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 81.

    Scotland is owed £200 million from the Fossil Fuel Levy. That is what Scots have paid in.

    Giving back only half is very much Scrooge like, as is asking Scots to show gratitude for what is a Westminster hand-out.

    It is our money we want it all back.

  • rate this

    Comment number 80.

    How much of this will go into wave energy projects, which the photo with the article implies? Wave energy is ultimately more productive than wind and there is a super abundance of it around Scotlands shores.

  • rate this

    Comment number 79.

    Why Scotland? It may have large waves, but it doesn't have the highest tides. It is also nowhere near where the power is needed.
    Put money into small scale tidal power schemes in the Bristol Channel and get guaranteed power EVERY day and also be close to existing grid installations.
    A massive Severn barrage isn't needed to take advantage of the second highest tides in the world.

  • rate this

    Comment number 78.

    @ 57. daven's32ndestablishment
    I wish they would push for devo-max. If Scotland was responsible for setting tax rates and collecting revenues as well as managing expenditure they would be truly in charge of their own destiny. It would also eliminate any talk of subsidies going across the border in either direction. No need to dissolve the union to achieve that. Look at autonomous regions in Spain

  • rate this

    Comment number 77.

    @72. Edward2010 - how right you are! Westminster hs been extremely reluctant to give Scotland their share of the FFL money!

  • rate this

    Comment number 76.

    Well let's face: it if this is Scotland's money that our nationalist brothers are claiming I don't fancy being in Scotland when we get the £850m bill from Westminster for bailing our failed Scottish Banks! However I think this is a good thing for Scotland and I just hope someone can design a horizontal wind generator to fit in the ceiling of the Scottish Parliament for first minister's questions!

  • rate this

    Comment number 75.

    "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."

    As above!
    I don't support 'em but I know the SNP keep on saying that everyone, wherever you were born can support independance. in the same way that they support the same for the "regions"

  • rate this

    Comment number 74.

    62. rhmer
    Not so. Scotland largely gets back what it contributes to the UK economy.

    Some years are better than others and that is where the Unionists and Indpendence factions spin the statistics to suit their arguments.

  • rate this

    Comment number 73.

    Sidney Monroe
    9 Minutes ago

    Scotland will need rewenable energy because the English have used all their oil.

    CHEEKY BUT VERY TRUE,if Scotland had enough renewable energies in place,we/they could sell it at a premium to other uk countries and put on a dodgy tax on it for all the OIL London has taken.

  • rate this

    Comment number 72.

    Osborne - " "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."
    Does this idiot think we are that stupid? The Scottish Government have been requesting this money (which is Scotlands anyway) since they were first elected to re-invest in renewables. (BBC knows this )

  • rate this

    Comment number 71.

    And how long, if Scotland had independence, would it be before Aberdonians start comlpaining that their city puts more into the Scottish economy than it gets back because most cash is being spent in Glasgow and Edinburgh?

  • rate this

    Comment number 70.

    Can someone please explain why the government has halved subsidy to householders installing solar technology? I know its not the whole answer, but if every south facing roof in the uk was generating solar based power, surely it would have to help??
    Seems a no brainer to me ....

  • rate this

    Comment number 69.

    Program recently identified price rises in energy was in no small part due to shift towards green energy, fossil fuels being more cost effective to produce with. Theresofore, does this "assistance" mean more energy production, higher green % & corresponding increases in energy costs to customer? Is this the path we wish to race down (rather than slowly -, slow shift allowing slow price inpact)?

  • rate this

    Comment number 68.

    Does this investment get repaid to the rest of the UK if Scotland becomes independent ?

  • rate this

    Comment number 67.

    Scotland has only been given half of the money it is rightfully due.

    This is Scotland's money, we want it all. All £200 million of it.

  • rate this

    Comment number 66.

    With Offshore options being far more costly than existing and perfectly viable "onshore" options this is in effect the nation paying a NIMBY tax for renewable energy.

    All crown land should be used for wind renewable energy; that alone would resolve much much of the energy demand. Let's see if HRH Charlie is as Green as he says he is shall we?

  • rate this

    Comment number 65.

    This is all fine and dandy and yes Scotland does have a strong tidal resourse around Scapa flow BUT I have no doubt that if they get the independance they seem to be seeking, we will pay through our teeth for their green energy.

  • rate this

    Comment number 64.

    we should be going nuclear, not wating money on windmills

  • rate this

    Comment number 63.

    We need to adopt the Danish model to make this £200m go as far as possible. In Denmark local residents form collectives (each contributing a few thousand euros) to buy a share of a larger more efficient turbine. Residents contribute 75% with the remaining 25% coming from a private company that operates the turbines. Ownership of the power source remains in local hands, boosting the local economy.

  • rate this

    Comment number 62.

    50 mabeuf
    WRONG !
    When Scotland becomes independent
    there will be no more money from Scottish
    revenues to help subsidise the UK
    Scotland puts more into the UK exchequer than it gets back.


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