Some things work better when they are together - united and integrated. Energy certainly does.
In the UK, as one nation, our integrated, single energy market is delivering the investment, jobs and power we need. The same goes for booming oil and gas industry in the North Sea and our world leading renewables sector - both are successes in the UK, helped by the UK.
Take our oil and gas industry. The UK and Scottish governments have both agreed that the best way to maximise our north sea resources is through the Wood Review, commissioned by the UK government. The Wood Review proposals are expected to increase the potential output by between 3 to 4 billion barrels of oil and gas worth over £200 billion over the next twenty years. We are implementing the review's recommendations quickly so that Aberdeen, Scotland and the rest of the United Kingdom can continue to reap the benefits in the years to come. The reforms needed will be challenging, both for government and global investors in the North Sea, but there is increasing confidence we can deliver.
The renewables sector is another successful UK energy story. Since 2010, businesses have announced over £34 billion of investment in renewables in the UK - £14 billion of which is in Scotland. That investment has the potential to support around 12,000 Scottish jobs. The UK government's vision for the world's first ever low carbon electricity market has given industry and investors the long term financial and legal frameworks they need to commit billions of pounds of investment into infrastructure projects with lifespans of over 25 years.
Even though Scotland accounts for just 10% of electricity sales, it already benefits from a disproportionate amount of support for renewable energy - 28% of the total UK-wide support for renewable generators (around £560 million). Scotland's green investments are doing well within the United Kingdom.
I am not the only voice arguing these points. The engineering giant, AMEC has recently said that independence would create uncertainty at a time that the North Sea needs billions of pounds of investment. Last month, Bob Dudley from BP also warned of the "big uncertainties" that independence brings.
The Scottish consumer could take the brunt of any changes. Currently the UK has amongst the cheapest energy bills in Europe and we are doing everything we can to keep it that way - despite all the rises in gas prices in international markets.
Independence would change this. The rest of the UK wouldn't contribute as they do now to the costs of supporting Scottish energy network investment, small-scale renewables and programmes to support remote communities. Instead those costs would fall on Scottish bill payers alone. That would add at least £38 to annual household energy bills and around £110,000 to energy costs for a medium-sized manufacturer in 2020.
Yet the increase in people's energy bills could be much worse. If the full costs of supporting large scale Scottish renewables fell to Scottish bill payers the total potential increase would rise considerably - up to £189 for households a year and £608,000 for a medium sized manufacturer in 2020.
Of course the SNP's energy script is different. But the reality is England imports more electricity from France and the Netherlands than it does from Scotland, and we're making plans to import more with new interconnectors.
Yet, above all, we want Scotland to remain part of the UK - energy will be cheaper, more secure and more green, for everyone, if we stay together. It makes no sense to risk the energy and economic progress we're making, together.
The "Scotland Analysis Paper: Energy" is available on GOV.UK
1 comment
Comment by Peter Strachan posted on
The goal of UK energy policy should be to ensure security of supply for households as well as businesses and to ensure the affordability of the electricity we use. Unfortunately, you have taken your eye off the ball and are scoring an own goal by failing on both fronts.
In particular your flagship initiative – Electricity Market Reform – has led to a hiatus in energy investment. This failing is very bad news for England. In effect we are now seeing a critical reduction in our energy capacity reserves, which will eventually see electricity costs spiral out of control. For London this might well mean the lights going out post 2015.
As Scotland exports approximately 25% of the electricity it generates, this is not such a problem for Edinburgh. In Scotland, we produce much more than we use. In recent years this has been bolstered by a truly world class renewables industry. Scotland now produces nearly the equivalent of 50% of its electricity from renewable energy sources such as onshore wind and hydro. This will increase to around 70% by 2017.
I strongly reject your announcement last week that if Scotland votes ‘Yes’ then Scottish electricity bills would increase. This claim is evidenced by a comprehensive report that I published with colleagues from a number of Universities from across the United Kingdom in December.
To summarise some very complex arguments, as a result of the Coalition Government’s decision to fund new nuclear build, what we found in this report was that a Scottish Government committed to no nuclear build would actually see reductions in consumer electricity bills compared to the rest of the United Kingdom. Scottish consumers would not be subsidising the hundreds of billions of pounds of investment that new English nuclear power stations require.
Already the Department of Energy and Climate Change (DECC) spends £2.5 billion or 42% of its annual budget on existing nuclear legacy. Of that £1.6 billion is spent on managing the waste at Sellafield alone. In your misguided aspirations for new nuclear build the Coalition Government is now writing a ‘blank’ cheque. At a time of unprecedented financial austerity this is somewhat astonishing.
Under no scenario can I see in an independent Scotland electricity bills increasing along the lines outlined by your announcement last week. In an independent Scotland, even with an integrated electricity market, Scotland would be able to sell its electricity to England at commercial rates. England currently has to resource its electricity requirements from Scotland; there is no alternative source.
Scotland offers an excellent model of how to deliver a world-class energy policy. The Coalition Government could learn much from Scotland.