Scottish independence: An energy revolution?

How a ‘Yes’ vote could transform Scottish society by ending the intellectually bankrupt oil tax regi

For Scotland to prosper, the profits generated from natural resources need to be controlled democratically by the Scottish people, writes Minio-Paluello [EPA]

Canvassing for independence in south Glasgow on September 6, debates flourished over Scotland’s economic future. People want an end to cuts imposed from London, to an economy shackled to the financial sector. The referendum on September 18 is not about blood and soil nationalism, but a battle over democracy and economic justice.

Oil is central to the debate. Shoppers in Govan and residents in Pollokshields raised concerns about how long the oil will last. The Westminster government and No campaign have warned of imminent doom and budget shortfalls. Meanwhile, the Scottish government says that North Sea oil and gas will underwrite Scotland’s economy post-independence.

But the large political parties on both side have got it wrong, ignoring Britain’s past experience and misrepresenting the future. The Scottish Nationalist Party alongside Labour, Conservatives and Liberal Democrats have all promised to defend the interests of oil companies. For 30 years, the UK’s North Sea model has functioned as a form of corporate welfare, delivering massive profits to multinationals and minimal public benefit. With the second weakest tax system in the world, the UK collected only $21.50 per barrel of oil in 2008, compared to Norway’s $48.50 – less than half.

The nonsense about struggling oil corporations requiring tax cuts hides a reality in which the same companies use the momentous cash flow from the North Sea to subsidise drilling in other parts of the world. The issue is not just how you spend the oil money – although this is important – but, crucially, how much you get for it in the first place.

Charting a different course

With independence and full control over its energy policy, Scotland could chart a different direction. What happens if a future Scottish government goes beyond the SNP’s strategic posturing, and prioritises democracy, social equity and environmental sustainability over corporate profit and maximum extraction rates? There needs to be a rapid shift from fossil fuels to renewables, to have a chance of surviving climate change. But North Sea crude that is extracted should at least be taxed sensibly.

Scotland: Could the Kingdom still be united?

Britain missed out on a £74 billion windfall in oil revenues in just six years, from 2002 till 2008, compared to Norway’s fiscal regime. An independent Scotland could choose not to concede to the corporate lobby, and replicate the Norwegian ownership and tax model.

Some £74 billion over six years is a vast amount of money. Instead of boosting corporate profits, it could provide Scotland with 10 new mega-hospitals like the South Glasgow Hospital and 1,000 new GP clinics, with 10,000 new doctors and 20,000 new nurses to staff them. It could also fund a renewable energy project in every community, a community centre in every village and a solar panel on every home, to enable a decentralised and democratically-owned energy system. Or even a high-speed rail between Edinburgh and Glasgow, 10 new railway lines in Scotland and free local bus services. Or perhaps even free state childcare for pre-schoolers, a return to grants for higher education students and a citizens’ income for all Scottish residents of £5,200 per year.

This list sounds almost fantastical, yet these calculations are based on overestimates and leaves a 20 percent contingency. It seems unimaginable because our imagination has been effectively colonised by neoliberal power. We forget what is possible when public resources are used for public benefit.

From petrostate to just transition

Arguing against independence at a town hall debate in Govanhill on Friday night, former Labour MSP Pauline McNeill warned of Scotland’s longterm dependence on oil. Yet it’s Britain that has long been a petrostate, London is an oil city, and the corridors of Whitehall practically reek of crude. British democracy has been quashed by lobby groups like Oil & Gas UK and the revolving door between politicians, civil servants and company executives. Finance and fossil fuel corporations reign supreme, shaping our energy future with no accountability.

It seems unimaginable because our imagination has been effectively colonised by neoliberal power. We forget what is possible when public resources are used for public benefit.

But Pauline McNeill is correct that Scotland needs to avoid dependence on oil in the long run. Beyond the newspaper columns, independence campaigners like Green Yes, Common Weal and the Radical Independence Campaign have focused instead on Scotland’s renewable energy future.

Scotland’s wind potential is another hidden story largely ignored in the media eager to downplay the future of oil. Apart from its significant onshore potential, Scotland’s offshore wind capacity is an enormous 132 GW – enough to make Scotland a significant regional electricity exporter.

Public control from Scotland’s vast renewable resources is essential to ensure public benefit, as argued by the Jimmy Reid Foundation. To the extent that London’s Parliament even supports renewables, the Westminster consensus is a low carbon economy subjugated to the vagaries of the market. Big business, large landowners and the international financial hierarchy are being invited to cash in on, privatise and transform Scotland’s natural resources into private wealth.

Instead of handing renewable energy potential to large multinationals and replicating the mistakes made with oil, an independent Scotland could distribute ownership over wind and solar projects to local communities. Creating collective ownership over energy sources and distribution would share power and build energy democracy. The Isle of Eiggon the inner Hebrides has already taken control of its energy future through community ownership of hydro, solar and wind generation that deliver 95 percent of the island’s electricity demand.

In terminal decline

The fossil fuel industry is in terminal decline. In the coming 10-20 years, climate change will force increased regulation, shutting down much of the oil industry. Scotland can choose whether or not to be ahead of the curve, and ensure a just transition for workers from the fossil fuel sector by creating alternative, permanent and well-paid work. With foresight and planning, Scotland can employ more people in wind, marine, solar power and geothermal energy than the 200,000 jobs the oil industry claims to support directly and indirectly. Major downstream fossil fuel infrastructure can be retooled, e.g. a coal gasification plant at Grangemouth can instead produce low-carbon synthetic gas.

The transformation can provide the basis for a sustainable and decentralised reindustrialisation, generating foreign reserves and jobs while building long term economic diversity.

Sensibly taxed oil, decentralised renewables and a just transition to energy democracy – the vision of an energy revolution being developed in Scotland can make corporate oil executives feel queasy. Hence BP, Shell and lobby groups are undermining the independence campaign. BP boss Bob Dudley was clear: “My personal view is that Great Britain is great and it ought to stay together.” He knows that a Yes vote creates democratic possibilities.

The struggle won’t end on September 18. Those who believe in democracy need to be ready to stand up to the oil barons. The companies will fight tooth and nail to protect their privileges even after independence, by placing themselves at the heart of Scotland’s cultural, economic and energy identity. BP’s sponsorship of the Glasgow Commonwealth Games was just a foreshadowing of future battles.

True independence will mean reducing the concentration of economic power in the hands of unaccountable elites and preventing dependence on foreign multinationals. The transition can help end fuel poverty and position Scotland as a beacon in the global fight against climate change. For Scotland to prosper, the profits generated from natural resources – whether oil or wind – need to be controlled democratically by the Scottish people, not by a corrupt globalised corporate hierarchy.

This means breaking both from Westminster, and also with decades of oil-dominated politics and the fossil fuel companies that smother democracy and economic justice. 

Mika Minio-Paluello works for the energy think-tank Platform and is co-author of The Oil Road: Journeys from the Caspian Sea to the City of London (2012).