Comment: Sharing our green ideas can help the world

We punch above our weight on renewable energy and waste policies – more collaboration can only help, writes Susan Rice

One of our national characteristics may be to underplay our strengths. But Scotland has many strengths, and other nations often tell us that. So there’s value, in the best sense, to “see oursel’s as others see us”.

I had the chance to do just that earlier this year on trips to Santiago and Sydney, which related to renewable energy and the wider low-carbon economy. I was pleased but also not a little surprised during these trips to discover just how well-regarded Scotland and its renewables activity is around the world.

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In Santiago, I was asked to speak at the national renewables conference. The Chilean government heard about the Scottish Low Carbon Investment Conference last autumn because they were looking for examples of leading approaches to renewables in other countries.

Seeing video clips of the 2011 conference, they reached out through the 2020 Climate Group and were keen for me to draw on several perspectives – I know something about financing renewables through my day job with Lloyds Banking Group; about energy through my non-executive directorship with SSE (formerly Scottish & Southern Energy), and about the wider Scottish picture through the 2020 Climate Group.

The Chileans were aware of Scotland’s aspirations in this area, including its aggressive carbon reduction targets, its policy framework and its focus on financial solutions for developing renewables. With 4,000 miles of coastline – the fifth largest in the world – Chile is also really interested in our pioneering work in marine energy generation.

My sense was that Scotland had captured the imagination in Chile – they were impressed that a country of our size can reach so high and do so much. There’s a genuine interest from outside our country in the way Scotland takes advantage of its size to move this agenda forward so effectively.

Chile is bigger than Scotland, and has a larger population (17 million), but there are similarities – as well as its enormous coastline, it has a large base of hydro schemes. It also has familiar issues involving both the grid and energy security.

Chile intends to move on from its current situation because it can’t continue importing oil and gas forever – and it has had gas supply problems in the past when a neighbouring country, which supplied much of Chile’s needs, had to retreat. Chile also has a growing focus and a new, well-thought-out policy, around wind energy.

After my session in Santiago, a large number of people approached me, wanting to find out more and wanting to make contact for the future. I met a number of Chileans who had studied in Scotland – some had been on the masters in carbon management programme at Edinburgh University, part of the Carbon Masters project, for example – and who were looking at the prospect of returning here because of the opportunities in renewables.

The previous Chilean energy minister has been over here looking at Scotland’s work in marine energy and there was talk about follow-up visits.

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Scotland clearly has a reputation as the country to watch – because of current policy, our educational strength, our engineering and technology capability and our vision to drives this forward.

But while some countries look to us for our technology developments, in other instances we are taking new technology from elsewhere and giving it a significant trial here in Scotland. We can do this because we have the focus on innovation and solving the challenges of renewable energy; we have viable test beds. I was recently pleased to hear about one such initiative between two small companies, one Australian and one Scottish.

Zero Waste Scotland recently connected Ace Recycling Group (ACE) in Clackmannanshire to a small Australian enterprise. The Australian company has developed an effective micro-biological technique to break down green waste in large volumes, both safely and more quickly than any other technology.

As social entrepreneurs, both companies share a philosophy on green issues and on communities. Because ACE has a strong platform in Scotland, the Australian company adapted its technology to enable ACE to start developing a closed loop food waste recycling service. This is exactly the kind of international connection that benefits us all – sometimes we have the technologies that others want and sometimes we have the structures to advance others’ technologies.

I was interested in this connection in light of my Australian visit in March, which came about because the Australian Institute of Company Directors hosts a masterclass for ASX100 chairmen and non-executives. Their topic this year was on the environment, social, governance (ESG) approach to corporate governance and investment.

They approached me to deliver the environment strand of their programme via SSE, which they see as an exemplar in the area of renewables and governance. I talked about everything from renewables to remuneration, and I did a lot of listening as well.

Australian companies are focussed on the basis on which investors and asset managers make investment decisions; many are keen to see those decisions based on more than pure financial results, and to take a longer “time horizon”. This is a goal which I share.

This global respect for Scotland’s position in driving the environmental agenda has been cemented by the Scottish Low Carbon Investment Conference, now into its third year. Next month, it will again bring key people from around the world together to consider some of the big questions, especially around funding.

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The conversations which take place at the event are becoming more diversified – and more complex in some respects. The scope has broadened over the last couple of years. There is now increasing discussion about energy efficiency, not just renewables, and greater focus not just on inward investment, but on Scotland’s reach internationally.

Large private equity and institutional investors are becoming more involved. Biomass and waste are attracting more interest, as are smaller-scale projects. There are more conversations about the Green Deal and energy efficiency, and how to move households on with this; how will the golden rule for payback work?

The Green Investment Bank will focus on offshore, non-domestic energy efficiency and waste. Even more important is its presence in a transaction to reduce the perceived level of funding risk and hopefully pull in additional money.

Overall, the debate is far more textured than even a year ago. We’re also talking more about new sources of finance. Experience across a range of types of finance – for instance with bonds – and across a growing number of institutions, is broadening and deepening.

One key to success is giving investors stability in the approach to policy and subsidies. Building renewables is a long-term prospect and companies want and need reassurance that today’s business case will hold up over time. While doing everything they can to drive down costs, energy companies which have engaged in this area are concerned that the support which renewables needs will be provided in a stable, effective way. Once new plant is up and running, it becomes easier but, at the development stages, political uncertainty must be considered.

As our international profile increases, I think there are great opportunities for sharing knowledge and policy approaches with other countries – and significant opportunities to work across borders to build new partnerships and find solutions together. And, at the end of the day, to do business.

Collaboration is key, in tandem with technological development. Scotland is ambitious, it has aspiration, it has momentum. It’s all very exciting – and make no mistake, the world is watching, and learning.

• Susan Rice is managing director of Lloyds Banking Group Scotland. She is scheduled to speak at the Scottish Low Carbon Investment Conference in Edinburgh, 10-11 October

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