Osborne unveils £103m renewables funding for Scotland

Pelamis wave power device. Pic: Pelamis The money is to be invested in onshore and offshore renewable projects

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Chancellor George Osborne has announced an extra £103m of funding for renewable energy in Scotland.

The money from the Fossil Fuel Levy was additional to the Scottish government's budget, but within the UK's overall spending plans and contingencies.

Scotland's Finance Secretary John Swinney said the funds were "long-awaited" but welcome.

Accompanied by Chief Secretary to the Treasury Danny Alexander, Mr Osborne made the announcement in Easter Ross.

Friends of the Earth Scotland has also welcomed the new deal, but said it was a "small part" of a larger effort to reduce carbon emissions and the would be a challenge in spending the money appropriately.

The UK and Scottish governments have reached an agreement on accessing funds from the Fossil Fuel Levy, a tax paid by suppliers of non-renewable energy sources.

It currently holds about £206m.

Under the deal, £103m will go towards Scottish renewable energy projects, including wave and tidal schemes.

The remaining £103m will be made available to support the capitalisation of the £3bn UK-wide Green Investment Bank.


The fossil fuel levy was introduced in Scotland in 1996.

It was, in essence, a tax on carbon, designed to raise money from traditional energy sources in Scotland to invest in renewable power.

But in 2002 another environmental tax was introduced, the Renewables Obligation.

For several years the two processes ran in tandem, generating a surplus which presently stands at £206m.

Mr Osborne said the UK government was committed to creating jobs across Scotland - particularly in the green energy sector.

He said: "It's great news that we have been able to cut through the arguments and the wrangling with the Scottish government that have stopped this money being invested in the past.

"It shows how serious the UK government is in its support for Scotland's green future."

Mr Alexander added: "The UK government is strongly committed to supporting the growth of this sector in Scotland in the long term."

The Scottish government has been calling for money to be released from the Fossil Fuel Levy, which is held by Ofgem, so investments can be made in onshore and marine renewable projects.

Mr Swinney said: "For too long Scotland's money has been sitting unspent in an Ofgem account in London."

He added: "Scotland has the natural renewables resources to become the green energy powerhouse of Europe using all forms of renewables including hydro, wave, tidal, onshore and offshore wind."

Mr Osborne made the announcement at a former oil rig construction yard at Nigg which is set to become a service hub for the energy industry, employing an estimated 2,000 people by 2015.

Per Hornung Pedersen, chief executive officer of Edinburgh-based developer Pelamis Wave Power, said the funding was a welcome boost.

George Osborne says he hopes the money can create "centres of employment and growth" in Scotland

He said: "Wide scale commercial deployment of marine renewables will be delivered by substantial high-value manufacturing activity.

"Pelamis Wave Power are currently planning for the serial production of Pelamis wave energy machines and we welcome the confidence this sort of support brings.

"The majority of the capital expenditure involved in the manufacture of a Pelamis machine is currently spent in the UK, and all the design, fabrication, and assembly of our machines is done in Scotland - so we are well aware of the potential economic opportunity in this sector."

Francis Stuart, Friends of the Earth Scotland's policy officer, said the money had been a long time coming, but was welcome.

He added: "The challenge now will be to ensure that it is used in the best and most appropriate ways, to support Scotland's vast renewable potential, and help fund a just transition to a low carbon economy in Scotland.

"While this funding will make a welcome contribution to progress towards meeting Scottish and UK carbon reduction targets, it is still a small part of the overall picture."

He said the Scottish government needed to significantly increase investment in energy efficiency and demand reduction measures.


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  • rate this

    Comment number 61.

    51 -david.

    That would be the report that has been rubbished not only by members of the same Institute, but by banks and businessmen also. Funny how that all coincided with the citigroup report (written by an ex-tory cabinet minister) then David Cameron rubbishing investment in Scottish renewables in parliament.
    Anyway, the money is rightly belongs to the Scots, it's theft from Wastemonster.

  • rate this

    Comment number 60.

    Cut out the green rubbish, cut out the robbery and give us some energy.

  • rate this

    Comment number 59.

    I can't believe how negative some of these comments are. Yesterday Scotland didn't have the money, today it does. Given the realities of today's politics & finance, it's a good deal. I hope it will be spent on tidal energy - the only 100% reliable, predictable 'natural' source. But I bet it will go on wind: watch for 'planning gain' (= bribe the locals) in future wind power applications.

  • rate this

    Comment number 58.

    @39 minuend - The Fossil Fuel Levy (FFL) is a levy paid by suppliers of electricity from non-renewable energy sources in the United Kingdom. The costs are shared by the suppliers and consumers, as a proportion of the cost is passed on to consumers in the cost of the electricity supplied. So no, it's not all Scotland's money.

  • rate this

    Comment number 57.

    I wish the Holyrood would ditch their agenda of independence and work with Westminster. We should be working together to build Scotland – Scotland is better and more secure in the UK than on it’s own.

    Hopefully we will spend this money wisely and not blow it like we have with the Edinburgh tram farce.

  • rate this

    Comment number 56.

    Please Scotland, just go, what is Mr Salmond waiting for? Even then I bet you don't stop whining.'

    His prooblem is most Scots don't want full independence.

  • rate this

    Comment number 55.

    1.George Osbourne halves the Solar Energy feed in tariff putting thousand of English workers out of jobs. His reason, no money.
    2. George Osbourne announces a £103 million investment in Scottish renewable energy. Quote "Mr Osborne said the UK government was committed to creating jobs across Scotland - particularly in the green energy sector"
    British parliament?? Scottish agenda !!

  • rate this

    Comment number 54.

    Earlier this year the BBC calculated the entire tax take of Scotland (inc oil) and all the net returns it received from the UK.

    Guess what? It was largely neutral and so if Scotland decided to go their own way they would be no better or worse off than they are now. That is.... until the oil runs out.

  • rate this

    Comment number 53.

    @15. HK23

    Who pays into the fossil Fuel Levy?

  • rate this

    Comment number 52.

    OMG Scotland gets back half the money raised from a tax raid on it's oil& Gas sector and posters on here call it a hand out and demand that Scotland pays are you people for real!?!

  • rate this

    Comment number 51.

    More of OUR money (because the government doesn't actually have any money of its own) going on subsidising so-called 'green' projects - which will presumably go the way of the £1bn wasted on the Carbon Capture and Storage fiasco...
    I suggest that government ministers on both sides of Hadrian's Wall read the assessment of Scottish renewables produced by the Institution of Mechanical Engineers...

  • rate this

    Comment number 50.

    I guess this depends on whether Scotland devolves when the referendum comes out. No more money from Westminster then!

  • rate this

    Comment number 49.


    No, I won't sign your petition because hydrogen isn't a primary source of energy, it is merely a transport medium similar to a battery.

  • rate this

    Comment number 48.

    "shouldn't scotland be paying for this?"

    One way or another you can bet we will. Almost ALL of this money, and the money from energy it generates, will end up in the treasury (in taxes) and pocket of some fat cat in London (in profits)

  • rate this

    Comment number 47.

    Scotland ARE paying for this. The money is coming from Westminster, to which Scottish taxpayers and successful Scottish carbon-based energy businesses fund.

    Renewable energy is a key component of the energy mix, but let's not forget the vital contribution that energy from Oil & Gas that keeps the lights on in the rest of the UK and our cars on the road.

  • rate this

    Comment number 46.

    A good move. Whether you like it or not the cost of fuel is rising and is only going to get higher as demand soars and resources dwindle.

    Investment into new renewable energy sources to complement nuclear and possibly future fusion generated power should be the backbone of our energy policy.

    We could also help develop new technologies to export making us a world leader.

  • rate this

    Comment number 45.

    Wales should go for independence; then maybe Boy George would give Wales hand outs, to try and keep the Union together.

  • rate this

    Comment number 44.

    I assume this is some of the money that the Scotish government has been asking to be released for over the past year or so. Is it a consolation prize since they withdrew the one billion pound "carbon capture" money from Scotland ?

  • rate this

    Comment number 43.

    I'm amazed that a story about investment in sustainable clean energy has been turned around into a nationalistic slagging match from both sides of the border in these comments. Unbelievable.

  • rate this

    Comment number 42.

    'A Levy only paid due to demand, aka consumers, from ALL of the UK.'
    Have to correct you, think you will find that £ 200 Million is actually owed to Scotland as that is the amount that Scotland has accrued and not from the rest of the UK. So in effect Scotland is getting its own money back, well half of it!


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