Seòmar agus comataidhean

Concerns have been raised with us that Ofgem is not as adaptable or as flexible as it needs to be. You have said that you have plans for the future, but why are you being so slow in mobilising the immense amount of investment that you have said is needed? Is it because you have not, in the past, allowed investment in anticipation of need? You have said that you are improving ASTI and so on, but what sort of trajectory are we talking about? After all, this will all have to accelerate at a rapid pace. How can people—and, indeed, investors—have confidence that Ofgem will be fit for purpose with regard to what we need for that expansion of renewable energy?

I think that we are getting to the nub of the issue and the concerns about it. Clearly, when there are queues, there is the potential for delays, for a number of reasons. Currently, because you have to create the conditions for a market investment, all the risk for grid delays lies with the developer and the generators. Is there anything that you can do to rebalance that? You imply that you would want to investigate the viability of some of the proposals. That is a shift from being an enabler to being—dare I say it?—a market interrogator. Is that what you are suggesting would lead to greater flexibility, adaptability and investment?

However, with regard to your existing responsibilities, particularly to customers, the issue is the location of demand, and we have seen charging costs, especially transmission costs, increasing rapidly in Scotland. That sort of thing leads to uncertainty, which we know business does not like when it comes to making the immense amounts of investment that you have referred to. Can something be done to send out clear, positive signals for investment? Is the dichotomy that has existed to date going to change in the future?

There is clearly a mismatch, bearing in mind that, as far as we are aware, Scotland has the most expensive transmission costs in Europe, and that—thinking about your responsibility for customer pricing, too—we also have some of the most severe fuel poverty among our energy customers. We are able to generate so much renewable energy precisely because of the rural nature of our geography and the offshore and coastal lines that harness the wind. I think that the mismatch is caused by the speed at which decisions are made. When will the pieces of work that you have mentioned emerge so as to change that policy and give more certainty for investment?

I will then ask a final question, if that is okay, convener.

I want to take you back to the first question. The name Circularity Scotland implies that the process will be circular and end to end, but you have said in your answers that you are responsible only for the producers. You offloaded retail responsibility to SEPA, trade associations and the Scottish Government. Are you implying that a similar organisation should have been set up for retailers that would do something similar to what you do for producers?

My degree is in economic history. It would be wonderful if Grangemouth is one of the first places to move to such a model. It is only miles from the birthplace of the industrial revolution at the Carron iron works in Falkirk, and only 10 miles from where shale oil was first discovered in Winchburgh. It would be quite something to imagine that re-engineered future in a place-based approach.

—but it is about economic growth and productivity.

This has been fascinating and informative, so I very much appreciate your joining us.

I will start at the macro level. I am interested in what you are saying about decisions that Governments can make that can make things happen. We are expecting the UK Government response to the Skidmore report, there is that point about the delivery plan, and we are hoping in Scotland for a decision on the Acorn project for track 2, because that shifts the dial considerably for Grangemouth, which is the focus of this inquiry.

What are the types of policy decisions that are needed to unlock things? Even in relation to heating buildings, which we have been discussing, the UK Government’s decision on gas boilers is not due until 2026—that is a decision that could be brought forward. I am interested in the types of decisions that would help us to move.

It is about investment in advance of need. I am also deputy convener of the Net Zero, Energy and Transport Committee and we are currently looking at the electricity infrastructure and whether it is an enabler or an inhibitor. The Office of Gas and Electricity Markets does not have a net zero policy focus. If it did, it might help some of that investment, and some of that investment in the grid helps us shift on hydrogen, and hydrogen is a big focus for what we are looking at for Grangemouth. It would help us if you illustrated the types of Government decisions that you are talking about that can help move things. Clearly, some of them are in reserved areas, but some are devolved. We are about to get a circular economy bill, so that might help. It would be helpful if you could illustrate the types of decisions that you mean.

It is back to the future, potentially, in a place-based way—

That is a very good overview of the bigger aspects that need to be dealt with. I am very taken by your agreement that place-based approaches can really work. How we translate that into the just transition plan for Grangemouth is going to be very interesting. It is convening power, and it is interesting that the ABI is a convener because everybody needs house insurance. Everyone needs a mortgage, but does a mortgage stay with a person or the building?

Grangemouth is a fascinating place to be a first mover when it comes to how you do everything, as in heat and transport. It has the biggest industrial site in Scotland. Most of the people who work at the site live within 10 miles, we have been told. There is something very geographical about that, and most of the housing—I defer to the constituency MSP on this—is post-1950s. How do you convene that and do it on a place base and entrust the private sector to do it—not just social housing, which would be easier to do?

Is doing things geographically as a package in that way investable? Alexander Dennis, the bus company that does hydrogen, is there so an interesting aspect is using industry as an anchor, as there is a major anchor industrial site. It may not be beyond the realms of possibility that we will get blue hydrogen and then green hydrogen. Hydrogen may not be for housing everywhere, but it might be in district heating in that area because of Acorn and so on. How ambitious is that? Is it realistic to look to use the convening power of local government or whoever to do something on that, or is that too small? Is Grangemouth too small? It has a major industrial site. Could that work together?