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 e-mail and 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 US, 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. Among all our major competitors, including the US, 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 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 US 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 or Japanese or even 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.