SNP Government hails renewables amid energy strategy delay

It came ahead of the expected publication next month of the final version of the Scottish Government's energy strategy following attacks on the draft released by Nicola Sturgeon last year after long delays.

The GERS report showed total public expenditure in Scotland exceeded revenues by £22.7 billion in 2023-24, compared with £18bn in the preceding year. The deficit increased to the equivalent of 10.4% of total economic output in Scotland in the latest year, from 8.4%.

The UK deficit fell to 4.5% of gross domestic product, from 5%.

The announcement noted the increase in Scotland's deficit came after a £4bn fall in the share of North Sea revenues attributable to the country. This followed a drop in oil and gas prices from the peaks reached in the aftermath of Russia’s full scale invasion of Ukraine.

READ MORE: Green energy output slump poses challenge for SNP Government

However, finance secretary Shona Robison chose to put a positive spin on the numbers.

“I welcome the fact that Scotland’s revenues grew last year, with those generated onshore growing faster than in the rest of the UK, thanks in part to our progressive approach to tax and the revenue from renewable energy,” she declared.

The comments appear intended to suggest that the rise in revenues was due to the enthusiasm the Scottish Government has shown for the development of windfarms and the like. It has claimed that Scotland can become a global leader in the renewables industry.

However, the narrative in the GERS statistical release made clear that the increase in renewable energy revenue was due to the windfall tax on electricity generators that the Johnson administration announced in November 2022.

The move followed public anger about the surge in profits that the likes of SSE enjoyed amid the increase in electricity prices fuelled by the war in Ukraine, which resulted in huge increases in consumers’ bills.

The Conservative Government said the Electricity Generator Levy would be a temporary 45% charge on exceptional receipts generated from the production of wholesale electricity.

“One effect of the rise in global electricity prices has been that many UK generators of electricity have received vastly increased revenues for their power,” it said. Levy receipts were to be used to help fund measures to support households and businesses with the rising costs of living.

Mr Johnson imposed a windfall on oil and gas firms in May 2022.

READ MORE: New energy jobs boast insults electors in Scotland

However, the SNP went nuts about the electricity levy, which it portrayed as an assault on Scotland.

Angus and Perthshire MP Dave Doogan thundered on Twitter: “The UK government's fiscally illiterate electricity generator levy will choke off billions from future investments in renewable energy projects - the kind of projects that my Angus constituency excels at delivering.”

Drew Henry told the House of Commons the levy would disproportionately impact Scotland.

Mr Henry lost his Inverness and Skye seat to the Liberal Democrats in the July general election, in which the SNP suffered a drubbing.

Electricity giants were predictably critical of the levy, which also came under fire from green energy industry champion Scottish Renewables.

However, the Scottish Government boasted this month that Scottish receipts under the levy were £238 million in the latest year, "around 20% of the UK total”.

READ MORE: North Sea activity boost for Aberdeen oil services giant

Given the importance attached to the EGL revenues, First Minister John Swinney may have reason to regret the forcefulness of the anti-levy lobby now, in PR terms at least.

Following complaints that oil and gas firms were spared much of the impact of the windfall tax on their sector by the investment allowance introduced alongside it, the Government caved in to demands for electricity firms to be granted a similar relief.

The introduction of the EGL exemption from November will likely lead to a big fall in receipts in the current year.

Energy firms will also benefit from the regulator’s announcement last week that the cap on bills will increase 10% from October. The average household’s annual bill will rise by £149 to £1,717.

It should be remembered that Scotland has seen relatively large numbers of windfarms developed on shore largely because renewables firms were effectively prevented from developing them in England under planning curbs imposed by the Tory Government. These followed complaints about windfarms’ impact on the landscape.

One of the first things the Labour Government did was scrap the planning restrictions in the hope of encouraging a surge in windfarm development south of the border. Scotland will face much stiffer competition for investment as a result.

READ MORE: UK Government move will hit Scottish renewables drive

But we will no doubt hear more talk about the scale of Scotland’s renewable energy opportunity when the final version of the SNP Government’s Energy Strategy is at last published.

The Scottish Government has said it will be published this summer. The document is expected to be issued after MSPs return to Holyrood from the summer recess next week.  

The strategy has been an age in development. The first draft was published in January last year following delays that frustrated campaigners.

In September, Scottish Renewables lamented: “It is now more than four years since the Scottish Government declared a climate emergency. This document was due in Spring 2022, and a delay of more than two years is not the pace at which policy making should move in an emergency.”

The draft energy strategy looked like a collection of aspirational statements that were crafted to help keen greens onside in the independence campaign.

While the SNP fought the 2014 referendum on the claim the North Sea oil and gas industry would ensure prosperity for Scotland, the draft said there should be a presumption against new exploration in the North Sea “in order to support the fastest possible and most effective just transition.”

After Nicola Sturgeon and her successor Humza Yousaf opposed plans for major North Sea developments, SNP criticism of Labour’s decision to increase the windfall tax on the sector rang hollow.

While spending months fine-tuning its energy strategy the Scottish Government has made painfully slow progress with delivering on its just transition agenda. In March a Holyrood committee raised big questions about the £500m plan to support the transition that Ms Sturgeon unveiled in 2021 after striking the ill-fated cooperation deal with the Scottish Greens.

The report by MSPs came five months after Humza Yousaf announced the launch of a £500m offshore wind supply chain support programme that looked like an afterthought.

To make things worse, amid all the Scottish Government’s virtue-signalling about renewables ministers appear to have no idea how to secure a significant drop in demand for energy. This could have a much bigger impact on emissions than cutting North Sea production or building windfarms in scenic areas of Scotland.