Edward Davey launches the Scotland Analysis Energy Paper
As the UK Government publishes its analysis of the implications in energy of Scottish independence, Ed Davey speaks about Scotland’s energy future within the United Kingdom.
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Introduction
I am here in Edinburgh today to make the case for the United Kingdom.
And to make the case for Scotland’s place in the United Kingdom.
And today, as the UK Government publishes its analysis of the implications in energy of Scottish independence, I want to talk specifically about Scotland’s energy future within the United Kingdom.
Before I go into detail, let me first address the wider debate on whether we are better off together or apart.
You know, as the UK Energy and Climate Change Secretary I’m regularly here in Scotland.
This is business as usual for me.
The Department of Energy and Climate Change is co-located in Aberdeen.
And as I have said here in Scotland many times before, I have no doubt that with the talents of the people, and the natural resources of the land, Scotland could make a go of it alone.
But to do this, the people of Scotland will have to give up being part of family of nations that make up the United Kingdom.
Not a holiday, not a sabbatical.
But an irrevocable, irreversible act of divorce.
That closes the book on three hundred years of shared history, shared fortunes, shared fates.
The decision that the people of Scotland will take in September is monumental.
Not just for the people here but for the people of England, Northern Ireland and Wales too.
Because if Scotland chooses to go it alone, it will have a huge and lasting impact on all of us.
Because the United Kingdom is more secure and richer with Scotland in it.
And Scotland is more secure and richer as part of that family.
Families stick together
Yes, we can split up and be small countries making our way in the world.
But such a decision would leave all of us, all of us, poorer than we are today.
Not just in an economic sense – but emotionally too.
Together we are a great country.
Greater than the sum of our parts.
People always say that you never really miss something until it is gone.
And I think that if we wake up on 19th of September to find that our United Kingdom has been sundered forever, we will regret it for the rest of our lives.
And that is why, although this is a decision being taken by the Scottish people alone, all of us in the United Kingdom have a stake in the outcome.
All of us have the right to be heard.
Not bullied into silence, or scared off, or told we have no part in this, or our views don’t matter.
Just think about what would never be the same again.
Just think about what we would have to do to unpick the ties that have bound us together.
Things that affect all of us in the United Kingdom.
Our economy - the money we use, the taxes we pay.
The debts, pensions and liabilities we have built up together for better or for worse.
Our welfare state.
One of the crowning achievements of the post-war generation.
That supports every citizen of the United Kingdom in sickness and in health.
The Armed Forces that protect us and our way of life
The historic units that trace their history back centuries.
Who have fought for us and died for us in good times and in bad.
This United Kingdom is so much more than a marriage of convenience.
Just a body of law and regulations.
It is a Union of the heart and the mind and the soul.
We are a family and we should stick together.
Better together, poorer apart.
Energy powerhouse
And in no area is that more true than in energy.
The industries and networks that generate and deliver power around this United Kingdom.
Keeping our houses warm, our lights burning, our businesses working.
As part of the United Kingdom, Scotland is fast becoming an energy powerhouse.
One of the world’s energy hubs.
And this is being achieved precisely because Scotland is part of the United Kingdom.
Supported by the integrated energy market across Scotland, Wales and England of 30 million homes and businesses.
Supported by the pull and weight of the UK economy with the scale of the financial support it can provide.
Scotland’s energy future is booming.
Oil and gas
The UK is providing substantial help to industry to maximise output and revenues from the North Sea oil and gas as the challenges of extraction are increasing.
And, in the process, supporting the 225,000 Scottish jobs that directly rely on the oil and gas industry.
We are also investing heavily in decommissioning and cleaning up those areas that are becoming depleted.
Can Scotland do this alone?
It would be far more difficult.
North Sea Oil revenues fluctuate.
Since devolution anywhere between £2bn a year and £12bn a year.
The weight of the UK economy can soak up this uncertainty as it amounts to only 1.5% of income.
But for Scotland, North Sea revenues would have been almost 14% of income.
In the UK, Scottish tax payers are shielded from over-reliance on a single uncertain strand of income.
In Scotland alone, they would be exposed.
Take decommissioning.
An independent Scotland would have to invest around £3,800 per head to match the £20bn the UK has committed to decommissioning
That is over ten times more than when the costs are spread across the UK.
Scotland’s Oil and Gas industry prospers in the UK and Scottish taxpayers are protected from volatility and uncertainty.
Better together, poorer apart.
Renewables
But it is not just the traditional oil and gas industry that makes Scotland’s energy future within the UK so bright.
It’s the new green energy industries too.
A third of all renewable generation in the UK is now in Scotland.
This is a fantastic story bringing jobs and investment to local communities.
And the pipeline is looking very healthy.
My Department’s planning database shows that Scottish renewables projects set to power a further 4.3 million homes (5GW), have been approved.
Worth around £4bn, supporting over 4,000 jobs.
And further Scottish renewables projects are currently in the planning system have the potential to serve up enough electricity to power another 8 million homes (9.7GW).
Worth over £10bn, supporting almost 8,000 jobs.
This success is being mirrored in other parts of the UK too.
I’ve been able to boast with my European colleagues about how the UK has become Europe’s renewable investment hotspot.
Many on the continent are casting envious glances our way.
By working together as the United Kingdom, with our integrated systems and markets, we share the risks and costs.
And share the benefits too.
I am convinced that we can meet the ambition of the Scottish Government, one that I fervently share, for renewables sources to meet 100% of Scottish electricity consumption by 2020.
So let’s get down to the heart of why this green future, this green ambition, the interests of both Scotland’s new green energy industry and Scotland’s households are better served within our United Kingdom.
Better off together
These new industries need support to compete as technology matures and costs are reduced.
And because of the success of Scottish renewables, although Scotland accounts for some 10% of electricity sales in the UK, it receives 28% of the support paid by all UK consumers to renewable generators.
And then there are the networks.
£6bn has also been earmarked over the next seven years to upgrade and improve the electricity transmission network in Scotland to support this green boom.
Reaching out to the remotest islands.
Within the United Kingdom, Scotland’s people are protected from the full costs of this necessary transmission work and support for renewables.
All 30 million UK consumers pay an equal share.
Because we are part of an integrated market place.
If Scotland became an independent state, the current integrated energy system could not survive it is current state.
Both the independent Scottish state and the continuing UK would be focussed on serving the best interests of their citizens.
For the continuing United Kingdom, the energy relationship with and independent Scotland would become purely commercial.
The future of European energy is a single competitive market, where we trade our home grown energy and boost our collective energy security.
The UK has interconnectors that transport electricity to and from a number of countries in the rest of Europe and is developing more.
In fact, we already input on average more electricity to England and Wales from France and Belgium, than we do for Scotland.
The current connections to France, Ireland and the Netherlands have the capacity to provide electricity for almost 3.5 million homes (4GW).
And there are new advanced interconnector projects where other European countires could potentially provide electricity for 5 million more (6GW).
These include:
NEMO to Belgium.
NSN to Norway.
And ElecLink to France - through the Channel Tunnel .
All to be operational well before 2020.
The market price is paid for power traded in this way.
The UK does not currently provide financial support for network infrastructure or support generation in these other countries.
Why would we pay over and above the market price for Scottish power?
Poorer apart
In an independent Scotland, only Scottish households and businesses would bear the extra burden of upgrading the Scottish grid and supporting Scottish renewables.
And the analysis we are publishing today sets out how this would add at least £38 to the averages household’s yearly bill.
And £110,000 a year to the bills of a medium sized manufacturing firm.
I say at least.
Because our analysis shows that in some scenarios, where the full costs of supporting large scale Scottish renewables falls to Scottish bill payers alone, it could be as much as £189 extra per year per household, or over £600,000 for a medium sized manufacturing firm.
The SNP insist that the integrated market will continue in its current form.
They insist that England and Wales will continue to need and pay for Scottish renewables regardless of the cost and there would be no taxation issues at all.
They have even gone so far as to claim the continuing UK would face blackouts if it doesn’t play the ball their way.
If that isn’t the negative politics of fear and bullying, I don’t know what is.
And if that is the way the SNP would conduct negotiations on behalf of an independent Scotland, I would seriously fear for the future.
So let me be crystal clear.
As the analysis in the paper published today proves, in the event of independence 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.
The lights will stay on, with or without Scotland as part of the UK.
The SNP insists that the continuing UK will have to buy Scottish electricity to meet our renewables targets.
But why would the continuing UK not instead invest in burgeoning renewables within its own borders?
English and Welsh offshore wind is booming.
England and Wales have huge tidal powers reserves.
And we have more hours of sun in the average year than Scotland.
And with the interconnectors being built to Europe, renewable credits can be sourced from wherever they are cheapest.
There can be no guarantees about how much or at what price the UK will trade energy with an independent Scotland.
Because there are no guarantees about how much electricity from an independent Scotland will actually cost.
And bills in Scotland are likely to rise as a result – by as much as £189 per household.
Despite all this, the SNP insists that bills would go down in an independent Scotland.
They have said they would pay for some social policy costs through general taxation rather than through bills – for things like energy efficiency and supporting the most vulnerable.
But that is just robbing Peter to pay Paul.
Putting these costs into taxation would mean either higher taxes or £175m that can’t be spent in other areas.
Conclusion
The whole point is this.
As the UK we are a family.
Those who need more, get more, supported by the whole.
This is business as usual in the United Kingdom.
It’s the way we do things.
It’s natural.
We don’t tot it all up on a per capita basis.
Instead everyone across the UK pays their fair share.
And the money goes where the money is needed.
Where it will be used best on behalf of all the citizens of the UK.
The United Kingdom provides security and economies of scale that cannot be matched by Scotland alone.
The United Kingdom supports Scotland’s bright energy future – and benefits from it in equal measure.
But its more than just economics.
The United Kingdom is our way of life, our identity, our comfort.
It’s what we built together.
For better and for worse.
We are integrated precisely because we choose to be governed jointly.
And I would urge the people of Scotland not to walk away from our future together.