Shaping Scotland’s Economy

2nd Nov 2020

Shaping Scotland’s Economy

A new report on Scotland’s Inward Investment Plan: Shaping Scotland’s Economy was published on 27th October by the Scottish Government and reinforces the opportunities for hydrogen and fuel cells to contribute to Scotland’s economic growth and the wider post-Covid recovery. Investment in infrastructure will be a priority, with a focus on infrastructure to enable inward investment decision making of around £32 billion over 5 years.

Clusters and regional concentrations of expertise and activities are identified as a key factor in enabling the development and deployment of new low carbon technologies, and can enhance performance at the firm and regional level. Examples of regional clusters given in this report include:

The Marine Economy in the Highlands and Islands

The Highlands and Islands are well placed to take advantage of the growth potential in the marine economy. The region has 61% of the UK coastline, combined with innovative businesses, outstanding research capability and a skilled workforce. The European Marine Energy Centre in Orkney already demonstrates the potential of the wave and tidal energy sector. There is now an opportunity to build on this and to create high value jobs in some of Scotland’s most remote and fragile communities.

Energy Transition in Aberdeen

The £62 million Energy Transition Fund (ETF) seeks to help both accelerate economic recovery from the Covid-19 pandemic in a key sector and region, and assist with Scotland’s long term aims to decarbonise the economy – shifting the energy sector from using fossil fuels to renewable energy sources. The ETF will boost the North East renewable energy sector further, helping businesses and workers in the region build resilience to economic fluctuations, and help to diversify the region’s energy sector and wider economy whilst maximising inclusive growth impacts. The potential investment projects for consideration have been identified and which will be the focus of the ETF programme include the Energy Transition Zone and Hydrogen projects, including links to carbon capture and storage with the Acorn project at St Fergus.

Low Carbon Transport in Dundee

Michelin Scotland Innovation Parc in Dundee is a globally competitive centre for advanced manufacturing, skills and innovation in low carbon energy and sustainable transport. The site has excellent infrastructure, connectivity and space for companies to grow. It includes an advanced skills academy to develop the workforce of the future and comprehensive company support packages. Future investment opportunities will include a hydrogen technology integration centre, to demonstrate the coupling of hydrogen technologies in the transport and energy sectors at scale.

Low Carbon Rail in Fife

Spanish train manufacturer Talgo has announced plans to locate a proposed major new train manufacturing facility at Longannet in Fife, supporting the creation of around 1,000 direct high value manufacturing jobs and providing new opportunities to develop a cluster of low carbon rail innovation and supply chain companies around this major investment. Longannet offers the opportunity to develop a physical focal point for this clustering of rail skills, innovation, test and demonstration and supply chain activities on a site with excellent rail and port connectivity.

This investment report identifies nine key opportunity areas where Scotland’s strengths match global investment flows: Energy transition, Decarbonisation of Transport, Software and IT, Digital Financial Services, Digital Business Services, Space, Healthtech, Transformation of Chemical Industries, and Food & Drink Innovation. The first two of these opportunity areas are particularly relevant for our activities with hydrogen and fuel cells:

Opportunity Area 1: Energy Transition

Energy transition is the shift in the global energy sector from using fossil-fuels like oil, gas and coal, to renewable energy sources like solar, wind and wave. It’s also about reducing carbon dioxide emissions across a range of energy-intensive sectors like heat, transport and some industrial processes, through various forms of decarbonisation.

Renewables: Scotland is a highly attractive key location for investment in renewables. In terms of inward investment deal flow in renewable energy, Scotland has attracted 6.3% of the total projects that came into Europe and 6.4% of the jobs, over the last three years. Scotland has strong competitive advantages in several specific areas across the energy transition Including Offshore Wind and Hydrogen.

Hydrogen: Scotland has an emerging Hydrogen Coast, which runs from Orkney to Aberdeen and to Fife, with a number of new and existing projects. World-leading hydrogen demonstration projects, such as BIG HIT in Orkney, test the integration of renewable energy to create hydrogen for power, heating and transport.

Carbon Capture & Storage: Scotland’s competitive advantage in CCS is based on the built and natural assets of the North Sea oil and gas industry and the great offshore engineering skills and experience of that workforce. The St Fergus gas terminal in North East Scotland is being developed as a major site for low carbon hydrogen production and CCS.

Local Energy Systems: Scotland has key strengths in the enabling technologies (data analysis, software, sensors and power electronics) to manage the shift to smart, flexible local energy networks that can match power supply and demand.

Scotland is world renowned for its expertise in the energy sector. The existing skills base is exceptional and competitive globally. Scotland’s universities and colleges continually develop, expand and deliver renewable energy-specific courses, producing graduates with highly specialised skills.

Opportunity Area 2: Decarbonisation of Transport

Scotland has a highly skilled workforce with a strong tradition of manufacturing high value, low volume products for marine, energy, aerospace and transport sectors with a focus on heavy-duty vehicles rather than the high-volume automotive sector. Key manufacturing companies make buses, refuse vehicles, earth moving vehicles, emergency vehicles and marine vessels. In addition to the production of vehicles, Scotland has already established the UK’s most comprehensive EV charging network and is now developing hydrogen refuelling capacity.

There are a range of ambitious, innovative, low carbon transport projects across Scotland, including the development of the Michelin Scotland Innovation Parc in Dundee; the deployment of Europe’s largest hydrogen bus fleet, in Aberdeen; the BIG HIT and Surf ’n’ Turf projects in the Orkneys creating integrated approaches to hydrogen in transport and heat networks; and the deployment of the world’s first hydrogen dual-fuel refuse collection vehicles in Fife;

A wide range of companies are involved in the transport supply chain covering on and off road vehicles, and the marine, aerospace and rail sectors. Examples include:

Alexander Dennis Ltd, manufacturer of electric buses and developer of the UK’s first prototype hydrogen fuel cell double deck bus;

Hillend Engineering, developer of zero emission refuse collection vehicles and other heavy duty applications;

Logan Energy and Hydrasun, developers of integrated hydrogen fuelling systems;

Calmac, the operator of the world’s first diesel-electric hybrid ferries, serving routes around the Clyde and Hebrides


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