News of Shell’s withdrawal from the Cambo oil project presents supporters with two awkward realities.
First, there is declining investor confidence in fossil fuels as the new climate consensus makes sizeable new oil fields look like stranded assets. Norway has already decided against drilling around the Arctic Lofoten islands with oil and gas worth almost three times Cambo’s expected yield. That’s in line with Norway’s own Sovereign Wealth Fund which divested from its last fossil fuel company in January this year.
Markets are dictating the exit from oil just as they benefitted from its extraction. And the market can be a cruel master.
That’s where politicians are meant to come in, steering strategy, transitioning oil workers to new green jobs, lifting the vast, accumulated experience of the North Sea and moving it carefully, seamlessly into new, green on and offshore energy industries.
That’s the second awkward reality - it’s not happening. The stuttering Cambo project has uncovered a near total strategy vacuum at Westminster where a worked-out transition plan should already be in place.
London not Edinburgh controls energy policy. And they’ve made a right royal mess of it. Where are the alternatives to oil and gas ask Cambo’s supporters? Good question.
Alternatives do exist in fledgling form, but they have failed to develop on Westminster’s watch.
Take wind, tidal, wave, and green hydrogen - all present in abundance on Scotland’s energy-rich islands but all stuck there thanks to the absence of the large subsea connectors that transformed renewables by connecting Nordic and Baltic islands with their mainland states - over the last three decades.
The big difference - we had Thatcher, they didn’t. We had to stand by while a British Prime Minister sold the family silver, privatised energy, left major investment decisions to the market and quietly subsidised oil, gas and nuclear energy instead of pioneering renewable alternatives.
Today, connectors are finally planned for the Northern Isles, but far smaller than the ones that service Nordic islands, despite a massively more valuable Scottish wind and tidal resource. It’s like waiting years for a school blazer and then getting one you are certain to outgrow.
And it gets worse. Currently, even if the Scottish islands had grid connections, Westminster rules mean their energy producers would pay a substantial sum per kilowatt of energy to join the grid, whilst producers in the south of England are getting paid to connect.
This discredited and redundant pricing policy was designed half a century back to encourage the location of coal, oil and gas power stations near large centres of population, with electricity shipped out to the margins. But although renewable energy has reversed the direction of travel, northern infrastructure still lags and pricing policy remains punitive for no good reason - except Westminster diktat.
Finally, there are UK Government subsidy rates - with nuclear king of the heap, oil and gas next and renewables far further down the support chain. Support is mostly delivered via a UK Government system called Contracts for Difference (CfD) where energy projects compete against one another for a limited pot of development cash. Unsurprisingly, Scotland’s fledgling marine energy sector has lost out to wind projects every time and Scottish bids have lost to English consortiums, even though the best renewable resource is located here.
This really matters because tidal energy is constant, predictable and available at the flick of a switch (like oil and gas) - an ideal complement to Scotland’s excellent but inherently intermittent wind resource.
Last week, relentless SNP pressure produced news of a £20million UK ring-fenced fund for tidal energy within next year’s CfD funding. Hooray. Eight years late and about a third of what’s needed. But is that funding guaranteed next year. And the year after? And the decade after that?
Westminster practically destroyed community hydro and damaged solar technology take-up by suddenly axing financial support. So although the City is awash with pension funds looking for safe green places to invest, their cash won’t back the next generation of renewables without the certainty and confidence that comes with a proper integrated government energy strategy.
Westminster, of course, doesn’t do strategy about anything, preferring one-off politically-motivated projects (Cambo, East Coast Cluster) to what’s really needed - an over-arching plan that dismantles the crippling rules of Thatcher’s oil-based privatisation and helps our energy-rich, energy-savvy islands move carefully towards their renewable future.
Let’s be honest. That’s never going to happen.
Ironically, Westminster’s failure to finance alternatives over many decades is actually being held against renewables and the Scottish Government now. This is beyond absurd.
With the uncertainty of contracts that arises from the auction-based nature of UK Government energy contracts, it’s been impossible for Scotland’s turbine manufacturing yards to stay in business, even as the biggest hardware rollout since the 70s discovery of North Sea Oil beckons.
It’s true that the Scottish Government carries blame for failing to back yards like Bifab or use devolved control over heating to shift households from gas to heat pump systems and green district heating. But these failings are small compared to Westminster’s whopping transgressions over long decades - skewing investment away from technologies that could provide alternatives to oil and gas and leaving Scotland’s most energy-rich parts islands with the worst fuel poverty.
There’s no point misleading Scotland’s 70k oil and gas workforce. Big change is coming. We either get ahead of it, as Denmark did with wind energy in the 1970s and own the lion’s share of new jobs and technology. Or we hang on to oil too long.
Sadly, that crucial choice is not in Scotland’s hands.
Holyrood must somehow craft a transition with both hands tied behind its back as the UK Government continues to lease energy extraction to the highest bidders, and let jobs, manufacturing, design and intellectual property drift overseas.
So, the big question isn’t the future of Cambo. Can this vicious circle be broken if Scotland is not free to design its own sensible, mixed energy future outwith the UK?
Our columns are a platform for writers to express their opinions. They do not necessarily represent the views of the Herald.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel