Michael Kelly: Labour switch on to energy policy

'It does seem that public opinion is on Milibands side and against the energy companies.' Picture: Getty

THERE is no doubt that Ed Miliband’s promise to freeze gas and electricity prices for a period during which his Labour government would seek to reform the energy supply market is a vote winner. Given last week’s poll which put the price at which Scots would accept constitutional change at £500 a year, voters would certainly support a party promising annual household savings of between £130 and £1,800.

The big six energy companies which Miliband has targeted for special attention are already bleating that such interference will cause long-term investment to fall and the lights to go out – by which they mean their profits will be threatened. We in Scotland can take the prospects of blackouts much more sanguinely as current SNP energy policy has already set us on that path by its heavy emphasis on green energy.

There is no question that to seek to cut Scotland’s tiny share of the world’s carbon is a noble aim. Climate change is a fact and reducing the amount of carbon dioxide released into the atmosphere might help. I must declare playing my part in a small individual wind turbine company. Scotland is in a unique position to make a contribution. The country has a renewable energy potential in wind and tidal power to add to existing hydro-electric production which puts it at the top of the European league as a natural resource base for renewables.

This is the basis for Alex Salmond’s commitment to deliver by 2020 the equivalent of at least 100 per cent of gross electricity consumption from such sources. Ambitious it certainly is. It is possibly even achievable. In 2011, around 35 per cent of Scotland’s electricity came from renewable energy, exceeding the Scottish Government’s target of 31 per cent, and Scotland contributed almost 40 per cent of the UK’s renewables output. The industry and Scottish government sources make great claims for employment – 11,000 jobs in 2011 rising to almost 40,000 at the end of the process. Independent studies, however, suggest that for every job created in renewable energy in the UK, 3.7 jobs are lost. In Scotland, it is argued that there is no net benefit from government support for the sector, and probably a small net loss of jobs.

Public sector spending on renewables in the past ten years totals £209 million. Much of the spending in Scotland has come from support from the UK. Without that subsidy, independence would lead to much higher costs to Scotland. And there are signs that further benefits will be increasingly difficult to achieve. Audit Scotland counsels that the rate that green power projects are coming online needs to double in order to meet renewable targets. The warning lights are beginning to come on.

The push towards green energy in Scotland is based on dogma, not economics. First, Scotland contributes a minuscule amount of carbon dioxide to the atmosphere. Maybe ten per cent of the UK’s total, which itself is less than 2 per cent of the global total. The policy may be guilt, driven by a need to atone for the pollution Scotland generated at the forefront of the industrial revolution. But it will have little practical impact. No one surely expects the big polluters – China, the US, India and the rest – to be impressed by Scotland’s noble example and fall into line? We are not going to solve the problem of global warming and I doubt most Scots would wish to waste the money we are currently spending in a vain effort to do so.

Secondly, the dogma even extends to denying ourselves the use of one of the greenest and safest forms of energy generation – nuclear power. This is a proven, reliable, long-term source of energy. Witness France, where it accounts for more than 80 per cent of energy supply. The SNP turn their back on it on the basis of no negative evidence, but simply because their green supporters do not like it. Instead they want Scotland to rely on unproven technologies which will need years of experimentation before they can demonstrate their viability.

Thirdly, there is the hypocrisy that attaches to many SNP policies. While the virtues of renewables are extolled, an independent SNP government will, at the same time, be cajoling the oil companies to pump as much of their carbon-based fuels out of our seas as possible to fill the black hole created by SNP spending policies. It seems that as long as we don’t touch the black stuff ourselves, our hands will be clean.

Renewable generation is subject to the overall state of the economy, the view of the private sector – which remains cautious – and changes in energy policy. If Miliband’s proposal comes into effect it must adversely affect investment in renewables here. The SNP expects to sell surpluses to an independent England. That has always been fraught with political difficulties. Now the energy companies will be looking very closely at their costs. In fact, it could be a game-changer in terms of Scottish energy policy. At the very least, it adds a further degree of uncertainty to the energy market. And as the UK energy companies fight the price freeze, they will be focusing on how much of our current bills are paying for the green subsidy. When Scottish consumers wake up to how much it is costing them, the whole green revolution may be forced into reverse. There is a sound case for removing this burden from consumers and adding it to direct taxation.

It does seem that public opinion is on Miliband’s side and against the energy companies. If this should help return a Labour government there is no doubt that more stringent regulation of domestic fuel prices will be enforced. The legislation necessary must focus on future investment funding as well as price capping. No matter how little the SNP may like it, this must impinge on their long-term energy strategy. They need to respond by announcing the necessary re-balancing of that policy. It would be helpful if they did so quickly, so that before the referendum voters can assess the cost of keeping the lights on in an independent Scotland.