How To Own Scottish Energy
Briefing Note
Credits — Common Weal
Overview
Gillian Martin, currently acting Cabinet Secretary for Net Zero and Energy, has responded to a recent poll showing overwhelming support for public ownership of Scottish energy by again claiming that the Scotland Act prevents the Government from making this happen. This claim is disingenuous, misleading and is based on a limited reading of a law that is obsolete and should be changed.
The Scotland Act does indeed prevent the Scottish Government and Scottish Ministers from ‘owning, generating, transmitting or storing’ electricity which, on the face of it, would prevent a National Electricity Company.
However, other options within the Scottish devolved settlement would allow Scottish energy to be brought into public ownership. This briefing note outlines those options.
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Gillian Martin, currently acting Cabinet Secretary for Net Zero and Energy, has responded to a recent poll showing overwhelming support for public ownership of Scottish energy by again claiming that the Scotland Act prevents the Government from making this happen. This claim is disingenuous, misleading and is based on a limited reading of a law that is obsolete and should be changed.
The Scotland Act does indeed prevent the Scottish Government and Scottish Ministers from ‘owning, generating, transmitting or storing’ electricity which, on the face of it, would prevent a National Electricity Company. However, it should be noted that the law is blatantly not fit for purpose as a pedantically strict reading of the law also appears to make it illegal for the Scottish Government to fit solar panels to the roof of its buildings, run wires from those panels to the light fittings or to own a set of AA batteries in the stationary cupboard.
Regardless of that pedantry, the Scottish Government is leaning on almost as strict a reading of the Act as an excuse for inaction in the face of demand for the public ownership of Scotland’s energy assets. When Governments want to look for an excuse to not act, they can always find one.
We have already presented to the Government multiple options to circumvent or bypass those restrictions and we’re disappointed that the Government continues to choose to ignore them in favour of allowing multinational corporations and foreign public owned energy companies to exploit both Scottish energy assets and Scottish energy users for their own increasing unacceptable profits.
We republish our alternative options for the public ownership of energy below.
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The Scotland Act specifically prohibits the national public ownership of electricity but not other forms of energy. A National Heat Company would generate, store and transmit heat via district heat networks and could be powered by a variety of sustainable energy sources such as solar thermal panels or geothermal sources.
Decarbonising heat is a much larger problem than decarbonising electricity in Scotland, especially with limits on the devolved powers to improve the National Grid which currently prevent the Scottish Government from progressing climate plans faster that Westminster allows. A National Heat Company could build infrastructure at its own desired pace.
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If we really want public owned electricity rather than energy more generally, then Local Authorities have the power to own a Local Electricity Company themselves. The Scottish Government could fund them directly (or via SNIB), LAs could be given powers of taxation to launch them, or they could use their existing prudential borrowing powers which allow almost unlimited borrowing so long as the investment delivers sufficient return to pay back the loan (which should be trivial in the case of selling energy).
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While there are advantages to local ownership, the Local Authorities could pool their resources and launch a
National Energy Company jointly owned by all 32 Councils. Indeed, the recently announced push to give LAs General Power of Competence (which gives LAs the powers to “do anything an individual could do” which includes setting up for-profit companies) would be useful (but not essential) to do this.
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A Public/Public Partnership is where several different types of public-owned vehicle cooperate on a project. This could include, for example, a Local Energy Company owned by the Local Authority (as in Option 2) collaborating with a community energy project owned by a local Development Trust as well as various other combinations of partnerships. These could be supported by the Scottish Government via the Scottish National Investment Bank as per its as yet unfulfilled missions to to achieve a Net Zero Just Transition and to improve opportunities for people and communities.
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This would technically be a private company but would be one where the shareholders would be limited to adult residents of Scotland and each such resident would be issued one non-transferable share in the company – effectively meaning that the company is wholly owned by the Scottish public. Such companies used to be common in banking and retail but there are examples of mutual energy companies, including in the UK. Shareholders would have a say in the running of the company, including a vote at annual strategy meetings over how much of the company’s surpluses should be invested in future development or issued as a dividend.
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As said above, the limitations of the Scotland Act are based on a law written before public energy was on the political agenda and therefore is obsolete. Instead of merely complaining about limits to their powers, the Scottish Government could be campaigning for a change to the Act. If the only way they will support the public ownership of energy in Scotland is if Ministers themselves get to own the National Electricity Company, then they should campaign to be allowed to do so. However, the backlash against a similar centralisation of ownership of the National Care Service should serve as a warning that other options, such as the ones above, may be faster, easier and would better serve the Scottish public.
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For a non-technical video presentation of Scotland’s energy options, see Craig Dalzell’s interview on Independence Live titled “Unlocking Scotland’s Energy Powerhouse” - https://www.youtube.com/watch?v=JV3MRR1JYOU
Or his presentation on the options for Scottish public ownership of energy, “Owning Our Energy” - https://www.youtube. com/watch?v=2lj2-W2-Bdc
See also our blueprint for a National Energy Company in our policy paper “Powering Our Ambitions” - https://commonweal. scot/policy-library/powering-our-ambitions/
