Is the Scottish Government's energy strategy just wishful thinking?

Written by Mark McLaughlin on 7 December 2017 in Inside Politics

Will the SNP’s dream of a publicly funded renewable energy company become a reality, or will it be consumed by the market’s burning desire for oil?

Image credit: Holyrood

In the mid-18th century, three great Scottish minds bonded over questions that continue to frustrate people to this day: what is the world made of, how does it move and can we make money from it?

One was Joseph Black, a chemist who discovered that burning stuff produces a gas that kills animals – carbon dioxide. We’ve been trying to get rid of it ever since.

The second was James Watt, an engineer whose efficient use of air and water reduced the amount of stuff he had to burn to make things go. We’re still trying to perfect that one.

The third was Adam Smith, an economist who taught that an efficient market means more wealth for everyone. The jury is still out.

These three elements are at the heart of the Scottish Government’s energy strategy, which is still trying to figure out how to make things go without killing everyone or making us all poorer.

“We will continue to champion clean energy,” said Nicola Sturgeon as she unveiled her latest programme for government, which promotes engines powered by air and water, carbon capture to remove dirty emissions, and a publicly-owned energy company to ensure the wealth is distributed for the benefit of Scottish society.

But Scotland, like nearly everywhere on the planet, remains addicted to fossil fuels which are not only necessary to power the current engines that keep Scottish industries and their workers moving, but drive Scotland’s economic powerhouse in the north east, which was built on oil but now faces an uncertain future as the old wells run dry and new sources remain elusive.

There are still around 20 billion barrels of oil left in the North Sea, according to industry estimates, but burning it is becoming as politically toxic as fossil fuel emissions. Renewable energy is still largely experimental, and even the proven technologies are now running into brick walls because of the difficulties of storing the energy they produce.

A barrel of oil is a natural battery. It lies dormant for millions of years waiting for its energy to be released to make things go, but it has a nasty side-effect of producing gases that disturb the natural equilibrium of the Earth that keeps us all breathing.

One way of dealing with this is to pretend it isn’t happening.

“Global warming is a total, and very expensive, hoax,” said Donald Trump on numerous occasions.

“We can’t destroy the competitiveness of our factories in order to prepare for nonexistent global warming. China is thrilled with us!”

Four of the top ten Fortune 500 companies make money selling petroleum, while most of the others primarily make money by burning it.

Trump and his many followers believe global warming is a Chinese ruse to shut down US factories and make Americans poor. Burning stuff remains more efficient than other means of making things go, and efficiency means more wealth for everyone, right?

Well, energy market leaders China and America are side-by-side in the top ten most unequal countries in the world, with over two-fifths of their wealth held by just one per cent of the population.

Russia, which killed its aristocrats 100 years ago in the name of wealth redistribution, is now the world’s most unequal country, according to the widely cited equality report by Credit Suisse. Russia’s economy is also heavily reliant on burning stuff, but Trump still quite likes Russia, apparently. 

So, burning stuff doesn’t necessarily make everyone richer, while most people outside Trump’s small but increasingly influential cadre believe the scientific consensus that it will probably kill us all eventually.

But rich people aren’t going to stop burning stuff any time soon, so another way to deal with the problem is to remove the nasty side-effect.

“The North Sea is potentially the largest carbon storage resource anywhere in Europe,” said Sturgeon in September, as she railed against the UK Government’s withdrawal of support for carbon capture and storage initiatives.

The technology involves removing carbon from the air and storing it in drained oil and gas wells underground. It has the added benefit of utilising the increasingly redundant skills of Scotland’s North Sea workers.

Peterhead power station and the White Rose scheme in North Yorkshire were in the running to win a £1bn carbon capture contract before it was cancelled by the UK Government in 2015, amid concerns about its efficacy and fears the required subsidies would push up consumer energy bills.

The UK Government said it hasn’t “closed the door” on carbon capture, but it has put off saving the planet for the time being because money’s tight.

In the absence of any immediate UK action, the Scottish Government has stepped in with funding for a carbon capture demonstrator project at the St Fergus gas plant in Aberdeenshire.

“We are determined to encourage others to see Scotland as the place to research, design and manufacture their innovations,” said Sturgeon.

“For us to become a laboratory for the rest of the world in the digital and low carbon technologies we want to champion, we must also become early adopters of them, we must be bold in our ambitions, just as we have been in renewable energy.”

The Scottish Government is also trying to stop burning stuff.

“The transition from petrol and diesel cars and vans to electric and other ultra-low-emission vehicles is under way and gathering pace,” said Sturgeon.

“We intend to put Scotland at the forefront of that transition (with) an ambitious new target. Our aim is for new petrol and diesel cars and vans to be phased out in Scotland by 2032 – the end of the period that is covered by our new climate change plan, and eight years ahead of the target that was set by the UK Government.”

The Scottish Government intends to massively expand the number of electric charging points in rural, urban and domestic settings, extend the Green Bus Fund and accelerate the procurement of electric or ultra-low-emission vehicles in the public and private sectors.

There are also plans for pilot demonstrator projects that encourage uptake of electric vehicles among private motorists, and for a new innovation fund to encourage business and academia to develop solutions to challenges like charging vehicles in tenements.

The A9 will become ‘Scotland’s first fully electric-enabled highway’ with plans to install regular charging points alongside the new dual carriageway, and low emissions zones will be rolled out in Scotland’s four biggest cities by 2020 to encourage drivers to leave their gas guzzlers at home or switch to greener vehicles.

Sturgeon also went further in her SNP conference speech in October, pledging to set up a publicly owned energy company by the end of the current Scottish Parliament.

 “Energy would be bought wholesale or generated here in Scotland – renewable, of course – and sold to customers as close to cost price as possible,” she said.

“No shareholders to worry about. No corporate bonuses to consider.

 “It would give people – particularly those on low incomes – more choice and the option of a supplier whose only job is to secure the lowest price for consumers.”

The Tories, predictably, dismissed the idea as a publicity stunt.

“The proposed nationalised energy company was announced to attract headlines at the SNP conference, but there was no analysis of how it will work,” said Dean Lockhart, the Conservatives’ economy spokesman.

The idea of a ‘nationalised’ energy company, inevitably, will come under sustained attack by the powerful private energy firms and their right-wing supporters, who were weaned on Atlas Shrugged.

In Ayn Rand’s 1957 neoconservative bible, a mysterious engineer harnesses unlimited energy from the air, but when his employers turn the company into a Marxist collective, the engineer absconds and the factory town descends into ignorance, lawlessness and alcoholism. It’s a right-wing fairy tale with a typically unsophisticated message, but the Russian-American author is enjoying something of a resurgence amongst leaders who owe their influence to unsophisticated messages.

Conservative “high priest of Eurosceptics”, Daniel Hannan MEP, keeps a photograph of Rand on his Brussels desk, perhaps in the hope he can turn Britain into a genuine ‘Galt’s Gulch’ – Rand’s mythical valley where the world’s industrialists trade favours for small change and leave the rest of the globe to the “parasites”, “looters”, and “moochers”.

Rand’s prototype, The Fountainhead, is amongst the only three books Trump claims to have read, while Conservative Communities Secretary Sajid Javid says he reads it twice a year. Javid was pilloried by the left last year when he overturned Lancashire County Council’s decision to reject fracking, in another example of the growing divergence in energy policy between the UK and Scottish governments.

Scottish Energy Minister Paul Wheelhouse extended the moratorium on fracking “indefinitely” in October, “balancing the interests of the environment, our economy, public health and public opinion”, but the Conservatives still believe that burning stuff is the answer to Scotland’s economic problems.

“Banning fracking is all about the politics and not the science,” said Dean Lockhart, Conservative MSP, when questioning the minister.

“Scotland’s economy is left behind yet again. Time and again, independent assessments have shown the significant benefits that fracking could bring to Scotland’s economy. Up to £4.6 billion in additional gross value added could be generated by the industry as well as thousands of highly skilled jobs across Scotland. That much-needed economic boost and those jobs will now be created outside Scotland, thanks to the SNP,” Lockhart said.

The Scottish Conservatives have their own energy strategy based on “the right generation in the right place”, which is code for rejecting the onshore windfarms that its rural supporters despise.

“While we do not believe that more large-scale onshore wind power is right for Scotland, we will maintain our position as a global leader in offshore wind and support the development of wind projects in the remote islands of Scotland, where they will directly benefit local communities,” the Scottish Conservative 2017 manifesto said.

“Above all, we believe that energy policy should be focused on outcomes rather than the means by which we reach our objectives.

“So, after we have left the European Union, we will form our energy policy based not on the way energy is generated but on the ends we desire – reliable and affordable energy, seizing the industrial opportunity that new technology presents and meeting our global commitments on climate change.”

In contrast to the SNP’s plan to make energy cheaper by taking control of the supply, the Conservatives want tax cuts to encourage individuals to cut down on demand.

“Investing in energy efficiency is the most straightforward way of tackling these unacceptable levels of fuel poverty,” the Conservative manifesto said.

“We have been making the case for an additional £1 billion to be invested in energy-efficiency measures over the next five years, aiming to ensure no one has to live in a hard to heat home by the end of the next decade.

“We would do this through a truly national infrastructure project, bringing together all levels of government, the private and the third sectors, that would create thousands of jobs, with much of the benefit in some of the most remote parts of Scotland.

“In addition to direct capital investment, we should introduce a range of loans, LBTT and council tax discounts as well as greater regulatory control backed by incentives across all tenures.”

The UK Conservatives are also taking action to cut bills, with Theresa May’s own attention-grabbing conference pledge to cap energy prices for an extra 12 million consumers, saving them an average of £100 a year. May told the Tory party conference in Manchester that Britain’s energy market was broken and needed to be fixed.

“The energy market punishes loyalty with higher prices, and the most loyal customers are often those with lower incomes, the elderly, people with lower qualifications and people who rent their homes,” she said.

The price cap was one of the recommendations of Oxford University academic Dieter Helm’s Cost of Energy Review, which was commissioned by the UK Government shortly after the election.

UK Energy Minister Greg Clark is carefully combing through the rest of Helm’s report, which warned that households and businesses are paying too much for their energy because of years of flawed policies.

Helm called for the energy market to be radically simplified to reduce bills, blaming high prices on “legacy costs, policies and regulation, and the continued exercise of market power”, citing “spectacularly bad” government forecasts of rising gas prices when it handed out subsidies to nuclear and renewables.

The right-wing press, typically, focused on the latter, burying the impact of market forces and energy lobbyists beneath headlines like: ‘Excessive green tax forces up fuel bills’.

Helm’s main finding was that the UK market is terrifyingly complex, allowing the energy companies to mystify consumers with a myriad of tariffs and blame esoteric shifts in world energy prices for rising bills while reaping unwarranted profits. His solution was straight out of Adam Smith’s playbook – make the market simpler and more efficient to distribute the wealth more evenly.

Left-wing environmentalists engaged in a David and Goliath struggle with the Fortune 500, the Big Six, the popular press and a right-wing government therefore have Black, Watt and Smith in their corner - carbon dioxide kills animals, efficient use of air and water reduces the need to burn stuff, and efficiency breeds equality.

But if the SNP cannot demonstrate that it can run a company more efficiently than the Big Six without burning stuff, the descendants of Ayn Rand could crush their publicly funded renewable energy dream.

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