Official Report 825KB pdf
Our third item of business is an evidence session on the Great British Energy Bill. I welcome to the meeting Michael Shanks MP, Minister for Energy, and his supporting officials. Minister, I think that you want to make an opening statement. This is the first time that the committee has had a UK Government minister before it. I welcome you and thank you for agreeing to take questions from us. It has not always been so easy in the past for the committee to get UK ministers in front of us, so I will give you a chance to make a brief opening statement.
Thank you very much, convener, and good morning to you and members of the committee. It is a pleasure to be in front of you. I am sorry that I cannot be with you in Edinburgh, but thank you for making this remote exchange work. It is a pleasure to be the first UK Government minister to speak to the committee on an LCM. I hope that that underlines the UK Government’s changed priorities for our relationship with the devolved Parliaments and our keenness to engage as much as possible on these matters. Thank you for having me.
I will briefly outline three points before taking your questions. The first point is that the Great British Energy Bill is a different way of doing things in this country. It is different in two ways. First, it encapsulates this Government’s ambition for the future of our energy system, which is to make sure that we have a clean power system that delivers energy security and brings down bills, that reaches every part of the UK and, in particular, deals with questions about our economic growth and builds on good, well-paid jobs of the future in every part of the UK.
The second way in which it is different is that it makes a break in terms of Government support for public ownership. We are very clear as a Government that we think that public ownership is an extremely important model and that communities should have a stake in the energy future that we are building together. Public ownership should deliver not only benefits in terms of the energy infrastructure that we want to build together, bringing communities with us on that journey, but also social and economic benefits to communities in the longer term. We are unashamedly pro public ownership and the bill is partly what will deliver that.
The second point that I want to make is that the bill represents a new way for the Government to deliver ambitious projects. Across the whole of the UK now, we have a shared ambition about how we get to net zero, how we deliver on our climate obligations and how we deliver energy security for the future. The clean power mission that we have embarked on is about bringing the whole of Government together to deliver on clean power by 2030. That is a hugely ambitious project, but one that we think is absolutely achievable.
The third point that I want to make is that this is also a reset in how we engage with the devolved Governments of the country. We want to be partners with the devolved Governments. We will not agree on everything—of course not—and nor should we. The point of devolution is that people can make different decisions. However, where we have a common aim, we want to be productive in working together to deliver that aim. The bill, and our energy policy more generally, have been really good examples of where that reset in relationships has already achieved results.
Great British Energy is our ambitious plan for public ownership in this country. It will be headquartered, of course, in Aberdeen—where else could it be headquartered, given the skillset and experience of the north-east of Scotland? That also ensures that, as we build the transition to the new jobs of the future in the north-east of Scotland in particular, we will build on the expertise of the existing workforce as we move forward with Great British Energy.
The company is capitalised with £8.3 billion in this Parliament. Money will go to every part of Great Britain to deliver on really ambitious projects, to work alongside Governments that are already moving forward on so much of this, to help de-risk projects, to crowd in more investment and to deliver the economic and energy future that we have a shared ambition for across the UK.
I hope that the Scottish Parliament will be able to give its consent to this hugely important bill, which delivers for Scotland as well as the UK and shows that Scotland is at the heart of this UK Government. I look forward to your questions.
Thank you, minister. The first question is from me. When the Acting Cabinet Secretary for Net Zero and Energy was at the committee the other day, she told us that the Scottish Government was looking for an amendment to clause 5 of the bill so that it would require consent from the Scottish Government rather than just that it be consulted, as the clause states at the moment. Is that amendment likely to be forthcoming, and will you support it?
You are right to outline the discussions that we have had on the matter. Context is really important. There is very little, if any, previous legislation that we have been able to identify that has a consent clause in such a section, so our default was to put a consult clause in there. After a number of detailed conversations with not just the Scottish Government but the other devolved Governments, we have come to a position now where we agree that, in fact, where clause 5 impacts on devolved areas, there should be a consent clause. We have agreed that position. I have agreed in writing with ministerial colleagues in all the devolved Administrations that an amendment on that will be forthcoming. The timescale is that the bill is still in the House of Lords. It has its final committee reading tomorrow. The bill will then come back for report stage, and at that point an amendment will be tabled, which the Government will support.
That is very helpful, because until we can see that amendment, it is difficult for us to consider the LCM in the context that has been given to us.
I thank the minister for attending the committee. I note the genuine goodwill that we sensed from the evidence session with the acting cabinet secretary last week in relation to the shared agenda between both Governments.
It is in that context that I want to look at some of the nuts and bolts around the LCM, in particular clause 6. Clause 5 would require consent from devolved Governments in relation to the statement of strategic priorities under which GB Energy would operate. However, clause 6 gives a quite substantial power of direction to the UK Government over GB Energy. At the moment, there is no provision to consult the Scottish Government in relation to that. I wonder whether that will be amended. If a UK Government wishes to direct GB Energy in a devolved space that links into the priorities in clause 5, should that not also require consent?
Thank you, Mr Doris. I appreciate your opening remarks. This is a genuinely productive relationship, and I hope that it will continue. Your question is very important.
I will spell out the difference between clause 5 and clause 6. Clause 5 gives the secretary of state the power to set the strategic priorities of Great British Energy. We see that as not a regular statement but something that will happen more than once in time. That requires engagement with all parts of the UK. We have now come to the view, in agreement with the devolved Governments, that that should include the ability of those Governments to consent.
Clause 6 is quite different. It gives a power of direction in very limited circumstances. A number of bills include such a clause giving the secretary of state a power, on very rare occasions, to direct in a particular way. It is not a day-to-day operational power. In fact, in anticipation of questions on the matter today, I asked my officials to look for any previous examples of where the same power in other bills has been used. It has been used very rarely and usually only in circumstances where there is an immediate need to give a direction—for example, in a matter of health and safety or in national security. It is not a direction in terms of the operation of the organisation and therefore we do not think in this case that consent from the devolved Governments is appropriate.
Can I check whether that means that the UK Government is open to consulting in that area? Further, can you provide more information in writing to the committee about the reassurances that you can give of the limited circumstances in which such powers might be used?
Yes, that is very helpful. I should have said that we have agreed with the Scottish Government and other devolved Governments that I will write to set out exactly what we think the consult process will be. Of course, I should say that the context of this is that we expect to consult very regularly on all aspects. In fact, our officials have been in regular engagement. Certainly, on a formal basis, any time that there is a direction given, we would absolutely consult the devolved Governments. That will be in writing. Secondly, yes, I am happy to write to give any examples from the past of where the power has been used.
That is very helpful. It would also be helpful to know specifically what on the face of the bill limits the UK Government’s scope in relation to directions.
I do not expect this to happen in short order, but if the UK secretary of state were to direct GB Energy in an area that any future Scottish Government thought was contradictory to the clause 5 strategic priorities and was in a devolved space, what power or influence would the Scottish Government or the Scottish Parliament have to tackle that? Would there be a dispute resolution system between the Scottish and UK Governments?
I will separate my answer into two points. First, there is a broader context to this, which is, to reiterate, that Great British Energy will be a publicly owned company. However, it will operate in exactly the same regulatory and legislative landscape as every other company. It will not have any additional powers, and therefore it will have to operate within all the regulations, consents and laws that the Scottish Government sets out in Scotland. The secretary of state would not be able to give it a direction that would be counter to any legislation that already applies. That is important in terms of context.
Secondly, we will not spell it out on the face of the bill, as we have agreement from the devolved Governments that our approach will be to write to them to clearly set out what the consult process will look like—I have committed to that. There is no other legislation that is a precedent for this very narrow power. For example, if there were a really urgent issue of national security, there would not be scope for anything further than, yes, a proper consultation—a phone call or whatever—but to move through a consent process would negate the urgent response that is needed on some of those issues. It is not possible to put that on the face of the bill. We have agreement on that in principle, which we will follow up in writing, but I am happy to share any further information on that with the committee.
That is very helpful, Mr Shanks. I look forward to the further information so that the committee can reflect on it in due course.
Good morning, and thank you for your time. I will turn to the role of GB Energy. Given the level of investment that is presently made by the private sector in both onshore and offshore wind, what do you see as GB Energy’s role in investing in those sectors?
Good morning, Mr Matheson. That is an important question. The role that we have been really clear on is that Great British Energy is not about crowding out any of that existing investment, much of which is already committed for future years. In established technologies—especially onshore wind, which is very established in Scotland—we do not necessarily see that there will be a key role for Great British Energy. It is in those less-established technologies, particularly marine renewables or floating offshore wind, where the development has not yet quite got to the stage where the level of investment is where we need it to be, that, in some cases, we would see Great British Energy being involved.
The other side of this that is important is that this is about giving the public a stake in some of those projects in the future. For Great British Energy to be a publicly owned energy champion that owns generation capacity in the country and gives a return to the British people and to people all across Scotland is a different way for us to think about the ownership of this. Yes, we want to see continued investment from all the investors that currently invest, but we also want to see the British public benefit from some of that as well.
Finally, Great British Energy will focus not just on investing directly in generation projects, but on some of the supply chains, which we really want to see developed in Scotland and across Britain, so that the jobs follow the projects. We all know that, in far too many cases, we have been towing this infrastructure into Scottish waters and building it, and no one in Scotland has seen the benefits in terms of jobs and investment in supply chains. There are some really good projects under way at the moment. We think that Great British Energy can help turbocharge a lot of that.
That is helpful.
In terms of investment, would GB Energy be taking a stake in the technology—for example, the development of offshore floating foundation technology—or would it be taking a stake in a project overall?
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Both, I think. The key thing about us setting this up as a company that is publicly owned but independent from Government is that it will make its own investment decisions. Those will include technology-specific decisions, but also decisions about the type of funding, with the key parameters being to deliver a return for the British public and to really move forward on how we drive forward clean power. Investment could take both those forms. It might be that the company takes a stake in a project overall, or it might be that, at a much earlier stage, it provides some of the pump-priming funding to get the supply chain going. In the community energy space, for example, the company might have a key role in getting some projects started in the first place.
The funding will look very different for different types of projects, and we expect the company to have a real mixed portfolio. We will be developing that approach over the next few years.
We are starting with a commitment that Great British Energy will have a key role in all of this. It is not going to become a Vattenfall or a Statkraft overnight, but those companies had to start somewhere. Our ambition is for communities and the public to have a stake in the area, and for us, through Great British Energy, to drive some of the innovation, supply chains and jobs in this country. This is our starting point.
In ScotWind, the majority of the projects are floating offshore wind. How exactly will GB Energy operate as an organisation? Will it look to buy a stake in a project? Will project developers approach GB Energy for that funding, or will GB energy approach them to look at taking a stake in a project? How will that operate? Many developers bid for ScotWind projects and offshore floating wind projects on the basis that everything will be paid for by private investment.
Again, I am sorry to not give a very specific answer, Mr Matheson, but I think that those are investment decisions that the company will make, and, crucially, it will not be directed on a case-by-case basis by ministers. That is a really important aspect of why we are setting up the company in the first place.
However, I imagine that both of those scenarios could absolutely happen. In fact, Juergen Maier, the start-up chair, has been in Scotland a lot over the past few months and has had a lot of engagement with developers that are keen to partner with Great British Energy.
We have enormous potential in floating offshore wind, to take that example. We are a world leader already, and we will continue to be a world leader. However, it is difficult to drive forward some of those projects, particularly because we have not quite got over the line yet with the test and demonstrator projects, which are so important for understanding the supply chains. We hope that we will see more of those projects in future contracts for difference rounds.
Critically, this is not just about how we deliver the actual capacity on the ground or in the sea; it is also about how we build the supply chains that will bring the jobs to this country. GB Energy can play all those roles. If you are a developer looking to build a floating offshore wind farm, you want confidence that you have a supply chain, and Great British Energy can help deliver that.
Could it invest in carbon capture, use and storage technology?
Clause 3 of the bill outlines some of the limits of Great British Energy, but we have been clear that hydrogen, CCUS and a whole range of technologies are within the scope of GB Energy.
The next questions come from Kevin Stewart.
Thank you very much, convener, and good morning, minister.
You said in your opening statement that this involves partnership, and partnership with communities. In order to have good partnerships, you have to have trust. The chair of GB Energy previously said that the headquarters in Aberdeen could mean more than 1,000 jobs being created for the city that I represent. That estimate has since been revised down, to between 200 and 300. Can you provide clarity for us on what the real job numbers will be in the great city of Aberdeen?
Good morning, Mr Stewart. Thank you for your question. To be absolutely fair to Juergen Maier, what he very clearly said in that evidence session was that, in the initial phase, we see a few hundred jobs being very likely while we are starting up the company, but that it is not inconceivable to see in the future that there would indeed be more than 1,000 jobs. I do not think we have moved away from that position at all, but we have to be really clear that we are setting this up from scratch. The Government is committed to £8.3 billion in the first Parliament, but, of course, setting up an organisation takes time. We want to make sure that we are delivering value for money, and therefore every job that is created in Great British Energy will have to be justified.
In the initial phase, there will be a lot of work just setting up what some of that investment will look like. In time, we really see a role for GB Energy—in fact, this is particularly why it is important that it is in Aberdeen—that is not just about having investment expertise, although that will be important, but about having engineering and technological experience in delivering projects. We want to see GB Energy not just as an investor, but as an organisation that delivers energy projects on the ground and works with communities to bring jobs to the country.
My ambition for Great British Energy is limitless. I hope yours is as well, Mr Stewart, because there is real potential to deliver jobs in the future in Aberdeen, and I am really excited about that opportunity.
Mr Maier’s change in the number of jobs—from 1,000 to 300—took place within 44 days. That has an impact on people, and trust is often lost because of such statements.
You have stated that each area will focus on different technologies. We have also heard that there will be separate offices in Edinburgh and Glasgow. Will you outline in the near future what specialities will be undertaken at each of the centres that you envisage coming into play?
First, I agree with you that trust is very important, and that is why we should be careful not to misquote. Juergen Maier, as I said in my first answer, was very clear in that evidence session that we see a few hundred jobs in the start-up of Great British Energy—all organisations start off small and build—but that it is entirely conceivable that, in the future, we will see many more jobs. Of course, this is not just about jobs in Great British Energy’s headquarters; it is also about the investments that the company makes that will deliver jobs, many of which will be in the north-east of Scotland as well. We should be really clear on that. We have not changed our ambition in terms of the jobs that will be created by Great British Energy.
On your second point, we said that the headquarters will be in Aberdeen. For some time, that will be the sole headquarters of Great British Energy. In time, we want to build on the specific knowledge that we see in Glasgow in particular, and in Edinburgh, around some of the tech innovation that is going on. I visited the University of Strathclyde recently to hear about that. In Edinburgh, there is particular finance expertise, and some of the other investment arms are based there.
However, that is a long-term aim. The key is to set up the headquarters in and focus on Aberdeen. The chief executive will be in Aberdeen, driving forward the future of Great British Energy, and that is why we are absolutely committed to making sure that it is headquartered there.
I am glad to hear that the chief executive will be based in Aberdeen.
On the trust aspect, GB Energy was sold as something that would bring bills down, with your party pledging during the election to cut bills by £300. When will that become a reality under GB Energy? As we all know, bills have risen by an average of £449 since you came into office.
I think that you highlight exactly why the wider mission is so important to the Government. At the moment, we are still far too exposed to volatile fossil fuel prices. We said that the mission that we are on is to reduce bills in the long term; we did not say that that would be possible overnight, as that is just not credible. That is still an absolutely vital part of what we are aiming to do.
Great British Energy is a hugely important part of how we speed up the process. As a Government, we are moving as quickly as we can, working with the Scottish Government, to drive forward as much deployment of clean energy as we can. We want to move even faster on many things. GB Energy will be key to doing that, and I hope that your colleagues in the Scottish National Party will support it, because it is a key part of bringing jobs to Scotland, bringing down bills in the long term and delivering on our climate obligations.
Bills have gone up; you said that they would go down.
We move to questions from Mark Ruskell.
Thank you very much for joining us this morning, minister.
One of the areas that we are looking at is the relationship between GB Energy and the Crown Estate, which operates outside Scotland, around the rest of the UK. I am interested to know how you see GB Energy working with Crown Estate Scotland, which is set up slightly differently and does not have borrowing powers. We are trying to understand how the two Crown Estate organisations will work with GB Energy. What will that look like?
We are aware that you have a Crown Estate Bill going through Westminster at the moment. It would be useful if you could provide a little bit of clarity on how you see that relationship developing.
You raise a really important point. The relationship with the Crown Estate in England and Wales is slightly different. We have signed a partnership with it to help deliver on some of the Crown Estate’s priorities through Great British Energy.
In Scotland, the relationship will be different, not least because Crown Estate Scotland has already progressed quite a lot of its leasing rounds. It is in a very different place from where the Crown Estate in England and Wales is. The Secretary of State for Energy Security and Net Zero and the Acting Cabinet Secretary for Net Zero and Energy recently signed an agreement on how public bodies in Scotland will work closely with the UK Government, but of course there is a recognition that they will have different priorities.
Day to day, the engagement has already been very good. Officials have regular contact with the two Crown Estate bodies, but also with my department, the Scottish Government and Crown Estate Scotland.
The honest answer is that we are quite open-minded about what the relationship with Crown Estate Scotland will look like. There will be elements where we can share some of the learning from England and Wales and, frankly, there will be a lot of areas where the Crown Estate in England and Wales will take learning from what Crown Estate Scotland has been doing. Together, we can build on that.
For example, in relation to supply chains, Crown Estate Scotland faces the same challenges as the Crown Estate in England and Wales. How we can make things work in that area is therefore a shared priority.
However, we are quite open-minded about what the future of the partnership looks like.
Are there any implications for Crown Estate Scotland from the bill that is going through Westminster?
I am not directly responsible for the Crown Estate Bill, so I would need to check and write to the committee about that. Crown Estate Scotland is devolved, and my broad understanding is that there is nothing in the bill that would directly change any of the powers, funding or relationship around that.
On a practical basis, the bill will unlock a lot of potential for Crown Estate Scotland because it gives the Crown Estate in England and Wales much more power and investment opportunity to engage in some of these big areas, in particular around the leasing rounds for offshore wind. I think that Crown Estate Scotland is already much further through that process. There will be areas for joint working, but I think that there will also be areas where we recognise that we are at different places in the delivery of some of this, so we will take slightly different directions.
Okay. Thank you. I will come back with some more questions later.
I think that you have another question. I am quite happy to take that now before we move on to Douglas Lumsden.
You have spoken a bit about a good and evolving relationship with the Scottish Government. When the acting cabinet secretary was in front of us last week, we got the impression that there has been change and that things are more positive. Inevitably, however, there will be policy differences. You have acknowledged that, under the devolution settlement, it is inevitable that there will be differences.
I am interested to know how you might manage those differences. Within the remit of GB Energy, there is a commitment to work with Great British Nuclear. You will understand the Scottish Government’s position on nuclear in national planning framework 4. Does that cause you a problem? We have two different energy policies: one that explicitly rejects nuclear in Scotland, and the policy of your Government, which is about promoting nuclear and using GB Energy and Great British Nuclear to provide support for that. Is that a problem?
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I will say something about the general point and then come to nuclear.
When we talk about a reset in relationships, that is not about us all somehow finding consensus on everything. That is not the aim of devolution, but it is also not the political reality. It is about trying to have a much more mature approach to how we deal with disagreements. I might say that this bill has been an example of that. We had a very strong position, I engaged with the devolved Governments, and we have changed our position in a way that gets the bill through and benefits everybody. That is a grown-up way of looking at the problems, which, frankly, we have been missing for the past 14 years.
A second point is that we want to look much more at dispute resolution around devolution generally, and the Chancellor of the Duchy of Lancaster has been looking at that. That is why we have put much more emphasis on the interministerial working groups, which largely fell into abeyance under the previous Government in many areas. It is about how we bring people together to collaborate much more across the British isles. That is important, and I was pleased to join the first of those meetings in Edinburgh recently.
Clearly, we have a political difference on nuclear. I think that nuclear has an important role to play. Aside from anything else, it has huge potential for jobs. The small modular reactor programme could have real impact in Scotland. That is my party’s view, and it is not going to change. However, the planning system in Scotland at the moment precludes that from happening. Great British Energy and Great British Nuclear operate within the landscape that the devolved Administrations have set. If the Scottish Government has a clear statement that there will be no new nuclear in Scotland, I might disagree with that but that is the landscape in which we operate. Therefore, there are no plans and there will be no engagement on that issue, because it is clear that the Scottish Government would block those applications.
That is the legitimate position that the Scottish Government has taken on that planning matter, and I do not think that there is a confrontation or a conflict on that. It is just the reality that both GB Energy and Great British Nuclear will operate in the legislative landscapes in Scotland, Wales and England. Of course, it will be slightly different in Northern Ireland, where energy is completely transferred.
In effect, GB Energy will take its direction from the Administration in the jurisdiction that it is working in, and there will not be any kind of mission creep in its work. Therefore, we will not get GB Energy officials in Scotland talking about nuclear. Is that what you are saying? There clearly is not a route to developing nuclear power in Scotland under the current planning legislation, but GB Energy might take a different view.
There are two parts to that. First, the legislative landscape is that GB Energy does not have any extra powers compared to any other company, and therefore it has to conform to every rule, regulation, consenting regime, planning statement or whatever. It is not empowered with extra powers as a result of being owned by the UK Government. That is really important.
Secondly, we want this collaboration to be about not just the consent moment for the statement of strategic priorities but day-to-day engagement in the parts of the country where the company is operating, to work out how we dovetail the priorities. The Scottish Government and the UK Government have broadly the same outcome in mind around our energy future. It is in all of our interests, and in GB Energy’s interests, to work alongside that policy direction to support it and deliver it faster.
Thank you.
The next question is from Douglas Lumsden.
Good morning, minister. In Scotland, we have the Scottish National Investment Bank, which invests in renewables such as tidal. How do you see GB Energy and the Scottish National Investment Bank working? There seems to be a bit of overlap between the two organisations.
That is a good question. I would also bring the UK National Wealth Fund into the discussion. Just last week, we saw a good example of the Scottish National Investment Bank funding a project alongside the National Wealth Fund to together deliver a project around a cable factory. There are already really good partnerships.
In the short term, we will see the National Wealth Fund and GB Energy working closely together while GB Energy builds up its in-house investment expertise. In time, there will be a clear mandate about how those will separate and will work alongside other investment vehicles such as SNIB, Highlands and Islands Enterprise, Scottish Enterprise and other funding bodies across the rest of the UK. Clearly, there will be a process of engagement on individual projects to consider how we get the best value for money and what investment will get a project over the line. That could well involve co-investment opportunities with SNIB, or there might be things that GB Energy sees as a priority and that SNIB does not see as a priority. There certainly will not be a competition. It is about how we engage constructively to get the best bang for our buck.
Do you see a formal agreement being put in place between SNIB and GB Energy, just so that they are not competing against each other?
I do not know about a formal agreement. I am open-minded on the suggestion. Given the nature of the ownership structure and the lines of accountability, that is probably quite challenging, but I am open-minded to it if that is an option that works for us.
Part of Juergen Maier’s work as the start-up chair is engaging with all these institutions. I think that he has met the Scottish National Investment Bank. He has certainly met the First Minister and the cabinet secretary and has had a number of engagements in Scotland about how we build relationships so that we are working together with the whole investment landscape to be as productive as possible.
You mentioned that GB Energy would probably invest more in test and demonstrator projects. Do you see the level of risk that GB Energy would entertain as higher than that of a private company?
We have to look at risk in two different ways. Yes, the whole point of GB Energy is that we want it to invest in some of the technology development and supply chains that other investors would not necessarily look at. That goes back to Mr Matheson’s question earlier. We do not see GB Energy as crowding out investment; it is about trying to crowd it in.
We also need to look at the risks if we do not act in some of these spaces, particularly around jobs. We want to invest in an industrial strategy. If the British Government, in its broadest sense—including the Scottish Government—is not investing in some of the potential, there is a real risk that, in future, we will not get the jobs and supply chains in this country and that they will go somewhere else.
There will of course be a risk appetite. GB Energy will have a board—we announced a number of non-executive directors just last week—and it will have a fiduciary obligation to look at the investment portfolio for the company. However, the whole point of setting up GB Energy is that it has a certain appetite for risk to help us drive forward projects that the private sector might otherwise not be looking at.
So, we should not be surprised if, in a couple of years, the number of investments on which we have lost money is quite high, because the level of risk in the investments is higher.
I think that that is right. The risk appetite of any organisation should recognise that there might be some projects that do not succeed in the way that it wants. We also want to invest in the long term. This is not about getting quick returns within six months or a year. Some projects might take a few years to develop but, if we take a stake in them—for example if we take a stake in a floating offshore wind farm—there will be an upfront development period and then a constant return on that stake as they start to generate over their lifetime.
This is a long-term project. We need to be clear that we do not expect that, by the end of the Parliament, GB Energy will be an EDF, Vattenfall or Statkraft. Over time, however, we think that it will be able to deliver a return for the British people while continuing to invest in the next set of technologies, which we have not imagined at this point.
Douglas, if you want to ask your last question, now is the chance to do it. Then I want to go to Monica Lennon.
I will do that. Thanks, convener.
I want to ask about CCUS. Obviously, the Scottish cluster has track 2 status. Going forward, will the investment vehicle for the Scottish cluster be GB Energy?
I probably cannot answer that absolutely, one way or the other. My initial thoughts are that it probably will not be, but it could well be part of it. The broader point on CCUS is that, fairly quickly on coming into government, we pushed forward on the track 1 projects to make the announcement about the investment in those. That is important to give confidence to the industry. The Government remains really supportive of the track 2 projects, not least the Acorn project, but we need to move forward on the budget for that and to make sure that we have the spending commitment. That will take time, and the Government will say more about that in the months ahead.
GB Energy might play a role. However, as we see with the track 1 projects, it is also about how the Government can unlock private investment in CCUS. I do not rule out that approach, and the bill that is before us certainly does not rule it out. However, the issue is probably more likely to be a broader Government priority rather than just one for GB Energy.
For Acorn, are we still looking at 2030? That is my last question.
You are right—it was your last question, because I need to get Monica in. Sorry to cut you off. Monica, the next question is yours.
Good morning, minister. In your opening statement, you reinforced the UK Government’s commitment to communities having a greater stake in energy generation. Could you explain to the committee how GB Energy will fulfil its pledge to deliver 8GW of community-owned energy generation projects? As part of that, how do you see the Government engaging with local government? You have talked a lot about the Scottish Government, but I am interested to hear your take on local government’s role.
That is a very important question because, at the heart of not just Great British Energy but the Government’s policy is thinking about ownership in a different way. We think community ownership is a very important model. You have seen that in how quickly we have moved on public ownership of the railways across the UK and on GB Energy.
The local power plan is all about how we unlock that potential. We do that in two ways. First, there is a funding need to deliver some projects. There is a need to give investment to communities to set up projects and to have the initial investment to deliver them. However, in relation to your question, there is a broader point about the capacity of community groups and local government to deliver. After 14 years of austerity, we know that local councils are on their knees. There used to be a lot of expertise on community energy in local government but, because that is not a statutory obligation, it has gone by the wayside in many cases. Therefore, there is an issue about how we build up that capacity in councils again.
We have been open minded and not been specific about whether community projects should be delivered through local councils or by communities acting through their own organisations. We want to support all of that. GB Energy’s role will be around funding and capacity building. It will also be about how we can potentially share things such as the projects in a box approach, which builds on all the learning from good community projects and hands that over to communities that perhaps do not have the capacity to form a committee and a company and do not have all the expertise.
On your final point, clearly, the role that the UK Government has on community energy in Scotland and Wales is different from the role that it will have in England, where the UK Government will be directly involved in projects, working with other organisations in England. In Scotland and Wales, we want to work with the devolved Governments in a partnership. We do not want to reinvent organisations that already exist. In Scotland, we might work with the community and renewable energy scheme—CARES. We have had a number of useful discussions with the Scottish Government on that already.
Clearly, the UK Government is not going to circumvent the devolved processes in Scotland, so we will go through the Scottish Government when it comes to any investment in that. However, we want a huge increase in community ownership across the UK, and we think that that ambition is shared in Scotland.
I am glad to hear you talk about capacity, because it is not all about funding. This committee takes a close interest in skills and knowledge, not just for workforce and organisations but for communities, to make sure that all communities have equal opportunities.
I want to probe a bit further. You are telling us that the Government will not be overly prescriptive about what will work in different projects. However, is it your expectation that GB Energy will help communities to secure stakes in privately operated energy generation projects by providing, for example, matching capital investment? We are aware of the Danish renewable energy act, which requires at least 20 per cent community ownership for all new wind projects. Will GB Energy perform a similar role?
Just before you answer that question, minister, I realise that time is never in our favour in committees, and I think that you have another meeting to go to. Unless you tell me otherwise, that will be the last question, and it is up to you how long you take to answer it—it is your clock that is ticking rather than ours. Over to you, minister.
Do not worry about that. I am happy to be a bit flexible.
On that last point, it is absolutely possible that GB Energy will do that. Partly we want to shift the understanding about community ownership away from the idea that it means only microgeneration projects to the idea that communities could own things at the scale of multi-megawatt projects. That might mean them owning something outright, with support from GB Energy. It might mean that they take a stake in a wider project, which is perhaps more likely in the short term.
We are not going to move down the line of legislating to insist on community ownership stakes but, in our engagement with developers, we find that, in many cases, they are quite open-minded to that approach, and they see it as a real community benefit for communities. We are certainly open to that other approach. As I said on other issues, part of the reason why the bill leaves things as broad as possible is that we want GB Energy to have as much scope as possible to develop in those innovative spaces and help drive forward community ownership, create jobs, invest in supply chains and deliver benefit for people right across Scotland.
Thank you.
That all seems to have worked perfectly, timewise—I am not quite sure how that worked.
Thank you for giving evidence to the committee, minister. It has been particularly helpful, because we have been looking at the LCM since, I think, August last year, and your comments on clauses 5 and 6 have enabled us to look further forward than we perhaps were able to in our previous meeting. We will work towards preparing a report on the memorandum. Thank you very much, minister.
We now move into private session.
12:01 Meeting continued in private until 12:28.Air ais
Budget Scrutiny 2025-26