Shepherd and Wedderburn on Scotland’s drive towards clean energy
Meanwhile, in Australia, a spate of bushfires continues to rage across New South Wales, causing multiple deaths and destroying hundreds of houses. In the US, the National Weather Service has recently issued new high-level fire warnings for Southern California. And, closer to home, there is widespread flooding across the north and midlands of England.
The evidence of climate change on a global scale is stark and is becoming increasingly compelling.
“Never has the world been in a more perilous state due to the long-term effects of greenhouse gases,” says Clare Foster, Head of Clean Energy at Scottish-headquartered UK law firm Shepherd and Wedderburn. “We must do more to reduce carbon emissions – and quickly – as time is running out.”
Governments worldwide are finally addressing the disastrous effects of long-term reliance on fossil fuels. Many are pledging a dual goal for decarbonisation – reducing and, ultimately eliminating, carbon dioxide emissions and investing in clean energy generation, power derived from renewable, zero-emission sources, such as sun, wind, wave and tidal.
In the UK, Westminster has set a net zero target for cutting greenhouse gas emissions by 2050. The Scottish Government’s aims are more ambitious, setting the same goal for 2045. The “further and faster” Holyrood directive heeds advice from the Committee on Climate Change that says our country has more potential sites for carbon capture and a greater landmass for tree planting.
At the same time, the Scottish Government has also set out clean energy directives, calling for 100 per cent of the country’s electricity consumption to be generated through renewable sources by 2020, and 50 per cent of total energy consumption – including transportation – by 2030.
Foster observes: “We need a number of pieces to fall into place. Co-operation and partnering between private and public sectors is vital. Policy and legislation needs to step up to underpin what needs to be done, and continued investment is essential if Scotland is to have any hope of meeting the ambitious targets set by the Scottish and UK governments.”
Currently, Scotland is home to 25 per cent of Europe’s offshore wind and tidal resources and more than 60 per cent of the UK’s onshore wind capacity.
Scotland is fortunate to have abundant natural resources, including thousands of miles of coast, hundreds of islands and plentiful wind, for the development of clean energy. The establishment of world-class research and development facilities has enabled the country to become a global leader in renewables.
Indeed, Scotland is driving innovation in the clean energy sector, including the planet’s largest tidal array power project, the world’s first floating offshore wind farm and Europe’s largest hydrogen bus fleet.
At the same time, confidence is growing in the development of battery storage technology, which for years has limited the proportion of electricity demand renewables could realistically fulfil.
In addition, it has been reported that Scotland is the best-placed country in Europe to realise carbon capture utilisation and storage on a commercial scale.
It’s no surprise then that Scotland has attracted investors keen to back renewable energy projects and developments. Clean energy assets are attractive because the technology is, in many cases, well proven and the UK generally has been regarded as a stable environment that provides long-term certainty for investors. This has been bolstered by the Scottish and UK governments’ commitments to the low carbon agenda.
“Many advancements in offshore wind, floating wind, hydro and tidal energy markets – from concept to commercial viability – were made in this country, and Scotland is now the envy of the world, given its knowledge base, academic prowess and abundance of opportunities to harness the elements, both on land and around our shores,” explains Foster.
In March, Westminster announced the Offshore Wind Sector Deal, a partnership between government and industry which will see the sector invest £250 million, backed with up to £557 million to support future Contracts for Difference (CfD) rounds, to develop the UK supply chain and help reinforce the government’s industrial strategy to build a Britain fit for the future.
This will create more opportunities within the UK to deliver an expected five-fold increase in global export value by 2030 – a huge boost for developers, their existing and prospective supply chain and for the economy at large.
The UK Government’s CfDs incentivise investment in renewable energy by providing developers of projects with high up-front costs and long lifetimes with direct protection by effectively guaranteeing prices for suppliers, protecting them from volatile wholesale prices.
They also protect consumers from paying increased support costs when electricity prices are high. CfD prices are currently at record lows, which demonstrates the huge achievements made by the sector to bring costs down.
In addition, the Crown Estate recently launched a new offshore wind leasing round; and another round for Scotland will follow shortly.
“Globally, there is growing consumer and political will to decarbonise. Scotland and the UK has a 20-year start in leading on projects at the cutting-edge of the sector. We need to work hard to retain that lead in order to develop what could be huge potential in the development pipeline, both here and internationally, allowing growth of a viable domestic supply chain and maximising export potential,” says Foster.
“Scotland’s thriving clean energy sector offers tremendous opportunities for investors,” Foster adds. “Investing in Scotland means access to a diverse mix of clean energy project opportunities with significant capex requirements and the opportunity to help drive forward a sector with huge potential.
“Scotland is a country rich in natural resources and it is renowned for its innovation. Many of our universities and industry-focused research and incubator centres are considered centres of excellence in clean energy technology development, and there are a number of pioneering and landmark projects already underway.
“Given the climate emergency, we must all accelerate our efforts to galvanise the industry and encourage collaboration between the private and public sectors to do what is needed to achieve net zero. The challenges are formidable and our aspirations are ambitious, but Scotland is a nation known for rising to the challenge.”
This article first appeared in the Vision supplement in the Scotsman – see it in full here.