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Scottish Independence and UK Energy Policy

It’s cold up north and it might get a whole lot colder

The yes / no vote on Scottish Independence may still be five months away but that isn’t stopping the various factions getting in their claims and counter-claims. Most, quite frankly, are not terribly interesting or relevant, whilst some, like the future of the Pound really are.

One other element in this increasingly rancorous debate that has chimed with us is the claims from both sides around the impact of Scottish independence on UK energy policy.

On the one side, the current Scottish government has claimed that an independent Scotland would be essential to the UK for its future energy needs whilst on the other side, the UK government has confidently predicted that England and Wales have no need for independent Scottish energy generation.

Nationalists predicted the UK, without Scotland, would be unable to fulfil its carbon reduction commitments, and that Scotland had exported in excess of 25% of its electricity to England in recent years, leading Scotland to become the UK’s “energy reserve”.

The UK government dismissed such claims with Secretary of State for Energy and Climate Change, Ed Davey, backed up this calming of fears by saying:

“There would be no need for the continuing UK to support an independent Scottish state’s energy costs to ensure its own security of supply”

Mr Davey cited the fact that less than 5% of current energy supply was sourced from Scotland meant that any potential gap was small and easily covered by alternate sources.

In the typical wanting cake and eating it narrative of the Salmond initiative, the contrary expectation is that an independent Scotland would still be able to be part of an inclusive UK energy market and in addition gain greater control and audit over UK energy policy, despite not being part of the union.

Whilst some energy businesses predicted there would be some continuance of pre-exiting relationships post any break up of the union, Davey warned that an independent Scotland would be on its own in terms of funding any new generation infrastructure and would no longer receive UK subsidies.

Indeed Davey pointed out that an independent Scotland would be just another “foreign country” looking to compete in the UK market alongside other suppliers, claiming that French nuclear power and Irish offshore wind could prove to offer a better deal for consumers, Davey added:

“I haven’t done the calculations, but common sense shows that there are low-carbon options the UK could start to tap into which would be cheaper than the likely low-carbon options that an independent Scotland would be offering us.”

Indeed it is claimed that if under independence Scotland was inevitably extracted from the UK energy market then the costs of network investment, support for small-scale renewables and subsidies for remote areas, which are currently borne by all UK consumers, would fall solely on an independent Scotland’s population base.

This was forecast to add an astonishing £110,000 to the energy costs of an average independent Scotland based medium-sized manufacturer.

If the full cost of supporting “large-scale Scottish renewables” were included, the bill increase would rise to £608,000!

Unsurprisingly the proponents of an independent Scotland dismissed the claims as “scaremongering”, whilst Alex Salmond, in typical boisterous mood told a New York audience that rather than having any fears over an independent Scotland’s relevance to the UK energy market and its ability to fund itself that:

“It’s time for Scotland – working with nations and companies from across the planet – to become the intellectual powerhouse of green energy”

Despite the drudgery of a lot of the independent Scotland commentary It will be fascinating to see which way the wind blows in September and whether the UKs worst fears or Alex Salmond’s highest hopes come to bear.

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