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 101.

    All £103m should have been invested in Hydrogen fusion, the only source worth following. None should be given to Scotland until they decide whether to leave Britain or not.

  • rate this

    Comment number 100.

    Can I ask something of all those who don't believe in man made global warming and/or think sustainable energy not worth the hassle or whatever - assuming you survive the looming armagedon will you apologise for not only being wrong but actively doing so much to help GW when you are proved wrong...???

  • rate this

    Comment number 99.

    What about England. I have been trying to get solar panals fitted to my roof,but NO grants available.

  • rate this

    Comment number 98.

    Not only do we have to keep subsidising England, when we get our money back is giving with lies and threats (see the posts here). On top of that, today we find that compensation for the English riots will be paid by Scottish, Welsh and Irish tax payers.
    Post 87. Money will be used on actual infrastructure, Scotland tends to do that, England are the ones with the crooks.
    Saor Alba

  • rate this

    Comment number 97.

    I am puzzled as to why a 'province'/'country', whose Govt is seeking independence from the rest of the UK, should continue to receive grants and subsidy such as this from the majority of the UK population governed from outside Scotland. If Scotland aspires to independence, they should seek funding for these projects from the EU; not 'the hated English'!

  • rate this

    Comment number 96.

    Scotland has many renewable options. Granite bedrock ideal for geothermal power. And more water flows through the Tay estuary than all of England's rivers combined. Wind turbines are a token gesture compared to the terawatts of untapped energy sitting literally under the noses of the oil tycoons.

  • rate this

    Comment number 95.

    So Westminster has decided to steal £100+ million from the Scots and give it to London in the shape of the Green Investment Bank (a UK government money pit).

    What a rip off!

  • rate this

    Comment number 94.

    Should we be grovelling in thannks for Osborne and alexander giving us HALF of our own money.? We have been waiting for this for years. 2 years ago cameron said it would all be released to the Scottish government, but then the trasury wnated to claw the same back.

    Typical BBC not to report all the sides to this.


  • rate this

    Comment number 93.

    @13. robkimberley
    it takes my breathe away that anybody is still this ignorant. Although you haven't noticed yet there is no more cheap energy because we have used it. What's left is the expensive stuff.

    Great news for Scotland, keep up the good work. Having said that should Georgie be at the helm in London as Europe collapses round us?

  • rate this

    Comment number 92.

    Why is it that you assume that the problems lie with Holyrood as opposed to Westminister. Like it or not the SNP have done a good job of running the Government despite Unionist opposition. They present the vision of a positive future for our country. You conclude with the usual Unionist position, 'we are better of together', more like code for 'too wee, too poor and too stupid'.

  • rate this

    Comment number 91.

    More cash to be wasted on renewables instead of power stations. We pay extra for power companies to invest in renewables , and then we subsidise them from taxpayers cash ; and still the prices rise . Soon electricity will be a luxury item which few can afford . Madness, the green goblins cost Scotland thousands of jobs this week by blocking the building of a power station because of ideology..

  • rate this

    Comment number 90.

    This amount of money is derisory . If we are to overcome our economic problems we need to spend billions on re-newables so that we can become world leaders and provide for the future enormous potential market in the world. It will also help to re-build our engineering industries that desperately need help. Britain must realise it cannot earn a living with an army of paper shufflers.

  • rate this

    Comment number 89.

    What I want to know is will this £103m be like the £1billion "available" for carbon capture in that though its there the UK Governent refuses to hand it out? Also good to see DC sticking to his word and the UK govt not investing in Scotland, it really make you wander WTF is the point in them?

  • rate this

    Comment number 88.

    Why did the Government not give the money back to electricity customers who paid for it in the first place? At least that would have helped to mitigate the rise in fuel poverty.

  • rate this

    Comment number 87.

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

    Really? Into the projects, or into the coffers for comittees and focus groups to discuss the possibility of renewable energy and the quality of the lunch?

    It's sad to say, but, I doubt very much indeed that this money will deliver any meaningful results.

  • rate this

    Comment number 86.

    Actually it doesnt,it has already been proven that Scotland contributes more than it gets back.
    The FFL is accumative, Scotland has been requesting release of its own FFL for ages. Now we get half of whats owed and were are supposed to be greatful, but the Scottish FFL is higher as the figure quoted is 2 years out of date, so is more than £ 200 million!

  • rate this

    Comment number 85.

    As the pot of money for the subsidy deminishes they adjust the value of the subsidy - first in gets best return, last in worst (if anything)

  • rate this

    Comment number 84.

    Its a good start in the right direction, however we should be trying to get Geothermal Energy!

  • rate this

    Comment number 83.

    New nuclear, govenment owned power stations too, on all sides of all borders/devolved governments that divide the UK now, but will have to pull together as the British Isles when the lights go out when French power companies pull the plug?

    Seriously, England is not a good place to live.

  • rate this

    Comment number 82.

    71 daven's 32nd...
    Rather silly question M8.
    Probably the same length of time as London when it gets fed up supporting the rest of England and declares independence from the UK.
    Silly question = silly answer.


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