Zeroing in: Why engagement is key to the government's net zero economy plan

Humza Yousaf is very keen that Scotland meets its net-zero targets. The first minister is so keen, in fact, that earlier this month he chaired a cross-party meeting on the subject, urging those from opposing parties to recognise “that we require bold action to tackle the scale of the climate crisis”. 

Ahead of the meeting, Yousaf underscored that all parties had signed up to a legally binding commitment to achieve net zero by 2045 and reminded them that “tackling the climate and nature crises is the collective fight of our lifetime, with implications for generations to come”. Afterwards, his government partners, the Scottish Greens, spoke about the “weight of responsibility on our collective shoulders”, the “fight for our lives” we are all engaged in, and how it is vital to “play the movie all the way to the end to understand what the world looks like” if that 2045 target is missed. 

Yet amid all the scaremongering there was no mention of the opportunity the transition presents for businesses – and by extension the jobs market and the economy as a whole – or how the government aims to help them grasp it. For Stefanie O’Gorman, director of sustainable economics at engineering consultancy Ramboll and a member of the Climate Emergency Response Group – a collective made up of representatives from the public, private and third sectors – that is a mistake given it is the transformation of the Scottish economy that holds the key to the net-zero transition.

“For me the concept of a net-zero economy is about finding the parts of the economy that are driving towards that net-zero goal,” O’Gorman says. “That’s really diverse and has the potential to be across all sectors of the economy but we need to identify where the opportunity is the greatest and we need to work out what we mean by the greatest opportunities – we need to identify where the big wins are and go after those. 

“It could be anything from offshore wind, onshore wind and the hydrogen sector to tech businesses delivering the capabilities that enable us to be connected in a way that doesn’t require travel. The opportunities exist in so many different places.”

The energy sector is the most obvious starting point when it comes to the transition to net zero. Earlier this year Yousaf travelled to Aberdeen to meet members of industry body Offshore Energies UK, saying afterwards that the government’s Draft Energy Strategy and Just Transition Plan “sets out a clear pathway to delivering on global climate change commitments while capitalising on the enormous opportunities offered by becoming a net-zero economy”.

“I fully appreciate just how important the North East is for our energy sector and how important the sector is for Scotland’s transition to net zero,” he said. “That is why I value opportunities like this to discuss with industry the detail of their planning to help deliver that transition in a way that is fair and just. It is only by working together that the Scottish Government and industry can redefine the role of a global energy hub and ensure that offshore energy continues to be an attractive career for the current workforce and next generation of engineers and innovators.”Professor Sir Jim McDonald says the Scottish Government must move to implementing its just transition strategy

However, Melfort Campbell, chairman of engineering firm Imes Group and a member of the Royal Society of Edinburgh’s economy and enterprise committee, is not convinced that, as things stand, that is going to happen. On the face of it, the government has some big ideas about how it wants the Scottish economy to change. The energy strategy, which is expected to be finalised by summer, will, according to the government, provide a “route map of actions we will take to deliver a flourishing net-zero energy system that supplies affordable, resilient and clean energy to Scotland’s workers, households, communities and businesses”. Its National Strategy for Economic Transformation, meanwhile, which was published in 2022, “sets out the priorities for Scotland’s economy as well as the actions needed to maximise the opportunities of the next decade to achieve our vision of a wellbeing economy”. 

The problem, says Campbell, is that the two strategies “just don’t meet” because the just transition plan is “focused on being a green energy project rather than a strategy for economic transformation of the whole economy”. At the same time, the government appears to have taken its eye off the ball in terms of getting that “green energy project” over the line. That is evidenced, Campbell says, by the fact the Scottish Energy Advisory Board – a forum that is made up of industry figures, is co-chaired by Yousaf and University of Strathclyde principal Professor Sir Jim McDonald and is supposed to meet four times a year – has only met once since Yousaf succeeded Nicola Sturgeon as first minister last March. Several of the leadership groups that underpin the board – one of which Campbell co-chairs – have been without ministerial input for the same period. 

Though now-former energy secretary Neil Gray replaced former business minister Ivan McKee as co-chair of the Scottish Offshore Wind Energy Council working group, the Oil and Gas and Energy Transition group has been without a co-chair since Richard Lochhead switched portfolio from just transition to small business last March and the Renewable Energy Strategic Leadership Group has likewise been without a government co-head since Michael Matheson moved from net zero to health.

With Gray's move to health following the resignation of Michael Matheson, all five groups are currently without political leadership.

At the same time, last week the Auditor General for Scotland, Stephen Boyle,  issued a scathing report that found the government’s plans for implementing its National Strategy for Economic Transformation “lacks political leadership”. When it published the plan in March 2022 the government said it would establish an Economic Leadership Group, chaired by the first minister, to oversee the strategy but that group has yet to be set up. Boyle said that without the group being in place it is “not clear how evidence about what is successfully transforming Scotland’s economy will flow to the relevant decision-makers”.

“That kind of makes my case,” Campbell says. 

A government spokesperson says work is ongoing to “review the subgroups of the (energy) board” and that “details will be announced in due course”. “The Scottish Energy Advisory Board was established in 2009 to provide a forum for strategic discussion on the current and future energy challenges and opportunities for Scotland,” the spokesperson says. “It continues to be a vital platform to help the Scottish Government, our economic agencies and industry work together to plan and deliver a just energy transition as part of our journey to net zero.”

McDonald, who in addition to his role at Strathclyde is president of the Royal Academy of Engineering, is similarly upbeat, noting that the board and sub-groups are in the process of being “reconfigured”. 

“We had a bit of a delay through 2023,” he says. “There was a lot going on that was taking up the time of ministers, not least the transfer from one first minister to another, but the first minister came to the last energy advisory board meeting in December and has made a commitment to quarterly meetings […] I’m confident they realise the urgency with which we need to move to implementation [of the just transition plan].”

Nevertheless, he notes that 2030 – the point at which the Scottish Government wants 50 per cent of the energy used for Scotland’s heat, transport and electricity to come from renewable sources – “is only seven years away”. Implementation, in other words, is long overdue.

The narrowness of the government’s engagement with business has always been of real concern to me

For Campbell, in order for the implementation stage to be a success the still-incomplete planning stage must take in the views of businesses right across the economy, not just the organisations working at the top end of the energy sector, because the transition to net zero will only work if it impacts on all sections of the economy. “You need to get it so the guy that drives a taxi in Banchory is saying ‘I’m part of the low-carbon energy industry’,” he says.

“The narrowness of the government’s engagement with business has always been of real concern to me,” Campbell continues. “There’s a corporate economy and an enterprise economy. Scotland is an enterprise [small business] economy but if you look at the national economic advisory council there are only two enterprises on it. It’s got some great people and we need them, but we also need others. The breadth of the government’s understanding is limited by the narrowness of the people they are talking to.”

Tracy Black, director of CBI Scotland, says that cuts both ways, with business input vital for shaping government thinking while government policy and actions must be robust enough to give all businesses the confidence they need to engage in the transition.    

“We can’t forget that this is a global energy emergency, it’s about the planet,” she says. “Sometimes that gets lost in the conversation – that it’s optional if you get involved or not – but every year we delay we make the problem much, much bigger for the planet.

“There are two key strands to the net-zero economy. There’s the imperative that businesses become sustainable and net zero themselves – that’s about their journey to becoming a sustainable business with low emissions and a zero-carbon footprint. That’s quite a journey.

“On the flipside of that there are huge opportunities because we will need hundreds of thousands of businesses to help those organisations become sustainable, but also our houses, the food we eat, how we travel. We’ve not seen a revolution on this scale in industry and in life in hundreds of years. It’s a bit like the post-World War Two build-out because everything is going to change. That brings opportunities.”

While the government is still trying to get to grips with what those opportunities might be and how it could help facilitate them, individual organisations are showing examples of transformational best practice. Black points to Scottish Leather Group, a Bridge of Weir-based business that provides leather to the automotive industry, which was been bolstered by becoming the first tannery in the world to gain UN Global Compact accreditation – something that has made it more attractive to customers whose own green credentials are burnished by having it in their supply chain.

“We know that there’s an upside to being a green business,” Black says. “At the moment a lot of people are using gas boilers for their heating but we know that heating will probably go electric. If you are a company that can produce those types of products you’re going to do well in the marketplace. From a consumer’s point of view, the more companies that do that, the more the cost of the products will come down.”

CBI Scotland director Tracy Black says the transition to a net-zero economy presents a wealth of economic opportunities that need to be grasped

It is in that context, O’Gorman says, that the Scottish Government needs to progress beyond writing papers about what it wants the economy of the future to look like and onto helping companies across the economy follow Scottish Leather’s lead.

“We’ve suffered from a desire to go after everything,” she says. “What that has the potential to mean is that we have not maintained our focus on the things that can deliver real change. The Green Industrial Strategy [which was promised in the Programme for Government published last September] should be about getting to grips with that. We have to understand the two different parts of the equation – achieving net zero alongside making this something that has a return for Scotland.”

It’s not that the Scottish Government isn’t doing anything right – the SNP-led administration’s new-found interest in cross-party working is a case in point. Indeed, given the long-term nature of the journey to net zero, Black says such things are imperative. “Countries like Germany are really good at taking long-term bets and sticking to them if there’s a change in government,” she says. “This needs to be cross-party – there are milestones that parliament needs to reach so decisions need to survive changes in government.”

But, with 2030 looming large, the Holyrood administration is going to have to start doing more than drafting strategies and talking about holding meetings – and fast – if plans for a net-zero economy are to become a reality.

“2030 is an absolute beacon that we must move towards,” McDonald says. “We will have to have really moved the dial by then to feel confident about 2045. 2045 seems like a long way away, 2030 – I can touch it. We should really be concentrating on what we can achieve in the next six years.”