Securing the Benefits of Scotland

Securing the Benefits of Scotland’s Next Energy Revolution
Scottish Government
09.12.10

 

Introduction

 

1. The just exploitation of the environment is a challenge for every generation; to share our resources amongst our people, while preserving the integrity of our assets for future generations. It has been a central tenet of this administration that the assets of Scotland’s land and water should be available to all and should be as widely enjoyed as possible.

 

2. Our land and sea provide a wealth of renewable energy opportunities. Renewable energy is the next great energy revolution, set to transform economies as coal and oil did before.

 

3. Previous energy revolutions have provided boosts to our economy but have often done little to provide long term benefits. The benefit from the discovery of North Sea oil has been thus far largely used to sustain day-to-day government spending. In contrast, Norway used this bounty to invest in the future care of its people, creating in 1990 a Government pension fund which today is worth the equivalent of £294.09 billion. Norway understood that it is the people who own the environment, and the people should manage this natural gift for future generations.

 

4. During the last decade, Scotland’s potential low carbon energy resources – in wind energy, wave energy, tidal energy, and carbon capture and storage ( CCS) – have been shown to be of European significance. Exploiting these resources in an environmentally sustainable manner will enable Scotland to lead the world in the transition to a low carbon economy over the next four decades.

 

5. The development of renewables is of benefit to Scotland as a nation: it will help us meet our rigorous climate change targets and help us generate substantial new economic activity, jobs, prosperity, and a new place in emerging global markets. The people of Scotland are also entitled to benefit directly from this revolution, as its draws on collective resources and impacts on communities. The Scottish Government is therefore committed to the principle that the people see some return on the exploitation of our natural environmental assets.

 

6. The development of renewables occurs on land and at sea. This means that many bodies are involved – the powers of the Scottish Government, of local authorities and, as manager of the seabed, of the Crown Estate Commissioners. It is a complex landscape and it is right that we consider now – at the start of this next energy revolution – whether the right structures are in place to enable Scotland to receive a lasting legacy. Habits and practices have grown up around the exploitation of offshore oil reserves and it is important to reflect on the lessons learned from these previous energy revolutions.

 

7. The Crown Estate Commissioners is a unique body within the UK constitution. It administers certain property, rights and interests which historically belong to the Crown in Scotland. It manages the Crown Estate on a UK basis and is responsible to the UK Government. Surplus revenues are passed to HM Treasury. It has been a long-standing policy of the Scottish Government that the role of the Crown Estate Commissioners in Scotland be clarified and it become accountable for its activities to the Scottish people.

 

8. While firmly committed to the principle of community benefit, the Scottish Government is also mindful of protecting a competitive commercial environment. Our vision is that Scotland should be the best place in the world for doing business in the low carbon energy sector. This will build on Scotland’s leading position as Europe’s oil and gas hub and our pioneering role in harnessing hydro-electric power. This Government has set out this vision in our Renewables Action Plan, our National Renewables Infrastructure Project and our Low Carbon Economic Strategy. We are setting out plans for how our national water resource can also contribute to our economic and environmental strategies. We are committed to developing the renewables sector and low carbon technologies so that Scotland can continue to be a leader in sustainable energy production and use in the post-carbon world.

 

9. We now want to take the opportunity to seek views on this subject. At the same time as ensuring that we make this revolution happen, how we can be sure that it provides a significant and long-term legacy for Scotland at both a national and a local level?

 

10. The principal questions on which this consultation paper seeks views are:

 

In what ways can the legal framework within which the Crown Estate Commissioners operate be reformed to ensure greater accountability for the management of the Crown Estate in Scotland to the people and government of Scotland?
How can Scotland benefit fairly from the opportunities which will be created by the development of our renewable and low carbon energy sources?
How can we enable local communities to enjoy substantial, long-term and tangible returns?

 

11. Without change, Scotland will not receive a revenue stream from exploiting its renewable off-shore energy resources. We should be able to use those resources, for example to develop our peripheral and remote communities. It cannot be right that the main beneficiaries are UK bodies and not the Scottish people.

 

12. If we can get the basics right, the benefits to Scotland and its local communities could be substantial and long-lasting:

 

Local communities would be empowered to take a real stake in the low carbon energy opportunities on their doorsteps and to invest the benefits from such opportunities in their future. This could enhance the future for some of our most remote and isolated communities.
Developers would benefit from working in an environment where local communities and businesses actively support and wish to be part of low carbon energy projects.
Scotland could place itself at the heart of European sustainable energy production and use. With the availability of additional powers and funding, Scotland would be better placed to lever in further substantial funding from the private sector, the European Union and the European Investment Bank to provide the capital injection required to make a reality of our low carbon energy ambitions. We would ensure that innovative and early-stage technologies are put in place ensuring Scotland maintained its position as a leader in renewables deployment and technology development.

 

13. This consultation paper sets out proposals on how we can respond to these questions. It also invites further suggestions about how to secure community benefits from renewable energy developments and how the financial benefits realised for Scotland can best be used. In summary, our proposals are:

 

Bringing about a fundamental reform of the administration of the Crown Estate in Scotland so that it is more accountable to the views and wishes of the people and Government of Scotland and so that the revenues which the Crown Estate Commissioners receive from offshore low carbon energy projects benefit Scotland, in particular our coastal communities.
Setting up a Future Generations Fund to give all of Scotland a real stake in the development of renewable energy.
Ensuring communities benefit fairly from renewable energy developments by creating a publicly-available register of community benefit. This would ensure greater transparency for land-based renewable development.
Enhancing community benefit within the planning system and maximising community benefit from renewables projects on property in Scotland owned by the public sector.

 

14. Scotland must not let the opportunities created by its next energy revolution pass. The Nobel Prize-winning economist, Joseph Stiglitz, recently made a very similar point when discussing the UK’s failure to maximise the benefit of North Sea oil and gas exploitation:

 

"You took all that North Sea oil and you did very well, for that period, because you were living off your wealth. And you mistook the success of the Thatcher era as a success based on good economic policy when it was really a success based on living off your wealth, leaving future generations impoverished. […] You should now realise the mistake of the past. You don’t have that asset and you have to make up for lost time". (Newsnight interview ,BBC Scotland, 24 August 2010)

 

15. We cannot allow the mistakes of the past to be repeated. We must ensure that, in stewarding our plentiful natural assets sustainably and for the benefit of all, the benefit streams from those assets do not bypass Scottish people or flow out of Scotland altogether.

 

16. Views and comments are invited on the issues raised in this paper by 18 February 2011 and should be submitted to securingthebenefits@scotland.gsi.gov.uk.