COP26 One Year On: Energy
Written by Andrew MacNish Porter, Policy Team Volunteer
With almost a quarter of global greenhouse gas emissions being produced by the energy sector, the challenge of reducing our consumption of fossil fuels is at the heart of addressing the climate crisis. This is also true of ending Scotland’s contribution to climate change; in 2020 the energy sector accounted for 74.3% of Scotland’s greenhouse gas emissions.
Energy was therefore a key focus at COP26 held in Glasgow in November last year. A key output of the COP was the creation of the Energy Transition Council (ETC) which produced 8 strategic principles for reducing emissions in the energy sector. Whilst Scotland is blessed with abundant renewable energy resources and is a genuine world leader in the energy transition, this is no reason to be complacent as there is still a long way to go and many challenges to overcome. To maintain its leadership status, Scotland (and the UK as a whole) must also continue to drive progress according to the priorities set out by the ETC.
With COP27 almost upon us, this blog examines how Scotland has performed over the past year against the eight strategic priorities of the ETC.
1. Integrated energy planning
Energy planning in Scotland is somewhat of a complex issue as energy policy is technically reserved to the UK parliament. Nevertheless, the Scottish Government still has significant influence over energy planning and in 2017 published the first Scottish Energy Strategy. The Strategy set the ambitious target of having 50% of Scotland’s energy use coming from renewable sources by 2030. However, it was somewhat light on detail of how this target would be met. An eagerly anticipated update to the Strategy which is hoped to have a greater focus on delivery was due to be published earlier this year. However, there is as yet no sign of it and publication has been delayed until December.
2. Utility-scale renewables
This is an area where Scotland has particularly excelled over the past year. Over a gigawatt of renewable generation capacity was added to the energy system in the first half of 2022. This was largely down to the commissioning of the Moray East offshore windfarm. The first power was also produced by Seagreen, which will become Scotland’s largest offshore wind farm when installation is completed early next year.
Another important development was the announcement of the results of the ScotWind leasing round which allocated rights to develop offshore wind farms in designated areas of seabed surrounding the Scottish coast. Including projects that came through the clearing process, almost 28GW of offshore wind projects were given option agreements. This far exceeded expectations of what would be announced and the results were met with both excitement and trepidation by industry. The priority now must be to ensure as many of these projects as possible are delivered.
3. Coal and fossil fuel transition
No electricity has been generated from coal in Scotland since 2016 and in December last year the chimney of the decommissioned Longannet power station was demolished in a controlled explosion. This was an understandably significant moment and First Minister Nicola Sturgeon was there to press the button to trigger the demolition. However, Scotland is served by an electricity grid which is integrated with the rest of the Great Britain and, unfortunately, the same cannot be said of coal power stations in the rest of the UK as can be said of Longannet.
There are three coal-fired power stations currently operational in the UK. Whilst plans were in place for their retirement, after Russia’s invasion of Ukraine sent energy prices soaring deals were made to extend the operation of these plants to reduce the risk of blackouts. This will of course have a significant climate impact and represents a setback to Scotland and the UK achieving their climate objectives.
4. Investment (policy and instruments)
The Climate Change Committee estimates that on average £50 billion of investment in low carbon technologies per year is needed to meet Net Zero by 2050. This is a particular challenge because of the cost profile of making the switch to clean energy. Whether it be switching to an EV, installing a heat pump, or building a wind farm, doing so typically involves a large upfront cost. Therefore, despite clean technologies being cheaper over their lifetime than fossil fuelled alternatives, this initial investment represents a significant barrier to transitioning away from fossil fuels. Bringing forward the necessary investment is therefore the central challenge in decarbonising the energy sector.
The good news is that there have been significant policy developments over the past year which should help to deliver this investment. Firstly, the flagship support mechanism for delivering large-scale renewables – the UK Government’s Contracts for Difference (CfD) scheme – will now be allocating support to developers on an annual basis rather that once every two years. Secondly, the UK Government launched the Review of Electricity Market Arrangements aims to identify and implement the market reforms necessary to achieve the targets of a decarbonised power sector by 2035 and Net Zero by 2050.
5. Green Grids
Upgrading the electricity grid is an often overlooked but absolutely critical element of decarbonising the energy sector. After all, there is no point in generating lots of renewable electricity if it can’t be transmitted to where is it needed.
Unfortunately, investment to date in the UK’s electricity grid has not kept pace with the development of renewable generation, much of which has been built in Scotland. However, plans to build a grid fit for Net Zero are being put into place. In July 2022, the National Grid ESO published the Holistic Network Design (HND) which sets out a plan for £54 billion in investment in grid infrastructure out to 2030. Time will tell whether the measures will be sufficient to deliver the huge buildout of the grid required to accommodate the renewable generation capacity that is expected to be added to the electricity system over the rest of the decade.
6. Energy efficiency
Improving energy efficiency is the quickest and cheapest way to reduce emissions in the short term and the overall gains which could be made from using energy more efficiently are huge. However, this is another area which has not received sufficient attention, particularly in relation to our energy use in buildings. With heat currently accounting for over half of Scotland’s energy use, improving energy efficiency in buildings must be central to efforts to eliminate emissions.
The push for energy efficiency in buildings is hindered by the fact that retrofitting is typically a disruptive process, there are shortages of heat engineers with the necessary skills, and the thorny issue of how the costs of installing low carbon heating systems should fall across building owners, building occupiers and government.
However, the Ukraine crisis has thrown into sharp relief the need to reduce our use of energy in buildings. Hopefully this will act as a catalyst for the action which is desperately needed.
7. Distributed renewable energy
Distributed renewable energy is another area in which Scotland is a world leader. Particularly in Scotland’s island communities, innovative distributed energy systems are being tested and built delivering considerable benefits to the households and businesses they serve.
However, the Scottish Government has fallen short of its target of having 1GW of locally owned renewable generation operational by 2020; as of December 2021, only 896MW of distributed energy was operational. This is therefore another area where more action is needed if Scottish Government’s next target of having 2GW of distributed renewable energy by 2030 is to be met.
8. Just transition
The concept of a just transition has been central Scottish energy policy. The Scottish Government has a dedicated Minister for Just Transition, Employment and Fair Work and has also established the Just Transition Commission (JTC) to advise policymakers. The second JTC was convened this year and produced a series of strategic recommendations for Scottish Government to ensure the decarbonisation of Scotland’s economy is achieved equitably.
However, as ever, the devil is in the delivery. A £500 million Just Transition Fund was launched to support projects in the North East and Moray, which was a positive step. But with the publishing of Scotland’s first economy-wide Just Transition Plan being delayed alongside the Energy Strategy Refresh, it largely remains to be seen to what degree Scotland will put this element of the COP26 legacy into practice.
Overall, then, it is a mixed picture. Scotland’s ambitions for renewable energy deployment look set to maintain our position as a world leader in the energy transition. However, there are challenges concerning the electricity grid, energy efficiency and distributed energy which still need to be overcome on our path to Net Zero. Key to whether these challenges can be overcome fairly and equitably will be the content of the upcoming Energy Strategy Refresh and Just Transition Plan. With COP27 concluding before the expected date of publication, here’s hoping it lives up to the legacy of this COP as well as the last.