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HARNESSING SCOTLAND'S MARINE ENERGY POTENTIAL

SECTION A

INTRODUCTION

Introduction

1. At its inaugural meeting in October 2003 the Forum for Renewable Energy Development in Scotland (FREDS) established a Marine Energy sub-Group (MEG). The membership of the Group is shown at Annex A and our terms of reference are at Annex B.

2. This report aims to provide details of the challenges and opportunities that marine energy represents both for Scotland and the UK, together with MEG's conclusions and recommendations in the form of an Action Plan for the strategic development of a potentially major new renewables industry with markets worldwide. It does not attempt to comment on the merits or demerits of particular marine devices and technologies. Similarly, whilst MEG is satisfied that there is a strong case for Government support for our emerging marine energy industry we have not sought to quantify the level of support likely to be required or the best mechanism for delivering this support. We believe those are decisions for Government and we urge the Scottish Executive and the Department for Trade and Industry to use this report and material provided in other recently published work to inform their response.

Why Marine Energy is Important to Scotland

3. The Scottish Executive's Partnership Agreement " Partnership For A Better Scotland" confirms the Government's commitment to ensuring that by 2020, 40% of Scotland's electricity is generated from renewable sources. In making that commitment, Ministers took account of the contribution which established renewables technologies, such as on-shore wind and hydro, could be expected to make towards the existing 18% target by 2010, and concluded that Scotland was unlikely to achieve a target of 40% based on these technologies alone. Rather, the key to realising Scotland's full renewable energy potential lies in our ability to develop new technologies, particularly (but not exclusively) wave and tidal power.

4. The Executive's commitment to renewable energy is driven by environmentalimperatives, the potential for new economic development and the requirement to achieve a secure and diverse energy mix. With the right nurturing and support marine energy can make a very substantial contribution to achieving these objectives.

5. Environmental Imperatives - the 1990s was the warmest decade since records began. Without action to reduce greenhouse gas emissions, the earth's temperature is likely to rise faster than at any time in the last 10,000 years or more. The worst effects of climate change can be avoided if greenhouse gases in the atmosphere are stabilised instead of being allowed to increase. MEG recognises that the Executive is strongly committed to increasing renewable energy usage in order to help reduce greenhouse gas emissions and thereby contribute to national and international targets for emissions reductions. We therefore agree that if Scotland is to generate 40% of its electricity from renewable energy sources by 2020 it cannot rely exclusively on wind and hydro; marine technologies will have to make a significant contribution. MEG believes that by 2020 up to 10% of Scotland's electricity production could be from marine resources - equivalent to around 4000 GWh/year.

6. Economic development opportunities - tidal and wave industries can also make a major contribution to the Executive's top priority of growing the Scottish economy. In the recently published DTI/Carbon Trust Innovations Review wave and tidal energy were identified as technologies with global potential. Scotland is in a very strong position to benefit from the development of an indigenous marine energy industry.

7. Scotland has some of the best wave and tidal-stream resources anywhere in the world - see paragraphs 16-21 for further details - with the potential for a healthy home market for marine technologies. In 2001, the report Scotland's Renewable Resource found that up to 21.5 Gigawatt (GW) of wave and tidal energy capacity could be produced in the waters around Scotland.

8. A strong home market is an essential pre-requisite for the development of any industry. With its long involvement in oil and gas exploration, Scotland has many of the necessary skills in manufacturing and design of off-shore equipment vital to the successful development and deployment of marine energy devices.

9. Scotland is already an important player in the energy industry, relative to its scale, and has the opportunity to be at the forefront of the new technologies and their industrial development, which have valuable synergies with our existing capabilities and strengths. We have a strong base of engineering research and development, supported by considerable expertise in several world class universities and research facilities.

10. Security of supply - last year the Energy White Paper ("Our Energy Future - Creating A Low Carbon Economy") acknowledged that in 10 years, most of the UK's deep coal mines will be exhausted. By around 2006 we will be a net importer of gas and by around 2010 of oil, and by 2020 we could be dependent on imports to meet three-quarters of our total primary energy needs. As we shift to become a net importer of energy, we may become potentially more vulnerable to price fluctuations and interruptions to supply caused by regulatory failures, political instability or conflict in other parts of the world. One of the best ways of maintaining energy reliability will be through energy diversity. Renewables, and in particular predictable sources such as wave and tidal energy, can provide diversity in our energy mix, vital to security and continuity of supply as fossil fuels continue to deplete. Developing our marine energy resources to the full can help ensure that Scotland continues to play a very significant role in meeting both its own and the UK's future energy needs.

A Vision of Success

11. MEG believes that if Scotland and the UK are to realise the full potential of marine energy technologies, Government and industry need a shared vision of what can be achieved. The membership of MEG, which is drawn from industry, academia and government, share a common vision:

12. If, in partnership, Government and industry can create a policy, financial and planning framework that is truly supportive of marine energy technologies, MEG believes that by 2020:

• 10% of Scotland's electricity production can come from marine resources;
• we could see 1300 Megawatts of marine energy capacity installed in Scottish waters, increasing at a rate of 100MW per year;
• Scottish based marine energy companies could be supplying major international export markets;
• 7000 direct jobs could be created in a diverse marine industry in Scotland, supported by sustainable research development and skills bases.
• Scotland should lead the world in the research, development and certification of marine energy devices.

13. The prize for Scotland is huge, but so are the challenges. A thriving marine energy industry has the potential to enhance Scotland's manufacturing capacity, to develop a new indigenous industry, particularly in rural areas, and to provide significant export opportunities.

14. Section B of this report assesses the opportunities which can help place Scotland at the forefront of marine energy development, and identifies the challenges and constraints which will need to be overcome. Section C uses MEG's conclusions to chart an Action Plan for the development of a globally successful marine energy industry based in Scotland.

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