First Minister Alex Salmond
Offshore Europe Oil and Gas Conference
Aberdeen
September 4, 2007
Good morning ladies and gentlemen.
I welcome the opportunity to be with you this morning here in Aberdeen, a proud Scottish city, the centre of operations for the oil and gas industry in the North Sea and the largest energy hub in the world, bar Houston.
Many of the people here today represent companies who have been at the heart of this success - companies now adapting to a new phase of oil and gas exploration and production, exploiting new technologies and new sites which could hardly have been envisaged forty years ago, and making a real success of it too. We welcome your important contribution to our country's prosperity.
As Scotland's First Minister, I'd like to welcome those of you who have come to our country for this event. While you meet to debate and do business this week, I hope also that you will take time to experience the OE07 Energy Festival, with its programme of live music, ceilidhs, fireworks and entertainment - all laid on because you're in town!
I hear Tam White is playing at the Spiegel tent in Union Terrace Gardens. Tam not only sings the blues - his was the voice behind Robbie Coltrane's Big Jazza in the BAFTA award-winning BBC TV series, Tutti Frutti and he also played the chief of Clan MacGregor in Braveheart, the Mel Gibson blockbuster rumoured to be my favourite film of all time. A man of many talents.
I want to start by thanking the Aberdeen City Chambers of Commerce for hosting this business breakfast. I relish the opportunity to talk to such an international business audience. The Chambers of Commerce do a great deal to represent businesses - large and small - across the length and breadth of Scotland. In fact, the Chambers of Commerce network represents over 50 per cent of all private sector jobs across Scotland, so yours really is a voice for business in Scotland. Like you, we believe that a strong, successful and sustainable economy for Scotland provides wealth and employment that everyone can share in.
Now, those of you who live here all year round might have heard that I rather hastily commented a while back that business breakfasts should become a thing of the past…
So why am I here today if I don't like business breakfasts? I am here because I want to share with you our Government's commitment to deliver faster, and more sustainable economic growth in Scotland. I am here because I want to explain the Scottish Government's position on energy - a position that is a step change from that of the previous administration, a confident, fresh approach, and I am here because I want to learn more about how we can work together to ensure that offshore exploration and production flourishes in Scotland.
Government Economic Strategy
I want to start with the basics.
Our Government Economic Strategy, which will be published in the autumn, will set out the principles and priorities for sustainable economic growth in Scotland.
Over the past generation, Scotland's average annual growth rate was 1.8 per cent per year, compared with 2.3 per cent for the United Kingdom and more than 3 per cent for small independent European countries. There has been some debate of late about the exact statistics but this growth gap exists, has existed continues to exist and it is time to do something about it.
These seemingly small percentage differences translate into an opportunity cost of many billions of pounds for the Scottish economy. So we want to drive up economic growth in Scotland, by giving our nation a clear competitive edge - by reducing or removing business rates, and through lighter and more effective regulation - and we believe we can do it.
As a Scottish nationalist, I believe that the best way to achieve the kind of competitive edge we want is through Scottish independence. But, even within the structures we have, I think we can work together in a national effort - across government, business and our public services - to drive up economic growth.
This is not some wishy-washy tentative hopefulness based on the never-never; I've appointed a Council of Economic Advisers with eminent members drawn from around the world to advise me directly about the best way to improve Scotland's sustainable economic growth rate; to challenge accepted wisdoms; and to think freely about the best way forward.
It is my firm belief that the Council of Economic Advisers signals a step change in the analysis of economic policy in Scotland. Together with our Government Economic Strategy, I believe we have a firm and confident basis on which to improve Scotland's competitiveness.
Sustainable economic development
I know that Jonathon's [Porritt] organisation, Forum for the Future, agrees with me that sustainable business is profitable business. In my first speech to the Parliament as First Minister I said that I saw no contradiction between the desire to see Scotland competing in a higher economic league and the absolute necessity of ensuring that our approach is sustainable.
I said then that this was not just a principled policy commitment- but that in the face of massive climate challenges, it was a moral imperative. Putting climate change at the heart of our core economic decision making will give us the best basis for meeting those challenges.
Tomorrow I will set out my Government's legislative programme in the Scottish Parliament. This will include preparation for a climate change bill that sets ambitious targets to reduce greenhouse gas emissions in Scotland.
19. Climate change is a global issue requiring collective action, so we will set a clear long-term statutory framework so that businesses, organisations and individuals can invest in low-carbon technologies with certainty.
Oil will remain an important part of Scotland's economy, but it is only one part of an impressive resource and economic hand Scotland can play. As important as oil is we have huge renewable potential, with Scotland having as much as 25 per cent of the potential EU tidal and wind resource. As we approach green energy day here in Scotland [7th Sept], the day on which the installed capacity of renewables generation in Scotland will overtake the installed capacity of nuclear power, I reiterate my view that our commitment to renewables and our opposition to nuclear is reasonable, realistic and supported by the evidence here and now.
I want Scotland to become a global leader in developing solutions to the challenge of climate change. I want Scotland to stay ahead of the game by becoming the pre-eminent location for clean energy research and development in Europe. I want Scotland to become the green energy capital of Europe, and I know we can do it - because, as many of you here know only too well, we have the natural resources, the know-how and the skills right here on our doorstep.
A North Sea Energy Grid, for example, would allow us to contribute to European security of energy supply and, at the same time, to harness the as yet largely unexploited off-shore renewable energy potential. That is why we are making sub-sea grid connections a policy priority.
To build on our strength as an international energy hub and develop new technologies - we need people; skilled people. Our new skills strategy for Scotland, which will be published shortly, provides a new agenda for skills and learning in Scotland. It focuses on Scottish approaches to Scottish issues, articulating potential priorities, choices and options.
I commend it to you and invite those of you who have an interest for your input as we move towards action.
Carbon Capture
I think many in this audience will know about my support for the carbon capture project at Peterhead and indeed other projects which could emerge. Scotland is ready to take a real lead in carbon capture and storage.
Use of renewable energy must and will expand. I welcome and support the EU target of 20% of energy to be from renewable sources by 2020. But that alone is not sufficient action to tackle climate change. We need to use our fossil fuels in a cleaner way.
In the project proposed by Scottish and Southern Electricity [SSE] and BP, CO2 is extracted from gas prior to combustion and stored - leaving hydrogen to produce electricity. In other projects CO2 is sequestered after combustion. Scottish Power is working on that approach.
This is a technology which the UK and world needs - in which Scotland can be a world leader.
The UK Government has recognised that and the need for financial support for these early projects. But a sense of urgency seems to be completely absent.
The competition timetable has already posed problems for BP. Last week I wrote again to the UK Government- pressing John Hutton to make sure that the competition timetable does not slip- again.
I have also met Commissioner Piebalgs over the summer to press for urgent EU action. He, I am pleased to say, recognises the need to move on this issue and is enthusiastic about the potential for this technology. He is inviting a number of key companies from across the EU to Brussels in two weeks time to inform the shape of EU financial framework. That framework could transform the economics of projects such as such as Peterhead and allow Scotland and Europe the opportunity to establish a world leading position in this exciting technology.
You will not be surprised that SSE, Shell and BP have been invited to be part of this select gathering. - and, I welcome your involvement.
When I wrote to John Hutton I also reminded him of the importance for carbon capture of access to North Sea infrastructure. Pipelines no longer required to carry oil have the potential to carry CO2 for storage. This is important in any decisions on decommissioning oil fields.
These and other decisions on our energy future would - I believe - be better taken in Scotland.
That is why we are starting discussions on how Scotland can have more responsibility for hydrocarbon development, and will not be deterred by the knee jerk negativity of the Scotland Office. This is not just about income - it is a clear strategy that looks to the future, that seizes opportunities rather than misses them.
Today, I am glad to be in the company of two visionary gentlemen, Tim and Jonathon, who represent organisations with their eyes firmly fixed on the opportunities and challenges that will emerge over the next 20 years. The job of Government is not just about competence day to day, though that is important - it is also about setting a compelling vision for the future.
We can see carbon capture and storage in Scotland. We can see sub sea grid connections to other parts of Europe allowing direct export of renewable energy. We can see a future where Scotland can become a leader in sustainable energy; a place where other countries can come to learn about emerging technologies. It requires vision and a clear medium term plan. That is what I intend for this government's approach to energy.
Aberdeen
Before I finish, I want to say a few words about Aberdeen and the North East.
This is one of the most prosperous regional economies in the UK - and, a lynchpin for our economic ambitions.
As you know, the prosperity that oil and gas has brought to this region and how it can be sustained for future governments is an important part of the conversation we have launched on the nation's future.
Last November, I visited Norway.
By investing their oil wealth, the Norwegians have safeguarded their financial future and built an economy that for the sixth year in a row puts them at the top of the UN's quality of life league table. Two weeks ago they announced that Norwegian oil fund had they announced £165 billion accumulated in 10 years or so. We still have time to do likewise.
I said then and I say it again now: Scotland can and must learn from independent Norway's success. Oil, gas and renewables - along with a set of pro-Scottish business policies - have the potential to transform Scottish prospects over the next 30 years.
This area boasts a high skills base, a high level of business start ups, consistently low levels of unemployment and a GDP per worker which is the highest in Scotland.
As we enter the "second half" of North Sea oil production, it is encouraging to see the economy diversifying - building on strengths in traditional sectors like fishing and the oil and gas industry - and developing expertise in new sectors like renewable energy, health research and life sciences.
The North East of Scotland now accounts for one third of our food and drink companies - and roughly a third of the Scotland's food exports come from the area. This is a real strength. And, there are other strengths too.
Tourism - including business-related tourism that brings more than 30,000 people from more than 100 countries to Aberdeen to talk about oil and gas - supports around 21,000 jobs in the area and contributes well over £500 million to the local economy.
If you've come here for the conference, I hope that you are enjoying your accommodation, whether you're staying in a cottage, a cruise ship or a castle!
Innovation is as we all know a key to economic growth, and the University of Aberdeen, the Rowett Research Institute, and the Robert Gordon University are making a very significant academic and research contribution to life sciences.
In health research too, there are now hundreds of graduate researchers contributing to R&D in important new areas like antibody engineering, bone health and nutrition.
Conclusion
I welcome the work many of you do through the Aberdeen City and Shire Economic Forum to "build on energy" through your economic manifesto for the City and Shire. You rightly recognise the advantages you have and the challenges you face and your Vision for 2025 is a bold and compelling one. You speak of momentum, vision and focus. That's what I would leave you with today:
A sense of the direction and the momentum we have created in just over 100 days in Government;
A clear vision in our approach to energy; and
A strong focus - on delivering for Scotland, on making Scotland a wealthier, smarter, fairer, healthier, safer and greener country.
Thank you.