Chamber and committees

The Energy Transition Fund (ETF) is a five year programme beginning in 2020. Some of the projects benefitting from this new investment will complete within that 5 year time scale. Larger projects with multiple phases of development may complete over a longer period.

The ETF is intended to accelerate development of project proposals brought forward by partners in the energy sector, ensuring that the economic benefits are felt as soon as possible as part of a green recovery.

The Aberdeen Hydrogen Hub has been identified as one of the major projects to be considered for funding within the £62 million Energy Transition Fund (ETF). Projects like the Hydrogen Hub which help to anchor the development of a green hydrogen industry in Scotland will support the broader objectives of the ETF to underpin the region’s ambitions to become a world leader in the transition to net zero, helping Scotland meet its ambitious targets on climate change. Scottish Government officials are engaging closely with Aberdeen City Council officials and opportunity North East on the next steps for the Aberdeen Hydrogen Hub proposal.

The Energy Transition Fund will support a range of initiatives capitalising on the energy expertise within the North East to accelerate the delivery of a range of emissions reduction technologies.

Projects that will be supported include innovation projects led by the Oil and Gas Technology Centre’s Net Zero Solution Centre, whose goal is to accelerate the development and deployment of technologies to decarbonise offshore operations and develop the UKCS as the first net zero oil and gas basin globally.

The oil and gas sector has recently announced their aim of reducing emissions by 50% by 2030, a target that will be monitored by the Oil and Gas Authority, the industry regulator, and reported to the Scottish Government through the Oil and Gas, and Energy Transition Strategic Leadership Group.

Specific projects have been identified for investment from the Energy Transition Fund (ETF). The projects have been developed by regional partners in the North East of Scotland. Among these are an Energy Transition Zone in Aberdeen; the Global Underwater Hub; projects being developed by the Net Zero Solution Centre, and a number of Hydrogen projects.

The ETF is not intended as a challenge fund. As yet, no formal awards of funding of have been made to the constituent projects in the investment programme. The Scottish Government will work with the project owners as they develop full business cases.

Funding will be issued following full business case approval. In order to meet the ambition for the ETF to accelerate the economic and green recovery for the region and Scotland as a whole, it is our aim to begin investing funds this financial year 2020-21, extending over the full five years of the ETF to 2025.

Scottish Government Ministers have made clear to the UK Government, in person and in correspondence, our red lines concerning a UK-US free trade agreement. These are:

• protecting our public services
• protecting our environment and positively contributing to achieving our net zero target
• as a minimum, maintaining alignment with EU standards
• building a fairer society, reducing inequality and improving economic wellbeing through inclusive economic growth
• being a good global citizen and helping to raise standards through trade

The UK Government must stick to its commitment to uphold high standards in future trade negotiations.

On food standards and animal welfare, recent reports suggest that previous assurances on the UK’s position may be compromised in the US discussions. We are concerned that the UK Government’s response to these reports has referred only to food safety which, alone, does not guarantee that other standards will not be undermined.

The Scottish Government’s objective is to keep pace with EU standards of environmental protection. The Scottish Government opposes the concept of weakening or reducing levels of environmental protection as a means to encourage trade or investment. Furthermore, any FTA should contribute to international climate action through the promotion of low carbon goods and services, support Scotland's net zero commitments, recognise respective obligations under international Treaties (such as the Paris Agreement) and enable Scotland to align with - and where possible exceed - EU standards.

On public services, the Scottish Government and Scottish Parliament's devolved responsibility, including for the NHS, social care and public health services and interventions, must be protected. The NHS in Scotland must not be put at risk of privatisation in any form, nor should any aspect of an agreement restrict the ability of the Scottish Government to implement public health measures to protect and enhance the health and wellbeing of the population.

With respect to the potential impact of the differences in Scots law and UK law in these areas, there are currently powers available to restrict imports for public health purposes. This is in subordinate Scottish legislation made under the European Communities Act 1972 (“the ECA”) and the Food Safety Act 1990 (“the 1990 Act”), in so far as these powers fall with devolved competence as set out in the Scotland Act 1998. The ability to legislate using powers under the ECA will be lost when the transition period elapses. Where powers under the 1990 Act alone are insufficient to legislate effectively, it is proposed that new enabling powers will be available via the UK Withdrawal from the European Union (Continuity) (Scotland) Bill which is currently before the Scottish Parliament.

The Scottish Government has made clear to the UK Government that ISDS provisions must not affect Scotland’s right to regulate and has raised such risks with the UK Government. The Cabinet Secretary for Constitution, Europe and External Affairs has recently made representation to the UK Government to state that any mechanism which might constrain the ability of the Scottish Parliament to introduce new legislation due its effect on the so-called UK internal market will be vigorously opposed by the Scottish Government.

The Scottish Government’s assessment is that the UK’s pursuit of a US-UK trade deal when compared with our EU membership delivers a net negative impact on GDP and employment in Scotland. Our 2018 publication, Scotland's place in Europe: people, jobs and investment , showed how loss of friction-free trade with the EU would lower GDP by 6.1% by 2030. By contrast, the UK Government’s assessment shows an FTA with the US would only increase UK GDP by up to 0.16% - this fails to make up for the loss of trade from leaving the single EU market. In 2019, the Treasury and the National Institute of Economic and Social Research estimated that signing free trade agreements with countries including the USA, Canada, Australia and New Zealand, as well as the so-called BRICS emerging market economies, would increase GDP by less than 0.2-0.4% by 2030.

Assessment of the UK Government’s recent publication, ‘approach to trade negotiations with the US’, carried out by the Office of the Chief Economic Advisor (OCEA), found the benefits to Scotland of a US free trade agreement emerging in the UK modelling would largely be through derived demand for energy consumption, due to energy production being disproportionately based in Scotland, rather than a significant increase in Scottish exports. The UK Government’s analysis showed that young people will be disproportionately negatively affected by a US trade deal, and that an FTA could increase outputs from carbon intensive sectors, and increase emissions by diverting trade to a distant market. The UK’s analysis took no account of the short term impacts and potential economic or social dislocation but instead presented the impact for 15 years’ time once the economy had adjusted. This misses potential risks for employment and wages and localised problems as sectors and regions adapt.

The Scottish Government has continually put the risks of UK-US trade deal on record with the UK Government, whether this be that it could conflict with Scotland’s transition to a low carbon economy, and our net zero commitments, or that it endangers the protection of food safety, plant health, animal health and welfare standards and environmental regulation.

The Scottish Government does not feel this is the right time to engage with the US on free trade negotiations. Dealing with the economic consequences of the Covid-19 pandemic and a comprehensive agreement and close relationship with the EU must be the UK Government’s priority. An FTA with the US or any other country must not come at the expense of this.

The USA is already an important market, and Scotland exported an estimated £5.5 billion of goods and services to the USA in 2018. In contrast to the UK Government’s approach, our export growth plan “A Trading Nation” identified a set of actions that the Scottish Government has already started putting in place to increase our exports to the USA on current trading terms.

The Scottish Government and Scottish Parliament's devolved responsibility for the NHS, social care and public health services and interventions, must be protected. The UK Government must not risk access to medicine through changes to pharmaceutical pricing and copyrighting.

The Scottish Government has not had any direct discussions with the UK Government regarding the risk of the Scottish Medicines Consortium not being able to control medicine prices under a US-UK trade deal because controlling medicine pricing is not within the role of the Scottish Medicines Consortium. Their role is to consider the clinical and cost effectiveness of medicines and whilst the price of the medicine forms part of the decision making, it is only one component.

It is deeply concerning, however, that a future trade deal by the UK Government with either the USA or anyone else might increase the price of medicines in Scotland, as research by Dr Andrew Hill of Liverpool University has observed that if we had to pay for medicines at the same per capita rate as the USA that medicines prices could more than double.

Water policy in Scotland is fully devolved to the Scottish Parliament and there is no risk of any part of the business being privatised. Scottish Water will remain in the public sector and continue to operate in the interests of its customers, the people of Scotland.

The Scottish Government and Scottish Parliament's devolved responsibility for public services must be protected. Representation has been made repeatedly by Scottish Government Ministers to the UK Government to underline that this must remain the case throughout the negotiation and agreement of trade deals.

Any future trade deals must recognise the specific characteristic of the NHS in Scotland – including the very reduced role of private providers compared to the NHS in England – and must not open up the NHS to further privatisation.

The Scottish Government and Scottish Parliament's devolved responsibility for the NHS, social care and public health services and interventions, must be protected. Scottish Government Ministers have made clear in person and in correspondence that the UK Government must not cast doubt on the future of the NHS as a public service or risk access to medicine through changes to pharmaceutical pricing and copyrighting.

The Scottish Government has invested £33 million since 2012-13 in restoration of peatlands via Peatland Action and the Agri-Environment Climate Scheme under the Scottish Rural Development Programme. Peatland restoration is an important nature-based solution to climate change and biodiversity loss and delivers a number of other ecosystem services such as improvement of water quality and management of downstream flood risk.

The broader management of peatlands, which includes some further restoration activity for which it is not possible to disaggregate separate budget figures, is part of a wider endeavour to care for our upland, moorland and heaths, on which a further £36 million has been spent since 2006-07.

A further breakdown on an annual basis can be found in the following table: