30 November 2023
The Panel was tasked in December 2022 with providing guidance on how Scottish Government can compete for mobile capital investment to support the nation's transition to net zero. The Panel focused on the broader Scottish investment environment, as well as the specific challenges linked to three key areas: offshore wind, the hydrogen value chain and heat in buildings.
The final report of the Panel lays out the opportunities and challenges in the Scotland. They note that Scotland's 'intimate size' and devolved powers creates an opportunity to differentiate itself from other countries and project an agile, investor-friendly environment. However, Scotland currently faces multiple challenges in attracting international capital including what is perceived as to be its "small scale relative to other countries" competing for investment, "limited visible opportunities to scale investment", and a regulatory environment that has led to planning approval delays and the lack of a clear infrastructure priorities in the form of a pipeline of "planned, shaped and costed projects." Furthermore, the Panel noted a lack of mechanisms or opportunities for Scottish Government to develop a long-term relationship with investors.
Dr. Ian Cochran, Director of Impact for B-CCaS, provided expert input to the panel's focus on heat in buildings. He said: "The recommendations of the Panel point to the significant, but surmountable, challenges Scotland faces in leveraging internationally mobile capital to support its transition. Mobilizing this investment to support heat in buildings, such as heat networks or other residential applications, faces in particular a 'chicken or egg' dilemma: before investors will supply capital, they need to see clear signs of a strong future demand for the associated services and projects that can be yield a viable margin and, in turn, stable returns. Based on the findings of this report and the work of the Green Heat Finance Taskforce, Scottish Government has multiple roles to play in filling the current gaps in market development in manner that can draw in mobile capital investment when, where and how it can best serve to meet national climate objectives."
The National Strategy for Economic Transformation (NSET) committed to establishing an Investor Panel, co-chaired by the First Minister, to attract investment to projects in Scotland that support our transition to net zero and to bring investor intelligence to policy and regulatory development early in the process. In Summer 2022, the former First Minister invited Angus Macpherson, Chief Executive of Noble & Co, to co-chair the Investor Panel.
From the outset, the intention was to produce a short, sharp overview and set of recommendations from the perspective of investors. This has been informed by the experience and expertise of Panel members and a series of semi-structured interviews and discussions with over 40 institutions, companies, advisers and individuals who are active in making infrastructure investments and know Scotland. Members of the Panel also engaged with senior officials across the Scottish Government, Enterprise Agencies, Scottish Futures Trust and the Scottish National Investment Bank. Support for the Panel was also provided by the Universities of Edinburgh and Strathclyde.
Read the First Minister's Investor Panel final recommendations
Programme Director of the MSc Climate Change Finance & Investment and Lecturer in Climate Finance & Investment