Comment: Wind or oil? Energy policy is a gas for SNP

Terry Murden. Picture: TSPL
Terry Murden. Picture: TSPL
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THE SNP really needs to sort out its energy policy if the contrasting messages issued by the leadership yesterday are a measure of what to expect in the 
year ahead.

Energy spokesman Mike Weir and his boss Alex Salmond ought to have compared notes. Weir was cheered by a report supporting the view that focusing on renewables will mean cheaper fuel bills than relying on other forms of energy.

The First Minister, in a new year message for the oil and gas industry, talked up the vital contribution the North Sea makes to the economy.

Cake and eating it, sprung to mind.

Weir was salivating at the report from the Committee on Climate Change stating that household energy bills will be about £600 a year higher by the end of the decade if the UK relies increasingly on gas, but only £100 above today’s average if the focus is on renewable power generation. The SNP has been quick to applaud other milestones for renewables such as the level of investment in Scotland now tipping £1 billion and another study disclosing that Scotland burst through its target for 2011 by generating 
36.1 per cent of electricity demand from green sources.

Yet, this continued push on renewables is somewhat at odds with the party’s pledge to oil and gas. As Weir was promoting green energy and demonising gas, Salmond was declaring the oil and gas sector to be a sunrise industry and one of Scotland’s big success stories that he will ensure goes from “strength to strength”. Or does that support stop if someone wants to build a gas-fired power station?

Contrast Weir’s reference to “an over-reliance on gas”, which he also referred to as “expensive” and “far less reliable”, with Salmond’s statement that “oil and gas currently meets more than two-thirds of the UK’s 
energy needs, and is set to remain a vital part of our energy mix for decades to come.”

It also comes as something of a 
surprise that the renewables industry is not reciprocating the SNP’s 
devotion. A survey of developers, funders and suppliers in the renewables sector conducted by Davidson Chalmers revealed that 44 per cent were unhappy about the prospect of independence and what it might mean for their sector.

Finance is the big issue for an industry that depends hugely on subsidies and long-term finance and one major concern is whether an independent Scotland could continue to provide the funds required. Those questioned may have noted that the Green Investment Bank, co-located in Edinburgh and London, has £3 billion to invest, all of it provided by the UK taxpayer to help fill the gap left by the banks and other sources.

There was added scepticism among respondents over the party’s target of producing all of Scotland’s energy needs from renewables by 2020, not helped by the fact that in his statement yesterday Weir gave the date as 2030. It doesn’t instil much confidence.

Return of confidence vital for recovery

A series of surveys published today indicate a more optimistic tone among business leaders. To a degree, that is inevitable as a new year heralds hope that things will improve.

But there are grounds for thinking more positively. The Treasury and Bank of England are providing cheap money, which ought to work its way into the economy and the eurozone is more stable than this time last year. Companies are sitting on a lot of cash that they are ready to invest.

No-one knows if 2012 will turn out to be the watershed year for the long slump and few have predicted 2013 to be the start of a meaningful recovery. But today’s surveys do suggest that businesses are preparing to expand and hire staff.

Other more pessimistic surveys point to firms being kept on life support by patient banks and creditors, so we are not there yet.

But the year has kicked off with the FTSE above 6,000 and some hints of confidence returning.