The Scottish government’s reaction to the double whammy of the closure of Longannet, Scotland’s last coal-fired power station, and the scrapping of plans to build a new gas-fired power station at Cockenzie, East Lothian, was rather predictable.
The dual announcement by Scottish Power should have given the SNP government pause for thought to rethink its obsession with renewables and pursue a more balanced energy mix. Sadly it chose instead to adopt its default position of blaming Westminister, conveniently ignoring its own role in eroding Scotland’s energy security.
It is true that Westminster’s misguided carbon taxes have made coal-fired plants like Longannet completely uneconomical. But the Scottish government has been a cheerleader for these taxes.
Longannet is one of the top polluting energy plants in the European Union and is squeezed by increasing taxes on burning coal and more stringent rules on emissions. The plant was estimated to have accounted for about 17% of Scotland’s total greenhouse gas emissions in 2012 and was facing a carbon tax bill of about £160m for 2015-16.
It was due to shut in 2020 but Scottish Power warned in March that the above bill, combined with the long-running row over transmission charging, would force it to accelerate its closure programme.
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An agreement with regulator Ofgem to cut Longannet’s transmission costs from £40m to £34m was never going to be enough to convince Scottish Power’s owner, the Spanish utilities giant Iberdrola, to keep the plant in business.
An equivalent power station in the south of England would receive a payment of £4m, so Fergus Ewing, Scotland’s de facto minister for wind, is on safe ground when he blames the UK’s “discriminatory transmission charging system” for the closure.
But he ignores the reality that his party’s energy polices, including the SNP’s unswerving support for George Osborne’s outrageous carbon price floor — which taxes emissions from coal-burning stations at a rate nearly five times higher than the rest of Europe — have failed to create a sustainable mix of energy sources and, as evidenced by the Cockenzie decision, are scaring away investment in the sector.
New cleaner replacement gas plants are not being built because Scotland’s drive for more intermittent wind farms means energy companies can no longer be sure how often they will actually be required to generate, and of course, how much profit they will be able to make.
Scotland’s nuclear power stations, Torness and Hunterston, are both scheduled to close within the next eight years. But the Scottish government’s opposition to clean nuclear power, one of the lowest-cost options for reducing carbon emissions, means they will not be replaced. It has also imposed a moratorium on fracking. Consequently, if Scotland does face a battle to keep the lights on when the wind doesn’t blow, and is forced to import power from England, the blame will lay in large part with the Scottish government’s one-track energy policy.
I don’t believe in LBTT
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Even allowing for the fact that estate agents often compete with farmers for the Victor Meldrew award for complaining, Scotland’s Land and Buildings Transaction Tax (LBTT), which replaced UK-wide stamp duty in April, looks increasingly like a disastrous policy.
Estate agents in Aberdeen and Edinburgh, Scotland’s traditional property hotspots, complain the sale of homes worth more than £1m has collapsed since LBTT was introduced.
Just six properties worth £1m or more were sold in Scotland during June, half the number of last year’s monthly average. In May only two were sold.
But more worryingly perhaps is the impact LBTT is having on the Scottish government’s hard-pressed finances. In the first quarter of this year UK stamp duty raised more than £8.5m in Scotland. By contrast LBTT raised just £982,511 between April and June.
Even allowing for the fact that Aberdeen and Edinburgh both voted no in the independence referendum, the loss to the nation’s coffers should ensure Jim Swinney looks afresh at LBTT before next year’s elections.