How a country or individual approaches the politics of energy is perhaps one of the most significant bellwethers for party and personal politics there is. In 2016, the Conservatives chose to break up DECC – the Department of Energy and Climate Change – and instead wrap energy in with Business and Industrial Strategy. This bundling in of energy with industry and business belies the focus of the government as being energy’s commercial – rather than social – good. In the USA, the Department of Energy’s mandate stretches as far as the United States’ nuclear arsenal, truly encapsulating in a radioactive microcosm the sword-edge of Atlantic entrepreneurism.
Scotland’s booming renewables potential, then, presents not only eye-catching opportunity but also enormous responsibility for the policymakers and stakeholders involved in its exploitation. With the Conservatives’ announcement around the recent budget that no new forms of subsidy for renewables are to be announced until the mid-2020s, the conventional avenues of market guidance – “carrot and stick” – are now acutely warped, as we have apparently run out of carrots.
If Scotland wants to capitalise on its renewable energy in a sustainable and socially just manner, it needs to learn from past mistakes both in terms of how the industry was run when it was nationalised and how it is run now it is privatised. While the Conservatives have suspended new subsidies, the SNP have announced the creation of a public-sector non-for-profit competitor; pair that with Holyrood’s support of small-scale renewables through schemes like CARES and a broadly amenable planning policy for renewables and there is plenty of reason to be hopeful for Scotland’s future in energy- but also many potential pitfalls.
The UK has always had a bounty of energy resources, be that coal, oil, or gas- but the wealth derived from these has eluded much of the country. When the coal and steel industries fell out of favour these communities were simply dismantled whether the mills and mines were state owned or privately owned; all it takes is a callous enough business or a government with the will to allow it and enough political capital to afford it. The economic devastation that was wrought in the post-industrial heartlands of Scotland, Northern England, and Wales, speak in grim testament to the capacity of the whims of capital and the right to destroy industrial-centred communities when they can no longer profit from them. Just because the energy is coming from gusts of wind instead of fossil fuel does not mean the associated industry will therefore be immune from future tinkering by those with ill-intent.
Scotland has long acted as a hub of energy across the United Kingdom, but for many Scottish communities it has been a largely dysfunctional relationship between those communities surrounding the resources and those benefiting from the rents. A significant reason for this is because power over the distribution of resources and the wealth associated has laid not in Scotland but London, and the ownership of those assets has, correspondingly, not been with communities in Scotland but multinational corporations or UK-wide departments.
Conversely, if you go to rural communities in the Highlands and Islands, London is not the centralising enemy: in many cases, neither even is Edinburgh. The “black star” of these local economies is Inverness, drawing investment, capital, and young people from the Highlands and Islands away from their communities to a city hundreds of miles away. Centralisation of capital and policymaking can continue generations of depopulation and social engineering by landlords via less obvious, equally insidious means.
Wealth redistribution across a state from a wealthy region to those who need it, of course, is not in itself a bad thing – but that is not what occurs in the United Kingdom and is not traditionally ever what has happened when energy resources are involved. Energy flows south in Scotland, but so too do wealth and people. The discovery of oil provided a boom in rents which helped support Thatcher’s dismantling of British industry and centralisation of wealth and power, and Scotland must ensure that its renewable energy revolution does not simply replace dirty centralised industry with clean centralised industry; that the wealth and opportunity generated by wind, wave, and tidal benefits those who need it most – not those already fortunate enough to be able to afford microgeneration, insulation, and energy-efficient devices for their homes.
With a UK Government still bound to austerity, reluctant to invest in infrastructure on the scale needed to sustain the remarkable growth in renewables we have seen, and markets too flighty to wallop any further with regulation, the Government has left itself at an ideologically-induced dead end. This has been recognised in Lord Helm’s energy price review – but there has simply been no attempt to address the issues in Westminster’s budget or policymaking beyond cutting subsidies, which completely misses the fundamental problems in the system.
So, what is to be done?
Nationalisation will not solve these problems on its own if merely performed as done so in the past, as this will still leave communities just as vulnerable to future malicious governmental reforms. As renewables proliferate we must simultaneously look outwards and inwards; outwards to diversify our energy portfolios and utilise our neighbours’ energy assets to support our own via supranational energy markets, interconnectors, and emissions trading; inwards to facilitate local investments in renewable energy and community ownership of local energy resources. Larger scale energy projects and the national transmission system, however, require an economy of scale and co-ordination that is simply not possible on a community level and needs either massive companies to provide the capital or national governments’ investment.
Plenty of well-meaning and intelligent people have come up with all sorts of bright solutions to “fix” the UK’s energy market, but these are almost universally treating the symptoms rather than the sickness. Public sector ownership, too, will also not directly solve many of these issues if it is done in a purely centralising manner. Local system requirements must be paired with national interest and the independence of small-scale community grids must be encouraged whilst also balancing that with the need to have a secure, adequate national system.
There are no easy answers here, but it strikes me that at least the Scottish Government is trying to answer the right questions.
Privatisation of energy was sold as was as “democratising” ownership of centralised state assets, but this “democratisation” was based on buying rights to wealth via already having wealth. If we want to truly democratise ownership and the benefits of renewable energy developments it’ll take more than just replacing hedge funds as the primary shareholder with the UK – or Scottish – Government.
Magnus is a researcher in electrical engineering and high impact low probability events. Originally from Perth and an alumnus of Heriot-Watt and Abertay University, he is currently based at Strathclyde University and Imperial College London, researching the effects of climate change on the power system and how to anticipate and mitigate the effect of disasters on networks with the aim of reducing loss of life and economic harm associated with power outages following extreme weather events.