Make Scotland a clean energy superpower that delivers a golden ticket for UK growth

CBI CEO Rain Newton-Smith will call on the Holyrood and Westminster governments to unleash the “restless energy” of business to help turn Scotland’s energy sector into a dynamo of economic transformation for the UK.

Speaking at the CBI’s annual dinner in Glasgow, Newton-Smith will talk about leveraging “natural resources that are the envy of the world” and an energy sector whose investment will be “mission critical for unleashing green growth” to deliver a “golden ticket for UK growth.”

In a speech focusing on hope, confidence and overcoming adversity, Newton-Smith will however emphasise that this once in a generation opportunity to deliver secure jobs, drive social change and transform lives could be put at risk if the UK and Scottish governments don’t act quickly to reassure prospective investors. 

She will highlight the need for governments to work together, and with business, to overcome the lack of policy certainty, uncompetitive sector taxes and fierce competition for investment that could hold Scotland back from realising its potential as a clean energy superpower.

She will also point to the importance of delivering a UK-wide Net Zero Investment Plan that can bring focus to decarbonisation efforts and catalyse essential private investment.

On transforming Scotland into a “clean energy superpower”, Rain Newton-Smith, CBI Chief Executive, said:

“We are now at a moment when global energy markets are shifting, redefining economies and growth prospects in the blink of an eye. And we’ve seen ripples of that in the UK.

“Last year, when the UK economy as a whole pretty much flatlined, our net zero sector grew 9 per cent. That’s just a taste of what can be achieved – CBI research has found up to 57 billion pounds of green growth opportunities by 2030.

“And Scotland is right at the centre of that - it’s already accomplished so much. Leading on offshore wind and exporting over 18 terawatts of renewable power round the world each year.

“It has the tools at its fingertips to be a global clean energy superpower. The dynamo for economic transformation – for Scotland and the UK. 

“Natural resources that are the envy of the world. 11 gigawatts of renewable wind capacity and even more potential. Vast bioenergy resources and a tidal range of up to eight metres – that gives it a natural lead in hydropower.

“When countries around the world are jockeying for position in green growth, you can’t just manufacture advantages like that. And Scotland has every tool it needs to use them: powerhouse universities and R&D, a financial sector that is truly world-leading and the best-educated workforce in the UK. There is so much power, so much potential to lead, to truly make this a just transition. 

“And it’s clear the new government in Westminster gets that. They’re absolutely right to home in on Scotland’s clean energy as a golden ticket to growth.

“Already, we’ve had the announcement of the National Wealth Fund and Great British Energy. And just last week we heard strong rumours that GB Energy is likely to be based in Aberdeen. To transform the Oil City into a net zero capital has always been the right ambition.”

On the challenges holding Scotland back from realising its clean energy potential, Newton-Smith said:

“The tools to make Scotland a clean energy superpower aren’t new. And though Scotland has made huge progress in pioneering the concept of a just transition and setting one of the most ambitious net zero targets in the world, the truth is, on green growth, as on long-term growth across the UK, we’re not where we need to be.

“In 2022, the Climate Change Committee said Scotland had “largely stalled” on its ambitious interim targets and this year we heard they were “no longer credible”.

“The reality is that this stuff is complicated. Like anything in business, it needs constant focus and attention for the strategy to fly. Getting the new infrastructure we need off the ground, connecting to the grid when planning is devolved but grid powers are reserved – it’s hard.

“But the world hasn’t waited while we’re trying to get this right. Scotland, the UK – we’ve started to stall on the green investment we need. Since 2020 we’ve fallen down the league tables, behind France and Germany. We’ve lost our first-mover advantage in green growth markets to vast economic stimulus packages from the US and China.”

On the “restless energy” of businesses desperate to invest in a clean energy revolution, Newton-Smith said:

“Businesses have been watching this. Watching us fall down the league tables. While nine-year consent for planning has held back offshore wind. While we’ve been missing the policies we need. While our headlines haven’t matched the ambitions of business – and the great work of so many CBI members. 

“It’s been frustrating. But there’s only so much we in business can do ourselves without clear direction, plans and backing from government. 

“Now, at last things seem to be moving. We’ve got commitments from Westminster and Holyrood to reform planning – that’s more progress on planning in the last eight weeks than the last eight years.

“But it still doesn’t feel like we’ve been given the green light. We’ve got vision but not detail. We’ve got direction but not certainty.

“Businesses have a restless energy to go for growth, to invest, but they need really clear signals from governments north and south of the border to lay down their markers.”

On the dangers of mixed signals from government, Newton-Smith said:

“We get the need to take a hard look at the economy. We know how difficult the last few years have been.

“But at the same time, I think the more we focus on that difficult inheritance, the harder it is in global boardrooms to make the pitch to invest in, come to, and stay in the UK. So I think we must also have and offer hope.

“Energy companies whose current revenues come from oil and gas activities: right now, they represent over 10 per cent of Scotland’s GDP and they can also be a huge part of the transition to net zero. 

“Their infrastructure, investment, skills and knowledge, if focused in the right direction, will be nothing less than mission critical for unleashing green growth in Scotland and the UK.

“But for many of them, the changes to the Energy Profits Levy last month marked the fifth change to the industry’s taxes in two years. That’s not fiscal certainty and it’s not a spur to invest – exactly when that investment is most important for transitioning the sector.

“Put simply, it’s very hard to make the case to global boardrooms for more investment in renewable energy in the UK when current revenues aren’t profitable. And though we get the need, it’s not going to work to take with one hand, without encouraging with the other.”

On the need for a Net Zero Investment Plan and the role of GB Energy, Newton-Smith said:

“If governments north and south of the border are serious about getting investment flowing – about channelling that restless energy in business – we need a proper Net Zero Investment Plan.

“One that monitors the investment we need to decarbonise different sectors; one that targets solutions to knock down the barriers to commercialising breakthrough net zero technologies; and one that is accountable for delivering against targets and milestones.

“We also need the detail of the investment vehicles that have already been announced. From Westminster, on GB Energy and the National Wealth Fund. Firms need clarity on how they’ll work with each other and with business. How they’ll complement and stimulate the private sector – rather than duplicating or even displacing it. From Holyrood, too, we need the detail of their new Climate Change Plan, their Green Industrial Strategy, and their Energy and Just Transition Plan.

“We need to see that the thinking has been done on how this all connects.”