David Rennie, head of low carbon energy, Scottish Enterprise, thinks we are heading into another challenging 12 months for the energy sector.
We are heading into another challenging 12 months for the energy sector. The impact of the coronavirus pandemic, shrinking economies, severe weather events and geopolitical shocks, namely Russian’s invasion and occupation of Ukraine, are being felt keenly.
It’s a situation that’s causing some commentators to predict the derailment of the energy transition – arguably the greatest global challenge of our time – at a point where it’s growing in urgency.
Other opinion formers are taking a much more optimistic view. They argue that the events of the past few years have brought the energy trilemma – security, affordability, and sustainability – into sharper focus and have the potential to accelerate the energy transition.
I’m a subscriber to the latter, more positive view. The energy transition was always going to require innovation, investment, considerable changes in attitudes and behaviours and, in the face of difficult economic conditions, resoluteness.
One area I continue to draw encouragement from is the effort to reshape Scotland’s oil and gas industry by businesses previously immersed in it. The ingenuity, resourcefulness and sheer pioneering spirit that created a globally respected industry is now being brought to bear on the energy transition.
I’ve been reassured by companies such as Whittaker Engineering, which has reduced its reliance on oil and gas through the development of a new heat pump design, with Scottish Enterprise support.
We’ve also helped Hydrasun Group, a business with a proven track record in the oil and gas industry, establish a new hydrogen skills academy through our Green Jobs Call.
That leads me neatly on to the huge opportunity on our doorstep; the area where I want to see real progress in 2023: the development of the hydrogen economy.
As recently as December 14, the Scottish Government reaffirmed the potential of the hydrogen economy to support more than 300,000 jobs by 2045 in its Hydrogen Action Plan. The plan includes a commitment to make £100 million available, starting with a £90m Green Hydrogen Fund that opens early 2023.
Concurrently, groups including the North East Scotland Hydrogen Ambition (NESH2A) Steering Committee, are coordinating the efforts of private and public sector partners to create hydrogen hubs in areas across Scotland that have benefited in the past from the presence of the extractive industries.
This includes Cromarty, the home of the North of Scotland Hydrogen Programme, which aims to develop a state-of-the-art hub for the production, storage, and distribution of green hydrogen in a locale where there’s huge demand from distillers and other industries.
Head north-east to Orkney, where an ambitious multi-billion-pound project aims to deliver significant quantities of green hydrogen via the creation of a hub at the existing Flotta oil terminal. This would allow hydrogen to be blended into the UK gas grid or exported to Europe.
The demand for exports already exists, as evidenced by the ‘Scot2Ger’ research project. In addition to identifying immediate demand, it also pointed to strong interest in establishing longer-term supply agreements with Germany alone.
This gives me confidence that the energy transition will remain on track. The intention exists; the interest exists; the innovative spark exists. Scottish Enterprise will support it. Let’s turn the dial up.
Scottish Enterprise (SE) is Scotland’s national economic development agency and a non-departmental public body of the Scottish Government. It supports businesses to innovate and scale to transform the Scottish economy by focusing on new market opportunities through targeted investment, innovation and internationalisation.