Westminster parties rerunning of the referendum makes them look fools!

I suppose given that I’ve written previously about so many similar instances I really shouldn’t have been surprised when I read that an organisation called “Social Investment Scotland” was doing a deal to help fund a developer of low carbon projects install an Australian developed micro combined heat and power unit (MCHP) on initially seventy but potentially up to three hundred and fifty properties across Scotland with a view to helping residents reduce their fuel bills. 

The company producing the MCHP is Ceramic Fuel Cells Ltd and according to their website they were spun out of the Australian Government's Commonwealth Scientific & Industrial Research Organisation (CSIRO), their corporate head office and research and development facilities are in Melbourne and they have a fuel cell assembly plant in Heinsberg, Germany and a ceramic powder plant in Bromborough in the UK. 

So perhaps not surprised but just downright gobsmacked that once again we have let an international competitor steal a march on us in an important area of technology.   It’s perhaps even more frustrating because I know that at least two of our universities have specific recognised expertise in fuel cell technology. In fact a few years ago one tried to commercialise a ceramic fuel cell but as is often the case in Scotland, couldn’t get together the funding.

So why raise this now?  Well it’s simple.  I’m truly fed up to the proverbial back teeth with Westminster unionist political parties ranting about how badly the economy of an independent Scotland would have been affected by the rapid and unpredicted fall in the oil price and wasn’t it a wonderful thing that the sensible Scots voted against independence.

Now if the unionist army of doom merchants had told us before the independence referendum that the oil price was going to collapse I’d be a bit more generous but on the steam radio recently even Ian Wood – in no sense someone I consider an independence supporter – said  "Frankly, no one foresaw the oil price coming down from $100". 

Now given Wood is Westminster’s favourite oil and gas guru then we should believe him and so should all those miserable, childish and generally incompetent unionist politicians who would prefer to re-run the independence referendum than beat George Osborne round the head to make him get on and sort out a new and sensible oil and gas fiscal setup now instead of waiting for budget day in March.    The industry knows what’s needed. So why the heck doesn’t Osborne do as he’s told instead of insisting on yet another consultation.  More delay, more of Danny Alexander pretending he knows what he’s talking about.   I really can’t take these people seriously anymore and I’m afraid the opposition isn’t any better. 

Demanding a “£10m resilience fund” to help struggling companies is a joke.  £10m in an industry the size and value of oil and gas is a drop in the ocean.  If they wanted to do something serious how about proposing the Bank of England set up a Quantitative Easing fund directed specifically at say, increasing exploration or stepping in to pick up industry funding when the lousy banks start pulling the plug on the loans they’ve made to both operators and supply side companies.   Not specifically my idea by the way but one that bears consideration.

Anyway, I was talking about fuel cells which are just of course one sort of technology Scotland should be active in but there are plenty of others. 

As an example, Scottish Renewables told me recently that there are 196 operational wind farm projects in Scotland with 2,590 turbines making a total installed capacity of 4,966MW.  At a cost of roughly £1.5m per MW installed then a quick back of the beermat calculation suggests implementing a policy to build windfarms has increased Scotland’s trade deficit by around £7.5bn!

I don’t know how large the overseas market is for companies such as the Danish wind turbine builder Vestas but a good guide is that with 13% of the market they turn over around 5bn Euros and employ some 17,000 people.   Would have been nice to have had a Vestas based in Aberdeen to add value to our economy and provide an alternative source of high value adding jobs.

Other parts of the renewables sector aren’t fairing much better whereas one might have thought that by now it would be humming. It’s not as if we don’t have the intellect or the engineering and scientific capability because we know we do and that should have been used to build up the Scottish economy to the point where oil and gas was just something else in our economic armoury.

But the sad fact is that even since I came into the oil and gas industry in 1974 Scotland has lost its aircraft building sector, most of its civil shipbuilding and a large chunk of its military shipbuilding capacity, its car manufacturing and other elements of what once formed a formidable industrial sector including of course steel production. 

This is hugely difficult to replace and whilst there were attempts to develop new sectors such as electronics this has largely only resulted in the establishment of small or medium size companies working in specific niche areas.  For example, Scotland has a company that builds micro satellites. 

It’s dynamic, innovative and technically highly advanced but it only employs around 30 or 40 people. I’m not belittling it because I think it’s a great company but its size illustrates the scale of the problem in building up a higher value more broadly based industrial economy.

Now I hate to mention this but this decline all actually took place under Westminster’s watch.  So if those unionists are right and Scotland couldn’t withstand the collapse in the oil price then it’s obviously their fault. 

They allowed and in some cases deliberately invoked policies that resulted in Scottish industrial and economic decline.  Even in the oil and gas sector they pretend they’re so passionate about then according to Strathclyde University we ended up with a situation where poor levels of investment and an utterly lunatic attitude to foreign ownership has resulted in 80% of all post-tax profits being remitted overseas.

Frankly, Westminster by rerunning the referendum arguments on oil price is shooting itself in the foot: no, both feet.  Maybe they should just keep quiet and get on with the business of restoring confidence in the future of the oil and gas industry if indeed that’s what they really want which I have to say I sometime doubt.

©Dick Winchester Jan 2015  

(First published in the Press & Journal Energy Supplement Jan 2015)