By Ratio Law’s Stuart Stones
With only a couple of weeks before Scots vote on whether they want to stay united with the rest of Britain or become an independent nation, both supporters and critics of the ‘yes’ campaign are voicing their views. There is a lot of discussion about what impact an independent Scotland would have on business in general, however what has particularly caught my eye is the debate around how it would affect the renewables market.
Scotland has an extremely prosperous renewable industry, boasting 25 per cent of Europe’s offshore wind resources and an estimated 25 per cent of its tidal potential. Scotland has set itself the ambitious target of generating the equivalent of 100 per cent of gross annual electricity consumption through renewable energy by 2020, and it was recently announced the amount of heat generated by renewable sources in Scotland grew by 17 per cent last year.
Should Scotland go independent, the rest of the UK would have to work hard to meet its EU commitments to reduce carbon emissions by 20 per cent by 2020. But while some may think this is the main reason why critics of the yes campaign are standing against it, there are other factors to bear in mind.
If Scotland wants to truly establish itself as an international leader in green energy, it needs to secure funding to finance new projects and the new technology to drive them. However, there has also been a lot of uncertainty for potential investors, with a report by Citigroup urging “extreme caution” over investing in Scottish renewables. Even before the vote takes place, with such uncertainty around the future of the country and how it will ensure investments are secure, a lot of potential investors may have already been put off parting with their cash.
Finally, cost is always, unsurprisingly, a key consideration with any business issue. At the moment, a third of the UK’s renewable subsidy goes to Scotland, but Scots only contribute one tenth of the cost. It has been estimated that if Scotland goes independent, and subsequently loses this financial support, it could increase household energy bills by as much as £189 a year by 2020. Businesses wouldn’t be exempt from price increases either, with a medium-sized manufacturer expected to see bills rise by as much as £608,000 per annum.
A lot still remains unclear in terms of how Scotland will ensure it keeps bills affordable for consumers and businesses, and how it will encourage investors to spend. While Scotland has an abundance of renewable energy sources, it remains to be seen if it has the ability and gravitas to manage international relationships, secure investments and drive the market forward.
Regardless of whether Scotland goes independent or not, if the whole UK cannot work together to build a powerful, sustainable and effective renewable market then it risks missing out all together on some of the exciting opportunities available in the market.