Scotland’s Hydrogen Economy

– in the Scottish Parliament at on 11 February 2021.

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Photo of Kenneth Macintosh Kenneth Macintosh Labour

The next item of business is a statement by the Minister for Energy, Connectivity and the Islands, Paul Wheelhouse, on developing Scotland’s hydrogen economy. The minister will take questions at the end of his statement.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

Hydrogen is rapidly emerging as a sustainable solution for the decarbonisation of the economy and a key piece of the energy transition picture. That view is now held in Scotland, in Europe, in south-east Asia and around the world.

On 21 December 2020, we became the first country in the United Kingdom to publish a hydrogen policy statement. The statement is underpinned by independent analysis and sets out how we can make the most of Scotland’s massive potential in this new sector. I am pleased to talk today about hydrogen’s role in decarbonising our energy systems and about our ambition for the future hydrogen economy in Scotland.

Hydrogen has a potentially very important role to play in achieving net zero. We also believe that Scotland’s abundant natural, human and physical resources will support the establishment of a thriving hydrogen sector in Scotland and the emerging global hydrogen market.

That view is supported by the extensive engagement, assessment and analysis in three studies that we have commissioned over the past year: the “Scottish Hydrogen Assessment”, the “Scottish Offshore Wind to Green Hydrogen Opportunity Assessment” and the “Deep Decarbonisation Pathways for Scottish Industries” study. Those key reports have provided a comprehensive evidence base for our hydrogen policy statement.

We are not acting in isolation. The European Union has set a strategic objective of installing at least 6GW of renewable hydrogen electrolysers that will produce up to 1 million tonnes of green hydrogen in the EU by 2024 and 40GW that will produce up to 10 million tonnes of green hydrogen by 2030. The UK Government’s recent 10-point plan for a green industrial revolution included setting a target of 5GW of low-carbon hydrogen production capacity by 2030, and we expect a UK hydrogen strategy to be published in 2021. In 2020, the Government of Germany committed €9 billion of funding to its hydrogen strategy over the next five years, and it was closely followed by the French Government committing €7 billion of funding to deliver France’s hydrogen strategy.

The sixth carbon budget report from the Climate Change Committee suggests that low-carbon hydrogen production will scale up to 90 terawatt hours by 2035. That is nearly a third of the output of the current power sector in the UK.

In our hydrogen policy statement, we set out a vision of Scotland becoming a leading hydrogen nation. We believe that producing clean hydrogen and showing that it can be used to meet challenging energy demands from industry and from the transport and heat sectors will be a key part of the next stage of Scotland’s energy transition pathway. From our assessment, it is clear not just that hydrogen is an energy and emissions reduction opportunity, but that it could also have an important role in generating new economic growth for Scotland by creating new jobs and significant just transition opportunities—for example, in the export of hydrogen and associated technologies.

Our hydrogen policy statement is aligned to the Scottish Government’s climate change plan update, and our climate targets are underpinned by our commitment to a just transition that supports sustainable economic growth and jobs.

Our policy statement confirms our support for the strategic growth of a strong hydrogen economy in Scotland, focusing our efforts on supporting the development of Scotland’s hydrogen production capability to meet our ambition of having at least 5GW of renewable and low-carbon hydrogen production capacity by 2030, which will be capable of producing up to 27 terawatt hours of energy. We will seek to have at least five times that capacity by 2045, which will be 25GW of hydrogen production capacity.

On the scale of our ambition, it is worth noting that our target of an installed capacity of 5GW of hydrogen production by 2030 is the same as the installed capacity target that has been set by Germany, which is clearly a much larger country with a much larger industrial base. We have confidence in setting such a high ambition due to Scotland’s vast resources in onshore and offshore wind and in wave and tidal energy, and we are confident about hydrogen’s potential to unlock more of those renewable resources and improve the competitiveness of hydrogen production in Scotland. Scotland’s company base, skills and assets in the oil and gas, offshore wind and energy systems sectors will add value and bring the transition opportunity that will be a critical part of building Scotland’s hydrogen economy.

We are in a climate emergency, and pace is vital. With that in mind, we have, in addition to existing funding programmes, committed £100 million of the £180 million of new funding in the emerging energy technologies fund to the development of our hydrogen economy over the next five years. That will be implemented through our hydrogen action plan, which is due for publication in 2021.

We believe that both green and blue hydrogen will play increasingly important roles in our energy transition to net zero. It is therefore important that carbon capture and storage systems are established to support the production of blue hydrogen by the mid-2020s.

Our hydrogen policy sets out our continued support for the demonstration, development and deployment of hydrogen. We are committed to exploring how we can drive forward technological progress and advance innovation by unlocking public and private funds for innovation development. We also intend to support demonstration of key hydrogen technologies such as fuel cells and electrolysers, which we will seek to exploit for supply chain development opportunities.

International collaboration will be key to the development of hydrogen markets. In our policy statement, we committed to actively seeking international collaboration in the development of our shared hydrogen economy. The hydrogen action plan will set out how we seek to develop Scotland’s potential to export significant quantities of hydrogen.

Carrying on from the wide-ranging assessment of hydrogen that we undertook in 2020, we continue to explore our hydrogen potential, and I can now announce the commencement of a project to examine marine vessel hydrogen transportation and storage. That collaborative project will reflect the opportunities for hydrogen development and energy transition in our regions and will be jointly funded by the Scottish Government, the Port of Cromarty Firth, Shetland Islands Council, the Oil & Gas Technology Centre, Global Energy Group, ERM and Pale Blue Dot Energy. We expect the study to conclude its report in the summer of this year.

The pace of industry-led hydrogen projects in Scotland is accelerating. I am pleased to inform members that, through its recently launched green hydrogen business, Scottish Power has signed an agreement with Global Energy Group at its Port of Nigg site to work together to identify how green hydrogen could be generated at the site. The project will open a window for us into how hydrogen can be viewed as playing an integral role in our energy and industrial systems.

I recognise that it is crucial that Scotland and Scottish companies benefit fully from our development of hydrogen. Scottish content will be central to the sustainable growth of this new sector, and the development of our supply chain will play a critical role in shaping and defining our approach to the hydrogen action plan. We will support the transition and growth of Scotland’s emerging hydrogen supply chain by embedding it in our new supplier development programme, which is led by my colleague Ivan McKee, and by including the development of skills and manufacturing capacity that can play a significant role in the hydrogen economy both domestically and internationally.

We cannot achieve our hydrogen ambitions alone. As we move forward, we will work closely with industry to design policy and regulatory environments that will enable us to support hydrogen production at scale.

Of course, many of the regulatory and legislative levers that will be required are determined at the UK level. We are therefore committed to closely engaging with the UK Government on the development of a UK-wide policy. We urge it to move quickly and decisively on the development of such a policy and of regulatory frameworks for hydrogen, and to make the important decisions on the future of the gas grid, business models and market mechanisms that will underpin the hydrogen economy. All of that will be important for increasing market certainty and boosting investor and consumer confidence.

Our provision of £6.9 million of funding to the Scottish Gas Networks H100 Fife project has now leveraged a further £18 million of funding from Ofgem. That flagship demonstration project will deliver a first-of-its-kind 100 per cent hydrogen heat network that will supply 300 domestic properties with clean, green hydrogen heating. It will be a critical step towards understanding the role that hydrogen can play in decarbonising heat by using the gas network, and it will demonstrate technology such as hydrogen-enabled boilers.

I re-emphasise the following key points. Scotland has abundant natural resources, and we believe that we have a competitive advantage in the components that are necessary to grow a strong hydrogen economy that will support jobs and gross value added growth and develop new industrial opportunities on a significant scale. Our reputation for excellence in energy, our innovative oil and gas supply chain and our strong onshore and offshore wind sectors will be key to our achieving a just transition to a low-carbon and, ultimately, a net zero age. Both our oil and gas sector and our renewable energy sector will be critical to establishing stable and secure production of affordable large-scale hydrogen power facilities. We believe that hydrogen will play an important role in our transition to a net zero electricity system, directly complementing renewable generation and providing new ways and opportunities to use, transport, integrate and store such energy.

We also believe that the development of a hydrogen economy with a strong export focus represents a substantial economic opportunity for Scotland. Many of our neighbours in northern Europe are looking to Scotland to export to them the hydrogen that they will need for their own decarbonisation journeys, with the rest of the UK also likely to be a significant net importer.

No single fuel or technology is, by itself, the solution to climate change, but hydrogen has the potential to be an important part of a decarbonised energy system, and it represents a significant and valuable export opportunity. We are committed to supporting the emerging hydrogen sector in Scotland while maximising the “new industry” benefits that the production of hydrogen may bring. I look forward to seeing Scotland grasp the opportunities that a hydrogen economy presents to secure a just transition to net zero.

The Presiding Officer:

Thank you, Mr Wheelhouse. There will be around 20 minutes of questions for the minister.

Photo of Alexander Burnett Alexander Burnett Conservative

I thank the minister for early sight of the statement. The Scottish Conservatives have long been supporters of looking at the use of new technologies such as hydrogen as a way to decrease our carbon emissions in our use of energy for both heating and transport. However, it has been disappointing to see how slow the Scottish National Party Government has been in supporting the emergence of hydrogen technology and giving support to the industry to help with the transition.

It is also concerning how much store the Scottish Government is setting on converting the mains gas grid to 100 per cent hydrogen. I questioned the minister’s colleague Roseanna Cunningham on the wisdom of that approach several years ago, when the industry was clearly telling us how unfeasible it was. However, it appears that the minister is continuing with that gamble in trying to hit his targets.

Can the minister please explain which parts of the gas network will switch to 100 per cent hydrogen before 2030 and how he will overcome chemical issues that arise with moving above a 15 per cent hydrogen mix? Today’s statement offers little more than a list of previous announcements at a time when the industry is asking for the hydrogen action plan to be delivered with urgency, so with no new mechanisms, plans or policies being announced today and given the SNP’s repeated failures to hit both emissions and renewables targets in the past, how can we trust the 2030 target?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I thank Alexander Burnett for his interest in the subject. It is important to stress, as I did in my statement, that Scotland is the first part of the UK to have a hydrogen policy, so when the member criticises the Scottish Government for being slow in developing hydrogen, I would just remind him that we are the first area of the UK to have a hydrogen policy. We are also participating actively in the UK Government’s workstreams. The Scottish Government is represented in that work at an official level and I have had regular discussions with UK ministers on the subject.

The member mentions his concern about the continued focus on potentially using hydrogen for domestic heating and for the conversion of the gas network. We are encouraging the UK Government to review the gas grid. Unfortunately, the Scottish Government does not have the powers to review the gas grid. We require the UK Government to do so, as it is a reserved area of policy. We are urging the UK Government, as is industry, to accelerate the review of the gas grid to see what the potential is for hydrogen within the gas mix.

The Fife H100 project that I referenced is a hugely interesting project. It is of great interest not just in Scotland but in the rest of the UK; indeed, similar proposals to have demonstration sites are emerging in the UK Government’s own strategy, so Scotland is ahead of the game in that respect. Mr Burnett is probably out of line with his party’s Government at the UK level, given its interest in the potential role of hydrogen in domestic heating. The H100 project in Methil will be of huge significance in demonstrating how hydrogen-ready boilers can be used in practice in 300 homes and will enable us to develop consumer confidence and investor confidence that the technology can work.

I will happily engage with Mr Burnett on issues of joint interest in relation to hydrogen; I recognise his interest in the energy sector and I am happy to discuss that with him. However, I encourage him to pick up on the fact that the UK Government is also interested in the area and that Scotland is the first part of the UK to develop a policy, so we are by no means the last in line, as he has implied.

Photo of Lewis Macdonald Lewis Macdonald Labour

Perhaps unlike Mr Burnett, I welcome the work that is being done to look at conversion of the gas grid and the potential for hydrogen heating systems, as in Fife.

However, if that is successful, what will be done to enable householders to make those conversions? Who will pay for that? Will the costs fall to low-income consumers or will the Government take action to support that conversion?

I welcome the link between hydrogen and offshore wind, which will be key going forward. However, we know that many of the offshore wind jobs are now going abroad and are not happening here. What do we do to make sure that hydrogen jobs are created here?

Finally, places such as Rotterdam are using a hydrogen economy to underpin heavy industry that is reducing its carbon emissions. What is being done to work with industry, in particular with manufacturing, in Scotland to enable hydrogen to play that role here?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I thank Lewis Macdonald for his constructive approach. I recognise his long-standing interest in hydrogen, particularly in Aberdeen, and I welcome his interest in the matter.

Lewis Macdonald makes the important point that, if we learn successfully from the H100 project that there is potential for hydrogen to play an increased role in decarbonising the gas grid—through upping the percentage in the gas mix to perhaps 20 per cent initially, which I think is what industry players propose, or ultimately to 100 per cent—and then proceed with that, clearly, there will be conversion costs. I am encouraged by the fact that manufacturers such as Worcester Bosch are developing hydrogen-ready boilers that would be relatively simple to transfer to domestic properties to allow hydrogen-enabled heating systems to be used. Obviously, other manufacturers are interested in the area.

There is a great emphasis on minimising the investment that individuals and businesses will need to make. Obviously, there is potential for the development of heat networks, which could use hydrogen. The Government is carrying out work on the idea of heat as a service. In effect, that would take the problem of having to decide what kind of system to put in place out of householders’ hands. In effect, householders would commission, through their monthly bills, a service from a provider that would provide the heat at the contract price. Householders would not have to worry about the technology because, in effect, the investment decisions would be taken out of their hands and developed through commercial arrangements.

Mr Macdonald is right that offshore wind is an area of enormous potential and that we need to do better on supply chain opportunities. We need to learn from the difficulties with offshore wind in that regard. An integral part of our approach not only to hydrogen but to the heat and building strategy is to consider the supply chain opportunities.

As I emphasised in my statement, we are keen to work with industry stakeholders as part of the development of the action plan. We want to engage with industry to identify where we can achieve early wins. For example, can we be the manufacturers of electrolysers? By being an early adopter and early mover, can we get an advantage in the market? That would give us the ability not only to generate low-cost green hydrogen in the long term and blue hydrogen in the meantime but to develop an advantage in the supply chain. I am happy to engage with Mr Macdonald on that.

Mr Macdonald is right to identify Rotterdam as a good example of the great interest in hydrogen that there is in Europe. We have had strong interest from the port of Antwerp, the Dutch Government’s hydrogen envoy and colleagues in Germany, all of whom are looking to work with Scotland to source green hydrogen for industrial decarbonisation. That could apply also in Scotland, in locations such as Grangemouth and elsewhere.

Photo of Gillian Martin Gillian Martin Scottish National Party

My question is in a similar vein to Lewis Macdonald’s, and is on opportunities for our workers. The minister alluded to the fact that hydrogen has a role globally in the transition to net zero. To what extent would a home-grown hydrogen economy present an opportunity to protect existing jobs and create new sustainable jobs as well as to export our hydrogen technologies worldwide?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

Gillian Martin raises a really good point. The hydrogen assessment by Arup that I referred to in my statement looked across three main scenarios and concluded that, by 2045, a hydrogen economy has the potential to protect or create between 70,000 and more than 300,000 jobs, with gross value added of between £5 billion and £25 billion annually, depending on the degree to which hydrogen develops for domestic use only or develops to service a wider export market.

That is hugely significant for Gillian Martin’s constituency and the wider region that it sits in, given the importance of the oil and gas industry there. If we can create new job opportunities and migrate people from the oil and gas sector across into those roles, that could be an important route to a just transition for the more than 100,000 people who currently work in the oil and gas sector and its supply chain.

Our hydrogen action plan will set out to align with our broader support for the just transition. The growth of Scotland’s emerging hydrogen supply chain will be embedded in our new supply chain development programme that I referred to in my statement and which Ivan McKee is leading on, which includes the development of matching skills and manufacturing capabilities. We want Scotland to play a significant role in the wider global hydrogen economy, but we will also be trying to service our domestic requirements in Scotland.

The Presiding Officer:

I highlight the fact that we have nine more questions to get through and we are almost halfway through the allocated time.

Photo of Graham Simpson Graham Simpson Conservative

What is the minister doing to help motorists to transition to hydrogen? Specifically, how is he getting behind the proposal to establish a network of 12 hydrogen stations across Aberdeenshire, Moray and the Highlands?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I recognise that interesting proposals have been put forward for a hydrogen coast, so to speak, from the north-east of Scotland all the way up to Shetland. There is enormous interest in that. We have previously set out plans for the A9 to be an electric highway and for investing in an electric vehicle charging infrastructure to meet the needs of travellers on that route.

We want to work closely with our partners in local government and the energy sector. Interesting partnerships are emerging in Aberdeen between BP and Aberdeen City Council, which build on the success of the deployment of hydrogen in the city and involve the extension of its use in buses to other modes of transport. We are keen to engage with all interested local authorities and partners to progress plans, and we want to work with industry partners, such as BP in the case of Aberdeen, to get the fuelling infrastructure in place to give motorists the confidence of knowing that they will be able to use the technology to travel freely across Scotland.

We should also be mindful of the fact that, as the use of hydrogen develops in Europe and the rest of the UK, we will need to cater for the heavy goods vehicles and private passenger vehicles that come to Scotland, through tourism or for business purposes, such as carrying freight. Those issues are very much on our minds, and I will be happy to engage with Graham Simpson on them.

Photo of Shona Robison Shona Robison Scottish National Party

Will the minister say more about the work that he has been doing with local partners Arcola Energy and Dundee City Council to ensure that the hydrogen project at the Michelin Scotland Innovation Parc in Dundee progresses? I understand that the refuelling station at the MSIP could provide hydrogen to a fleet of 12 hydrogen buses for Xplore Dundee, and that that is set to be taken forward through procurement.

I would welcome any assurances that the minister could offer with regard to Scottish Government support for the hydrogen bus project, as well as the refuelling station, to ensure that Dundee can become a leading centre for hydrogen technology.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

Absolutely. Shona Robison makes a very good point. We see Dundee as being the next city in line to develop hydrogen after Aberdeen. The Government is committed to supporting the Michelin SIP site in Dundee so that it can become a leading centre for sustainable mobility.

Shona Robison mentioned Arcola Energy, whose representatives Mr McKee and I met at a round-table event to discuss the potential for developing the supply chain. I know that the company is an exciting potential player in that area. We are working closely with Arcola and other partners, including Dundee City Council, the MSIP and a number of universities and companies, to create the infrastructure for the development of hydrogen technology in the region, and Transport Scotland is working closely with partners on the development and delivery of the Dundee hydrogen bus project that Shona Robison mentioned.

We regard the project in Dundee as unique in its structure and approach, which involves drawing together a mix of commercial research and public funding. In that regard, it is quite different from the approach that has been taken in Aberdeen. Discussions about the commercial elements of the project are on-going, but I assure Shona Robison that further information will be made public at the appropriate time, which I hope will be in the near future. I will make sure that she is kept informed of progress, given her strong interest in the project.

Photo of Claudia Beamish Claudia Beamish Labour

Will the Scottish Government commit to considering monitoring the advanced technology whereby green hydrogen is used to contribute to the production of liquid fuel for aviation, in particular, which has such high emissions, but also for haulage and shipping—[

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.]

[

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.]—negative impact on land use while contributing robustly to our net zero emissions target?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I agree with Claudia Beamish. It is hugely exciting to see the potential for hydrogen to play a role, either directly as an energy source or through conversion to ammonia, which has a potential role as a drop-in fuel for marine use and other heavy vehicles. It is enormously interesting.

Claudia Beamish also rightly raises the prospect of decarbonising aviation fuel, which would make an enormous difference not only to our ability to meet the challenge of the climate emergency, but to our ability to sustain international tourism and business travel in an otherwise challenging period, given the climate emergency.

I assure Claudia Beamish that the Scottish Government has partnerships with the likes of the University of St Andrews, which is proactively taking forward research into propulsion systems and alternative fuels. As she may know, we are also working to trial a converted hydrogen-powered train unit in Scotland in order to demonstrate the potential value of hydrogen for our rural rail routes, where it may not be economic to electrify lines. That may help us to ensure that we can decarbonise our railway journeys.

I am happy to engage with Claudia Beamish on the subject. I know that she is a passionate and long-standing campaigner for tackling climate change and I am sure that we can work together on the matter.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Does the growth of the hydrogen economy present any particular opportunities for island and rural communities, beyond transport?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

Indeed it does. That is a very important point. I have been passionate about this since the start of our hydrogen policy. Our island and rural communities often depend on imported heating oil, liquefied petroleum gas and conventional diesel and petrol to power transport and heating systems. With the potential growth of both green hydrogen and blue hydrogen, but particularly green hydrogen, I foresee a period when our island economies will not only provide themselves with self-sufficient supplies of fuel through hydrogen or ammonia, but also—potentially—become net exporters.

I recognise that Shetland and Orkney are already at the heart of our oil and gas industry, but hydrogen also provides potential for the decarbonisation of facilities such as the Sullom Voe and Flotta terminals, which would provide a long-term future for those important economic sites.

Across our islands, whether at the large-scale sites such as Flotta and Sullom Voe or in our smaller island communities, where a wealth of community energy projects are already in place, hydrogen provides a potential other revenue source for projects. That can deal with grid constraints, where there are such constraints, as we have seen in Orkney. Work at the Surf ’n Turf and BIG HIT projects has overcome grid constraints there. There is potential to make our other island communities net wealth generators and exporters through hydrogen, and that is a very exciting potential part of the vision for Scotland.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I thank the minister for early sight of his statement and for his previous answer. I welcome the content and assure him of Scottish Liberal Democrats’ support for efforts to maximise the potential of Scotland and the UK in the development and use of hydrogen.

As Orkney’s MSP, I see evidence of that potential already, not least in transport and heat.

The challenges of decarbonising our economy are perhaps the most pressing challenges that we face, but does the minister accept that hydrogen can play only a limited role in helping us to achieve our 2030 target en route to net zero? Does he further accept that scaling up home insulation and other demand-reduction measures can create jobs now and make the supply of heat—from whatever source—less difficult in future? Will he ensure that any hydrogen strategy does not see the Government take its eye off the ball on the need to improve thermal efficiency?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I very much agree with Liam McArthur on that point. We have to keep our eye on the ball as far as energy efficiency and renewable heat supplies are concerned.

As he may know, our “Draft Heat in Buildings Strategy: Achieving Net Zero Emissions in Scotland’s Buildings Consultation” was published last week, on 5 February, and it sets out an ambitious programme for Government spending, with £1.6 billion over the next five years and a larger programme of up to £17 billion over the next 10 years—that is the whole-economy cost—to improve energy efficiency and invest in renewable heat in the Scottish economy.

That is an important strand of work to which we are committed. As I said, £1.6 billion will be committed in the next session of Parliament should we be re-elected. In addition, we have set out the £180 million emerging energy technologies fund, which is a separate strand of funding that will help to support the development of hydrogen.

I believe that the two things are complementary. As I am sure Mr McArthur would acknowledge, hydrogen can play a role in decarbonising heat. I welcome his support for developing the hydrogen economy, as outlined in his comments, and I would be happy to work with him. I hope that we can develop this part of our energy system on a bi-partisan basis and that we can all work together to make Scotland a great success internationally in this area. I would be pleased to work with Mr McArthur and other colleagues in that regard.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

I welcome aspects of the statement in relation to green hydrogen—[

Inaudible

.]—for heavy industry and heavy transport, but I urge the minister to move away from the fantasy of blue hydrogen, which is too risky and reliant on the unproven technology of carbon capture and storage. It seems to be a ploy for the oil and gas industry to maximise production, which in the short term could lead to the production of grey hydrogen, which would be disastrous for the climate.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I want to reassure Mr Ruskell on a couple of points. First, we recognise that grey hydrogen is a product that is used in the Scottish economy already, but it is not a key plank of our hydrogen policy. We hope to see the development of blue hydrogen and green hydrogen so that they can replace grey hydrogen, which is used as an industrial feedstock in the manufacturing sector. I hope that I can reassure Mr Ruskell that developing grey hydrogen is not a core part of our hydrogen policy; indeed, we want to see it replaced.

Carbon capture technology is already up and running. There are several projects in Norway that are operated by Equinor. The issue is about getting carbon capture, utilisation and storage to a commercially viable position where it can survive without huge subsidies. We are truly excited about the potential for the Acorn project to use St Fergus gas terminal near Peterhead to deploy carbon capture, utilisation and storage technology and potentially play a role in developing green hydrogen for use in the Scottish economy. That could help to grow the hydrogen economy and make sure that demand for hydrogen can be met as we increase the capacity for green hydrogen in the medium to long term. There is a role and a need for both technologies.

Mark Ruskell seemed to be critical of the oil and gas sector’s involvement, although I appreciate that that might not have been his intention. We have to have an eye on the need for a just transition. We need to protect jobs in the oil and gas industry and transition those jobs into a form that is consistent with achieving net zero, and that is clearly what the industry is trying to do. I know that there is some cynicism about that, but I assure Mark Ruskell that I believe that the conversations that I have had with the oil and gas sector have been sincere and that the industry is genuinely trying to decarbonise. We have seen that with the Crown Estate’s auction round 4 in England, where there has been huge interest from the oil and gas industry in developing offshore wind sites to generate green hydrogen.

I am happy to discuss that with Mark Ruskell offline, but I hope that he can be confident that his fears are unfounded.

The Presiding Officer:

We are well over time now, but I will take Maureen Watt, to be followed by Liz Smith.

Photo of Maureen Watt Maureen Watt Scottish National Party

I thank the minister for his statement, which is hugely exciting. As members know, Scotland has been an early adopter of hydrogen in transport, with Aberdeen being one of the first European cities to roll out hydrogen buses. Will the action plan commit to increase the number of hydrogen buses and public sector fleet vehicles in Scotland?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I agree with Maureen Watt. The people of Aberdeen can be hugely proud that their city has been pioneering hydrogen buses, and I am pleased that the Scottish Government has played an important role in helping to fund that activity. We are working with the wider public sector to reduce emissions from the public sector vehicle fleet and we have established the bus decarbonisation task force, through which we are working to eradicate emissions from the bus sector altogether. Battery electric vehicles and hydrogen fuel cell vehicles will be very much part of that approach. We will also try to move the use of hydrogen into other heavy-duty vehicles, and ensure that hydrogen infrastructure is in place to support that.

I should point out that the £62 million energy transition fund that we announced last July has already helped to enable the development of an Aberdeen hydrogen hub, and, as part of that, the bid for funding for additional buses for the Aberdeen city area. I hope that that reassures Maureen Watt that we are committed to developing hydrogen in public transport, particularly buses.

Photo of Elizabeth Smith Elizabeth Smith Conservative

The minister knows that there are, obviously, huge opportunities for hydrogen in agriculture, not just in relation to fuel and heavy machinery but for fertiliser purposes. Programmes such as the James Hutton Institute’s HydroGlen programme have shown what can be done. What funding can the minister commit to take that beyond a feasibility study?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

I am very interested in Liz Smith’s point about the wider role of hydrogen. It would be useful to have a discussion with her and, indeed, the James Hutton Institute, if she would wish to do that, to consider the potential engagement that we can have with the industry as part of the development of the hydrogen action plan.

We want to try to understand the full role of hydrogen in the economy and the full range of economic opportunities that we can exploit. If we can exploit hydrogen, whether that is for use in fertilisers or for wider use in the agriculture sector, with a competitive advantage compared with our competitor economies, that will potentially allow sectors that will depend on hydrogen in one form or another to have a competitive advantage, a lower cost base and a faster rate of growth and, obviously, to sustain more jobs. I would be happy to engage with Liz Smith on that.

The Presiding Officer:

I apologise to David Torrance. I am afraid that we will have to end the questions there. We have already eaten into the time for the next item of business.