We are an energy rich nation
When I was back in Perth, Australia, recently seeing family, I was really struck by the huge investment in infrastructure since my last visit. The development of the Quay, improved rail links for the metro system, and refurbished, greener, public spaces were just a few obvious examples among many new projects.
Much of the capital driving these ventures comes from funding packages Western Australia negotiates with the federal government on the back of its natural resources. The state’s finances have long been reliant on iron ore mining and oil and gas from the North Western Shelf. While the economic benefits from these are shared with the rest of the country, Western Australia receives approximatively two-thirds of the royalties.
You can draw a clear contrast with the way the UK has mismanaged Scotland’s natural resources, past and present. As North Sea exploration ramped up in the 1980s, the oil bounty was squandered. Rather than the tax receipts being ringfenced, revenues were poured into the Treasury’s coffers to fund the government’s break-neck deindustrialisation of Britain’s economy. In contrast, Norway set up a sovereign wealth fund which future generations are now benefiting from with high levels of public spending.
Early opportunities to harness renewable energy were also lost. While countries such as Denmark pioneered the development of commercial wind power, Margaret Thatcher’s press secretary, Bernard Ingham, rubbished wind turbines as “lavatory brushes in the sky”.
More recently, David Cameron government’s decision to ditch policies he allegedly denounced as “green crap” are now playing a large part in rising bills. Analysis by climate-data experts Carbon Brief found these cuts to renewables will cost every household as much as £150 a year by the autumn.
A recent Survation poll on the effects of the cost-of-living crisis exposed the shocking level of fuel poverty across the UK and especially in Scotland. In Edinburgh North and Leith, 41% of people say they have not been able to afford to turn the heating on. And still the Tory government is scrapping the £400 Energy Bill Support Scheme, while oil and gas companies make huge profits.
The tragic paradox is that Scotland is an energy-rich nation. Our abundant clean, green energy makes us well placed for the transition to a fossil fuel-free future. Scotland has vast onshore and offshore wind resources and our tidal energy potential is often overlooked. We already have the world’s leading wave and tidal energy test centre based in Orkney, while companies like Nova Innovation in this constituency are pioneers in this technology. We should also be looking at green hydrogen production from surplus renewables.
But our energy system badly needs reform, both to drive down bills and help us meet our climate targets. On the Scottish Affairs Committee we’ve called for an urgent review of the electricity grid and for issues around transmission charges to be addressed. Electricity generators in Scotland pay the highest rates in Europe and significantly more than elsewhere in Britain to connect to the grid. We have virtually 100% capacity to generate our renewable electricity, but we’re locked into a UK market that prices our electricity based on the wholesale gas price.
The new Eastern Link project will draw from Scotland’s renewable energy surplus to transfer to 4 GW from Scotland to England via undersea cables, enough to power 2.8 million homes. This is welcome and should be supported, but there are concerns over how much the local communities in East Lothian and Aberdeenshire will benefit in terms of jobs and businesses, and whether it will help address our high levels of fuel poverty.
Unfortunately, the Scottish Government is reliant on block grant funding and cannot negotiate extra money from its own assets in the way Western Australia has. This somewhat undermines the frequent claims about Holyrood being the ‘most powerful devolved parliament in the world’.
Clean, green energy can help drive Scotland’s economy while tackling the climate crisis and the cost crisis, but this won’t be achieved without a fairer energy market and the power to better manage our natural resources. ■
Nova Innovation’s tidal turbine at Bluemull Sound, Shetland. Courtesy Nova Innovation