For 35 of the past 40 years I’ve been in the energy industry I’ve
lived in Scotland and have watched Aberdeen and the North East grow and prosper
on the back of oil and gas.
In a few weeks though we’re going to be asked to vote on whether
or not we want Scotland to remain part of the UK or become an independent
country and just like everyone else I’ve had to weigh up in which box I’m going
to place my cross. Inevitably, a major contributing factor to which way I vote
is how I think the UK Government has managed the opportunity of both oil and
gas and renewables so far and how I think a future Scottish Government might
manage them if it inherits that responsibility.
During the early 80s I ran the UK ROV and survey group of one of
Norway’s then largest subsea contractors.
It’s still around but it’s long become part of one of the other large
Norwegian subsea contractors and is perhaps ten times or more the size it was
then.
Out to dinner during one of my frequent visits to Norway for
meetings (no email & no Skype then) my Norwegian boss turned to me and said
“What the heck is the matter with the British Government and your banks – why
aren’t you Brits even trying to compete with us Norwegians?
It’s a question that I remember with particular clarity because it
alerted me to a problem I hadn’t really considered before.
As Norman Smith – former head of the Offshore Supplies Office and author
of “The Sea of Lost Opportunity” - puts it, “in terms of the global market
place Britain probably occupies fourth place behind the USA, France and Norway,
all of which exhibit a lower proportion of foreign-owned companies and a higher
proportion of proprietary technology than the UK.” This is backed up by Brian Ashcroft of
Strathclyde University who determined recently that some 80% of all post-tax
profits are remitted abroad. I find that
just utterly astonishing.
But it’s perhaps inevitable because since the early 80s UK
Government policy has been based on so called neoliberal economics which includes
a laissez faire attitude to company ownership.
Amongst all our major competitors including the USA, this attitude is
quite unique.
The result has been that as overseas companies have flooded in
then the UK Government – irrespective of the party in power - and the financial
sector have been able to avoid having to invest in indigenous companies and
technologies because others were already fulfilling the market demand.
This in turn has resulted in the level of public sector energy
R&D funding being pathetically low. In fact the UK is now ranked 19th
out of a list of 24 other countries in terms of the percentage of GDP it spends
on energy R&D.
I consider this a major
failure on the part of the UK Government compounded by the fact that the
Treasury in its effort to suck in as much tax revenue as possible, raised then
partially reduced tax levels so managing to achieve the double by introducing
both fiscal instability and unpredictability which without a shadow of a doubt
is still impacting on operator confidence.
The Scottish Government does however recognise that problem and is
looking at mechanisms to guarantee fiscal stability in an independent Scotland.
Of course, there is also the
question as to what the benefit of oil tax revenue has actually brought to the
country. It certainly didn’t go into an
oil fund as it did in Norway nor was it invested in new industry. Instead, it
just got added into the general tax pot.
What an appalling waste.
Considering the longer term future of the energy industry is also
important. After all, in many ways this independence referendum and its outcome
is more to do with how it will impact on our children, grandchildren and all
future generations than it is about us.
Discussing the inevitable eventual
run down in oil and gas production, in a recent interview about independence
Ian Wood said “It means our young voters must be fully aware that by the time
they are middle aged, Scotland will have little offshore oil and gas production
and this will seriously hit our economy, jobs, and public services”.
I disagree strongly with his
timescales but if he was so concerned about the future why didn’t Wood ask why
it is that Denmark – a country the same size as Scotland - Germany, the USA and
elsewhere have already realised this problem and have – for example – developed
wind turbine manufacturing companies. Why also are the big tidal technology manufacturers
German, Australian and of course American and why did a small Scottish company
developing a relatively low output tidal turbine have to turn to a Belgian company
for support? That one really surprised
even me!
And as for solar PV,
biofuels and most other renewables technology Scotland and the UK are already
well behind the competition. We also know that as far as new nuclear power
capacity is concerned the UK is now reliant on French, Japanese or Chinese
technology. Given the UK was once a
leader in this technology this is exceptionally disappointing but it’s not
surprising given what I said earlier about UK Government’s R&D spend on
energy technology.
This really is a disgraceful
state of affairs but Wood didn’t even mention it. Perhaps that’s because it reflects
badly on the Union!
In contrast though, the
Scottish Government’s strategy for an independent Scotland includes
reindustrialisation which in part will be based on developing a renewables
sector. They at least understand the industrial and commercial potential of
renewables whereas Westminster seems ideologically blinded to the opportunity.
So for me the decision
becomes easy. I’ll vote in favour of
independence because the evidence is that Westminster desperately wants the tax
revenue but is even less prepared to plough any of it back into renewables
technology than it was in oil and gas.
Such strategic short
sightedness in a competitive global market plan is naive and Scotland can no
longer afford it.
(First published in the
Aberdeen Press & Journal Energy supplement & on the Energy Voice
website Sept 1st 2014)
