Energy Security and Net Zero: Scotland

I will call Susan Murray to move the motion and then the Minister to respond. I remind other Members that they may make a speech only with the prior permission of Susan Murray and the Minister. Because this is a 30-minute debate, there will not be an opportunity for Susan Murray to make a winding-up speech at the end.

I beg to move,

That this House has considered Scotland’s contribution to energy security and net zero.

It is a pleasure to serve under your chairship, Dr Huq, and a privilege to lead this debate on a matter that will have such an impact on Scotland’s economy, our cost of living and our national security. Let me be clear at the outset that Scotland plays a disproportionate role in keeping the lights on across Great Britain, and it is leading the way in the shift to clean power.

The evidence is clear: the House of Commons Library noted that in 2024, clean power made up 90% of the generation in Scotland. The Department for Energy Security and Net Zero has published figures showing that Scotland produces significantly more energy than it consumes, and that it transferred 17 TWh of excess energy to England in 2024. In terms that we can all understand, that is enough energy to power every home in London for two years.

That production benefits us all—it supports energy security, making us resilient to international events, and helps to decarbonise the grid for everyone—but there is a problem that we cannot ignore: despite that enormous contribution, too often Scots do not see a fair share of the benefits in good jobs, local investment or lower bills. The case that I want to make today is simple: Scotland is delivering, so the UK’s policy and delivery machine must now match that pace with fairness, infrastructure and security. The North sea is the place to start.

The Scottish Affairs Committee set out the stark reality: in 2024, oil and gas production reached a 21st-century low—about 75% below the 1999 peak. Decline is not an abstract theory; it is measurable across Scotland. The workforce impact is already significant. The Library notes that there were 121,000 direct and indirect jobs supported by the oil and gas industry in 2023—a 51% fall compared with 2014. If workers leave before the clean energy pipeline reaches its potential, we will lose the skilled labour that is vital to a successful transition.

I thank the hon. Lady for securing this debate. I completely agree that the oil and gas sector is vital, and that we must secure the workforce in our energy industries, but I would like some clarity on the Liberal Democrats’ position. My understanding is that they support Labour’s ban on new licences, and that they had a manifesto pledge to backdate the energy profits levy. Is that still the Liberal Democrats’ position on the North sea?

The Liberal Democrats are keen that we move to a source of green energy. We are calling for the energy profits levy to be looked at again, as it was introduced as a windfall tax in particular circumstances, when there were very high profits.

I commend the hon. Lady for bringing this debate forward; she is absolutely right to do so. The devolved institutions’ contribution to net zero targets are important, and I am pleased to hear of Scotland’s success. I look forward to the Minister’s response.

Northern Ireland shares the commitment to a net zero future by 2050, but our smaller grid, limited renewable capacity and reliance on imported electricity means that achieving that goal is more challenging. Does the hon. Lady agree that we must make sure no part of the United Kingdom is left behind? I wish her well for Scotland, but all devolved nations must be given the necessary tools to succeed in the green energy transition.

I absolutely agree. Although I am focusing on Scotland, it is Scotland as part of the UK and not Scotland alone.

We want to make sure that we do not lose the skilled labour that is vital to a successful transition, because we would then have to pay more later to import the labour and expertise that we should have retained to do the work.

I want to be clear about a point that is often overlooked or used by those with a vested interest against renewables: the UK will need oil and gas for the foreseeable future, even as we decarbonise. In that context, and to secure our own energy security, we should meet as much of the demand for hydrocarbons as possible from a secure, well-regulated domestic supply, rather than simply importing more and losing or exporting jobs.

Importing more does not stop consumption; it simply shifts production elsewhere, often to jurisdictions with lower standards and higher geopolitical risk. Domestic supply, properly regulated, can be the safer bridge while we build out our new low-carbon system at scale and ensure security of supply. Will Ministers pull together existing work into a single transition pathway that links North sea decisions to a workforce plan, covering skills mapping, retraining and support where needed?

If we want a managed transition, we also have to be honest about the urgency of the whole-system needs of a clean grid. A net zero system is essential—Scotland shows that it is possible, and it should be the goal—but a renewables-heavy system needs predictable, low-carbon power alongside renewables, storage and interconnection. That is why I support nuclear, and why small modular reactors should be part of the plan to achieve net zero in Scotland.

The SNP Government’s position is that they do not support building new nuclear power plants in Scotland under current technologies. Meanwhile, the UK Government have confirmed Wylfa in Wales as the site for the UK’s first small modular reactor. The risk is obvious that Scotland will end up hosting more of the infrastructure footprint of the transition but without the benefits, while other parts of the UK will capture more of the firm power investment and the supply chain jobs.

It is a pleasure to serve under your chairpersonship, Dr Huq. I thank the hon. Member for securing the debate. I intervene in my capacity as Chair of the Scottish Affairs Committee, of which she and many other hon. Members here today are valued members. As she knows, our Committee has been examining this entire topic as part of a large-scale inquiry into energy and a just transition.

One of the areas we have turned our attention to is the question of fairness across the UK as we transition to cleaner energy systems. We have heard evidence from Scotland’s community-owned renewable energy sector that they face a significant number of barriers when it comes to connecting their projects to the grid. They also have some unique challenges created by the differences between the grid in Scotland and the grid in England and Wales. Does the hon. Member agree that we must turn our attention to that area if we are going to enable communities to generate their own electricity and power and be the beneficiaries of that?

I absolutely agree. We have a real opportunity with Great British Energy, in the current environment, to take advantage of what the commercial companies are offering with regard to reducing costs for individual homeowners and to use digital technology to ensure that community energy generated into the grid benefits the communities that host the infrastructure that generates that energy.

Communities see the turbines, substations and pylons; as the grid expands, they see that infrastructure expand, too. They live with disruption during construction and operation, and too often they do not see fair value for the disruption that they face. That means that there is an opportunity here. The Government have already been developing the policy infrastructure. DESNZ published a working paper seeking views on the design of a potential mandatory community benefit scheme and the facilitation of shared ownership for low-carbon energy infrastructure. That is not a small thing; it is a recognition that we cannot build at the pace required without public consent, and public consent is strengthened when communities are well-informed and share in the long-term value.

Do you agree that £9 million in total community benefit for the highlands, and £30 million for Scotland as a whole, is a paltry amount for a multibillion-pound industry?

Order. Can I just remind the hon. Member about use of the word “you”? I always get told off by the Deputy Speaker for it. “You” means me, because I am in the Chair. It should be, “Does the hon. Member agree?” But I think we get the point.

I thank the hon. Member for his intervention, which I absolutely agree with. As I have just said, this is something that needs to be looked at, and there is an opportunity to make sure that communities all across the UK benefit from the power generation that they have to live with locally every day. Will Ministers commit to introducing a consistent community benefit and community energy framework for major low-carbon infrastructure, so that host communities—especially in rural and off-gas-grid areas—share in any long-term benefits?

Beyond the initial generation of power, we forget about the grid. None of our ambitions on net zero or energy security will be met if we cannot move the power that we generate around the UK. We must fix the grid; we must stop paying to waste clean energy. We have built the infrastructure to generate power faster than we have built the network to connect and transport it. The result is that bill payers are burdened with the cost of electricity that they cannot use and that cannot be brought to them.

The National Energy System Operator’s annual balancing costs report sets out the scale of the problem. It reports that grid constraint costs increased by 64% in 2024-25, totalling £1.7 billion. The total energy lost to that failure was 13.5 TWh, which is nearly as much as Scotland sent to England. This is not a theoretical cost; it is money that households and businesses pay because the network cannot always carry the clean power that is available. Will Ministers pledge to accelerate grid development and to drive connections reform at pace and with clear milestones, so that we stop paying for unused electricity and improve resilience, particularly for rural and remote communities?

The grid is not just an infrastructure issue; it is an opportunity to redevelop our industrial heartlands. If Scotland is powering the transition, Scotland should also help to build it. Scotland has a proven history in heavy engineering and industrial delivery, with ports, fabrication, and a supply chain shaped by decades of offshore work. The transition should not become a story of “import the kit, export the jobs”.

The hon. Member has already covered the EPL, but it is important to recognise that Scottish Renewables and Offshore Energies UK wrote jointly to the Secretary of State and the Chancellor of the Exchequer expressing their deep concerns about its impact on the transition. It will not be possible to deliver the renewables transition we all want if the North sea is allowed—or even forced—to decline at the rate it is doing, and not enough effort is put into the renewables side and supporting that transition. Does the hon. Member agree that the Government need to address that rapidly? We need pace of decision making and certainty for investors and developers if we are to ensure that we make that transition effectively, which will provide the jobs for the skilled workforce she rightly referred to.

I absolutely agree: the vision is there, but we take too long to make decisions. When that happens, our workforce make their own decisions, and businesses do not come that might have considered coming. We have to support the opportunity that is available to us.

We must look seriously at how we encourage companies to build the components of the green revolution here. We have the skills and a history of great steelworks and dockyards. Those can be revitalised, and our communities alongside them.

However, building at home extends further than just good practice: it reduces risk to supply and security. The National Cyber Security Centre publishes dedicated supply chain security principles to help organisations manage supply chain risk. That is the mindset we need for critical national infrastructure, and we have seen why it matters. UK authorities have been looking into reported cyber-security concerns linked to remote-access features in some electric buses imported from China—the same place that much of our green technology comes from. This is not about sensationalising or point scoring: if supplier risks matter for buses, they certainly matter for the systems that keep the lights on and our countries running. Will the Minister use the industrial strategy to set out clear UK content and supply chain commitments, to ensure that demand for grid and energy production components is not only met in a timely manner but protected from foreign interference?

I finish by returning to the household reality, because net zero will not be delivered by megawatts alone; it will be delivered in homes and communities, and it must be made simple, safe and scalable. The Climate Change Committee’s progress report found a 56% increase in heat pump installations in 2024, driven by increased support from Government schemes, but it is clear that scaling remains the challenge. Households respond to a simple proposition: reliable installers, clear standards, stable support and aftercare. That too should be treated as part of the mission to build a UK production base. A national retrofit and heat pump supply chain would create skilled work in every community. Will Ministers treat heat pumps and retrofits as part of the same mission, supporting an installer pipeline, quality assurance, consumer protection and an end-to-end journey from advice, to finance, to installation, to aftercare?

I call Minister—and birthday boy—Michael Shanks to respond for the Government.

Thank you, Dr Huq. There is genuinely nothing I would rather do on my birthday than answer an important Westminster Hall debate on this topic. It is a pleasure and a privilege to be here—cake to follow.

I thank the hon. Member for Mid Dunbartonshire (Susan Murray)—that beautiful constituency on the other side of Glasgow from my own—for introducing this important debate, and it is a pleasure to see so many members of the Scottish Affairs Committee to the Chamber. As an alumnus of that Committee in the last Parliament, it is a pleasure to see it continue to go from strength to strength. As a proud Scot, I reflect many of the things the hon. Lady said about the contribution that Scotland has made to Britain’s economic past, and the critical role it plays at the moment and will continue to play in the future. I will return to that theme later.

I also want to reflect on the fact that it is the strength of us working together across the United Kingdom that has driven much of the investment into Scotland to make these projects a reality. I will come back to that point later because I know that the hon. Member for Strangford (Jim Shannon) will appreciate that, if nothing else.

I want to reflect on some general points, and then I will come briefly to each of the points the hon. Member for Mid Dunbartonshire made, because they are all incredibly important and things we are working towards. On the general argument about what the Government are trying to achieve, we are trying to tackle the energy trilemma—the question of security, affordability and sustainability—by driving as quickly as possible towards clean power. Our target—our mission—of achieving clean power by 2030 is partly about how we get off fossil fuels, and the past few days have demonstrated why that is so important in an uncertain world. It is also, as the hon. Lady rightly said, about how we take the industrial opportunity that goes along with that. How do we get the good jobs and industrial opportunity to go with it?

Of course, we cannot ignore the events of recent days in the middle east and the impact on oil and gas prices and supply. However, those events make it more obvious why we should be preserving and making the most of the supply and production we have in the North sea. The oil goes into the European market—not through the strait of Hormuz—so it stays accessible, and the gas all comes into our networks in the UK. It is vital that we secure our own production, and the Minister surely recognises that the energy profits levy and the ban on new licences put that at risk.