UK: Securing the Benefits of Scotland's next Energy Revolution

Last Updated: 31 December 2010
Article by Neil Amner

Scottish Government recently published a consultation paper on the future of the renewable energy industry in Scotland.

The consultation seeks views on three main issues:

  1. Suggestions for reformation of the Crown Estate to make it more accountable to Scotland.
  2. How can Scotland benefit from the development of the industry within Scotland?
  3. How can local communities benefit long-term from such developments?

Proposals

The consultation is split into 4 chapters titled: -

  1. Scotland's low carbon potential
  2. Learning from Scotland's past – the experience of the oil and gas revolution
  3. Who will benefit from Scotland's low carbon potential?
  4. Proposals for change?

The last chapter covers the consultations proposals: -

  1. Reformation of the Crown Estate
  2. Setting up a Future Generations Fund
  3. Ensuring fair community benefits by creating a public register of communities who have benefited thus
  4. Enhancing community benefit from within the planning system including those properties owned by the public sector.

Scotland's low carbon energy potential

Due to Scotland's geography and location there is much scope for renewables both in the surrounding waters and on-shore enabling the potential for exportation of such energy. The Scottish Government considers that this in turn will provide employment and many other localised opportunities.

Learning from Scotland's past

Reference is made to the past oil and gas industry and taxes on the revenue generated within this industry over the years which ultimately were transferred to the UK Treasury.

This chapter also looks at the other examples of utilising revenues generated from energy industries including: -

  • Norway's investment of revenue generated by hydrocarbon resources into a government pension fund has given the country financial security for the inhabitants for the future.

  • In Shetland a charitable trust was set up from oil revenues and as such has benefited the islands providing for charitable organisations and projects.

  • Both the Shetland and Orkney Islands Councils have provided a model for Scotland to follow by utilising the revenue from natural resources to provide future benefits to the local community.

Who will benefit?

While the benefits for local communities may be harnessed, the Scottish Government considers that current legislation causes complications and lack of consistency in providing such benefits.

This chapter sets out examples of benefits enjoyed by local communities from on-shore wind farm developments.

Currently for off shore developments tax is payable to the UK Government on revenue made, the Crown Estate benefits from rent and other fees and the Scottish Government receives payment for issue of a marine licence, which only covers the administrative cost of its issue.

The Crown Estate in Scotland includes rights out to 12 nautical miles for the seabed and the continental shelf out to 200 nautical miles. As such they are able to charge a levy or rent on developer using these areas for their projects. Surplus revenues generated by the Crown Estate are passed to HM Treasury.

The management and the revenues of the Crown Estate in Scotland are reserved matters, but there is no express reservation of the land and property rights the Crown Estate holds.

Proposals for change

These are classed within the consultation as 5 "Actions": -

  1. The consultation suggests that the current situation with the Crown Estate in Scotland is anomalous and should be reformed so that the Crown Estate in Scotland is managed and the revenues kept in Scotland.
  2. A future generation fund is proposed. The intention is it would provide investment in key areas of renewables and provide assistance to help overcome the barriers which stand in the way of future development, thus providing for the future generations of the country.
  3. The creation of a register of community benefits is proposed. The intention is it would assist in the knowledge that communities would have when considering developments in their areas and promote best practice amongst developers, thus placing the developer and the community on a more equal footing when negotiations take place. There is no detail on the information such a register would contain.
  4. The discussion on how to enhance the community benefits from within planning covers the principle that incentives should not influence planning decisions. It notes that the examples of community benefits referred to earlier in the paper have been voluntary.

    It refers to work underway by Community Renewables Scotland to provide a pre-planning loan fund, but makes no proposals regarding this.

    Comments are requested on whether a Statement of Community Benefits should be included with planning applications for wind farms. This is the only firm proposal for enhancement of community benefit from within planning, but no detail is given as to what the statement would consist of and why it would only apply to wind farms.
  5. The paper states that the public sector must ensure that any renewables placed on the land owned must provide community benefits. The paper asks how this might be achieved to the best advantage while giving an example of equity participation. Again, no detail is given.

Summary and comment

The consultation paper's most concrete proposals relate to the reformation of the Crown Estate in Scotland and in particular directing revenues from Scotland's seas from the UK Treasury to the Scottish Government. Given this is a long held ambition of the current government the paper is manifestly political. A change in government may see no action being taken whatever the responses to the consultation.

There is far less detail in the aspects regarding ensuring local communities benefit from renewable energy resources. However, these proposals could have a more direct impact on encouraging or hindering development. There is a danger, from the little that is in the paper, that rather than enhancing the benefits to communities it acts to hinder development. If the proposals become an entitlement to community benefit from every renewable energy development this could impact on the financial viability of such developments.

The consultation closes on 18 February 2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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