New Energy Transition Fund | ONE

A multi-million pound fund has been set up to help the energy sector recover from the dual economic impacts of coronavirus (COVID-19) and the oil and gas price crash.

The £62 million Energy Transition Fund will support businesses in the oil, gas and energy sectors over the next five years as they grow and diversify and will help attract private sector investment in the region.

The investment, with a focus on the north east of Scotland, underpins the region’s ambitions to become a world leader in the transition to net zero, helping Scotland meet its ambitious targets on climate change.

Major projects to be considered for funding include a Global Underwater Hub, Net Zero Solution Centre projects, a Hydrogen Hub, the Acorn project and an Energy Transition Zone.

The investment will also benefit the wider Scottish energy sector and supply chain, working with local businesses to support sustainable jobs and maximise inclusive economic growth across the country.

Economy Secretary Fiona Hyslop said: “This is an extremely difficult time for our business community and we recognise the need to do all we can to help the recovery of key sectors of the economy and Scotland’s regions.

“This package of investment for the North East will support our energy sector as it recovers from the impact of COVID-19 and will help us make significant progress as we move toward net zero by 2045.

“Aberdeen is recognised globally as a centre of excellence in oil and gas and this funding will help ensure that the knowledge, skills and expertise it has to offer will play a vital role in the energy transition.

“It is vital we move quickly to seize the opportunity to take forward a green, low-carbon recovery and support the workforce as the energy sector diversifies. Now is an opportune time to re-imagine the Scotland around us and to begin building a greener, fairer and more equal society and economy focused on wellbeing.”

Sir Ian Wood KT GBE, Chair of Opportunity North East, said: “We very much welcome today’s timely funding announcement from the Scottish Government, which provides £62 million of early stage funding for a number of projects, including the proposed Energy Transition Zone, to help strengthen the north east of Scotland’s growing position as a global integrated energy transition cluster, creating a lot of employment over the next 20 years.

“Earlier this year, ONE set out the ambition to help create a world leading Energy Transition Zone (ETZ) in partnership with Aberdeen City Council, Aberdeen Harbour Board and Scottish Enterprise. The Zone will create a place to attract and develop green energy related R&D, innovation, manufacturing, testing, demonstration and services, and the business and skills needed to support energy transition activities.

“Today’s announcement is the first step in evolving the ETZ from a concept to a live project which will deliver the economic ambition shared by all partners. It is now recognised in Aberdeen City Council’s draft Local Development Plan and a steering group has been created to develop the business case to secure commitment and further funding from the UK Government’s Oil & Gas Sector Deal and the private sector.

“The COVID-19 pandemic has increased the public’s awareness of the need to reshape our economy and both governments are driving a ‘green recovery’. The ETZ is aligned with this strategy and ongoing discussions to develop a ‘Transformational Sector Deal’ for the existing oil and gas industry.

“The people, communities and businesses in North East Scotland have played an important role in producing our country’s energy sources over the last 50 years. We now have the exciting challenge of helping develop a carbon free economy to meet Scottish and UK Government net zero targets by 2045 and 2050. This will require leveraging on our existing on and offshore infrastructure, technology and skills, and diversifying our global supply chain to ensure the North East of Scotland continues to play an important role in the UK’s energy future, albeit this time with the environmentally positive on and offshore wind, hydrogen and carbon capture and storage.”

Trevor Garlick OBE, Chair of the ONE Energy board and the Global Underwater Hub project, said: "We welcome today’s Scottish Government funding announcement for the energy sector in North East Scotland, which includes support for a Global Underwater Hub in Aberdeen to harness the huge potential the UK’s world-leading underwater engineering and technology expertise.

“The multi-sector Hub will help UK companies win more business overseas, attract inward investment and develop the skills and technologies needed to increase our share – currently £8 billion – of a growing global market with a gross annual spend expected to reach c.£100 billion by 2035.

“It will play a significant role in furthering Scotland’s and the UK’s net zero ambitions, connecting companies, universities and R&D institutions across the UK to leverage the collective strength of the UK’s underwater industries – from offshore renewables and oil and gas, to marine science and defence.

“We look forward to continuing to work closely with underwater engineering and technology companies, Subsea UK and other trade associations, governments, academia and regional development agencies to deliver this exciting project.”