Oilprice.com: Subsidies for renewable energy programs are losing popularity in many countries as expensive startup costs and the shale gas revolution make these technologies economically unfeasible. How are you attracting investors to your various programs?
Alex Salmond: Scotland has a natural competitive advantage in the transition to the low carbon economy given our vast renewable energy resources and our history of technological innovation. We believe that our competitive advantage lies in being at the forefront of technological innovation: this is achievable for a small nation. We want to make Scotland the destination for international investment in low carbon, and for the development of the financial architecture for a global low carbon economy, by operating at the forefront of development of clean energy. You also have to provide investment certainty. In 2009 the Scottish Parliament unanimously passed The Climate Change (Scotland) Act 2009. This groundbreaking piece of legislation sets a world-leading target of at least a 42% cut in national greenhouse gas emissions by 2020 compared to 1990. As well as having all-party support, the Scottish legislation received support from across Scottish civil society such as business organisations, trade unions and environmental groups. The aim of the Act was to provide certainty for businesses and the public about Scotland’s low carbon future. We have backed up the legislation with a comprehensive delivery framework. So business, and investors know that Scotland is serious about leading the low carbon transition and International energy companies are making Scotland their base for research and development in offshore wind and marine energy.
Climate change campaigner and Nobel Laureate Al Gore praised Scotland’s commitment to renewables when he said: “Scotland has not only provided inspiring leadership, you are exploiting one of the greatest resources anywhere on the planet, with wind onshore and particularly offshore, all sorts of variety of windmills – and the new renewable technologies are especially important”. So clearly, major international figures think we have the framework right in Scotland.
Oilprice.com: Given the SNP commitment to renewable energy independence would you be able to discuss the importance of wave & tidal power in the overall renewable matrix?
Alex Salmond: The Scottish Government sees wave and tidal as playing a central role in the energy mix given their ability to complement and balance other forms of renewable energy generation. In the short term our priority is to develop the industry through small arrays to meet as much as possible of the ambitious plans for over 1GW of wave and tidal in the Pentland Firth and Orkney waters by 2020.
We have also consented a 10 megawatt tidal power array in the Sound of Islay; this is the world’s largest consented wave or tidal stream project. We have launched the Saltire Prize, Scotland’s £10 million energy challenge to the world to push back the boundaries of marine energy innovation will accelerate the commercial development of wave and tidal technology.
Oilprice.com: Would Edinburgh join the EU? If so, what does that mean for its renewable energy targets?
Alex Salmond: Scotland is and will remain a member of the EU. We already have ambitious targets, above the EU target, so we will take those ambitions to the top table in Europe. Scotland has a target of delivering the equivalent of 100% of domestic electricity demand from renewables – far above the EU target of about 30% for the UK – we exceeded that last year.
Oilprice.com: Should you gain independence from the United Kingdom, do you believe North Sea oil will give Edinburgh enough cash to shield it from similar debt burdens plaguing the eurozone?
Alex Salmond: Scotland has had a lower fiscal deficit than the UK over the past five years as a whole. Scottish Ministers believe that with the additional economic levers that independence would provide, and the £1.5 trillion asset based provided by Scotland’s remaining oil and gas reserves, an independent Scotland would stand on a strong financial footing.
An independent Scotland would establish a credible fiscal framework to ensure Scotland’s public finances were put on a sustainable footing. In order to facilitate this process, the Scottish Government has recently established a Fiscal Commission Working Group (comprising of Professors Joseph Stiglitz; Andrew Hughes Hallett; Sir Jim Mirrlees; and Frances Ruane) to oversee the crucial work to assist in the design of a fiscal and macroeconomic framework for Scotland which entrenches financial responsibility.
Oilprice.com: A recent Citigroup research report estimated that to achieve your renewable energy goals you would need to invest between £6 billion to £7 billion a year. Where do you see this investment coming from? As green energy has not delivered good returns for investors in the past.
Alex Salmond: The Citigroup report was widely criticised by industry in Scotland and the proof is that investors are continuing to invest in Scotland. The UK Government estimates announcements more of renewables investment and jobs in 2011-12 in Scotland were £1.7 billion with 4411 jobs, with a potential £8bn and 3313 jobs in the pipeline – that’s more investment in the pipeline than the rest of the UK put together – significantly more. There have been a string of announcements by major domestic and international companies making significant investments in Scotland encouraged by our commitment to the low carbon revolution: Scottish and Southern Energy, Iberdrola Scottish Power, Gamesa, Mitsubishi, Samsung, Gaia Wind, Global Energy Group, Aquamarine Power. And we have seen substantial £7bn of investment in grid connections in Scotland being fasttracked by Ofgem in particular to strengthen the capacity to export green electricity to England – Scotland already exports around a fifth of our electricity generation. And of course we heard recent welcome news that the Green Investment Bank, with capital of £3bn, will have its HQ in Edinburgh.
Oilprice.com: Alex, thank you for taking the time to go through our questions.