Power up for grabs in a range of forms
Scotland has the skills and resources to be a global leader in technologies in the energy sector, says Derek Mcculloch
Brexit means change is coming in almost every sector of the UK and Scottish economy. Powers and responsibilities that are currently the purview of the European Union and which have fostered greater collaboration and interconnection across borders will be returned to these shores and it will be up to government in both Scotland and the UK to ensure their continued growth and evolution once we have left the EU.
Take the energy sector. Scotland has access to some of the most abundant energy resources in the world. However, its oil and gas sector has recently taken a hit from volatility in global prices while the renewables sector has reacted negatively to the accelerated change of policies from the UK Government.
There remains an underlying optimism for energy development in the longer term, as developers and investors adapt to the new support-light world, but influencing Brexit negotiations will be vital. These negotiations could last from two to 10 years and any transitional arrangements could affect Scotland’s short-term future, particularly as not all clawed-back powers will receive even UK Parliamentary scrutiny, never mind influence from Scotland.
The potential for loss of human rights enforcement is critical to many energy issues including fuel poverty and remote communities. Both human rights and environment policies remain unclear postbrexit.
Scotland has the skills and resources to be a global leader in technologies in the energy sector, some established and others yet to achieve commercial viability at scale, and to benefit from locally generated heat and power. Policies to co-locate or encourage business to use local power or storage technologies are critical to the economy given Scotland’s diverse geography. Taking the economic and environmental rewards of these resources will require focus and innovation and brings with it the opportunity to further develop skills and employment.
Post-brexit, who is going to have the power to unlock these lucrative resources? The Scottish Government or the UK government?
Energy is a matter reserved to the UK. Under the 2016 Scotland Act, elements of energy consultation and reporting rights have been devolved in respect of renewables and there is devolution yet to be brought into force for onshore oil and gas (fracking). Despite this, the UK Government retains responsibility for the security of supply, production and trade of almost all Scotland’s energy capacity.
In the absence of large domestic demand, cross-border trade is critical to Scotland’s economy, but the regulations, infrastructure and freedoms under which Scotland’s environmental credentials are supported (and surplus power can be traded) is up for negotiation.
The Scottish Government has minimal leverage even regarding devolved powers. The Supreme Court has determined that the Sewel Convention, enshrined in the 2016 Act, under which the UK Parlia- ment will not ‘normally’ legislate on devolved matters without consent of the Scottish Parliament, is still a convention and not legally binding.
The Scottish Government might play the independence card, or might it take the opportunity to push for greater devolution, not only in respect of powers returned from the EU, but additional powers to ‘buy off ’ the independence
threat? However Brexit negotiations proceed, Scotland must play a role.
The full devolution of energy, with some necessary exceptions such as grid and energy security compliance powers, could enable Scotland to target policies, raise revenue and support work with developers, engineers and Universities, encourage appropriate infrastructure, and promote excellence and advances in the relevant (to Scotland) elements of transport heat and power.
Scotland has to be seen as a pioneer and an influencer in the energy sector and one which is adaptable to change as we move into uncharted territory. Derek Mcculloch is Head of Energy, Land & Infrastructure at Gillespie Macandrew LLP