Kate Forbes today pledged to safeguard the oil and gas industry in the transition to clean energy and said she is looking to set up a sovereign wealth fund to protect the country’s assets.

Ms Forbes, the Finance Secretary, said Scotland’s transition to net zero “must avoid cliff edges in policy” which could compromise energy security as well as the ability to invest in renewables.  

Her comments during an online conversation will ease tensions in the north east which has been dismayed by recent SNP policy statements pointing to an willingness to support the region and its key industry.

Ms Forbes said she wanted to emulate Norway’s Sovereign Wealth Fund which has used revenues from oil and gas to help fund the transition to newer fuels.

She pledged to set up a working group tasked with bringing recommendations for a similar fund in Scotland – adding it is essential that independence is prepared for “in a meaningful way”.

She said: “The need to transition to net zero presents Scotland with considerable economic as well as environmental opportunities. We have great natural resources, not least in abundant renewable supplies of wind. 

I don’t think it is wise to throw the oil and gas sector to the winds

– Kate Forbes

“A key word here is transition.  We must transition, but we must avoid cliff edges in policy.  I don’t think it is wise to throw the oil and gas sector to the winds in a way that may compromise our energy security and ability to invest large sums, including in renewables.

“These are troubling times internationally, and we have to face the realities of how to protect our energy security not least during a period of transition.”

On the wealth fund, the Finance Secretary ladded: “For over 50 years, Scotland has cast envious eyes across the North Sea to Norway and its Sovereign Wealth Fund. It is managed by the state investment bank, Norges Bank.  It didn’t make the mistake of the UK and fail to prepare for the future when oil and gas was discovered in Scotland’s waters.

“It is worth noting that although revenue from oil and gas production is transferred to the fund, these deposits now account for less than half the value of the fund. Most of it has been earned by investing in equities, real estate and renewable energy infrastructure.

“That’s right, by investing in renewable energy infrastructure. They have taken equity in renewable firms. We should look to do the same. Norway is already far ahead of us in areas such as developing and investing in its hydrogen electrolyser, fuel cell, hydrogen storage and solar cell manufacturing businesses. 

“The fund is now one of the world’s largest, owning almost 1.5 per cent of all shares in the world’s listed companies. The fund is officially the Government Pension Fund Global.  The idea of having a powerful pension fund for Scotland being in part funded from energy sector revenues, has obvious attractions for future generations.

“I know we cannot emulate Norway’s achievements overnight.  However, we have part of the infrastructure needed, albeit in embryo form, with the SNIB and other components of a system, not least from Scotland’s financial sector expertise. We could learn from Norges Bank and others.

“If I am elected leader, I will appoint a working group to consider the evidence, including the current legislative and institutional landscape, and provide recommendations of how we move towards establishing a sovereign wealth fund for Scotland. We need to start preparing for independence in a meaningful way.”

Rival leadership candidate Ash Regan has also been focusing on the northeast which she described as having been let down by major political parties.

Speaking in Fraserburgh on Sunday Ms Regan said: “Every major party has turned its back on North East oil and gas workers, despite the fact that it is the revenues from North Sea windfall taxes that are currently keeping the whole UK finances almost solvent.

“It seems like some politicians would rather import hydrocarbons from overseas than sustain jobs at home in the North Sea. It is a position which will do nothing to help Scotland’s net zero ambitions and will simply export jobs internationally.”