Energy and constitutional change

Before Christmas the first shots were fired in what is likely to be a lively debate over the role of energy policy in the independence referendum. The UK Energy Minister Ed Davey was in Scotland arguing in his Scotsman article:

“The Scottish energy industry is clearly a success story – but also a forceful case for a flourishing Scotland in a united kingdom that is stronger together. The reason lies in the economics of ­energy. A united kingdom offers Scotland a single market – millions more homes in demand of Scottish generation, millions more homes to spread the costs of energy infrastructure. Furthermore, Scottish generation benefits from nationwide energy networks that can support a diverse mix of generation which will become increasingly important as we bring on more ­renewables.”

At the subsequent Scotsman energy conference he claimed it is logical to assume that energy bills will rise “significantly” for Scottish families after independence if the burden of paying for the country’s renewable sector falls upon consumers in Scotland. In response the Scottish Government energy minister Fergus Ewing said UK ministers would end up accepting a continuation of the current single energy market across the UK after independence, on the grounds that, without Scottish energy feeding into the national grid, the “lights would go out” in England. To put it mildly, a pretty bold claim with not much evidence to support it. A leading academic at the conference described the claim as “exaggerated”.

The issue was examined in more detail at the Scottish Constitutional Futures Forum conference at the University of Strathclyde on 18 January. Academic experts set out, in a very balanced way, the constraints and opportunities constitutional change might bring. You can read the full presentations and questions on their website.

These constraints are not only within Scotland and the UK. EU energy policy is developing with the aim of a single European market through the Target Model. The Scottish Government sees this as ensuring that Scottish renewables are not discriminated against if Scotland votes for independence. There certainly are models for a single market operated by different states. The Single Electricity Market (SEM) in Ireland could be such a model for Scotland and the rest of the UK as it works reasonably well. Of course there was strong political support following the Good Friday Agreement and there was a specific economic problem with a dominant supplier. SEM has also had difficulties when one party changes its policy, as the UK government did with the carbon floor price policy. This was only resolved by Northern Ireland being exempted from the policy.

Another approach highlighted at the conference was Denmark, whose impressive renewable energy strategy was featured in the recent Nordic Horizons seminar. Greenland and the Faeroe Islands both have devolved energy powers. UNISON has argued that this approach could be followed in Scotland enabling the Scottish Government to pursue a different energy strategy while retaining a UK market. A different strategy might also follow aspects of the Danish approach with a nationalised grid and much greater community, co-operative and local government involvement in energy generation. I will be discussing this in more detail in my chapter in the next Red Paper publication and the seminar on 16 February. In the meantime, I would recommend Andrew Cumber’s new book ‘Reclaiming Pubic Ownership: Making Space for Economic Democracy’.  He sets out the main ideas in the latest issue of Scottish Left Review.

In yesterday’s Sunday Herald, Steven Vass breaks the story that the Scottish Government is going further than Fergus Ewing outlined before Christmas. They confirmed that plans to repatriate control over subsidy levels from Edinburgh to London in the Energy Bill would endure if Scotland voted for independence. This effectively means handing over the key levers of energy policy to another country, taking independence lite to new levels. I am quoted in the article as saying:

“The Nats are trying to steady the bus and calm down companies that are already concerned about renewable investments in the UK because of the uncertainty being created by the Government’s Energy Bill and the Treasury’s dash for gas. They obviously think that the best way to do that is by tying Scotland into a broader UK regime. I’m not convinced it will work. It would be entirely reasonable for an energy minister sitting in London to say to National Grid, ‘This is our new energy strategy, and if that inconveniences the Jocks so be it.’ There’s nothing that says the UK has to use renewables to meet the emissions targets – or, more importantly, Scottish renewables. There are all sorts of alternatives, such as rigging the market to favour English nuclear stations.”

Why is all this so significant to the constitutional debate? Because energy is not only a vital service that we all rely on, but it’s a vital element of the Scottish Government’s industrial strategy. That’s why energy will be a key issue for supporters of independence and extended devolution alike.

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