POLITICAL instability is the biggest threat to Scotland’s net-zero transition, a report has revealed.

The energy transition survey, produced by the Aberdeen and Grampian Chamber of Commerce, KPMG and ETZ to assess the confidence in the UK’s energy sector, found out of a survey of 121 sector businesses, half expressed concern over the political and regulatory environment. This marks a significant jump from last year’s numbers, where 24% expressed the same concern.

With four chancellors and three prime ministers in the last few months, the survey found the uncertainty of future tax increases has caused concern.

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Ryan Crighton, the chamber’s policy director said: “Since the last edition of this report in May, we’ve had three different prime ministers and four different chancellors. And in that time, the UK Government’s stance on a windfall tax has shifted several times.”

Crighton said the sector’s already high corporation taxes have businesses worrying whether they are set to leap further in this week’s Budget.

He continued: “The result is we now have an energy sector paying some of the highest corporate taxes in the world, while trying to operate in one of the globe’s most mature and challenging basins, while also trying to invest in the new low-carbon energies of the future.”

With tax breaks ring-fenced for oil and gas investment rather than low-carbon technologies, there is concern that the opportunity to accelerate the energy transition is being missed.

Crighton went on: “The clamour for windfall taxes is understandable, but the whole debate has been driven by politicians unwilling to listen to the hard truths which lie behind this populist policy.

“The energy transition is going to cost tens of billions of pounds. And it is becoming abundantly clear that the UK’s public finances are not in a position to share that bill.

“At a time when oil and gas producers are being asked to invest more to help ensure the UK’s energy security and make longer-term investments in renewables, additional taxes risk undermining their ability to do either.”

The survey found that 70% of firms are actively diversifying away from oil and gas, and 44% believe they will be more involved in offshore wind within five years.

However, 61% said access to skills will be one of the defining issues in the year ahead, and there has been a surge in recruitment concerns. Just a quarter said their companies will be net zero by 2030, while 34% have yet to commit to a strategy.

The survey urges the UK Government to introduce measures to accelerate business transition to net zero and to progress the Scottish carbon capture cluster.

It comes as Scotland’s Environment Minister has said shifting away from fossil fuel reliance will help meet energy security targets.

The Scottish Government minister is set to bring Scotland’s experience of working to deliver a just transition to renewable energy.

It is hoped the discussions will help other countries in their shift towards greener energy, Ms McAllan said.

During Energy Day on Tuesday, Ms McAllan will take part in various events to promote Scotland’s hydrogen sector, hold bilateral talks with other government ministers and meet members of the Under 2 Coalition - a group of state, regions and devolved governments collaborating to drive climate action.

Speaking ahead of her meetings at COP27, Mairi McAllan said she will be promoting Scotland’s transition to net-zero.

She added: “While some, including the UK Government, seek to increase their extraction of fossil fuels amidst rising energy prices, we remain committed to a focus on policies that promote renewable energy and emerging green technologies, including the development of green hydrogen.

“Energy security that focuses on sustainability, with measures to promote energy efficiency, and to accelerate the development of renewable and low carbon energy, is a far better answer to the energy crisis than increasing reliance on fossil fuels.

“For example, wind power is already the cheapest form of power in Scotland’s energy mix.”

The Scottish Government will also support meetings and events on decarbonisation of transport and the role of nature and biodiversity, including forestry and peatlands, in tackling the climate emergency.

Following a £5 million commitment to address loss and damage caused by climate change, ministers will continue to support countries and organisations affected.

“As a country with a large, existing oil and gas sector, we can bring to COP27 our experience of work to deliver a just transition to net zero– a transition that putspeople and communities first and harnesses the full range of opportunities that come with it.”