Energy experts assess the referendum result

Picture: HeMedia
Picture: HeMedia
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In this short commentary on the aftermath of the Scottish independence referendum we will first reflect on the future prospects in the UK for oil and gas, and for energy. We will also comment briefly on David Cameron’s address to the nation following the announcement of the result of the referendum. We have not heard a single person purr at his assertions!

Quantifying future North Sea oil and gas tax revenue was a central feature of the referendum debate. Oil and Gas UK and most academics with knowledge in the area were portraying a bright future for the North Sea industry. In contrast, the soothsayers of doom, the Office of Budget Responsibility (OBR) and their acolytes, the Department of Energy and Climate Change (DECC) were astoundingly negative in their forecasts. At that point in the Referendum positioning, economically bright forecasts would encourage voters to opt for YES whilst the economically dim forecasts would raise the UK’s global risk-rating and be bad news for reducing the national debt. The remaining reserves of oil and gas in the North Sea are vast. The debate is only concerned on how much of it can be extracted on a commercial basis. The outcome depends on the price of oil and technological innovation. High prices equate to high reserves. History is on the side of the industry. The brilliance of Oil and Gas UK in encouraging development of innovative new technology is second to none.

New technology

Recent events have confirmed this. The BBC reported on 24 September that new technology developed at Herriot Watt University could lead to decades more production from the North Sea than was previously thought possible. Thus, future prospects for the North oil industry are bright.

Future prospects for Energy Scotland produces more electricity than it consumes. It’s excess production helps reduce the very real prospect of blackouts occurring this winter in England. And Scotland has led the way in onshore and offshore wind power generation. The renewable energy credentials of Scotland are even more substantial when the tidal and wave energy natural resources are taken into account. Scotland is energy rich. Within the UK policy setting framework, however, nuclear energy has received much greater backing than wind or wave energy. Our renewable energy bank has suffered from lack of a willingness to support companies such

as Technip. The policy is misplaced. Energy policy powers should be devolved to the Scottish Government as part of the post-referendum promise. If this does not happen then energy prospects will be problematic in the future.

As the dust settles on Scotland’s historic referendum, The Scotsman has created a special digital supplement to document the twists and turns of this hard-fought campaign.

In his post-referendum address to the nation the UK Prime Minister Mr David Cameron declared that the Scottish independence issue had been “settled for a generation”. He added that Westminster would fulfil its pledge to devolve more powers to Scotland but make it part of a wider scheme of devolution of powers across the UK. This desire to portray devolution of powers to Scotland as being no more significant than the

devolution of power to regions of England is breath-taking in its political naivety. The UK is a partnership of four nations England, Wales, Northern Ireland and Scotland. It is not an agreement to divide the UK into 10 regions based on population size and subsume national identity and rights within a regional federal structure. The people of Scotland will never accept that their rights to take economic and social decisions are identical to those of, say, Greater Manchester. Whilst Scotland has 10% of the UK population it also has one third of the land mass and 98% of oil. Real devolution of power should mean that all taxation resulting from economic activity in Scotland, including its North Sea waters, should be allocated to the Scottish Government.

Over 70% of voters aged 65 or above voted NO in the referendum. More than 50% of the generation aged below 55 voted YES for independence. Perhaps Mr Cameron’s remarks were aimed at the older vulnerable generation who had succumbed to the intense scaremongering of the better together (BT) campaign about loss of pensions if they voted YES. If that is the case, the BT win looks decidedly hollow. All it needs now is for Alistair

Darling to say he prefers his future activity to be on the international gravy-train scene, and not in Scotland, and the hollowness will be complete.

The future of Scotland lies in the hands of the younger generation. And for them, and us, the issue is far from settled.