This article appears as part of the Winds of Change newsletter.

Over four hundred jobs, it was reported last week, are under threat at the Mitsubishi Electric heat pump factory in Livingston.

Three months ago, I toured that same factory and watched as employees involved in the complex process of putting together the complex units that are heat pumps, slotted elements into place on assembly lines, toiled around fiery turntables, passing flaming brazers over copper parts and installed new factory equipment.

These were jobs and livelihoods that looked like the future, part of a growing green industry, and it’s shocking to hear that months later this Living site is engaged in a redundancy process which could see a quarter of the workforce go.

Why, given Scotland is on the brink of a Heat in Buildings Bill and a rapid transition to heat pumps as a key technology in decarbonising our heating, is our major heat pump factory shutting down? The answer given by Mitsubishi Electric is what’s happening in the market in Europe. In its statement about the redundancies, the company said, “Despite seeing some growth in the UK market, the majority of our production at the site has been for mainland Europe, where there has been a widespread downturn in demand. This has led to the extremely difficult decision to begin the consultation process.”

Mitsubishi’s factory was originally an air conditioning manufacturing plant, but 80% of its product is now heat pumps.

(Image: Herald Design)

Around 79% of that, I was told, on my visit, was exported to Europe - mostly Spain, France and Germany. The much faster uptake in those countries than the UK was attributed to the high price of electricity in the UK compared to gas, the so-called spark gap’. In France the cost of electricity is two times the amount of the cost of gas. Here it’s 3.8 times the cost of gas.

But in recent years that European market has slowed. That downturn was apparent in European Heat Pump Association sales data for 2023, which showed the first reverse in sales trends after a decade of continuous growth and attributed it to lower gas prices, European economy stagnation and “backlash against green policies, coupled with reduced ambition at both EU and national level”.

The Mitsubishi job losses are not a sign of a smooth and positive green transition. They are a reminder that, with the Heat in Buildings Bill ahead, it's important to get the policy right and counter misinformation - but also of the risks to transition when global markets and multinational companies are involved.

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Is nature and the green transition being thrown under a budgetary bus?

Meanwhile, a bigger 'just transition' question has been whether the Scottish Government's strategy to get itself out of a budgetary hole means it is squandering its capacity to avert future crisis and build green wealth.

Both the Nature Restoration Fund, and also £460 million of the £750 million pot gained from ScotWind’s auctioning rounds, looks set to be used to fill the gap in funding created by Scotland’s public sector pay deals - unless, as the Scottish Government hopes, the UK Government step in to pay some of the difference.

It’s not hard to see why this decision is being made. Pain is being felt everywhere - with cuts to public services - and the pain of climate and biodiversity crisis perhaps doesn't feel so real.

But should this £1bn hole have happened in the first place? The Institute for Fiscal Studies and the Scottish Fiscal Commission think not and have said that ministers failed to set out a clear public pay policy until after the annual budgets were set. And should the ScotWind fund really have been more protected? The money after all was pledged, as Michael Matheson said at the time, “to help tackle the twin climate and biodiversity crises” - not to be dipped into to balance the budget.

But the idea of drawing down from this pot is not without precedent for a Scottish Government that has been fighting budgetary hard times for some time. Back in January this year, it was revealed that money raised through the ScotWind leasing round was being spent to support Scotland’s overall budget, with £350m of the money from ScotWind had been drawn down.

At that time Finance Secretary Shona Robison explained the move, saying: “Any money that is drawn down from ScotWind is used to support the budget, so, in essence, it is used to support public services.”

(Image: Getty Images)

“We are investing £4.7 billion of capital and resource in positive action in the 2024-25 budget to meet our climate change goals. One could argue that, if whatever amount of the up to £350m of ScotWind money is part of supporting the budget, it is also part of supporting that £4.7bn of the budget that is tackling climate change.”

She also noted that the ScotWind money was not a sovereign wealth fund or something “specifically geared to future action on climate”.

Last week, Ms Robison announced she was back for more, and currently planning to use up to £460 million of additional ScotWind revenue to address in-year pressures in 2024-25.

What does this mean for the green transition?

But many believe that ScotWind was meant to be about doing things better than the UK Government had done with oil and gas revenues. The money was not just about averting climate and biodiversity crises but also using this wealth to build wealth. Such feelings about the raid on the fund were summed up ina letter from the GMB Scottish secretary Louise Gilmour, who described it as “unsustainable” and representing “poor financial planning”.

Ms Gilmour vividly compared it with Thatcher raiding Scotland’s oil and gas profits.

“For our members in energy, it yet again obliterates the claim of a ‘just transition’. These funds should have been used to build the renewable supply chains across Scotland. Instead, they have been squandered."

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And has the Scottish government deserted nature?

So, what about that Nature Restoration Fund? Does sacking it mean that the Scottish Government is giving up on nature commitments?  In fact, it is still continuing to create policy to protect nature - with a Natural Environment Bill in the programme for government. But, as many point out, all this cannot be done without funding.  

In a briefing event for journalists and policymaker hosted by RSPB Scotland and Scottish Environment LINK today, green groups welcomed the First Minister’s commitment to bring forward a Natural Environment Bill – but warned that we “can’t cut our way to nature recovery”.

Deborah Long, Chief Officer at Scottish Environment LINK, said: “Setting targets is the easy bit – what matters is following through with action.”

(Image: NQ)

Nature funding. Watch out for: 

How we fund nature is often the subject of heated debate. For Professor Gretchen C Daily, a pioneer in natural capital, who set up the Natural Capital Project, it’s about valuing nature in a world that otherwise does not.

The US professor will talk about some of her work in that field at the TB Macaulay Lecture, which takes place at the Edinburgh International Conference Centre tonight. A key concept she describes is Gross Ecosystem Product, a measure that attaches a monetary value to the work an ecosystem does.

But she also talks about reverence, connection and why what she does means she is not  “that b** who is slapping a price tag on nature”.