How Scotland can still be engine room of UK economy despite decline of North Sea oil and gas – Energy UK

Scotland is powering the transition to a diverse, cleaner and flexible system, which is now serving an increasingly electrified economy where energy security is more important than ever. In fact, it epitomises this transition – from its rich tradition in coalmining and the oil and gas industries to the new, clean energy sources of the 21st century like offshore and onshore wind (although its hydropower plants were an early forerunner when it comes to clean, renewable energy!).

The country has always made the most of its natural resources to produce energy which, together with its industrial heritage and a highly skilled workforce, means it is ideally placed to play a leading role once again.

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Insulating the country against international crises

The Russian invasion of Ukraine propelled the energy industry into the headlines, and with conflict in the Middle East we’re once again seeing concerns about security and affordability on the rise. Investing in new clean energy technologies and infrastructure, upgrading homes, electrifying heating and transport and supporting businesses to decarbonise are all at the top of the agenda.

And while this transformation brings huge opportunities, it also presents challenges that must be overcome to fulfil the potential of this new energy age and ensure it truly delivers for Scotland and its people.

That’s why our forthcoming manifesto focuses on the importance of partnership. Energy UK members are committed to working with the Scottish Government following the election to tackle these numerous challenges and seize the opportunities they present – something that I’m looking forward to discussing when visiting Scotland later this month.

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Avoiding £40 billion energy bill subsidy

The energy transition has the potential to transform lives. Ensuring people can live in affordable, warm homes by supporting the adoption of new, clean technology like heat pumps, EVs and solar panels also means creating quality, skilled, clean-energy jobs and having a workforce equipped to deliver right across the sector.

From power generation to supply chain, infrastructure, support services and installers – to name a few – the opportunity is clear. The next Scottish Government should also address the barriers so that the ambitions for its existing industrial clusters to host new technology like hydrogen and carbon capture can be realised.

Energy security is national security – and we cannot afford a repeat of the situation from three years ago when the UK Government had to spend at least £40 billion to support bill-payers, which fuelled wider economic effects like double-digit inflation and led to a cost-of-living crisis, as well as an ongoing challenge with high debt and affordability issues.

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Massive economic boost

Gas will continue to play a crucial role in our system for some time yet and while there is a valid debate about our existing resources in the North Sea, it is also a fact that it is a basin in decline and has been for decades. When self-sufficiency isn’t possible, we inevitably rely on imports – with the risk that brings in an unstable world and the exposure to volatile prices on international markets.

Investing in and developing our own sources of clean energy – along with the systems and infrastructure to deliver these in a country increasingly run on the electricity they produce rather than fossil fuels – is the only way to ensure energy security and stable bills in future while also meeting the demand for power.

It can also provide a massive economic boost if we create the right environment and incentives for the investment that will bring more jobs and greater prosperity. One can argue about the speed but this is the direction we must follow for the long-term interests of Scotland – and the rest of the UK.

Unfulfilled potential

This is a journey we’re only part way through – and there is much work to do to get there. You couldn’t have a clearer example of unfulfilled potential than the constraints put on offshore windfarms by transmission infrastructure that hasn’t kept pace with developments in order to carry the power they produce.

Scotland’s energy legacy cannot be measured in natural resources alone. This country has long been defined by the quality of its workforce, from engineers and tradespeople to the technicians whose expertise has powered industries for decades.

As Scotland shapes its energy future, that same workforce must be at the centre of it – Scottish businesses contracted and Scottish people employed and skills developed for the long-term. An energy transition built this way doesn’t just keep the lights on and our houses warm – it also builds something more durable. It creates a legacy which lasts generations.

Bills too high for too long

Fairness must be an underlying principle. Investing in energy security and upgrading infrastructure that currently acts as a brake on cheaper bills, businesses and economic growth is essential for our country’s future. Such costs shouldn’t fall solely on the shoulders of bill payers.

Bills have been too high for too long, domestic energy debt is at a record level and high energy costs are suffocating our businesses. The government has made a start at reducing this burden but needs to do more for both sets of customers, including targeted support for those in the most need. The promise of the future cannot make us neglect the present realities.

The nature of devolved government means that much of energy policy resides with Westminster but there is still a lot Holyrood can do to keep Scotland as the engine of the GB economy.

Dhara Vyas is chief executive of energy industry trade association Energy UK