Environment

2007 - 2021

Beyond Black Gold

The chair of the Growth Commission, Andrew Wilson has stated what a lot of us have been saying for a very long time, that the economic case for independence should not include North Sea oil revenues. Wilson has suggested that making North Sea revenues central to the economic arguments for independence ahead of the 2014 referendum was a mistake. He told BBC Scotland:

“I can say with some certainty in terms of our own work that we’ll assume for the purposes of our projections that oil is producing zero revenues and therefore treat any revenues that we get from oil as a proper windfall to be used on intergenerational projects rather than spent on spending today.”

He continued, reflecting the new pragmatism emerging as the basis for a second referendum:

“I guess that’s why oil’s not a particularly helpful argument – because it gives the suggestion that somehow there’s a free lunch and that we won’t have to work, and of course we all will have to work no matter what happens. Independence would give us more tools and that’s what’s different”.

c6t1qhfxeae_qvbThis came in the same week as the Financial Times report of a North Sea revival:  “Energy companies active in the UK North Sea will generate positive free cash flow in 2017 for the first time in four years, as groups show signs of recovery following the oil price crash of 2014, says the industry’s trade body.”

This revival, if it is indeed a revival, is of course completely beside the point, as Wilson, and no doubt the upper echelons of the SNP know fine well. The petrochemical case for an economy has been undermined since the first referendum and to continue or repeat that case would be political suicide.

Of course the far  more compelling reason to shift our economic and political focus is the harsh realities of our climate crisis, a point made repeatedly by this site and by the Scottish Greens for a very very long time. It’s a reality undisputed only by a tiny shard of people globally. It’s a point made vivid by this graphic of the reduction in perennial Arctic sea ice from 1984 – 2016 shows (in case you needed convincing).

So the choices we face about what kind of country we want to live in – and what kind of future we want to create cannot be exclusively constitutional.

The simple fact that the opportunity for Scottish renewables is vast is also a reason to make this long-overdue shift as part of the transition to a low-carbon society. This week saw two further announcements that are far more prescient than the Brent crude oil uplift.

methode-times-prod-web-bin-1e820606-01c8-11e7-ae09-71f14792998aFirst we heard from Atlantis Resources that:

“Developers of the world’s largest tidal stream energy plant have set out ambitious plans to slash its power generation costs by more than half in an attempt to secure subsidies for the project to continue. Atlantis Resources has installed four turbines on the seabed between the northern Scottish mainland and the island of Stroma. It hopes to expand the project, known as Meygen, eventually to build 260 such machines, which it likens to “underwater windmills”, harnessing some of the fastest-flowing waters in Britain to generate up to 398 megawatts of electricity, enough to power 175,000 homes.”

Second we heard new figures on renewables (‘Wind turbines ‘provided two thirds of Scots energy needs’) prompting WWF Scotland director Lang Banks to say:

“Thanks to a combination of increased capacity and stronger winds, output from turbines was up more than two-fifths compared to the same period last year. This was enough power to provide the equivalent of the electrical needs of almost four million homes. As well as helping to power our homes and businesses, wind power supports thousands of jobs and helps Scotland to avoid over a million tonnes of polluting carbon emissions every month.”

Now oil and renewable are very different energy sectors, but in terms of where we put our investment and where we create our economic and our ecological wellbeing (and how we deal with the North Sea) they are deeply connected. One is future-focused and life-enhancing and one is backwards-looking and life-draining.

Commenting on Andrew Wilson’s comments Friends of the Earth Scotland Director, Richard Dixon said :

“This is a very welcome recommendation.  The oil industry is in terminal decline and the future economy of Scotland should be based on our huge advantages in renewable energy rather than on a climate-wrecking industry of the past.  Following the Paris climate agreement financial investors are beginning to realise how risky new investments in oil and gas are and Scotland shouldn’t be banking on North Sea oil in future.”

And, on a less positive note: “A vital part of any future divorce from the rest of the UK would be agreeing who is going to pay the tens of billions of public money needed to remove the rigs and other structures the industry has litter across the waters around Scotland.”

The approach outlined by Wilson is likely to cause apoplexy amongst two significant groups. One is the self-styled unionist economists who view the fluctuating oil price as a political godsend (it is) and proof that Scotland is an economic basket-case (it isn’t). They are argue this in all worlds under all circumstances and are unable and unwilling to update their economic case for the union, which they will desperately need to do as their cultural case is fundamentally broken. The other group who won’t like this at all is the Petrol Heads in the Nationalist community, who either somehow prioritise independence over climate, or are so wedded to the idea of ‘It’s Scotland’s Oil’ that they can’t see past this. For some of this generation ‘Oil is Liberator’.

There are some who argue that Scotland’s contribution to climate change is so insignificant we should ignore any limits. You see this frequently argued on some platforms. It’s a bit like arguing “Look I don’t want to stab you but if I don’t someone else will”. If that argument holds sway they should petition the Scottish Government to abandon its famously world-leading climate change targets and get cranking the Fracking while we’re done.

Making the case for independence for Scotland means looking ahead not clinging to the past – and having some imagination – combined with a healthy dose of pragmatism. That is what will win us not just a functioning democracy but a sustainable ecology and a flourishing economy.

 

 

 

 

Comments (20)

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  1. ronald alexander mcdonald says:

    Good article Mike.

    The UK badly needs oil exports to boost their Current Account, which is dire. In fact the worst since 1930.
    It may be worth considering letting them have it all, in lieu of retaining the debt. In addition, we would waive our right to any joint assets, which are substantial.

    I’m not saying we should, but it’s an option. That would reduce our deficit by £5bn (includes debt to local authorities).

  2. Ian says:

    I agree that we should be looking ahead but we can’t ignore the past, particularly the abysmal economic performance of the UK governments over the past few decades (at least) when compared with our European neighbours. Looking ahead is pragmatic and progressive but without independence the future will be determined by a UK government and the past is the best guide as to what that would hold and therefore equally pragmatic.

    Possibly the best view of the UK’s position today and during the past 30 years, is to look at the UK’s trading account position, which has been negative since the 1980’s (and would have been much worse without North Sea oil) and then look the factors that mirror the poor economic position and relentless downward trend year by year. Capital investment % GDP and R&D spending % GDP, with the UK at the bottom compared with Germany, Denmark, Holland & Sweden every year. Then look at the reality of such economic failure – Health spend % GDP. Bottom again. Each year for past 20 years or so. Productivity? Same story.

    http://www.theglobaleconomy.com/compare-countries/
    https://www.theguardian.com/business/2016/feb/18/uk-productivity-gap-widens-to-worst-level-since-records-began

    So to ignore the continuation of poor UK economic performance, with quite likely even worse to come, would be a folly since painting a positive picture of the future for an independent Scotland, no matter how positive and realistic, will mean nothing if, by ignoring the flip side to independence, Scotland votes to remain in the UK and therefore that positive and realistic future will simply not happen and Scotlands future will be a continuation of the UK’s decline. Independence and remaining in the UK should not be kept separate. Both need to be openly communicated to get a full view of what the future will most likely hold. The relentlessly poor UK economic performance for decades compared with our neighbour’s is simply a matter of record and one that blows apart all the rhetoric that UK PM’s have spouted over the years and which continues today. The UK’s abysmal economic track record surely has to be the weakest part of the UK’s argument against independence.

  3. Crubag says:

    The big questions for the growth commission are on economic model (how much state, how much market), and on monetary and fiscal policy, and now on Brexit. These are the big issues.

    Scotland’s current energy mix doesn’t lend itself well to any particular argument. Renewables still need subsidies, and that depends on rUK consumers and on Westminster decisions (with Brexit and Tump potentially changing the international framework for mitigation). Our energy networks are becoming more interdependent, not less.

    North sea oil extraction doesn’t fit well with the proposed reduction in greenhouse gases – but then nor does cutting Air Passenger Duty to encourage more flights.

    But I think right to invest NS funds, such as they are, as Norway has done, given the size of the economy. Decommissoning costs will need to be factored in too.

  4. Frann Leach says:

    Seems he wasn’t paying attention. It was the Unionists that went on about oil. Alex and the rest of the independence movement said that the oil was “a bonus” and not needed to balance the books.

    1. interpolar says:

      I agree that your statement is an important point that is missing in the article and should have been mentioned. Nevertheless, despite being declared a bonus, oil was calculated into every single statistic showing Scotland’s revenue past, present and future. So in effect, it was not treated as a bonus, but part of the economic bedrock. That has come apart – but with it, also the “broad shoulders of the UK”, which have done little to prop up Aberdeen’s economic hardship.

      But we shouldn’t forget, the oil industry is more than just what can be extracted from the North Sea. Aberdeen has become a cluster of marine know-how which can exports products and services to the rest of the world (as long as it is enhanced by EU’s far-reaching trade agreements). Westminster has totally lost sight of this detail. The Scottish Government should not.

  5. bringiton says:

    I think it is clear to everyone now that the only people denying climate change were those with a vested interest in maintaining the profits of oil and gas production companies.
    The drive to de-carbonise our economies gathers pace as the global movers and shakers accept the reality of man made climate change and that doing nothing is not an option.
    George Osborne’s contribution to this was to put UK tax payers money into expensive nuclear power stations which may assist with their determination to isolate themselves from all things European but as with everything else will be at a cost to UK tax payers.
    The European smart grid being developed will allow future energy planners to diverge from the historical perceived need to provide “base load” in house and render these white elephants largely redundant.
    Scottish renewables could play a major role in the formation of the new pan European grid but if we stay within the UK,will have policy continued to be made in London,based not on what makes best use of technology but what fits best with their political ideology.

    1. Crubag says:

      The EU is also pro-nuclear. It just signed-off on Hungary’s new n-plants to be built on the banks of the Danube. Funded by Russia.

  6. Alf Baird says:

    Scotland is self sufficient in all things – water, oil, gas, renewable energy, utilities, farming, land, labour, whisky – yet still we allow ourselves to be exploited, independent or not, e.g. fuel poverty, offshore tax havens, etc. Public ownership is the key, and the real role of government is to prevent the interception of economic rents, not to promote it, as now.

    1. You are right Alf – public ownership of energy utilities absolutely vital. I think too that the good thing about renewables is they are scaleable down as well as up. So you can imagine big Hydro and big tidal or offshore wind being publicly owned but smaller tidal or turbine or solar being community owned or micro generation from homes. With recent Tesla storage facilities this latter is likely to become an essential and growing part of the mix.

      1. alasdair galloway says:

        You mention hydro, which is something I have long wondered has not been developed further. I recall in fourth year Geography at school (its a miracle I can do this after such a long time!) talking about hydro projects and Scotland’s potential to develop these. Yet since then, very little has happened. Is there any reason for this? It seems odd, given Scottish geography (its not like we are short of hills/ mountains), and that they can often be hidden in the hillside, why more hydro schemes have not been brought forward.

        1. Hi Alasdair

          thanks for the comment. Actually there’s been significant developments in hydro, not least of all pump storage hydro.

          As I wrote last year:

          “What about the idea that ‘baseload’ is an obstacle we simply can’t overcome? Ignored by all on GMS is the most well-known and tested alternative – pump storage hydro – which we already have at Scottish Power’s Cruachan plant and at SSE’s Foyers plant. This is ingenious. When the wind blows it pumps water to the top of the hydro facility, ‘storing’ that energy for when we need it, then releasing it when demand requires. Both Scottish Southern Energy and Scottish Power want to expand their pump hydro provision. This isn’t sci-fi and it isn’t thirty years off, it’s here and now.”

          and

          “What is missing in all this story isn’t just the investment in innovation and research to make genuine clean energy possible but a complete energy descent plan to take us away from growing demand. Insulation, smart technologies and – more importantly a civic commitment to reducing demand across the board planned strategically and towards which we all take responsibility – with a binding legislation to assure corporate compliance – is the key to transforming our energy futures.”

          See also Chris Cook on “how resilience, security and independence are bottom up not top down. This is how we move from a national grid to a natural grid” here:

          https://dev.bellacaledonia.org.uk/2016/10/18/on-energy-independence/

        2. Gordon McAdam says:

          Problem with hydro is that you can empty the dams in a day but it might take a week to fill them back up again. I say that based only on my limited experience of the hydro scheme in Galloway.

          1. Crubag says:

            Hydro was new technology in the 1950s and 60s, and there was a lot of development then. My recollection is that those schemes harnessed about 2/3 of the available resource (for about 5% of electricity generation) but that the remaining 1/3 would need about 7,000 smaller schemes to harness.

  7. Neil Winton says:

    The recent announcement of development money for a direct electricity interconnect to mainland Europe is also an important factor to include. We would have the choice of selling where we can get the best price and not be limited by the vagaries or penalties of the ‘National Grid.’

    It may be, given the projected costs of decommissioning, that we could offset those against our share of the national debt, though I don’t know if that would make any real difference as such, however, it does give us another bargaining chip.

    1. Thanks Neil – you are quite right, I should have mentioned that, its a vital part of the picture.

  8. Elaine Fraser says:

    Since the Scottish MSM refuse to show us anything but NHS bad night after night drip drip drip ..is there any chance at all of someone making a documentary about oil/renewables/climate-change/Scotland before Indy11 and getting it on tv? How else are the above points going to reach people and start them thinking?

  9. alasdair galloway says:

    good article – particularly that its going to take the wind out of the unionist sails next time because they cant bang on about how much oil is left, the price, the volatility etc etc. I take the point too about developing the renewables sector, though it is worth remembering – for the Unionist side will pick on any even possible weakness – that one difficulty with renewables so far can be storing their energy – put simply, what happens the day the winds dont blow or the tide runs a bit too slowly because the weather is too good. They WILL play on that.
    My one dissent would be that its easy to be hard on oil. Its use for such as power generation and transport etc is polluting, but at the same time we have to remember that its feedstock for chemical plants using it to make products other than petrol.

  10. Mathew says:

    ‘…a sustainable ecology and a flourishing economy.’
    I would say it’s one or the other, you can’t have both. Flourishing economies cause the problem so clearly illustrated in the sea ice graphic.
    But I agree entirely that we should ditch the oil argument for Independence.

    1. I think if we create an economy based on de-growth and de-industrialisation ten it is possible – completely different set of terms and values required

      1. Mathew says:

        Agreed. ‘Economy’ always tends to evoke Capitalism, growth, consumption but there’s no reason why it can’t instead mean thrift, efficiency or organised system.

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