Climate Change Programme Consultations

Section 2 - Place: Drivers for Change

Contents

 

Introduction

Energy Transition in Shetland has far reaching implications, there are various routes that we may take and a wide range of influences which are outwith our control.  This Section sets out a baseline for the four long term outcomes set out in Section 1 along with the overarching international goals and national targets which we are obligated to work towards. 

 

Long Term Outcomes & Drivers for Change

Long Term Outcome 1 – Reduce Emissions

Target: Bring Shetland land and marine based energy emissions to net zero and contribute to national targets through the export of clean energy

Where we are now

  • Global, National targets set for net zero to reduce emissions to keep temperature rise to 1.5°C
  • According to responses from the 2023 Shetland Energy Survey, protecting the natural environment is the highest priority for the energy transition.

From the Climate Conversation Survey 2021

Top areas folk want to see work done on are:

  • Green / renewable energy
  • Improving reduce, reuse, recycle  
  • tackling fuel poverty and more support for making improvements
  • fixed links to the isles

Top three priorities  

  • Transport
  • Energy Supply
  • Business and Industry

A target has been set for Shetland to be net-zero by 2045, there are sections of the community that are easier to decarbonise than others and there are numerous “wicked” problems where there is no obvious solution.  It is therefore essential that a place-based approach is taken to ensure no one is left behind.

Shetland has a precious marine and terrestrial ecology and bio-diversity. Long-term environmental protection and sensitive and balanced development are imperatives. 

Opportunities:

  • We have a strong awareness of the need to change.
  • Shetland has an excellent renewable energy resource, good infrastructure and a strong and extensive supply chain.
  • High energy prices have brought into focus the need to reduce consumption and insulate ourselves from global energy markets.
  • Extensive experience of Marine spatial planning and environmental monitoring

Challenges:

  • Changing government priorities
  • There are various routes to net zero, we need to find the one which suits Shetland.
  • Many decisions are out with our control, making communication and engagement essential.
  • How will it be paid for

Co-Benefits:

  • Community participation and engagement
  • Affordable energy
  • Create and retain local wealth:
    • By supporting existing industries and households to decarbonise,
    • The development of new opportunities associated with the transition to net zero.

Indicators for Change:

  • The Net Zero Route Map provides a framework for the monitoring of emissions.
  • Reduction in the amount of imported fossil fuels
  • Reduction in energy consumption, bearing in mind changes in energy consumption such as the transition towards electric heating and electric vehicles.

More covered in

Climate Change and Energy:

  • Net Zero Route Maps
  • Section 4 Energy Generation
  • Section 5 Whole Energy System
  • Section 7 Use of Energy

Environmental Protection:

 

Long Term Outcome 2 – Secure Affordable Energy

Target: Secure all Shetland energy consumption from affordable islands-based generation

Where we are now

  • Under the previous definition of fuel poverty 53% of Shetland households in Shetland spend more than 10% of their household income on energy bills.  Under the new definition this is 31% but the figure are not comparable masking the true situation
  • The cost of living in Shetland is consequently 20%-65% higher than the UK average.
  • According to CACI paycheck data (2021), 47% of households do not earn enough to live well, based on the minimum income standard for remote and rural areas.
  • The average household in Shetland uses around 21,000kWh of energy, compared to a typical UK household which consumes less than 15,000kWh
  • Under the current price cap, the average annual energy bill for a typical UK household is calculated at £1,928 January 2024 in Shetland it is more than double at around £4,600

There are various routes to net zero and it is important that we take the opportunity to achieve the best outcome for Shetland.

The importance of a secure affordable energy supply has been acknowledged throughout history.  For example, peat, as an abundant, largely free fuel contributed towards enabling people to live in Shetland in the past.  Several factors led to its decline, but families having more money to pay for services was a factor in households deciding to transition to electricity and oil, which were cleaner and easier to use.  We need to ensure that along with being clean, energy is secure and affordable.

Opportunities:

  • Have developed and operated one of the largest district heating schemes in Scotland, which could be replicated elsewhere.
  • Rebalancing control of energy supply so that Shetland communities become less attached to restrictive national energy policies,  
  • Potential new electricity demand for hydrogen production and electrification of offshore installations. 
  • High energy prices focus attention
  • There are ambitions from the UK Government for communities located close to energy generation to benefit from lower energy prices.

Challenges:

  • Investment in infrastructure, these developments have a long lead time
  • Importing clean energy fuels to replace hydrocarbons will be more expensive making Shetland less competitive with higher still levels of fuel poverty, 
  • Inability to reduce costs of alternative energy solutions,  
  • Limited grid connection capacity
  • Key economic sectors and lifeline services are some of the most difficult to decarbonise.

Co-Benefits:

  • Reduced emissions
  • Grow our prosperity in an equitable way

Indicators of Change:

  • Reductions in the cost of energy
  • Reduction in fuel poverty
  • The Community feel they can influence decisions affecting their local area

More detail covered in

Affordable green electricity and clean alternatives to fossil fuels 

  • Section 4 Energy generation
  • Section 5 Whole Energy System
  • Section 6 Use of energy
  • Section 8 Affordable Energy

Ensure a Just Transition to Net Zero

  • Section 3 The future
  • Section 9 People
  • Section 10 Communication

 

Long Term Outcome 3 – Create & Retain Local Wealth

Target: Generate £100m a year of diversified economic revenue to the Shetland economy

Where we are now

  • It can be estimated that the total value of the seafood industries (fishing, aquaculture, and processing) to the Shetland economy in 2019 exceeded £360 million.
  • This makes the value of Shetland's maritime economy 1/3 of the total or 2/3 of the non-service sector of the Shetland economy. 
  • In contrast the oil industry contributes £71 million to the local economy

Economic performance in Shetland remains strong but energy transition will have a direct impact on existing industries, therefore these need to be supported both to decarbonise and to engage with project developers on a range of fronts, from the protection of our natural environment through to ensuring Shetland based businesses are best placed to maximise new economic opportunities.  For further discussion see Section 7.

Opportunities:

  • Existing energy hub, for 50 years
  • Outstanding renewable energy resource
  • Extensive experience of marine spatial planning
  • Have a strong adaptable marine sector
  • Long standing oil and gas sector
  • Have existing infrastructure to build from
  • Cooperation and collaboration

Challenges:

  • Direct competition on space and resources. 
  • Limited labour force
  • Finance
  • Developers may stick with their existing supply chain and keep tasks in house, which will require expertise to be brought in rather than developing the local supply chain.

Co-Benefits:

  • Supply chain and employment opportunities
  • Increased income is a key component of affordable.

Indicators for Change:

  • GRDP for Shetland.
  • Balance between the economic sectors for:
    • Output,
    • Jobs, and,
    • Value added.

More detail covered in

Decarbonisation of our existing industries

  • Section 5 – Whole Energy System
  • Section 6 – Use of Energy

Create and Retain local wealth

  • Section 7 - Prosperity benefit to the community.

 

Long Term Outcome 4 – Skills and Capacity Development to Support Energy Transition

Target: Local supply chain adapted and grown to support new industries in clean energy employing 500 people in Shetland

Where we are now

Shetland has an established skilled workforce with many skills that are transferrable and adaptable.  However, Shetland has an aging population and a shortage of workers across a wide range of occupations.  The current labour market statistics highlight that the job density [the ratio between the total jobs and the population aged 16-64] for Shetland in 2021 was 1.12, the Scottish average was 0.81.

Opportunities:

  • High educational attainment
  • Culture of innovation, inclusion and skills development
  • Cooperation and collaboration

Challenges:

  • Low unemployment
  • Ensuring everyone has the same opportunities
  • Accommodation and services

Co-Benefits:

  • Supply chain and employment opportunities
  • Increased income is a key to making life more affordable

Indicators for Change:

  • Shetland age demographic
  • Job density
  • Household income CACI data
  • Underemployment
  • Employers struggling to recruit

More detail covered in

  • Section 7 – Changing Energy Use and reducing emissions – includes behaviour change
  • Section 10 – People Powered Change

 

We will statement for Long Term Outcomes

  • We will monitor progress locally against the four long term outcomes.

 

Policy Drivers for Change – Governance & Policy Frameworks

International

United Nations Sustainability Goals

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries - developed and developing - in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.

The UN goals fit with Shetland’s own needs and priorities.  Many communities and industries are already striving for sustainability, and these efforts are paying dividends to the health and connectedness of the community.  We need to ensure that no one is left behind with economic progress, social justice and inclusion, protection of the climate, environment and biodiversity. 

International Energy Agency (IEA)

In May 2021, the IEA published Net Zero Emissions by 2050: A Roadmap for the Global Energy Sector.  This report was updated in September 2023 to reflect the many changes which have taken place, notably the global energy crisis.  The report highlights that while global energy sector CO2 emissions have continued to increase there has been progress in the development and deployment of key clean energy technologies.

National

Both the UK and Scottish Governments have set a number of ambitious targets which are summarised in the table below.  Many areas of energy policy are reserved to the UK Government.  However, it is often unclear how these targets will be met, where these developments are to happen, along with the associated infrastructure that will be required to enable them to materialise.

Shetland’s role in energy transition is of national importance, as it has been for the past 50 years.  Shetland is at the heart of a highly productive energy region both for oil and gas and renewable energy, discussed further in Section 4.  Change is inevitable and, as many of the decisions in relation to energy are out with our control, the development and recognition of the Energy Development Principles is vital.  Decisions in relation to energy need to be made in a holistic fashion to a specific geographic area, taking into consideration the resources available and the infrastructure required too.  In addition to the high-level decisions on energy generation we must also find local solutions to the national targets.  For example, the highly ambitious national target of reducing fuel poverty to 5% by 2040 or the targets for building performance.  These targets will be difficult to achieve without a localised approach being taken.

Scottish Government Climate Change (Emissions Reduction Targets) (Scotland) Act 2019:

  • Net zero by 2045
  • Interim targets:
    • 75% by 2030
    • 90% by 2040
  • Councils are required to reduce their operational GHG emissions to meet a net zero target by 2045 at the latest
  • Energy Strategy Position Statement 2021
  • Provided an overview of the Scottish Government’s key short to medium term priorities.

Scottish Government:

  • Onshore wind: 20GW installed by 2030
  • Offshore wind: 8-11GW installed by 2030
  • Hydrogen: 5GW of renewable and low carbon hydrogen by 2030, 25GW by 2045

UK Government Policy Paper Net Zero Strategy: Build Back Greener published in 2021 updated 2022:

  • Power
    • Decarbonise the UK power system (electricity) by 2035. Subject to security of supply
    • 40 GW of offshore wind by 2030
    • Moving towards 1GW of floating offshore wind by 2030
    • Deployment of flexibility measures (like storage) to smooth out future price spikes
  • Hydrogen
    • Deliver 5 GW of hydrogen production capacity by 2030, whilst halving emissions from oil and gas
  • Industry
    • Deliver four carbon capture usage and storage (CCUS) clusters, capturing 20-30 MtCO2 across the economy, including 6 MtCO2 of industrial emissions, per year by 2030
  • Heat and Buildings
    • Set a path to all new heating appliances in homes and workplaces from 2035 being low carbon
  • Transport
    • Remove all road emissions at the tailpipe and kickstart zero emissions international travel
  • Greenhouse Gas Removals
    • An ambition to deploy at least 5 MtCO2 /year of engineered GGRs by 2030.

Local

At a local level the Council has approved the Shetland Islands Council Climate Change Strategy and Action Plan to set out how the Council will achieve its ambition of being net zero by 2045.  The Council is also working in collaboration with local community planning partners to prepare the Shetland Climate Change strategy based on the Shetland Net Zero Route Map completed in 2022.

Community Led Change and Engagement

The Climate Change Conversation was set up to ensure the Shetland community is engaged in climate change and represented within actions to address it. This initiative provides opportunity and space for a flow of communication between the community, the Council and partner organisations.

Community led change in relation to energy transition is discussed further in Section 10 People Powered Change.

 

We will statement for Policy Drivers

  • We will monitor and ensure alignment to local, international, national targets, guidance and legislation on energy transition and carbon emission reduction.
  • We will promote at a national level the scale of the challenge for Shetland in reducing our emissions and the need for a local approach.

 

Just Transition and Energy Justice

The importance of ensuring a Just Transition is recognised at National and International levels.  However, this can only be achieved with an empowered community to support and drive change, ensuring no one is left behind.

Energy justice refers to achieving equity in both the social and economic participation in the energy system, while also remediating social, economic and health burdens of those disproportionately harmed by the energy system (frontline communities”).

Shetland Energy Development Principles

One of the main mechanisms being developed to help deliver a Just Transition for Shetland is the Energy Development Principles.

The Shetland Energy Strategy aims to rationalise energy transition, to help make it easier to engage with.  Shetland Islands Council recognises that it is not the consenting authority for many of the energy generation projects that will come forward in Shetland and its surrounding seas.  Those powers sit with the UK and Scottish Governments and their agencies.

However, the Council is equally clear that it does have a very important role in community leadership including the obligation to promote and represent the Islands interests; and facilitate and support all sectors of the community to understand and contribute to the energy transition we all have to make.

Shetland has a long and very successful history in the energy business, achieved through commitment to a number of key principles embodied in the Sullom Voe Agreement, which recognised all parties’ legitimate interests and concerns.

It required determination and effort from everyone to find and deliver mutually beneficial, fair and balanced solutions that build on the rich resources on and around the islands, the strengths and capabilities in our infrastructure and the skills and initiative of our people.

A key step to ensuring a managed transition is to set out Shetland’s drivers for change and the indicators we will use to measure change against the long term outcomes set out in Section 1. 

Therefore, we will encourage all stakeholders in potential development to recognise the principles set out below and commit to following them throughout the planning and delivery of projects; as well as full engagement in and compliance with all necessary consenting processes and any associated conditions.

Environmental Protection:

  • Climate Change impact and mitigation  
  • Impacts and protection of wildlife and bio-diversity on and around Shetland
  • Protection of the Shetland landscape and seascape and containment of impacts on it

Local Supply Chain Integration:

  • Jobs in Shetland   
  • Contracts and opportunities for Shetland businesses  
  • Commercial Infrastructure  
  • Skills and Training for current, and new, Shetland residents

Sectoral Co-Existence:

  • Competition for mutually important locations  
  • Impacts on the sustainability of our key natural resources  
  • Any other beneficial or detrimental interactions between sectors

Benefits to the Shetland Community:

  • Fair Share of value from all developments, offshore and onshore
  • Financial Benefits to the community
  • Product Benefits; e.g. affordable energy for Shetland households
  • Public Goods Benefits

Good communications and effective engagement will allow all parties involved in promoting and regulating proposed developments to understand the Shetland community, our aspirations and concerns and build strong and effective partnerships.

We are optimistic and confident that Shetland’s successful track record of delivering technologically advanced, economically balanced and environmentally responsible developments can be replicated in the new energy transition we all have to make.

 

We will statement for a Just Transition

  • We will develop, promote and implement the Energy Development Principles.  With ongoing strategic direction and monitoring provided by the 4Shetland Forum.
  • We will encourage engagement from the community, as a Just Transition will be best achieved with an empowered community.