Could an independent Scotland deliver a low carbon future?

The Carbon Brief

In a little over three weeks, Scottish voters will head to the polls to decide whether their country should remain part of the UK, and politicians have been ramping up the rhetoric as the referendum draws closer.

Energy policy has been a topic the opposing camps have repeatedly clashed over. Those wanting independence – the ‘Yes’ camp – claim the country’s renewable electricity potential and North Sea oil and gas reserves can provide cheap, clean energy for decades to come.

In contrast, the ‘No’ camp claim independence could plunge Scotland into an energy crisis, with bills rocketing as the country struggles to fund its own energy sector.

So what difference will the vote make to the energy future of these isles?

Renewables: Plentiful potential, sparse funding?

Scotland’s first minister Alex Salmond has enthusiastically promoted the country as the “Saudi Arabia of renewables”.

The Scottish government has pledged to get the equivalent of 100 per cent of electricity demand from renewable sources by 2020. Scotland also shares the UK’s EU obligation to get15 per cent of energy from renewable sources by 2020.

Low carbon energy generation shouldn’t be a problem, in theory. At the end of 2013, 32 per cent of the UK’s renewable electricity was generated in Scotland. The country accounts for over 40 per cent of the UK’s onshore and offshore wind power capacity. According to a WWF report, the country has 25 per cent of EU’s offshore wind and tidal power potential.

But how such future development will be funded is a key question. Scotland currently gets 28 per cent of the UK’s renewable electricity subsidy, despite only providing 10 per cent of electricity sales.

Analysis from the Department of Energy and Climate Change (DECC) suggests that Scotland would have to raise £1.8 billion to hit its 100 per cent renewables goals. That could mean adding £129 to an average household bill in 2020, DECC says – joining the general (unsurprising) chorus of independence disapproval from government departments.

The Scottish government says it can avoid these issues by establishing an “energy union” with the rest of the UK. That would mean England, Wales, and Northern Ireland continue to fund renewable energy projects north of the border, importing low carbon electricity in return. That would enable renewables to continue to develop and all countries to hit their climate goals, the pro-independence camp argues.

UK energy secretary Ed Davey previously told the BBC that the rest of the UK would not pay Scotland’s “energy costs to ensure its own security of supply”. But in the event of a ‘yes’ vote, a more pragmatic approach might prevai. The rest of the UK is likely to need Scotland’s renewables to hit its own generation targets, and in the long run overseas renewable projects are supposed to be able to compete on equal terms for UK subsidies.

Fossil fuels: Boosting North Sea oil and gas

As well as talking up renewable power, Alex Salmond has been eagerly promoting what he sees as Scotland’s plentiful domestic oil and gas reserves. In a debate on Scottish independence yesterday, he said:

“the reality is North sea oil and gas will be with us way beyond 2050. Every other country in Europe would give its eye teeth to have North Sea oil and gas. It cannot be regarded as anything other than a substantial asset for Scotland.”

Historically, most of the UK’s domestic oil and gas has come from the North sea. But the UK is increasingly importing its fossil fuels as domestic production shrinks. Imports were at a record high in 2013, accounting for 47 per cent of the UK’s energy supply.

A review by energy magnate Sir Ian Wood on behalf of the UK government suggests there’s still around 24 billion barrels North Sea oil waiting to be tapped. But much of this is in depleted wells and will be difficult and expensive to extract.

Last week, Wood revised his estimate downwards, saying only around 15 and 16.5 billion barrels were likely to be extractable.

There’s also a question as to whether Scotland can shoulder the cost of supporting an industry in its twilight years. To keep the industry going, the Scottish government would have to invest around £3,800 per person to match the £20 billion the UK government has set aside for decommissioning costs, DECC suggests.

If the Scottish government was to decide it wasn’t worth the cost – or it simply couldn’t afford it – a significant part of its energy sector could die off . That could be bad for the country’s economy and energy security.

But if it decided to plough billions into ensuring every last drop of North Sea resources is extracted – as the UK government says it will – it could end up missing its climate goals. Developing expensive carbon capture and storage technology could limit emissions from burning the fuel, though the UK government currently funds those multi-billion pound efforts, too.

So while a low carbon energy sector could be achievable in an independent Scotland, in theory, it looks like it would cost.

If the ‘yes’ vote wins on September 18th, the new country will be likely to do whatever it takes to boost its economy. That could mean neglecting what it sees as expensive renewables in favour of supposedly cheap North Sea fuels – however long they last – with climate change commitments falling down the country’s list of priorities.

Or it could mean going all out for everything available, and perhaps becoming a renewables powerhouse. Part of what makes the idea of Scottish independence so interesting is how difficult it is to know what would actually happen.

Source: The Carbon Brief. Reproduced with permission.