The case for devolving energy policy to Scotland
Devolving energy policy would tidy up the often conflicting mix of devolved and reserved powers and enable Scotland to develop new approaches to energy policy.
At present energy is a largely reserved matter to Westminster. Specific reservations in Schedule 5 of the Scotland Act 1998 include the generation, transmission, distribution and supply of electricity; the ownership of, exploration for and exploitation of deposits of oil and natural gas; Coal, including its ownership and exploitation; Nuclear energy and nuclear installations. However, secondary legislation has devolved aspects of these powers including the Renewables Obligation in Scotland and consent for power stations greater than 50MW onshore and 1MW offshore.
Perhaps even more importantly, environmental legislation and planning are fully devolved matters. The Scottish Government has used these powers to set more ambitious targets for reducing greenhouse gas emissions by 42% by 2020 (UK target 34%); 50% of all electricity demand from renewables by 2020; and finally aims to decarbonise electricity demand by 2020. Most notably, the Scottish Government has used its planning powers to rule out new nuclear power stations, although supporting life extensions to existing capacity.
These conflicts have resulted in well publicised disagreements over issues like transmission charges that discriminate against Scottish generators; Electricity Market Reform (EMR), support for renewables and subsidies for nuclear power.
The Scottish Government believes that the Scottish Parliament should have greater responsibility for all energy policy and regulation, including all oil and gas. They argue this would deliver a streamlined approach and allow Scotland to design a regulatory and fiscal landscape which maximises the return from the energy sector, encouraging a sustainable industry for the benefit of the people of Scotland. This would include joint oversight of UK-wide bodies such as OFGEM, and an arrangement of shared competence in relation to the new Oil and Gas Authority proposed for Aberdeen.
With these additional responsibilities, it is argued that Scotland could also capitalise more fully on its comparative advantages in the energy field. The Scottish Government could advance community and local ownership of energy; and better address societal inequalities through tackling fuel poverty. The connection of the islands to the national grid could also be prioritised.
There is of course a certain irony in the Scottish Government’s position. In the referendum they claimed Scotland would remain part of the UK energy market, despite the obvious consequences for renewables. Scotland gets a third of the UK’s renewable support with less than a tenth of the population. The Scottish Government’s claim that the lights would go out in England without Scottish renewables, was simply not credible. The rest of the UK has a wide range of options, including new interconnectors to Europe and their capacity margins will be tightest when the wind isn’t blowing. So, intermittent Scottish renewables would be the wrong energy at the wrong time.
The UK Government position in the referendum was equally weak. They failed to properly address their management of capacity margins, the mess they have made of EMR, energy prices and the consequences for fuel poverty. Their green credentials are in tatters due to the malign interference of the Treasury in energy policy.
Devolution could well deliver the best of both worlds. Security of supply and support for renewables, as well the opportunity for Scotland to develop a distinct energy strategy. Instead of being a minor player pleading from the outside, Scotland could have a constitutional role in the UK energy market. There is also a potential gain at UK level, with Scotland able to play a positive role in developing a coherent energy policy, rather than just blaming Westminster. The recent problems at Hunterston and ScottishPower’s announcement on Longannet could mean the loss of 40% of Scotland’s generating capacity. A prospect that should shake the Scottish Government out of its own naive approach to energy generation.
Having powers is all very well, but the acid test is how you use them.
A Scottish energy policy should use our abundant renewable energy resources, within a balanced UK and Scottish energy system. A planned energy policy than relies less on the vagaries of the ‘kid on’ energy market and makes a real contribution to reducing greenhouse gas emissions. A formal role in regulation will support the necessary reform of the regulatory system, including transmission charges and retail prices. That links energy efficiency, price and welfare – the three elements that are needed to tackle fuel poverty. It can also link already devolved matters such as training and education to address the workforce skills gap. We set out these approaches in more detail in our policy paper ‘Scotland’s Energy-Scotland’s Future’.
There are international precedents for devolving energy powers. For example, Greenland and the Faroe Islands have devolved energy powers within Denmark. In recent years there has been renewed interest in local generation with local government leading the way in countries like Germany. We need to break away from the big business model of energy that is concentrating wealth in the hands of foreign corporations. One of the strengths of devolution is the ability of smaller parts of the UK to try different approaches. Scotland could be radical and innovative, with the devolved powers and the political will to use them.
UNISON has long argued that energy policy should be devolved to Scotland. It would tidy up the current mismatch of powers that allows governments to stop developments rather than encouraging new approaches. The UK would benefit from the innovation and Scotland would take responsibility rather than looking to others. That looks like a win-win for everyone within these isles.
- Posted in: Constitutional change