The success and wellbeing of Scotland’s people, communities, businesses and public services are underpinned by the supply of reliable energy. Affordable energy provision is a prerequisite for our quality of life and good health, and for ensuring that we have a productive and competitive economy.
Our energy sector already provides high-quality jobs and a vibrant climate for innovation in established sectors such as the oil and gas industry, where the skills and expertise that have been gained through more than 40 years of operating in the North Sea will prove to be invaluable to the engineering and innovation challenges in creating the energy system of the future, and in new renewable energy sectors such as offshore wind, wave and tidal energy, alongside grid-scale battery storage and pumped hydroelectric storage.
I announce to members that the Scottish Government has now published a consultation on our draft Scottish energy strategy, which sets out a vision for the future of energy between now and 2050. Our climate change ambitions underpin all the choices that are laid out in the draft strategy and have, in turn, been determined by our commitments under the Climate Change (Scotland) Act 2009. The strategy has been developed in concert with, and as a companion to, the draft climate change plan that was laid before Parliament and presented to members in the chamber by the Cabinet Secretary for Environment, Climate Change and Land Reform last week.
As it stands, the task to decarbonise our electricity production has been largely achieved; the equivalent of 59.4 per cent of Scotland’s gross electricity consumption is now met by renewable energy and we are well on our way to meeting the 2020 target of 100 per cent—albeit that United Kingdom Government policy changes have made our progress more challenging.
Our options in terms of the scale of supply of energy have substantially broadened in recent years. Consumers can now generate energy for their own needs from solar panels or a wind turbine, for example. Scotland has been at the forefront of the drive for community and locally owned renewables—there are more than 15,000 locally and community-owned renewable energy sites in Scotland, and there is installed capacity of 595MW, which has surpassed our target of 500MW five years early. By the end of 2015, we had seen the largest annual increase in renewable heat output since measurement began: it went up by more than 1,100 gigawatt hours in a single year. In 2015, Scotland produced enough heat from renewable sources to meet between 5.3 and 5.6 per cent of non-electrical heat demand.
We can all take pride in such successes, but it is clear that more progress will be required, in particular in the supply of low-carbon heat and transport, if we are to remain on track to meet our ambitious climate change goals. To maintain momentum, a new 2030 all-energy renewables target is proposed in our energy strategy, which sets an ambitious challenge to deliver the equivalent of half of Scotland’s energy requirements for heat, transport and electricity from renewable energy sources. I hope that members will welcome that landmark proposal, given the support that was shown for such an ambition last month in the chamber, during a debate on support for Scotland’s renewables sector.
Our renewables sector is facing an uncertain future. Unwelcome cuts to UK Government support schemes are jeopardising a very strong investment pipeline and strong Scottish supply chain across a range of renewables technologies. Onshore wind, for example, is now a mature technology in which a number of issues need to be addressed, including the approach to repowering existing wind farms that are coming to the end of their planning consent, or extending the life of sites where it is appropriate to do so. In our accompanying onshore wind policy statement, we set out in more detail our approach to those important matters.
Our draft energy strategy calls on UK ministers to do more to restore confidence in the sector, in the light of the UK’s slide down the investment-attractiveness league table, and it calls on the industry itself to continue to deliver the cost reductions that are required to ensure that low-carbon energy is affordable. Our strategy sets a challenge to the industry to make Scotland the first area in the UK to host subsidy-free onshore wind. There are real cost reductions, such as those that have been announced today by the offshore wind programme board, which show that offshore wind energy costs have fallen by 32 per cent since 2012. That is proof that offshore wind is rising to the challenge to reduce its costs.
Scotland can be proud of how we are playing our part and leading the way in marine energy and in development of floating offshore wind projects off our coastline—a technology that is well suited to our deeper waters.
The strategy reiterates our commitment to delivering a stable and managed transition to a low-carbon economy, and highlights a range of technologies and fuels that will supply our energy needs over the coming decades. The strategy makes clear our commitment to the oil and gas industry as a key contributor to the security and stability of energy supplies throughout our transition, with around three quarters of total energy consumption in Scotland currently being supplied by oil and gas. Production of oil and gas in the North Sea and west of Shetland is highly regulated, with some of the most advanced and, comparatively, least-carbon-intensive production methods of their kind anywhere in the world. Our oil and gas sector will continue to make a positive contribution as the engineering and technical bedrock of our wider energy transition.
Advances in technology mean that new and innovative ways of using hydrocarbons are emerging, and they will continue to emerge in the decades ahead. Energy sources such as hydrogen—a zero-carbon fuel at the point of use—have the potential to reduce substantially the total system cost of decarbonisation, to provide a range of services to our energy system and to provide integrated low-carbon solutions across the heat, power and transport sectors. Such innovations are already here. For example, Aberdeen hosts the largest fleet of hydrogen-powered buses in Europe, supported by two hydrogen refuelling stations, and in the Levenmouth community energy project, renewable wind power is being used to run a fleet of hydrogen vehicles, including Fife Council vans and refuse-collection vehicles.
The strategy makes it clear that the Scottish Government is committed to examining the evidence and to engaging with the citizens of Scotland to gather their views and to understand their needs and perspectives. Our approach to evaluating the impacts of unconventional oil and gas is an example of that evidence-based and measured approach. As I outlined in my statement on 8 November 2016, we will shortly launch our full public consultation on unconventional oil and gas, so that the people of Scotland can express their views on that important and contentious issue. The results of that consultation will be a key consideration when we finalise our energy strategy later this year. Our draft energy strategy confirms our proposal that underground coal gasification will play no part in our energy mix.
Our energy strategy is not just about energy supplies. Consumers of energy are at the heart of our whole-system approach, and our patterns of energy use are changing, too. We are more efficient than ever in using energy, but major shifts lie ahead. How consumers engage with those energy choices will be informed by smart technologies that provide better information on energy use and a better platform for informed decisions on consumption of energy.
Scotland will need a more flexible energy system that can accommodate the many choices that consumers and generators will make in the future. That energy challenge represents an exciting opportunity to capture the economic benefits of pioneering approaches here in Scotland. Smart and controlled charging of an ever-growing number of electric vehicles in Scotland will, in itself, grow demand for electricity, while providing energy storage capacity, capacity to absorb intermittent loads from renewables generation and, potentially, a source of grid power input, when required.
Most important, we recognise that energy remains unaffordable for too many people in Scotland. That is driven by high energy prices, but another key driver is our housing and non-domestic building stock, which is all too often profoundly wasteful of energy, despite our very significant investment in improving the energy efficiency of Scotland’s homes. The draft energy strategy seeks to address the needs of those who are least able to pay for their energy, by supporting energy solutions that provide warmer homes and better outcomes for consumers.
Scotland’s energy efficiency programme—SEEP—is a long-term programme to improve energy efficiency in both domestic and non-domestic buildings with the ultimate aim of decarbonising Scotland’s heat supply, which will make energy more affordable and reduce carbon emissions from our built environment. We have committed more than £500 million to SEEP up to 2020-21. SEEP is currently in its design phase. Today, we are also publishing two key accompanying consultations in support of the draft Scottish energy strategy. The first focuses on options for the programme and policy design of SEEP and the second consults more specifically on the role that regulation could play in supporting the development of district heating, as well as on a framework for planning at local level of heat decarbonisation and energy efficiency programmes.
Scotland is now a pioneer in the development of innovative local energy systems. Heat, electricity and storage technologies, combined with demand management and energy efficiency measures on an area-by-area basis, could realise substantial local economic, environmental and social benefits. Scotland’s communities and island populations are increasingly playing an active and important part in the delivery of innovative local low-carbon, smart-energy systems, in partnership with the private and public sectors. Those projects benefit from funding support from the Scottish Government, including the local energy challenge fund, which has to date allocated £31 million to a wide range of innovative projects.
In addition, under the low-carbon infrastructure transition programme, we have already supported more than 40 low-carbon projects, and today I can announce that around £50 million will soon be awarded to 13 low-carbon demonstrator projects at sites across Scotland. Those projects are at the cutting edge of innovation and will provide a solid basis for our learning as we mainstream the local energy approach.
I am proud to present our draft Scottish energy strategy to Parliament and to launch a consultation exploring the choices that we face about our future energy system. I invite members throughout the chamber and all our constituents to have their say on key decisions that will determine the shape of Scotland’s energy future.
I hope that, in the months ahead, as we finalise our strategy, the document will stimulate well-informed debate on the energy challenges in Scotland and the policies that are needed to meet our aspirations to deliver a secure and sustainable energy future for all—an outcome that will, I have no doubt, be in the best interests of our communities, our economy and our environment.