Why ownership is crucial to Scotland’s energy future

Last week Scotland’s national academy of science and letters, the Royal Society of Edinburgh (RSE), published a report on Scotland’s energy future. The report is the outcome of a two-year Commission Inquiry and involved taking evidence from a number of stakeholders, including a roundtable discussion which the STUC attended. The Inquiry was financially supported by BP, Centrica, EDF and SSE, although the RSE says these energy companies had no input into the content of the report.

The report is frank about the scale of transformation and investment needed to meet the ‘energy quadrilemma’ of tackling climate change, ensuring affordability, safeguarding security of supply and developing policy that is socially acceptable and economically sustainable.

It uses a traffic light rating system to assess how technologies such as carbon capture and storage, offshore wind and nuclear perform against the four aspects of the energy quadrilemma, highlighting the trade-offs and hard choices that need to be made – and made soon.

There is much therefore in the report to welcome.

Yet the report is silent on some key issues.

While it acknowledges that ‘low-carbon transition requires massive, long-term investment and presents significant challenges to the market model’, it is silent on questions of ownership. Indeed, in response to questions about ownership during the launch event, the Commission Chair, Muir Russell, simply said ‘we are not in that space.’

Ownership isn’t simply an ideological concern. It is an issue of economic efficiency and value for money for the taxpayer.

The energy sector is a capital-intensive business and the cost of capital – through dividends and interest payments – represent a significant part of the cost of energy. Yet the cost of capital is far lower for government who can borrow at much cheaper rates than the private sector.

Take the new nuclear plant Hinkley Point C, funded through the UK Government’s Contract for Difference (CfD) scheme, which is costing more than £20 billion. It is estimated that it would have cost £10 billion if the government had been borrowing at 2%, rather than EDF’s cost of capital, which was 9%.

The CfD mechanism ties the Government into subsidising the private sector based on the current cost of technology rather than future costs. For example, EDF’s Neart Na Gaoithe (NNG) windfarm soon to be built ten miles off the coast of Fife using turbine jackets from Indonesia, is being funded at £114 per megawatt hour (an even higher price than Hinkley Point C). Yet the cost of offshore wind turbines have come down hugely since the 15 year contract was awarded in 2015 and EDF are about to coin it in, while refusing community and trade union demands to bring manufacturing jobs to the local area.

If we are to ramp up investment in energy infrastructure, as the RSE report demands, then it will be far cheaper for the infrastructure to be developed by the public sector rather than the private sector.

Questions of ownership within our energy system are not simply questions of ethics but questions of economic efficiency and value for money. Although a number of companies and shareholders currently benefit from the system as it is, if we are to meet the energy quadrilemma, we cannot afford to neglect the question of who owns our energy.

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Fife comes together to stand Ready For Renewal

Last Thursday, over 130 community members, environmentalists, trade unionists and politicians packed out Buckhaven Community Education Centre all with a common aim: to get answers from EDF.

However, despite their own policies to consult with local communities, EDF failed to turn up.

Dave Moxham, Deputy General Secretary of the STUC and chair of the evening’s meeting began by highlighting the empty chair next to him on the panel.  He explained that since EDF has chosen not to come to the community, the community must now pay them a visit at their Edinburgh offices and called everyone to attend a rally scheduled for the 5th of July.

Michael Sullivan, Secretary of the GMB Leven Engineering Branch, then spoke of the history of the yards.  Michael himself first began working in the yards in the early 70s, and has fought many battles in attempts to ensure that work there continues.  He explained his anger at EDF for stating that the yards don’t have the capability for the project, “That statement should be trashed. We do have the capability. We have the workforce with the experience to build to a high safety level. We cannot let them say otherwise.”

Our next speaker, Audrey Egan, spoke on behalf of Methil Community Council. She spoke of the positive impact on the community that EDF could have by awarding this contract to the yards, and highlighted the need for the campaign to continue.

Next we heard from Kate Whitaker from Friends of the Earth Scotland.  Kate expressed Friends of the Earth Scotland’s solidarity with the campaign and highlighted that while we often speak of the “looming” climate crisis, climate change is already impacting on many countries in the Global South, with people in India currently experiencing a deadly heatwave.  Kate spoke of the environmental impact of shipping turbine jackets abroad, stating, “Climate action doesn’t look like offshoring manufacturing work to other countries so we don’t have to count them in our emissions.” This highlighted the urgency of needing to have the wind turbine jackets built locally, deliver a just transition of workers into quality green jobs and start tackling climate change now.

Lastly, we heard from Jimmy Robertson, a Unite member who previously worked in the yards.  Jimmy spoke highly of his experience working in the yards, “We had pride in the work – mines, fishing, oil, gas.  This all created a community identity.  That’s what we’re losing. Some guys from the yards have never found work since, or we have compromised – working away from home, further to travel, impacting on our families.”  Jimmy spoke about workers having to compromise, and take on work in places like Amazon resulting in trained workers who can build ships, bridges and oil rigs moving parcels, “What a waste. What a waste of training and resources.”

The floor then opened for questions and comments, with many community members looking to have their say.  The discussion that followed touched on many key issues facing the yards and the wider community.  One audience member stated, “I was born here, I’ve witnessed my friends unable to work now because opportunities are being denied to them.  Some are having to get help from foodbanks and some are having mental health problems due to the lack of work.  We are being denied the opportunity for our sons and daughters to become engineers.”

The calls from the audience ranged from stressing the need for more investment into the yards to calls for the creation of a national energy company here in Scotland.

Michael Sullivan ended the evening with this statement, “I’m battle weary. I have been disillusioned. But the amount of people who have shown support tonight has lifted my spirits. We have to win this. We will need the support from everyone in here, and we can win this”

The STUC would like to thank everyone who attended the meeting and the staff at Buckhaven Community Education Centre.  Further details on the rally at EDF’s offices will be announced soon.

Environmental campaigners voice support for Fife – Ready for Renewal

Ready For Renewal, launched this last month in Fife, is a joint campaign led by the STUC, GMB and Unite the Union.  As part of the campaign, we’re calling on EDF to meet with the community this Thursday, to listen to their concerns and do the right thing by building their new turbine jackets in the Fife yards.  The meeting this Thursday (20th June) will take place from 6pm-8pm at Buckhaven Community Education Centre and we encourage all to attend.

Building these turbine jackets in the Fife yards, 10 miles away from where the wind turbines are to stand would bring hundreds of renewable energy jobs to the area, avoid the environmental damage of shipping the work abroad while improving the local economy.

Two key environmental campaigners from the New Economic Foundation and the Just Transition Centre have voiced their support for the campaign:

David Powell, Head of Environment & Green Transition, NEF

“The UK’s proud history of manufacturing should be at the heart of a Green New Deal – making the kit that will power a new generation of clean, labour-rich infrastructure.  Governments must attach firm conditions to companies that benefit from energy subsidies to make sure they invest in the people and places that most need green jobs. Multinationals like EDF need to play ball too. Rather than shipping turbine jackets half way round the world, they should be using the Fife yards to build this important infrastructure.”

Samantha Smith, Director, Just Transition Centre

“A real Just Transition for Scotland means creating decent jobs for Scottish workers and communities, not offshoring jobs and raising emissions. EDF needs to keep the promises it made when it got support from the government and unions.”

To find out more about the community meeting this Thursday, please click here.

Fife is Ready for Renewal

Ready For Renewal, launched this last month in Fife, is a joint campaign led by the STUC, GMB and Unite the Union.  We’re calling on EDF to do the right thing and build their new turbine jackets in the Fife yards.

Building these turbine jackets in the Fife yards, 10 miles away from where the wind turbines are to stand would bring hundreds if renewable energy jobs to the area, avoid the environmental damage of shipping the work abroad while improving the local economy.

Over the coming days we will be looking at what key environmental activists are saying about the campaign asks, and how it relates to creating a greener economy.

Mary Church, Head of Campaigns, Friends of the Earth Scotland has expressed her support, stating:

“We urgently need to build the clean energy economy in Scotland to do our fair share of tackling the climate emergency. But the new clean economy must be created in a way that ensures the benefits and costs are shared fairly, both internationally and here in Scotland.

“Building turbine jackets in Indonesia for our renewable energy infrastructure means offshoring the climate-change emissions associated with manufacture, and creating significant extra emissions by shipping the turbines half way around the world.

“Crucially, it also means losing the opportunity to create decent manufacturing work in Fife, that could help kick start the badly need Just Transition for workers and communities currently dependent on high carbon industries here in Scotland. EDF should think again about the real costs of sub-contracting this work far away from the shores on which the turbines will eventually stand.”

We have invited EDF to attend a community meeting on Thursday the 20th of June, from 6pm-8pm at Buckhaven Communiy Education.  All are welcome to attend, let’s show EDF the strength of the local community.  Our Facebook campaign page has more details of the event here.