply ask the Scottish Government to reconsider that.
Good projects have also been put at risk in the deployment of solar power, which, if anything, is closer than onshore wind to reaching the stage of profitability without subsidies.
It is frankly bizarre that a party in government at Westminster that would claim to be a friend of business and of farmers should sabotage investment plans and block the roll-out of small-scale wind and solar projects in the Scottish countryside because it could not find a smarter way to shift the energy balance in the direction that it wants. It is not too late to do something about that, as we have heard this afternoon.
I think we are all in agreement that subsidies should gradually be rolled back as technologies come to maturity. We are in disagreement with the Tories on the speed at which those subsidies are being withdrawn.
How does the member justify the huge subsidies that the nuclear industry is receiving? If it is not a mature technology by now, when will it ever be?
Is it not a pity that Mr MacKenzie does not take the hint about building consensus and agreement across parties that oppose the actions that are being taken by the Tory Government at Westminster? I am afraid that, with his approach, we may have to work harder to achieve that consensus. At least I would look to David Cameron to agree to his ministers sitting down with the devolved Administrations throughout Britain to find ways to restore investor confidence and enable small-scale developments to go ahead.
During the summer I visited the first community-owned wind turbine in mainland Scotland—it is near Udny in Aberdeenshire. I also saw the benefits of solar roof panels at the National Trust for Scotland’s Pitmedden garden. It is difficult to see the basis for anyone wanting to stymie such projects, and I hope that ways can be found to make more of them happen.
The Scottish Government can act now in one area where it has power to do so by promoting the deployment of solar panels on government buildings and public sector housing across Scotland. Some councils, such as Aberdeen City Council, have already done that very effectively, and it would be a pity if Scotland’s devolved Government continued to lag behind.
Aberdeen is also best in class, not just in Scotland but across the UK, for combined heat and power. Over the past three years, there have been major extensions to the CHP networks that were put in place in social housing and public buildings in the city over the previous decade. That is a model for district heating that the Scottish Government should support, especially where it is possible to use renewable sources. I was pleased to hear about some small but welcome steps from the minister.
The Aberdeen CHP example also points to a wider challenge: how to reduce carbon emissions without adding to consumer costs. The installation of CHP in tower blocks in Aberdeen has led to reductions of 45 per cent in greenhouse gas emissions and consumer bills. That is exactly the kind of community-based development that we should support and the Scottish Government should lead.
There are also opportunities to respond to the pressures in the oil and gas industry, which could share its offshore fabrication skills.
Above all, we require an imaginative response—an inclusive response from all who share the objective of developing our renewables sector. I hope that we are able to build that across most of the chamber.
I have enjoyed moments of this debate. I will try to respond to some of the specific points that were put, although that I fear it will not be possible to respond to them all.
I agreed with a great deal of what Sarah Boyack said. To respond to her point about doing more on local energy systems, we are already encouraging such systems. We are encouraging a mix of technologies in relation to storage, which she specifically mentioned, in the ground-breaking community and renewable energy scheme—CARES—local energy challenge fund demonstrator projects, which are being funded this year through a £20 million fund. Each is a ground-breaking, innovative project, and some fall into the categories that Ms Boyack would support.
Sarah Boyack also mentioned permitted development rights. We already have permitted development rights for some air-source heat pumps, but she mentioned extending them to solar power. As I might have said already, if she wishes to write to me on that matter, I will give it serious consideration. We come at these issues from the same direction, and it behoves us to work together where there is common ground. I pledge that we will certainly do that.
Sarah Boyack rose—
I am really sorry, but I would like to try and cover as many points from the debate as I can before I make some final comments.
Patrick Harvie was kind enough to acknowledge the achievement today of the community energy target. We are proud that we in Scotland have achieved the target of 500MW of community schemes, which appeared ambitious when we set it. I acknowledge that much work was done with the support of colleagues in the Labour Party, the Liberal party and the Green Party. To respond to his specific request, now that we have achieved that target, it is sensible that we establish what it is appropriate to achieve in the future. We have high ambitions, as does he, so we will give careful consideration to the matters that he raised.
I acknowledge Mr McArthur’s long-standing commitment to renewables. I agreed with a great deal of what he said, although it was a little bit ironic that he berated me for making critical remarks about the UK Government, which he said later in his speech was acting in a “cavalier” fashion. I will not be churlish, so I will not say any more about the matter than that.
Suffice it to say—this is the most important point—that we try to develop as much common ground as possible in Scotland on energy. The challenge that we face is that the Scottish consensus on energy policy does not appear to match the London agenda. That is the predicament that we face. I will set out components of that Scottish consensus.
First, we need much more emphasis on energy efficiency and demand reduction. Of course that applies to our estate too, so we have announced our intention to do much more in public buildings.
Secondly, we need many more energy storage solutions at transmission and household level. For example, the SSE Coire Glas scheme that I consented and the Cruachan scheme would offer tremendous additional pump storage capacity. However, National Grid does not appear to recognise the benefits of pump storage.
I invited National Grid to look at the issue at an industry leadership group meeting that I co-chaired. If we are increasingly looking towards a low-carbon electricity generation system, with forms of energy that are intermittent, including hydro and wind—although they are a very good fit—storage solutions are necessary to provide the equivalent back-up and baseload to what we have had in the past.
I have always argued, although frequently Mr Fraser does not seem to recognise this in his speeches, that we need a variety of sources of electricity generation. Indeed, I have previously quoted Winston Churchill, who said that when it comes to the problem of electricity generation for a country, the solution is “variety and variety alone.”
Murdo Fraser rose—
I see that the mention of Winston Churchill has roused Mr Fraser.
I am always grateful to the minister for mentioning Winston Churchill—and for giving way.
The minister will be aware from the discussions that we had yesterday evening that the output from wind power across the whole country yesterday was precisely zero, and that that is not unusual. Wind power will work as a large component in energy with storage back-up, but what is the minister’s estimate of the combined cost of wind power plus storage, relative to other technologies?
Mr Fraser is right to say that wind energy is intermittent. He proves my point, in that that is precisely why we need more storage solutions. As to the cost, I can tell him this: the cost of providing sufficient storage will be far less than the enormous cost of the Hinkley Point nuclear power station, which Mr MacKenzie mentioned. The cost of Hinkley Point is not just eye-watering but almost unimaginable: it is £45 billion—45 thousand million pounds. It is the granddaddy of them all. It dwarfs the total aggregate subsidy for renewable energy.
Peter Atherton, of Liberum Capital, said that the cost of the nuclear energy that might some day be generated at Hinkley Point—the current estimate for that is the mid-2020s—will be
“£5 million per MW of capacity”.
He pointed out that the comparable cost per megawatt of combined cycle gas turbine generation is £755,000. In other words, nuclear is seven times more expensive than gas, yet Mr Fraser is arguing that we would be saving money. It is almost unbelievable.
I got sidetracked there by Mr Fraser’s intervention. I emphasise that we need more hydro. We need more solar, as Sarah Boyack and Lewis Macdonald rightly argued. We need more district heating schemes—we have developed 33 projects with £7 million thus far, but we need to do far more in that regard. We need to devote more attention to developing our heat resources in Scotland—not enough attention has been devoted to that. We need offshore wind. There are around 22 offshore wind schemes south of the border but there is not one here yet. It is time to even up the balance. We need more floating offshore wind, and I hope that the Statoil project will be delivered soon.
We also need a solution to the tremendous problems that have been generated by the Conservatives’ decision—which was not in the Conservative manifesto, despite what Mr Fraser said—to curtail, without notice, the renewables obligation certificate system. That has undermined investment and led Ernst and Young to criticise the Tory Government in language that is far more colourful than anything that I could manage.