First Minister's speech at All Energy conference
Wednesday 2 May 2018, Glasgow
It’s a real pleasure for me to be here this morning and to welcome all of you to Glasgow. It’s always fantastic to see conferences of this scale and stature and importance taking place here, in what is my home city, and I hope you all have a warm welcome as well as very productive discussions over the course of this conference.
I addressed this conference last year and it is hard to believe that a year has passed since you all gathered here previously. It has been a busy time for energy and, as I will cover in my remarks this morning, there are a number of opportunities, but more than that a number of real challenges that lie ahead over the years to come. I don’t think there’s any exaggeration when I say that this is the most important showcase anywhere in the UK for low carbon and renewable technologies, so it’s wonderful to have all of you here with us.
The businesses and organisations that are represented in this room right now make an enormous contribution to Scotland, and I want to thank you for that. You help to ensure that Scotland is able to meet our obligations when it comes to tackling climate change. You improve business efficiency and reduce consumer costs. And you also strengthen hugely our economy - low carbon industries in Scotland now employ almost 50,000 people, so your economic footprint and contribution is considerable.
It’s also worth pointing I think out that the businesses and organisations here today are also increasingly important to Scotland’s international reputation.
Just last week we had the privilege of hosting the President of Malawi here in Scotland, and it was an opportunity to reflect on the fact that Scottish support and expertise has brought renewable energy to more than 80,000 people in rural parts of Malawi. So you’re not only making a contribution here in Scotland, but also helping us to make a contribution globally.
And three weeks ago I was in China and Hong Kong – it was clear that the level of interest in, and knowledge about, Scotland’s energy expertise is immense and it is increasing all the time. China is already of course a significant investor in projects such as the Beatrice offshore wind project.
Right across the globe, people are aware of Scotland as a world leader in low carbon technology, and that’s a reputation that we’re determined to protect but also to build upon.
The reason for that reputation – first and foremost – is the leadership, the innovation and the expertise of many of the people, organisations and businesses here today.
It’s also true to say that Government has an important part to play in maintaining and encouraging that massive success story. And so my commitment, as First Minister, is that the Scottish Government will do everything in our power to support your sector. We understand that you are central to our ambitions for a greener, fairer, and more prosperous country. My responsibility is to do everything we can to support you in achieving your ambitions because that will help us achieve ours.
I hope that that commitment has been obvious to you through our actions over the last decade, and particularly perhaps in recent months, as we have published our Climate Change Plan and our new Energy Strategy. I am very grateful to the many people here who have no doubt contributed to the consultation process for those strategies.
The climate change plan sets out how we will achieve, and report on, some of the most ambitious actions anywhere in the world. We aim to reduce greenhouse gas emissions by 2/3 by 2032.
The energy strategy demonstrates some of the changes that will require. If you think about the last 12 years, we’ve already seen a near-transformation in our electricity sector – renewable energy in 2005 generated less than 20% of our total electricity demand; now that figure is well over 60%, and getting very close to 70%.
That success that we’ve seen in electricity now has to be replicated elsewhere. We now need something similar in the next 12 years - not just for electricity but for our energy use as a whole, including heat and transport. At the moment, 18% of our overall energy use comes from renewable sources. By 2030, our aim is for that to be at least 50%.
That is a very ambitious target. It will not be easy to meet that target but we are determined to do it.
We understand that will require major change across all of this conference’s four pillars - energy efficiency, heat, transport and renewable energy.
I’ll focus on energy efficiency later in my remarks – but I want to briefly cover the other areas first, and also to talk more about their massive economic benefits.
If we start with heating, our energy strategy makes it clear that we will probably need to increase our use of both hydrogen and renewably generated electricity. We’re also investing in district heating schemes – in fact one of the largest schemes in Scotland is being developed just a few miles down the river from here, in Clydebank.
Scottish Water confirmed today that they renewably host or generate twice as much energy as they use. As part of their efforts to promote renewable energy, they are starting to use the natural warmth of their sewage network to heat buildings. Their first project of that kind – at the Scottish Borders College – has received hugely positive feedback. So there’s really exciting things happening in the area of heat, and it’s important that we continue and build on that momentum.
In transport, we are investing in the infrastructure needed for electric and hydrogen-fuelled vehicles, and have set an ambitious target when it comes to phasing out the need for new petrol and diesel cars and vans. We are also doubling our investment in walkways and cycle paths – from £40 million last year to £80 million this year. So again, we understand the changes that are required in transport and are taking the decisions now to support those changes happening.
And if you look at electricity, I’ve already mentioned that renewables now account for more than 60% of Scotland’s total electricity demand. By 2030, that figure is likely to be well over 100%. That shows how much additional potential we have in solar power, onshore and offshore wind, and also wave and tidal power.
As we make these changes, we are working to ensure that we also capture the economic benefits that can arise from them. These benefits are potentially huge. Often, for understandable reasons, we focus a great deal on the challenges associated with tackling climate change. My great belief is we must talk much more about the opportunities that arise from tackling climate change as well.
I’ve said on a number of occasions that we must see innovation as being absolutely central to Scotland’s economic future. Just as Scotland did in generations and centuries past, our ambition must be, and is, to be the country that is developing, designing and manufacturing the key innovations, products and technologies of the future, not just a country that is a user of all of them.
That, I think, is a mission which is particularly important in relation to low carbon technology. Our location today – on the site of the old Queens Dock – is a reminder of our role as an industrial and trading powerhouse in the past. Just over a century ago, Clydeside produced almost 1/5 of the world’s new ships.
In so many ways Scotland – through inventions like James Watt’s steam engine - led the world into the industrial age. Our ambition now has to be to help lead the world into the low carbon age. That I think is an ambition that is very realisable for this country.
In some sectors we see that already happening. Scottish waters now host the world’s largest tidal power array and also the world’s first floating windfarm. The world’s most powerful offshore wind turbines were installed just last month in Aberdeen Bay.
Glasgow is one of Europe’s leading centres for offshore wind research. Last year I opened Scottish Power’s new headquarters - less than a mile from here, over on St Vincent Street. These offices, it’s important to stress, include Iberdrola’s global base for offshore wind. So staff here in Glasgow are involved in developing offshore windfarms in France, Germany and further afield.
Professor Sir Jim McDonald will speak in a few minutes. The work taking place at Strathclyde’s Technology and Innovation Centre is just one – pretty extraordinary - example of the importance of our universities in developing and exploiting new technologies.
And of course that research expertise adds to Scotland’s capabilities - not just in renewables - but in many related areas such as battery storage and smart grids.
Those extraordinary assets – our research base and our immense renewable resources – are already creating jobs and benefiting communities right across the country. But we want to make the most of that potential, and if we’re going to do that then we must further strengthen our supply chain capabilities.
That issue in Scotland has received a great deal of attention recently, given the difficulties of the company Bifab. There is a long road ahead for Bifab, although things now look more positive - but the Scottish Government’s actions there I hope demonstrate our absolute commitment to preserving and building Scotland’s supply chain.
More generally, we are investing to provide the support and assistance that ambitious businesses need. The new national manufacturing institute for Scotland will help businesses to achieve their potential in sectors such as energy and aviation.
We have also made it clear that the move to a low carbon economy will be a central mission for the new Scottish National Investment Bank which is being established. That new bank is one of the ways in which we are seeking to create an infrastructure of public support to help private enterprise to flourish. We’re determined to ensure that Scotland is the best place in the UK to set up a low carbon business.
That is true across all four pillars of today’s conference – certainly including heat, transport and renewable electricity. But the final area I want to touch on today is energy efficiency.
It’s an area that doesn’t always get the attention it deserves – it maybe captures the imagination a bit less than finding new ways of generating, storing or using electricity. But as all of you know very well, our climate change targets can’t be met without a significant improvement in the energy efficiency of our homes, offices and factories.
That is an area where we have already made significant progress in Scotland. Between 2010 and 2016 the number of homes in Scotland with one of the three highest ratings for energy efficiency increased by more than 450,000 – around 1 million homes are now rated as band C or better.
That’s good progress, but even with that improvement well over a million homes still don’t have a good rating.
That’s why we are investing heavily in further energy efficiency measures. The UK Government doesn’t give public support in this way to energy efficiency any more – I think that’s regrettable – but the Scottish Government is determined to continue to do so. We’ve given a commitment to £500 million of funding in the 4 years to 2021.
As part of that, I can confirm today that we are again providing £49 million this year for area based schemes that will be delivered by local authorities. They help to tackle fuel poverty by improving housing – for example by installing wall insulation – in order to make homes more energy efficient.
We are also providing more than £5 million of additional funding. Some of that will be available to local authority and housing association landlords to invest in social housing. And the rest will help local authorities to improve some of the services they provide – for example to other households who might not be in fuel poverty, but who want to invest to improve their own homes.
Perhaps even more significantly, today the Scottish Government is today publishing our route map to an Energy Efficient Scotland. It sets out our ambitions over the next two decades for improving the energy efficiency of Scotland’s buildings.
It proposes that all of Scotland’s homes will have a good rating for energy efficiency by 2040. That’s a target we have been lobbied fairly strongly on, so I hope it will be welcomed today.
For the private rented sector we are proposing an earlier target. We are consulting on plans that could see all private rented properties achieve a good rating by 2030. And I can confirm that minimum standards will start to apply in that sector from 2020.
We’re also setting a target date of 2030 for households that live in fuel poverty. That’s something that will make a massive difference to low income households.
And for social housing, we’re setting a target date of 2032. However we want to go even further in that sector - we want as many properties as possible to have at least a B rating.
Finally, non-domestic buildings will also be hugely important. So we will shortly consult on long term standards and targets for that sector as well.
Overall, this route map makes it clear that over the next two decades we intend to transform the energy efficiency of all of Scotland’s buildings. And where we can, we’re going to focus earlier action where it is most needed. It is one way in which we can ensure that the benefits of low carbon society are felt by everybody across our society.
Because the route map also demonstrates that, like so much else in relation to low carbon technology, investing in energy efficiency is both an obligation and an opportunity. It will help create employment – it is likely to support thousands of jobs. It will make businesses more competitive. And it will help us to tackle fuel poverty, making people’s homes warmer and their heating bills lower as well.
That sense of opportunity I think should be apparent across all of the 4 pillars of this All Energy conference. Greener transport can help us breathe cleaner air and live healthier lives. District heating schemes can reduce costs for consumers. Renewable energy is already supporting tens of thousands of jobs in communities across the country.
There’s no doubt at all that the move to a low carbon era is difficult. It represents a fundamental transformation in our society and our economy, in the way all of us live our lives. But i think we should, above all, see it also as a hugely exciting opportunity. The steps we take to achieve a low carbon society will make us a fairer, cleaner and more prosperous country. They will enable people to live happier, healthier, more fulfilling lives, and ultimately that’s what everything should be all about.
In the years to come, many of the businesses in this room are going to be at the forefront of achieving that change. My promise, my pledge and my commitment to you today, is that the Scottish Government will do everything we can to support you in that. We know that by doing so, we will bring benefits to businesses, communities and families and individuals in every part of the country.
So I’m absolutely delighted to be here with you today. I wish all of you all the best for a very successful conference. Most importantly of all, as we face up to all of these exciting opportunities, I look forward to working with you in the months and years to come.