The Labour Government stands accused of risking the devastation of the North Sea oil and gas industry but has offered generous support for the development of Scottish renewable energy assets - which householders will have to pay for.
While industry leaders warn that Chancellor Rachel Reeves' plans for a windfall tax hike will cause firms to slash investment in oil and gas assets, Scotland is set to get a disproportionate share of the funding for renewables provided under the latest official subsidy round.
As energy secretary Ed Miliband hailed the outcome of a ‘record-setting’ sixth allocation round under the Contracts for Difference programme, the detail of the announcement underlined how well Scotland has done out of it.
Of the 131 projects that won support some 37 are in Scotland. In the case of onshore wind Scotland won 18 of the 22 awards made.
While the SNP Government might claim the results reflect the quality of Scottish projects the reality is less flattering. Scotland won such a big share because developers were effectively prevented from putting schemes in England forward as a result of planning controls imposed by Boris Johnson’s government.
Ms Reeves has boasted that Labour scrapped those controls within 72 hours of taking power meaning projects in Scotland will face much stiffer competition.
READ MORE: Scotland wind energy drive will be hit by UK Government move
Mr Miliband was delighted that the round attracted bids from firms working on big offshore wind projects after they snubbed the last auction held by the Tories.
Developers claimed the support offered in the fifth allocation round was not generous enough to cover their costs following the surge in inflation.
Nine offshore wind projects won support in the latest round, including three in Scotland.
The one floating offshore wind project that won backing was the Green Volt scheme off north east Scotland. This is expected to supply renewable energy for oil and gas operations.
Mr Miliband said the round represented a significant step forward in Labour’s campaign to secure clean power by 2030, claiming: “We inherited a broken energy policy, including last year’s disastrous auction round which gave us no successful offshore wind projects.”
What he did not say was that householders across Britain could end up paying a high price for the apparent success.
READ MORE: Scottish windfarm plan fuels energy transition controversy
The Labour Government agreed to guarantee developers a much higher price for the energy they produce than was offered in the preceding round.
If wholesale prices fall below the agreed ‘strike price’ the Government pays developers the difference, even if the firms concerned are giants making massive profits from the sale of energy to consumers.
The costs of such support are added to the bills of households.
Consumers already face a 10% increase in their bills from October after the regulator raised the cap imposed on prices.
PA Consulting's Alon Carmel told the FT the decision to raise the AR6 strike price could mean consumers face an additional £250m costs.
Some fear Scotland may need all the help it can get given the outlook for investment in the key North Sea oil and gas industry under Labour.
Ms Reeves has said she will increase the overall tax rate payable by North Sea firms to 78%, from 75%. She plans to scrap the investment allowance that was introduced alongside the windfall tax by the Johnson government in 2022.
READ MORE: 'Mad' North Sea tax hike plan will cost UK billions warns big gun
Confirmation that the Great British Energy operation that Labour expects to lead on renewables development work will be based in Aberdeen would offer scant compensation.
It is far from clear what the new body will do. Aberdeen is already home to a range of industry bodies, including the North Sea Transition Authority.
Westminster Governments have felt able to impose a series of tax increases on the oil and gas industry in recent years despite facing bitter opposition in the Granite City.
SNP Governments have not helped the industry fight its corner, after opposing plans for the Cambo and Rosebank developments.
They have not done much either to help the country to develop the kind of renewable energy industry it will need, despite the SNP being in power at Holyrood since 2007.
Ministers have been good at making grand policy announcements with big numbers attached but pretty hopeless at delivering on them.
As finance minister Shona Robison announced plans for £500m spending cuts last week, the Scottish Government inadvertently underlined how little progress it has made under a flagship programme with a £500m budget.
The Just Transition Fund for the North East and Moray was announced by Nicola Sturgeon in 2021 with fanfare. In March a committee of MSPs raised big questions about the initiative noting the fund “did not open for new bids in the last financial year”.
READ MORE: SNP election manifesto Just Transition claim is absurd
In last week’s Programme for Government first minister John Swinney’s administration said it would “take forward the focused work of the fund and set out the next steps for future deployment” in the coming year without elaborating.
The programme said the Scottish Government would accelerate investment to support the offshore wind sector noting it had made a commitment of up to £500 million over five years.
The comment appears to refer to the offshore wind supply chain support fund launched by former first minister Humza Yousaf in October.
The Programme for Government states: “This year we will set out our priorities for investment in supply chains and enabling infrastructure, such as ports and harbours, and take further action to improve the planning and consenting regime for renewable energy generation.”
Rather than suggesting that ministers are on the case, such comments only underline how much SNP administrations have left undone.
Failings on the supply chain development front are partly to blame for the fact that the number of jobs created in the clean energy sector has remained well below Scottish Government predictions.
But the lack of action to curb demand for energy has also hampered the net zero drive.
The Programme for Government promises that ministers will at last bring forward a Heat in Buildings bill.
The Federation of Small Businesses said members would welcome publication of the bill as they look to benefit from opportunities within the supply chain in the transition to net zero.
“Providing further detail on the direction of travel here is something we’ve long called for,” said the FSB.
Japanese giant Mitsubishi last week provided further evidence that hype about Scotland’s green job prospects has been overdone when it announced plans to shed around 440 jobs at a plant in Livingston where it makes low carbon air source heat pumps.
READ MORE: Scottish turbine plant delay highlights energy jobs challenge
The Scottish Government faced flak last week for cutting environmental programmes in its efforts to save money. The decision to reinstate peak fares on ScotRail services angered greens in particular although the scheme to cut ticket prices appeared poorly designed and chiefly benefited the affluent.
A more serious criticism concerned the Scottish Government’s decision to use £460m lease payments made by windfarm developers to plug the hole in the public finances. The ScotWind revenue concerned was meant to be used to fund long term investment.
It was no wonder that Mr Swinney found himself being lambasted by the environmental lobby which he courted so feverishly as deputy to Ms Sturgeon.
Friends of the Earth Scotland climate and energy campaigner Caroline Rance said there was next to nothing in the Programme for Government that showed the Scottish Government was serious about getting back on track on climate or supporting a just transition from fossil fuels.
In a withering summary of team Swinney’s failings, she concluded: “This is a desperately weak approach to climate action and SNP Ministers are clearly refusing to learn from their own mistakes.”
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