 Fy edrych. Welcome to the eighth meeting in 2023 of the economy and fair work committee. I apologize for being received from Claire Baker, Maggie Chapman and Colin Smyth. Our first item of business is the fourth evidence session of our inquiry into a just transition for the Grangemouth area. Today's session will focus on how innovation and transition can be supported by a partnership working across national bodies. I'd like to welcome Derek Shaw, director of innovation and place Scottish Enterprise, Mark Monroe, interim head of investment origination and David Ritchie, executive director for partnerships and engagement both from Scottish National Investment Bank. As always, I ask members and witnesses to keep their questions and answers as concise as possible. Let me start with the first question, which is very straightforward. How do the Scottish National Investment Bank and Scottish Enterprise support the decarbonisation of industry in Scotland, particularly in Grangemouth, and what are the constraints and barriers that you face? Maybe I can ask Derek to start off on that. Delighted to do so. Thanks very much, convener, for that question. We support Grangemouth in a number of ways through our global account management service, where there are nine international and indigenous companies that we support through investment, innovation and our international activities. We work with Fodden direct investors, who are looking at opportunities in Scotland to identify potential locations within the Grangemouth area and promote Grangemouth as a centre of excellence in terms of the existing industrial cluster that is there, as well as the emerging opportunities that there are for net zero and decarbonisation. We work with the company base, as I mentioned. The nine companies there, we also invest into those companies, whether it is appropriate to do so. For the example, we have invested into Celtic renewables, which is quite substantial investment into that business over the number of years, which has allowed it to construct that new facility at Grangemouth, and we are starting to see the benefits of that. We have wider support to SMEs through the products and services that we provide, sustainability, innovation support, fair work, workplace development as well as investment and internationalisation. Specifically on Grangemouth and decarbonisation, we are progressing work around the bio-economy, and we are currently undertaking industry and supply chain research to identify and map future opportunities for low-carbon Grangemouth. We are developing a package of research to help to identify new project opportunities and global best practice around industrial cluster development and decarbonisation. We are working with Falkirk Council and other partners on the growth deal, and we are looking at biotechnology and carbon dioxide utilisation and storage facilities, as well as Zero Emissions Vehicle Centre of Excellence. We work with Fort Valley Council on skills, and we are working through our Scottish Development International arm to support and we are investing it into the sector. You mentioned carbon capture, which is a hugely expensive and, as yet, slightly untried technology. What sort of investment are you putting into this? Our investment is through our support, through our people, and we are working with partners, including INEOS, at Grangemouth, who are part of the ACORN project that you will be aware of to support the development of the business case for the ACORN project. Promoting that is a centre of excellence in the UK, where there are opportunities to financially invest, and we would do so. However, today, our resource and our input in investment have been people in Scottish Enterprise who are working with partners to develop that opportunity and partnership with INEOS. I also mentioned constraints and barriers. Where do you perceive them? I think that one of the major barriers constraints is the level of investment that will be needed. The challenge to decarbonise Grangemouth is significant, but the opportunities are massive, both for Grangemouth and for Scotland. However, to make those challenges and to capitalise on those opportunities will require significant levels of investment—multibillion pounds of investment in infrastructure and new technologies in companies. That is a challenge that we need to work collectively to overcome. The second one is around skills. We have a fantastic heritage in skills and experience at Grangemouth, which we need to capitalise on in terms of that just transition into the new economy. However, we know that there is a skill shortage in Scotland and in the UK. Therefore, when we are looking further afield five, ten, fifteen years down the line in terms of some of the new technologies that we are looking to capitalise on the hydrogen and carbon capture, we need to ensure that we have the right skills and that we are developing those skills now. David, would you like to comment on that? Thank you very much for the invitation, convener, and I am delighted to participate. For the bank, we try to look across the piece at the decarbonisation agenda, so we are looking at how the bank can support investments that support the decarbonisation of electricity generation. We are also looking at how the bank can support decarbonisation across heats. We are very interested and very focused in thinking about how the bank's investments can support decarbonisation of transport, and we are also very keen to support the decarbonisation of industry. We recognise the significant economic value that Grangemouth brings to the Scottish economy, both in terms of the GVA impact but also in terms of employment. We, as a bank, are actively trying to engage with companies in the Grangemouth area to find ways in which we can help them to support pivots from their existing activity, which might be more higher energy intensive in oil and gas related, and to help them to pivot to more lower carbon sectors and industries. At the bank, we are looking at commercial opportunities, both in terms of projects and businesses that we can look to invest in. We work closely with our partners in the Scottish Government and Scottish Enterprise to try to identify a pipeline of credible projects where the bank can offer its commercial support. We are keen to not only offer our commercial investment but also our expertise and insight into how the economy can transition in a meaningful way. Up to this point, we have spoken to several businesses from the Grangemouth area, and those conversations are on-going. As we go forward and develop our approach to investment and origination, we begin to focus our activity on how the bank can support the development of the hydrogen economy. We see that as a fantastic opportunity for Grangemouth and something that the bank is keen to help to enable. You have not mentioned constraints and barriers that would affect your ability to invest and engage there. Can you elaborate a little on that? Sure. One of the big challenges is the scale of investment that is required, but we are also trying to identify sustainable investment models and business models that can be invested into. Hydrogen, at the moment, is a fantastic opportunity. It has a potential opportunity around heat and transport, but, particularly within the context of Grangemouth, it is a fantastic opportunity as a potential feedstock for the industries that are there, as well as an opportunity for export and due course. At the moment, there is not an identified, sustainable business model in place that allows the hydrogen industry to develop at scale. One of the key things that we are keen to see and to support is the identification of projects that help to prove that business model. That is something that we are looking to agitate around and help to create, but it is not there at the moment. Another big challenge is skills. We may look at the skills that are required for the transition from high-energy, intensive-stroke, oil and gas industries into lower-carbon or renewables sectors. There is a process that will have to be gone through in terms of retraining and reskilling. That is happening, but whether it is happening at the scale that is required at the moment, I am not so sure. That is a huge challenge. Mark, do you have anything that you would like to add? I just want to build on David's points. You asked about the bank's role. We are clear that we see it as providing transition capital in and around Grangemouth, and in other areas that David spoke of, such as high-intensive energy sectors and the oil and gas areas. That is reflective of debt and equity capital being withdrawn from sectors over the past few years. We need those sectors to help us transition to the future. In the next three, four or five years, the bank's role will be to provide the bridge of capital to enable investment to move from those industries into the renewable industries of tomorrow. The Scottish National Investment Bank has three missions that guide investment decisions. One of them is about supporting a just transition to net zero. Can you talk me through how you approach the allocation of resources and investment decisions on that? How do you scrutinise a project and how do you satisfy yourself that it will support that just transition? I suppose that you put your understanding of just in a just transition. David, I am going to come to you first on that, or is it Mark that would be there? I am happy to. Which part was like my answer, first, just on the... Oh, I just picked one. I will maybe start with how we are set up. Until maybe six to nine months ago, the bank was set up based upon the mission, so the investment teams reflected the three missions that we had, but the reality is that every member of the bank has a responsibility to deliver the three missions. We are also much clearer on the opportunities and the demand of the bank since we opened in November 2020. The way that we are structured now is around an active origination strategy and what that involves is identifying the areas that the bank can create the greatest value and have the most impact upon. At the highest level, those are around such scalable technology, the built environment around decarbonising residential and commercial buildings in Scotland and in industries and offshore wind and alternative energies. We now have teams set up focused on those areas. In terms of the second part of your question about just transition, my view is that we are seeking to ensure that no group or community are disadvantaged as Scotland and the world moves from being a fossil fuel powered economy to a renewable powered economy. The point that I made earlier is that I think that the bank's role is to provide that transition capital so that we do not have businesses and projects that are needed for the future without access to capital, albeit that of equity. If the bank can take the necessary catalyst positions and we can crowd back in the capital that in the past few years has stood back from those important industries. I think that one of the discussions that we have had around this table over a period has been the definition of a just transition. Your quotation is virtually the Scottish Government's interpretation of it, which is fine. However, how do you as a bank actually define that and make it part of what you are doing? Just transition means different things to different people as we have found. How do you weave it into your investment decision? There are always two lenses to an opportunity that is being presented to the bank. In two years, we have had 815 opportunities presented to us. At that time, when I have a portfolio of 24, one is the commercial opportunity and just as importantly is the impact that can be created from our investment. We obviously go through quite an extensive due diligence process and, in that way, we use that time to convince ourselves that they are meaningful in what they are saying. We always look for meaningful action. If we take a business that is perhaps being more fossil-fuelled or lined up that would be in and around the Grangemouth area, what we would like to see would be that they have potentially not invested lots of money but that they are very meaningful. One, they will have declared a strategy to support net zero and just transition. The second is that they may have appointed an individual into that role. They may have not had an opportunity to have any impact on that business, but it is meaningful. That is to avoid those businesses that will come to us. We have read the website and regurgitate that back to us. We need to see that meaningful action that has occurred within those businesses and projects and is supported from the due diligence that we undertake, which will range from technical, to financial, to management due diligence. It is quite extensive and lots of options open to us. I would like to turn to Graham Simpson, who is followed by Gordon MacDonald. Thank you very much and good morning. I just want to start off with Snib, if that is okay. David O'Mark. Well, David, you said, correct me if I am wrong, but I get the impression that you are not actually involved in any companies in the Grangemouth area at the moment, but you would like to be. You said that you were speaking to a number of businesses. What sort of businesses are you speaking to in the Grangemouth area? We have not invested in any company in Grangemouth at the moment, but we are having discussions with businesses who could classify as traditionally in the oil and gas sector, who are thinking about transitioning and are already on the path to transition. Those conversations are at various stages of advancement. What we have said to those businesses is that we are keen to support them, but we are also helping them to understand what the bank has been set up to deliver, particularly around the commercial component of it, as well as the sort of mission impact component of it. Are there other restrictions on what you could invest and what you would get back? For every investment that we look to deliver, we always look to get a commercial return. In terms of when the bank was established by the Scottish Government, utilising public capital in a commercial way was central to what we were doing. We also have at the heart of all of our activity mission impact considerations. When we speak to any business, we look at the business through both of those lenses. If it is not delivering a commercial return or we do not feel that the business model is sustainable, that would have implications for how we would then advance that project. That would not be to say that we would not do it, but we would pause and seek other reassurance that they were going to move the business into a more commercial space and have a sustainable business model. In terms of the impact, if the business was not demonstrating that it was able to deliver the impacts that we would want to see as a bank, whether that is through our net zero mission or the impacts that we would want to see from a place perspective or social perspective, then that would be a consideration that we would have to take. Derek Mackay, you did list a number of projects that you are involved with. I wonder if you could tell us a little bit more. I was quite interested in the zero missions vehicle centre of excellence. Is that the right phrase? Yes, it is indeed. That is one of the projects that has been developed and hopefully delivered to the Falkirk growth deal, which has been led by Falkirk Council. That is part of their innovative industries theme. We are heavily involved in working with Falkirk Council and partners around that project in particular, but the carbon capture utilisation project as well as some others. That is part of the overall activity that we are progressing as part of the growth deal and part of the work that we are doing with Grangemouth in addition to the companies that are already located there and supporting them on an individual basis, as well as working through our SDI division to target inward investors that potentially could look to locate at Grangemouth. Is that a project about developing new technologies to allow vehicles to be zero emission? It is about electrification of vehicles and the testing of new technology that ultimately could then be scaled up if that technology is viable and scaled up and manufactured in Scotland. That is the key focus for us in working with especially new early stage businesses that are at the cutting edge of technology to support them with that technology development, but also looking at the end prize in terms of the manufacturing potential in Scotland. What we want to ensure is that the economic impact from those technologies are maximised for Scotland, and in a lot of cases that is ensuring that the end result in terms of manufacturing, which could be years down the line lands in Scotland, particularly at Grangemouth. You mentioned a particular company, Celtic Renewbils, which might make biofuels. What is your involvement there? Obviously they might make biofuels, but are you trying to link them up with people who might use the biofuels? What is your involvement there? We have been involved with Celtic Renewbils since the company was formed. We provided commercial investment through our growth investment arm alongside private sector investors, which initially allowed the technology to be tested and developed at a very small scale. We have provided support through innovation and account management. Recent investments over recent years have been to construct a facility at Grangemouth to scale up their technology. That is currently where the company is at, where we are just now is supporting them on that technology development road map, ensuring that the technology works. It can then lead to commercial success and linking them with partners and customers for the future expansion of that business. That is one example. As I said, there are other companies such as Petrionis, Pyramal, Fiji Films, Versalis, Syngenta and Sews, and other companies that we work with. I will ask you a tricky question. I am not trying to catch your out, but the Government is going to produce a just transition plan for Grangemouth. Can you think of anything that you would like to be in that plan? I think that the key is ensuring that we are maximising on the opportunity, because back to the question around what is a just transition. For me—I do not know whether that is the correct definition or not—it is a two-part plan. It is ensuring that the process of transition and the organisations, the people and the communities that are impacted on that transition are part of the process and feel part of the engagement around that transition, so that the impacts and the negative impacts are mitigated. Secondly, it is looking about the opportunities, and there are significant opportunities in Grangemouth and across Scotland for our transition to net zero. How do we maximise those opportunities for all? For individuals located at Grangemouth, for companies that are located at Grangemouth and across Scotland, and using Grangemouth essentially in the sense of excellence that we have currently got is a testbed for developing our technologies across the piece. For me, in terms of what would be in that plan, it is ensuring that people and communities that are impacted by the just transition benefit from that transition to a new or greener economy. I think that from a business perspective, the plan has to have a focus on the existing businesses that are looking to transition, whether that is them transitioning by becoming more energy efficient industries themselves or by transitioning into more lower carbon sectors, so transitioning away from oil and gas to renewables. That has to be a central component of that, but there has to be something in there about not just the existing business base, but how you can create opportunities for new businesses to emerge and to scale and grow. Those businesses might be spinning out of existing oil and gas businesses or petrochemical businesses, but at the same time, those businesses could spin out of our university sector and be located in Grangemouth, where you could potentially create a real hub of expertise. That would be a key component of it. The point about having the community at the heart of that and the social impact at the heart of that is also important. With a lot of our investments and all of our investments, we look to try to build in not just the commercial consideration but also the social impact, so trying to ensure that local communities benefit from an investment, whether that is through apprenticeship opportunities or whether that is through skills or general job opportunities in the investment. That needs to be a key consideration of any plan that is put forward. That has actually come out in a lot of the evidence that we have had already. There needs to be a local benefit, so you have both made that point. Thank you. Gordon MacDonald, followed by Michelle Thomson. Thank you very much, convener. We have started to touch on the area that I wanted to look at. Quaint Derek, earlier on you said that Scottish Enterprise is carrying out research to identify investment opportunities in the Grangemouth area. Last week, GMB Scotland noted that hydrogen and carbon captured both offer the potential for jobs growth, but that does not guarantee retention of current levels of skilled jobs. Given that Scottish Enterprise has this role to create jobs but also safeguard jobs, when you are making investment decisions, how do you strike that balance between safeguarding existing skilled jobs and creating new job opportunities? We undertake a praise a lot of all investments that we make. Jobs are at the forefront of that. What economic impact is going to be delivered as a consequence of the investment that we make? The creation of new jobs, high-value jobs and cadena jobs are a key component of that, as is the ability to safeguard existing jobs. Ultimately, as we look at a just transition, how do we support the business base that is looking at new opportunities and transferring their business models, their markets into new opportunities that require new skills? How do we support that? Last year, 2021, we created and safeguarded more than 13,000 jobs with the activity that we undertook. Safeguarding is a key component of what we look at, but so is the creation of new jobs and particularly green jobs. We are in a period of time where there is this transition going on when you are making investment decisions. How do you safeguard existing jobs and you are not undermining skills that are currently required in the economy? When we undertake the investments through the impact covenants that we would set, we seek to ensure that those businesses provide opportunities for those in those roles to move across. Providing the necessary training that is required so that they can maintain their existing skills and learn new skills, and that is something that is really coming through in a lot of the transition capital finance that we are being asked for in the past 12 months, because, going back to what I said earlier, there has been a flight of capital, both debt and equity, from fossil fuel-based revenue companies. We ask them to provide that opportunity and move across without forgetting the skillset that is important today. You spoke about the importance of local communities, and you mentioned apprentices, skills and jobs. The Grangemouth Community Council suggested, when they were given evidence last week, that there should be a percentage of jobs for local people. Is that something that you guys consider when you are doing investments? We definitely consider the local impact on the community. We have not built in any specific quotas into any sort of covenants or any impacts that we would want to see, but for every investment that we do, we speak to the investee company about engaging with the local community. We speak to them about engaging with local providers from an apprenticeship perspective and colleges perspective, and we speak in quite a lot of depth about skills and training opportunities. We actively encourage all of the investee companies to engage on those issues, and we actively encourage them to engage more generally with the community to help them to understand what the business is trying to deliver and how that can be beneficial to the community from a wider economic perspective, but also from an employment perspective. On the specific point of quotas and percentages, that is not something that we compel businesses to do. The same question to you about local jobs for local people. In addition to that, what do you do about considering growing local supply chains when you are looking at investing in the Grangemouth area? On local people, that is a consideration that we take into account. We do not take it to the extent that we specify within our investment conditions when we are providing support that jobs have got to be created within the locality. We would certainly encourage our account management service management teams to do that. There is a wider point. I was just reflecting on that conversation about the job opportunities, whether it is retention or creation of new jobs, the wider opportunities in terms of the sectors and the new technologies. As we have discussed, the challenges are massive but the opportunity is great. We need to ensure that Team Scotland, the public sector agencies, are working collaboratively and co-ordinated. We are working together with the private sector, so we have been joined up with the likes of Skills Development Scotland, Transport Scotland, the bank and other agencies. When we are looking at a significant proposition, we are bringing those collective skills and experience around the table, particularly around jobs and skills, ensuring that the SDS is around the table. In terms of your second question about supply chain, that is at icky consideration for us and increasingly so, particularly late for fallen Covid. We need to bring back supply chains within Scotland domestically. When we are looking at supporting companies, whether that is investment or just wider support, we are encouraging management teams companies to think about where they are sourcing their product from, can they source it in Scotland and make connections between companies that we have relationships with to get the biggest bang for the investment that we are making. It is not just about that company and the jobs that they are creating. It is important, but what is the wider supply chain benefits that could be achieved from that investment overall? We have touched on some of my themes a wee bit earlier in terms of the role and involvement of the local community. We had some quite compelling evidence last week from the Grangemouth and Skin Flats community council that depicted that they feel as though they bear the weight of providing all the GDP to the Scottish economy, but they do not get the benefit. You said earlier that you have referenced Celtic renewables and so on. You are already investing in local companies. In terms of your impact and assessment vis-à-vis the benefits to the local community, can you talk me through the process that you use? In other words, what did you specifically do to ensure that the benefit was felt within the community? I totally appreciate that you have a wider perspective as well. I guess that it goes through the sport that we provide at account management service. Working with those businesses and the locations that they are in—not just necessarily Grangemouth, but looking at where businesses are located and where the skills are needed for that particular business and encouraging those companies to source those skills in their local area. We do not take that to the extent that it is a condition of our support that ultimately has to secure jobs and recruit people in the local area, but we are certainly focused on working with companies to encourage that. The other thing that I would say is that we work at both our regional and local levels. We have got seven regions in the Scottish Enterprise area, so we are working with partners and stakeholders through regional economic partnerships. That is focussing on that particular region and the strengths and the opportunities that are within that. We are also involved at the local level through community planning partnerships, bringing in again community individuals and the challenges and the opportunities at a local level and how, potentially, Scottish Enterprise can support those opportunities. You must have guessed what my next question was going to be because you alluded to it in terms of conditionality. I am paraphrasing, but the sense from the community was that a lot of the activity that was going on was well-intentioned to include the community and have this kind of community focus at its heart. I suppose that my question to you is what would be the circumstances in which you think that it would be a good idea to put some conditionality around the funds that you provide? What would that look like? Where would you see that working to really try and make sure that they are at the heart of what you are doing? Maybe start by the conditionality that we put on companies just now. We are an early adopter of fair work first, so we require business to see that we are receiving our support to commit to fair work principles, including paying the living wage. We are implementing the Fader Scotland duty, which asks listed public authorities, including Scottish Enterprise, to do more to tackle inequalities caused by social economic disadvantage. When we are looking at those principles and policies, that embeds a degree of conditionality around the projects and the activity that we are supporting. That is part of our wider equality impact assessment, where we are checking that the policies and the projects that we are supporting impact on particular groups so that we are ensuring that there is equality overall of the provision of funding and the wider support in terms of our people. There could be more than we could be doing, and I think that that is something that I will take back within Scottish Enterprise and have discussions about what additional conditionality potentially would be appropriate to implement. I absolutely understand about the principles of fair work, and I think that that would be very helpful, because you will be at the coalface in terms of monitoring the existing investments. What are your suggestions for how those principles can be deepened to really put the community at the heart? I suppose that turning to SNP, as you have explained earlier, you have not made any investments, but how would you go about your impact assessment to ensure that the community is at the heart? To what extent is there a conflict when you are skiting across the top looking at return on investment in your debt equity ratios and so on? I would be interested—I appreciate it in principle, given what you said earlier. I will go first. Good business involves local community. The returns will come with maintaining that social licence, so it is not that it needs to achieve that particular level. David will elaborate a bit, but all we do is maintain that social licence with the opportunities and the businesses that we have invested in. To that end, the examples would be seeking to maximise the local supply chain around the area so that the benefits are available, but also touching on what we spoke about previously, the training and the apprenticeship opportunities for local people as well. Do you have anything to add to that? Sure. When we first start engaging with a business, we encourage them to be speaking to the local community, not just through the statutory requirements that a business has to undertake but just being more proactive in helping the local community to understand what the business is trying to deliver. We have not done any investments and arrangements, as I mentioned at the outset, but we have tried to put some life to this in terms of some of the other investments that we have done. When we did the Highland Coast hotels investment, which was an investment in a series of hotels to improve the infrastructure and the North Coast 500 routes, we actively worked with that company to not only get them to engage with the community, but also to work with the University of Highlands and Islands to help to develop the skills that would be required for that sector so that those in the local community could be skilled and then take advantage of the job opportunities that would emerge into the course. That is something that we do regularly when it comes to apprenticeships as well with other businesses. Another area that we have worked quite extensively on was when we did the M-squared investment, which was technology investment in the Glasgow area. We worked with that business to encourage them to undertake initiatives that promote female participation in STEM subjects, which was underrepresented from a female participation perspective. We actively speak to the company, identify areas in which we feel that they can make a meaningful impact and encourage them to have that dialogue with the community. Can I assume that you then assess the outcome as computer initial? We are about to publish our impact report in April this year, which will give a comprehensive insight into how the bank is measuring impact and creates a very good baseline for us to track progress against. We have only been operational for two years, and as Mark mentioned in his earlier comments, we have only made 24 investments. Trying to identify short-term impact has its challenges, but we feel that by correcting the right data in the right areas, that gives us an excellent baseline to then track progress against over time, and for us to assess ourselves against, but also for Parliament to hold us to account on those areas, too. Perhaps more for Derek, just finishing off this, but can you see the benefit of building insert community benefit requirement mechanisms to square off the circle, if you like, in some of those investments? Certainly in terms of the companies that we are working with and how they are supporting local communities, local businesses through supply chains. That is definitely a consideration when we are working with businesses around the locality in which they are located, maximising the opportunities at a local level, both in terms of skills but in terms of supply chain. That is a slightly different question before I finish up. Are you involved in the Grangemouth future industry board, or do you represent on that? Tell me a bit more about your involvement and also what is your understanding of its governance model? Alongside Scottish Government, I am the co-chair of the Grangemouth future industry board. It is now in its third year of operation. In submission to the committee, we had mentioned that it went through three phases. The first phase was pretty much its inception in terms of getting G-Fib up and running, putting the governance structure in place, and getting partners involved. The key purpose of G-Fib is to ensure that there is collaboration, visibility, co-ordination across the public sector. There is a number of public sector organisations, the council, CEPA, Skills Development Scotland and the Scottish Government, among others that are partners in G-Fib. The second phase was then taking the governance structure forward in terms of development and delivery. We established five key work streams, each led by a partner within G-Fib and really developing out those work streams. For Scottish Enterprise, we lead on project development and strategic investment. We have, in the second phase, started to build a pipeline of activity around that. Now, we are in the third phase, which is engaging with industry and Scottish Government leading on the development of a just transition plan for Grangemouth. In part of that just transition plan, the first phase will be looking at baselining, looking at the companies that are already there, the number of jobs that are there, the missions within the industrial sector, the opportunities that can be taken forward in terms of that transition, and engaging with industry, with local community groups, around the vision for Grangemouth in that transition going forward. I would say that, as I have mentioned, all of us that are involved in G-Fib in terms of the partners that need to engage with industry day in and day out in various different forms. I think that the key for me now in the third year is ensuring that that public sector and private sector in the industry that are there, potentially that industry that could be located there are working jointly on the challenges and the significant opportunities in a co-ordinated fashion. As I said, we are doing that individually, but now there is an opportunity to frame that as a collective. You have given me a lot of helpful information about what you are doing in your various phases, but I must admit that I am not any clearer about understanding the governance model and specifically who is ultimately accountable for the output of the G-Fib. On the G-Fib itself, surely there is an accountable house that is structured from a governance point of view? There is co-chair of the Scottish Enterprise and Scottish Government with the partners that are represented. On an annual basis, we agree priorities for the year ahead. Ministers sign off those priorities. Ministers are updated on a regular basis in terms of progress against that plan. Just now, I believe that the Scottish Government and maybe Andy Hogg, who is the fellow co-chairs, may be coming to the committee in April. Officials and the updated ministers are about the future direction now. Fiona Hyslop, followed by Jamie Halcro Johnston. Can I just follow up a wee bit on the G-Fib's future industry board? Is that the body that is going to be producing the just transition plan or the majority of content of it for G-Fib? Yes. The Scottish Government is going to lead on the development of that plan, but with significant input from G-Fib. In isolation, it will not be just G-Fib itself, there will be industry involved and the community as well. That is the next stage in that process in terms of the vision that is collectively coming together. G-Fib partners, industry and local community groups will input into what the vision is for the just transition plan for Grangemouth. We heard specifically last week that it is not just the future industries that have an interest in the just transition plan for Grangemouth, it is the rest of the business sector in Grangemouth. Where do they get a voice if they are not on the future industry board? The intention is that we will develop a workshop approach to develop the vision for the just transition plan for Grangemouth. The industry and the existing companies that are there will be an essential part of that process. We are coming together collectively, the public and the private sector, to discuss the challenges, what the opportunities are and ultimately what we believe the vision to be for that just transition in Grangemouth. They will industry and the companies that are already there will be an essential component of that process. That is something that we will explore separately about how the rest of business in Grangemouth can be part of that. There are a lot of overlapping policy initiatives affecting the Grangemouth area and the transition. We have the Falkirk Grossdale, the Forth Greenport, the UK Government's Living Up investments and, as we have just heard, the upcoming just transition plan. How does the Scottish Enterprise specifically engage with all those different policy initiatives to steer what you can add value to? There is a lot of policy in place. I think that Scottish Enterprise is as clear in our focus, which is to support companies, to innovate, to scale and to transform the economy. Ultimately, we do that in the context of existing Government policy. For Scottish Enterprise in particular, it is the national strategy for economic transformation. Obviously, other policies and energy policies are hydrogen that come underneath that. What I would say is a couple of points. First is that we have very good relationships with Government colleagues from a policy perspective. We help Government in terms of our knowledge and experience, the views that from our customer base, particularly the business, in terms of shaping policy. Ultimately, it is for Government to develop policy, but we have good relationships, as I said, that allow us to input into that process. Importantly, for Scottish Enterprise, it is around delivery. Looking at the existing policies that are already in place and how Scottish Enterprise can have a role in delivering against those ambitions, it may well be that there is some activity within some policies that is not for Scottish Enterprise, and that is absolutely fine. We need to be clear what our role is in delivering against Government's ambitions. Going back to the point that I made earlier, it is absolutely key for us and for other organisations that we are working collectively as a team Scotland on delivery of policy in our own objectives, and we are not working in isolation. We have seen that increasingly over the past couple of years, in particular, where we are having a much more joined-up approach with other agencies to look at it collectively and holistically and how we can support Government. That may mean that, on some occasions, it is for other partner organisations to take the lead and for Scottish Enterprise to support, and on other occasions it may be for the SE to support and others to lead and others to support. Referring to all those different policy initiatives that have been referred to the Scottish National Investment Bank now, which or any of them are you directly involved in, or are you just monitoring that to look for opportunities? We are not directly involved in the shaping of those policies. We have interaction with Government, as we would expect, given that they are our social shareholder. The main strategy and policy that guides us is the missions that ministers have set so that the net zero transition and their long-term missions. The net zero transition takes out to 2045, and we are focused on that. We have had engagement with Government around the development of the national economic strategy, and we feel that that is entirely consistent with the missions that have been set for us. We have regular interaction when there are significant strategies being developed such as the energy strategy at the moment and the innovation strategy at the moment, so we feed into that. However, we are guided by the missions that have been set for us and how those will fit into the macroeconomic strategy for Scotland, which is around the economic transformation. What is striking is that the Greenswish would fit all your missions. The three missions are about the place-based innovation and the carbon production net zero. Being ambitious about what could happen, the opportunity for the people and the community of Greenswish to benefit from hydrogen heating or transport is really striking. Is that something that you are actively involved in looking at? Would that be an ideal fit? I am not saying that you have to commit your money resources and decision making just now, but does that look as if it could be a potential fit for national investment bank, where there are no other investments to come or even an opportunity for you to crowd in the private investments that would be interested in what would be very innovative work in that area? Absolutely. It is almost like writing a sweet spot for us. There is a transition component from existing businesses that are looking to pivot. As I mentioned in some of my earlier comments, when we were talking about what should be included in the sort of Grangemouth plan, it is critical that there is a space in that for new and emerging businesses. That fits very neatly with what we are trying to deliver through our innovation mission. In response to Michelle Thomson's question earlier on, we are really thoughtful around the local impact of our investments and are keen to see that local supply chains are used, local employment opportunities and opportunities to link with local colleges or universities in order to improve skills. When we look at the scale of the challenge around Grangemouth and the opportunity around Grangemouth, it speaks to all the missions of the bank. When we engage with businesses and projects, it is through that lens. I will add to that. When we say that new businesses will exist in businesses as well, it is more that they will have new products or service lines that will then be suitable for what that next phase looks like. It does not just mean a business that is on paper today. It can be the existing businesses in the community and the local area that can be part of that. We would support that. I think that that is critical, because place-based also means what the existing businesses are. It is not all about new businesses. Innovative might want to change the way they do something or evolve one of the products of the service. Again, the bank has a role in supporting that. When we say that new businesses are more those new products and services that are needed for the future. That helps us, because part of what we want to do is to see what we think should be in the just transition plan of Grangemouth, and it is not always going to be about new businesses. That is why I will come back to Derek. I apologise, it was my phone that went off, but I was trying to google to see if Celtic renewables were a Scottish company or an Irish company, so that was my fault for making the interruption. In terms of the Scottish enterprises now focus on hydrogen, it is very welcome. I am very pleased to see that. To what extent are you focusing on trying to help existing businesses in supply chain potential for what could happen in hydrogen? Or, to what extent, as we know historically, Scottish Enterprise and STI have had a focus, understandably, because of the innovation and the investments that can come from inward investment. Is that rebalancing so that you can help smaller companies, or maybe existing companies, to pivot into potential supply chain development? It is absolutely both. It is working with existing companies that are looking at new opportunities, and that might be new opportunities in the low-carbon space. It might be opportunities around productivity, innovation and better ways of doing things, more efficient ways of process innovation, product innovation, leading to greater levels of productivity. It is supporting existing companies, looking at new market opportunities and pivot into new market opportunities where it is right for that business. We have lots of examples, particularly during Covid, when we supported companies with new opportunities and pivoting with their business models. It is a combination of working with existing businesses and promoting those new opportunities as we see them. The supply chain is absolutely key to that. One of the great focuses that we are placing now is the green energy supply chain or the low-carbon supply chain. We are looking at electrification of vehicles, decarbonisation of heat, hydrogen, offshore wind. How does that all come together, and what does the supply chain look like, particularly around high-value manufacturing, and how can we support existing companies? Small, medium and large to capitalise on those opportunities, as well as working with inward investors that are looking to invest into Scotland sometimes for the first time, or maybe they are already located here and looking for the expansion plan. It is a combination of both. Moving on to carbon capture utilisation and storage and the potential there, we are hoping to get an announcement from the budget, who knows. However, there are concerns, and the other committee that I said on the net as your committee produced a report expressing cross-party concerns about ACORN being on a reserve list. Quite clearly, that project going ahead in Grangemouth will unlock so much in that area. What is the specific role of Scottish Enterprise currently, but also if we can get that movement and that investment for ACORN to go ahead? Currently, it is working with partners, as part of the ACORN project, and NEOS is part of that, to support those partners in building the best possible business case for capturing that opportunity at Grangemouth. I do believe that the phase 2 is imminent in terms of UK Government announcement on that, so we might hear on that shortly. Just now, it is about supporting those partners in terms of how we can build the best business case possible. If we are successful in securing that, it is then looking at what support the Scottish Enterprise could provide along with other partners to really capitalise on that amazing opportunity. It goes back to that point around the supply chain, looking at the assets that are already there in Grangemouth and how that connects in with other regions in Scotland, so that it is not only Grangemouth that is ultimately benefiting from that opportunity, but the wider economy across Scotland and other parts of the region, including the north-east as well. Have you got an interest in the ACORN project? Where would you see your positioning? Or is that something between the private investment from NEOS and others and Scottish Enterprise that you might not need to be in that space? We have engaged with partners of ACORN, and I would say that the bank's role, if it is necessary, will provide capital to deliver the project once that model is clear for the partners. In terms of the impact of that, can you share with us your understanding of the scale of the impact of the ACORN project that you have once approved? We are very hopeful that it is absolutely delayed, but it would be very welcome if it is announced. The impact is not just for Grangemouth, but for the rest of Scotland. Does that put Grangemouth in the pilot position for that massive movement into that space, particularly for hydrogen production as well? I do not have the details in terms of job numbers that could potentially lead to, but clearly it would be a massive coup for Grangemouth, a massive coup for Scotland, having that opportunity at Grangemouth. Strategically, it is well at the end positions Grangemouth really well in terms of that wider piece around just transition. Carbon capture, utilisation and storage, then looking at the opportunities around hydrogen, again working with AOS and its declared investment for that blue hydrogen implant. You can see parts of the jigsaw really firming up in terms of the significant opportunities, future opportunities coming forward, but at this stage I have not currently got the information at hand, but I can certainly share that after the committee for that would be helpful. That would be very welcome. Finally, to ask the Scottish National Investment Bank, clearly you have got your missions. You have got a responsibility to all of Scotland. We know that Grangemouth is particularly important strategically, currently and in the future. How do you balance up that spread of investment so that you are serving all of Scotland but being strategic as to where your investment is? Who does that? How do you do that and how do you do it in balance with Scottish Enterprise and other agencies? The first lens that we apply is the mission lenses when we see an opportunity and we do monitor a portfolio across those missions and across the spread of it across Scotland. As it stands today, of the £380 million, we have invested £193 million across 13 projects in net zero, and that is across Scotland. We have invested £111 million across seven projects in the place's mission, and we have invested £74 million in innovation across 10 projects. That is across Scotland. I think that every region of Scotland has received investment from those £380 million. We also monitor our portfolio monthly as to what the portfolio would look like if we were to execute on the pipeline at this moment in time. There are 56 live opportunities within the ask of £750 million of the bank, and we are cognisant of how that would then shape the portfolio so that we do not end up underserving one mission or one particular area of Scotland as well. For the bank, your patient capital approach lends itself to technologies that are not there yet, but we know that they will be needed at some point in the future. Do you think that, particularly for the carbon capture utilisation storage and hydrogen, and for existing companies in the green enterprise area that could, as you suggested previously, provide new products and services? Is that potential to meet all your different missions in terms of investment? It is a mission hat trick that we all look for across the field. Is that the official Scottish Nationalist mission hat trick? In all seriousness, it is absolutely. It would come across all of our missions. We look at projects on an individual basis, and we look at the merits of that project. We also think about the big strategic opportunities for Scotland, and Scotland is a good example of that. We are not looking at an individual project, we are looking at the opportunity that Scotland might bring and thinking about what role the bank can play in that. The same can be said for Grangemouth. Grangemouth delivers significant economic value to Scotland, high value jobs, lots of expertise, lots of knowledge, lots of technology that can be applicable to the transition, and the bank sees itself as playing an important role in that. What is critical for us, though, is to try to engage with those businesses and identify how the bank's capital can support them, either transition or scale or grow, and to identify what those business models are is pretty important to us. I bring in Jamie Hockroy-Johnson, followed by Graham Simpson. Thank you very much, convener. Good morning to the panel. Sorry, I can't be there in person to speak to you. It's been very interesting. I was just looking to direct my questions to the Scottish National Investment Bank. I'll maybe leave it to Mark and David to decide who's best to answer these. It was really on the hydrogen side. We've heard a lot about it during this inquiry, but also previously in evidence that we've taken in other areas. I'd just be very keen to learn of where you feel that sector will play its role. There seems to be, I wouldn't want to say a lack of clarity, but a lack of understanding perhaps on what it physically means, where hydrogen will, which sectors it will play a role, how it will be delivered, how it will be constructed. I was just wondering if you could tell me how SNIB sees that and how you might be supporting the infrastructure side of hydrogen. I thank you for the question. Hydrogen has a key role in decarbonising the economy. It is a significant economic opportunity. It would be fair to say that we're not convinced that it will be for heating within residential houses. There may be areas on the islands at a more close loop or some areas of Scotland that are not on the current gas network nor for personal transport, but that doesn't mean that it's not for transport. More broadly, HGVs and public transport would be applicable. David touched on it. There's a huge opportunity around Scotland and the supply chain, given that hydrogen will be a key product of it. If I'm being very honest with you, we're still answering ourselves and I think that it can be part of the plan that's being put together. Scotland can provide the supply of hydrogen and we've got the skill sets and the opportunity of just spoken of. Where do we need more clarity on where the demand is for the hydrogen and how we'll then get that hydrogen to where it's needed? There is some more work needed around that in my view. That's very helpful, Mark. Thank you for that. Honesty is very welcome. I think that's what we're getting or I'm getting from some of the discussions that the concept, the idea is fantastic at providing and using some of the power that we generate to create hydrogen and etc looking forward, but the actual practical use in a lot of cases may be that vision isn't there. You talk about demand and identifying where the demand would be. Are you able to say where that work is happening? You say what it needs to happen. Do you know where it's happening or is it something that perhaps you're waiting to see and then obviously able to step in if there's opportunity to support? We are working, but bodies like the Net Zero Technology Centre, I've got quite a... They've done a lot of work in this area and have used it to where they're appropriate. The creation of things like ammonia is where the demand actually is, but it's then applying it from beyond that and the commercial business model then supports the supply that we can create. As I say, one example would be, and we work with them, would be the Net Zero Technology Centre. There's some universities in Scotland who are looking into this area as well, and again, we've had a couple of conversations on that. Another area that's emerged recently that we are quite keen to understand ourselves in a bit more detail is hydrogen as a potential substitute for gas-fired power stations. Methane is what is predominantly used in a power station at the moment, but there are emissions that are associated with that, greenhouse gas emissions that are associated with that, which presents challenges if you're looking to have a zero carbon generation. Most people recognise that there's still a requirement for some form of baseload to complement your renewable generation. There's been some recent thinking and discussion about hydrogen potentially being a feedstock source for those power stations. It's not something that we've got into sufficient depth on yet, but it is an area that we are keen to look at that could then potentially complement hydrogen's use, not just for as a feedstock for existing industrial capacity and the potential export that that might bring as well, but also for domestic use from an electricity generation perspective too. Thanks for that, David. Is that something that the work is happening on at the moment in terms of developing those ideas? Some of the early thinking of it has emerged from the committee on climate change, who have released a recent report that discusses hydrogen as a potential source for electricity generation and helping to manage the baseload. That's what we are keen to get into in a bit more depth on. We are speaking to the committee on climate change on that. We want to crystallise our own views on that. That's very helpful. I know this isn't going to be particularly related to this inquiry, but I just did also want to ask, we've obviously got Scottish Enterprise in today, but how are you going to engage with Highlands and Islands Enterprise? My local Enterprise board for the Islands, obviously. How are you going to engage with them on projects? Are there specific areas that you're looking at? Yeah. Sorry, I was that directed at you or me, Derek. I'm not sure. That's how that was to you, David, sorry. That's amazing. Yeah, sure. Very good engagement with Highlands and Islands Enterprise. We speak to them on a frequent basis to talk about projects that they are invested in or businesses that they are supporting who might be moving into the sort of scale that the National Investment Bank could then take over. That's related to a few projects, or BEX being one more recently that you might be familiar with, but we also done an investment into Highlands and Coast hotels where we spoke a lot to Highlands and Islands Enterprise about and we have frequent interaction and discussion about their pipeline and our pipeline and how we can work in partnership and collaborate. That's very helpful. In previous inquiries, we've put sometimes about the kind of move from smaller businesses out of business gateway into Highlands and Islands Enterprise not always being so good, so that's encouraging to hear that, sadly. That's all from me. Thank you very much indeed for your information there. Thanks, Grafina. Grim Simpson, can I bring you in there? Yeah, thanks a lot. I just want to ask again about the Grange on Future Industry Board and its membership, because just looking on the Scottish Government website and looking at the members, it seems to be all public sector. If that's wrong, this is to you, Derek, because you're on it. Is there any private sector membership? No, not currently. The objective behind the establishment of the Grange, Mouth Future Industry Board was to ensure that there was a co-ordinated approach across the public sector. What we were finding in the advance of G-Fib being set up was that our respective organisations were having numerous conversations with different partners, different stakeholders, having the same conversations but not being joined up. So to ensure that we weren't consilowed, Scottish Government had established G-Fib as an opportunity to bring that public sector partners together. I think that the next stage of G-Fib is how we ensure that we're joined up within the industry and going forward in the business space that's at Grange Mouth. But surely, the private sector is key to delivering a just transition in the Grange, Mouth area and indeed across Scotland. Surely, if you're going to have as important a board as this is, you would want to have private sector involvement, because when we're thinking about this just transition plan that you're going to produce, it sounds like this is led by the Scottish Government, so the Scottish Government is essentially writing a report for itself. It's not bringing in anyone from outside. One of our earlier sessions, we were hearing from a federation of small businesses, is a real frustration that they're not involved? Why can't you involve the private sector in this board? I think that's something definitely we would look at going forward as part of this phase 3. I think that we've got to the point now, we've got the governance in place, we've got the structures of the work streams. As I mentioned before, we are engaged through our respective organisations within the industry on a day-to-day basis in the business space that's at Grange Mouth, but bringing that together into that collective forum, potentially through G-Fib, is an opportunity that we would look at going forward. Final question from me. The plan that is going to be produced, when is that going to be ready? In kicking off the process, the Scottish Government, as I said earlier, is leading on that just now in terms of the first phase, which is that base-lining and then the vision overall. That will be in the next couple of months bringing together that workshop, particularly around the vision and partners to support that. I'm not quite clear on when the final plan, just transition plan, will be ready, but I can certainly take that back and ask Scottish Government officials. Okay, that will be useful. Leading on perhaps from what Graham Simpson was talking about there, we're talking very much about public sector investments into the Grange Mouth area. How is that being leveraged to attract in private investment on the back of that, or in partnership with that? Mark, would you be the best person to respond on that one? In terms of around the Grange Mouth area? Yes. As an example. Sure. When the bank makes our investments—I don't have a particular example to use, but we do seek private sector investment alongside ourselves. If I go back to the numbers, the banks invested £380 million and we've crowded in £650 million from private capital, thereby over £1 billion worth of investment within Scotland, that would be the model that we would apply to any investments that we do make in support of Grange Mouth in the surrounding areas. You've described that you're already in discussion with a number of companies there. Obviously, we don't know what stage that discussion is at, but presumably part of that will be to find a way also to draw an additional capital investment into that area. Of course, it is. The opportunities that we look at are private capital investors who would be investing alongside the bank. That is an act of consideration along with what you're doing. It is. What about Derek? What about? Yes. I think that there are three practical considerations in terms of leveraging private sector investment into opportunities at Grange Mouth. The first is ensuring that we're working with companies to develop investable propositions. It goes back to the point that David made earlier. We can have fantastic companies, as we do in Scotland. We can have fantastic technology, which we do, but if we don't have investable propositions that investors are keen to invest into, then it's going to be difficult to live with that private sector investment. Working with companies in terms of the funding that they need and developing an investable proposition is one thing. Second, we know that some of those technologies add a long-term play. It could be five, 10, 15 years before they're actually commercially valuable, and that's not attractive to a lot of investors who are looking for short to medium-term return. There's a need for the public sector to continue to de-risk propositions at the early stage, so that further down the line at a point where private sector investors are interested in investing. The third thing is engagement with investors. Identifying and working with investors in the UK and internationally who operate in this space. Increasingly, there are more investors that are interested in low-carbon technologies. Linking those investors and the engagement in the relationships that we've got with the company base that we're supporting through developing those investable propositions so that we're maximising the opportunity to get investment into companies. If we continue to develop those three areas, then we stand a good chance of maximising private sector investment into some of those new technologies. I like the term de-risk. It makes a sound as if it's a proposition that carries no risk at all, whereas what we're doing is we're transferring the risk to the public sector in effect or a degree of that risk. Maybe we should find another terminology for that. Can I ask members if they've got any other questions for the panel? No. In that case, that brings us to the end of the evidence session. I thank the panel members for attending today, for the time that they've given, and I suspend the meeting and we'll move to private session. Thank you.