The green transition: How is Scotland’s energy sector embracing renewables?
Read time : 4 mins Added: 07/12/2022
Our customers stand to benefit as policymakers and the energy sector consult on commercially viable net zero technologies. Our technical expertise in these discussions is a key driver of value, says Emily Martin, Director, Sustainability & ESG Finance, Bank of Scotland and Jim Ayton, Technical Director, Energy Transition and Commodities, Bank of Scotland.
The recent Autumn Statement delivered by Chancellor Jeremy Hunt, suggests the UK remains fully committed to the Glasgow Climate Pact agreed at COP26 including a 68% reduction in the UK’s emissions by 2030.
Scotland is already leading the way in the green transition. Over 97% of Scotland’s electricity demand is already covered by renewable energy sources, but major investments are required to ensure the resilience of the power grid. As of 2020, the renewable energy industry in Scotland supported 27,000 full-time jobs and generated £5.6bn of output, new figures show. This is impressive for an economy that has long been interlinked with North Sea oil and gas extraction.
Scotland has an ambitious carbon reduction target, pledging to reach net zero emissions by 2045, five years earlier than the rest of the UK – with an aim to lead in innovation and demonstrate momentum on the global stage in its ability to achieve a net zero target. If decarbonisation targets are unmet and climate change is left to run its course, the consequences are likely to be severe.
A fairer, greener future
The businesses we serve will benefit from a just energy transition, and Bank of Scotland is committed to helping them get there. This means a move towards net zero carbon emissions that places people at the heart of the process, so it happens in a socially fair way. Scotland has its own Just Transition Commission which is aiming for a fairer, greener future for everyone.
A key part of this will be creating more green jobs, securing our energy supply, and helping to prevent fuel poverty in a future powered by renewable energy sources. At COP27 a Green Jobs in Scotland Report was launched, supported by the Scottish government, which outlined that up to 100,000 roles out of the 2.5m jobs (PDF, 1.54MB) in Scotland are new and emerging green jobs created by the net zero transition, and they are typically higher paying than non-green jobs.
How will net zero technologies shape a low-carbon future? Our specialist ESG finance team has identified more than 85 technologies across 14 technology themes, that could have the most material impact in helping Scottish businesses move towards net zero, and that’s where funding is being targeted. These crucial technologies include, wind and solar power, new nuclear, large-scale energy storage, hydrogen and the electrification of heat and transport.
By the end of 2023, we will have completed a deep dive into each of these core technologies, guided by the UK government’s net zero strategy. It will require thorough analysis of the risks and advantages, the economic and societal impact each technology could have, and how the technologies can support regional regeneration across Scotland.
The exciting new technologies that need funding
For instance, floating offshore wind energy will be vital to ensure the supply of electricity needed to generate more hydrogen, which will be a valuable contributor to a net zero future.
Scotland is targeting 5GW of renewable and low-carbon hydrogen production by 2030 and 25GW by 2045, and has committed £100m of funding towards these goals by 2026. The government’s Draft Hydrogen Plan sets out the pathway by which Scotland will become a “leading nation by 2045 in the production of reliable, competitive and sustainable hydrogen.”
It added that established sectors of Scottish business such as oil and gas, subsea maritime, onshore and offshore renewables, chemicals, aerospace and transport will have opportunities to diversify into areas like hydrogen production as the energy transition continues.
Innovation will need continued government support
Innovation is crucial, and companies are pursuing opportunities to rapidly advance progress, alongside the right government policies to help de-risk the technologies. Government support will be critical to overcome these hurdles, and the energy transition should remain firmly on the political agenda because it is already seeking to advance Scotland towards a more resilient, sustainable energy mix. Meanwhile the environmental cost of not prioritising the energy transition is well understood, and the social cost is also increasing with rising energy bills and concerns over energy security.
Bank of Scotland’s ESG finance team works closely with the energy sector, taking part in government and industry consultations on emerging new technologies. Taking a technically-led approach, our engineers, policy experts and market analysts engage across a breadth of net zero technologies to better understand their applications, risks, real economy benefits and how best to fund them. Sharing our technical experience has allowed us to further accelerate investment and will help to upscale these technologies for mitigating the worst potential impacts of climate change.
Net zero technology is a fast-evolving space and will require the government to remain proactive so it can focus support and funding to the right areas at the right time. Without government support, Scotland simply won’t reach its net zero target. The result will be rising sea levels, extreme weather events, droughts, floods, and forest fires that will displace people, destroy natural capital and damage supply chains globally.
Collaboration is vital
Sustainable companies making the right long-term choices today by investing in a low-carbon future are essential to avoiding a climate disaster scenario. Not only will they make people and planet more resilient, but sustainable businesses themselves will be better prepared for whatever the future may hold.
We want to lead by example, so Bank of Scotland is aligned with the Net Zero Banking Alliance, making a public commitment to halve the carbon emissions we finance by 2030. Scotland’s net zero target is ambitious and will require a complete rewire of our economy. This means policymakers, business and society will each play a crucial role but won’t be able to do it alone – collaboration is needed.
Bank of Scotland stands by the side of business by supporting net zero technologies for a greener, more sustainable future.
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