1The Scottish National Party was created in 1934. In the Declaration published in 1947, the SNP wanted Scotland to become independent to control its own, natural resources:
- 1 “Statement of Aim and Policy of the Scottish National Party, December 1946”, in H.J. Hanham, Scotti (...)
The land and all natural resources and accumulated wealth rightly belong to the people of Scotland from whom they may not be alienated. Every citizen has the right to a share in the national inheritance and to own property. Such rights will be upheld by the State.1
- 2 Idem, B1 (2). Scottish Parliament, Official Report, 7 December 2021, Fiona Hyslop, SNP MSP, referr (...)
- 3 This was endorsed by the British Government under the Jurisdiction Act 1964, and in an Order-in-Cou (...)
2Scottish shale oil had been refined for industrial use in the 19th century but production was declining in the interwar years because of growing competition from the Middle East.2 Yet the discovery of offshore oil and gas resources in the North Sea in the mid-1960s was regarded as a major opportunity. Indeed, under international law (which relies on a median line from the foreshore to apportion the continental shelf), this oil would be under Scottish jurisdiction should Scotland become independent.3 The resulting revenues would thus accrue to the new state.
3SNP leaders thus based their independence campaigns on the link between sovereignty and full control over natural resources from the early 1970s onward. This discourse, encapsulated in the slogan “It’s Scotland’s oil”, enabled the party to gain representation in the House of Commons although as a minor party. In the new Scottish Parliament set up in 1999, the SNP was the second largest party, and the largest one from 2007. It has been in power ever since, although its ministers have not been dealing with oil, a matter reserved to British institutions. In 2014, when the Scottish Government held a referendum on independence, oil was still at the forefront of the campaign and presented as an asset of the future state. Brexit, which resulted from a referendum held across the UK in 2016, was supposed to provide an opportunity to trigger a second independence referendum in Scotland as 62% of Scottish voters wanted to remain in the EU. But a collapse in oil prices and a growing concern for climate change across the world caused the nationalist campaign in Scotland to take a different turn. The SNP was compelled to endorse greener, more international perspectives.
4Indeed in 2022, Nicola Sturgeon, Scotland’s First Minister and the leader of the SNP, asserted:
- 4 Nicola Sturgeon, Scotland’s Place in the World, Washington DC, Brooklings Institution, Edinburgh: S (...)
Having led the world into the industrial age, we now have an obligation to play our full part in helping the world move into the net zero age. […] Although we are a relatively small country we have very significant reserves of wind, wave, hydro and tidal power. […] We will lead by example in our actions.4
5This article analyses how the SNP has instrumentalised oil to shape its nationalism and is adapting to new circumstances both within and outwith the UK in early 2023. It first deals with the golden era ending with the 2014 referendum, when oil raised expectations, and then turns to discussing issues related to a supposedly greener future.
6While the SNP succeeded in linking oil and independence to promote nationalism, such a stance raised multiple constitutional issues related both to independence—its favourite outcome—and to devolution favoured by British parties in Scotland.
- 5 Gordon Wilson, SNP: the Turbulent Years 1960-1990, Stirling: Scots independent, 2009, 86.
7In 1971 oil was regarded as a major economic and political opportunity. The party’s official line was influenced by meetings with foreign leaders and thorough research. Gordon Wilson who supervised these efforts reckoned that the fourfold increase in oil world prices in 1973 made the SNP case “irresistible”.5
- 6 SNP, SNP and You, Edinburgh, 1973, 3.
8The SNP issued policy documents stating that Scotland should benefit from its own resources—a “universally-accepted” principle –, instead of being deprived of them by “London” (ie, the British Government) that would waste revenues and “leave [Scotland] with nothing except the mess and the unemployment arising out of a boom-slump situation”. 6
- 7 Edwige Camp-Pietrain, “L’Écosse et le pays de Galles à l’épreuve de la crise”, in Stéphane Porion ( (...)
9Contrary to Norwegian governments which had set up a state-owned corporation and a reserve fund “to make the oil last for a long time and spread the benefits”, 7the British Labour Government decided that it would grant licences to large, private companies such as BP, Shell and other major foreign operators. The only public intervention was through a British National Oil Corporation (BNOC) that took out stakes in some fields.
- 8 James Marriott, Terry McAlister, Crude Britannia. How Oil Shaped a Nation, London: Pluto Press, 202 (...)
10In this context, the SNP devised its own strategy: it aimed at working with private companies, while establishing a state-owned, Scottish company, which would enable the Scottish industry to adapt to the new markets and technologies. Furthermore, SNP leaders also wanted oil rigs to be manufactured in Scotland to counter the decline of heavy industry, ie shipyards and steel manufacturers, and thus challenge oil companies’ decisions to increasingly place orders overseas.8
- 9 Christopher Harvie, Fool’s Gold. The Story of North Sea Oil, Harmondsworth: Hamish Hamilton, 1994, (...)
11The SNP developed a campaign against successive British governments by having posters designed claiming that oil belonged to every individual living in Scotland and contesting tax revenues collected by the British Government. However, the slogan “Rich Scots or poor Brits”, opposing the Scots to other British people, was somewhat a failure in the face of a strong “British consciousness” and some “ethical view of the world”.9 SNP leaders then softened their stances by pledging mechanisms that would support the economy of the rest of Britain badly hit by inflation.
12The 1974 report drafted by Gavin McCrone, an adviser to the British Government, proved that public authorities feared SNP’s arguments. Yet that report was only published thirty years later under the Freedom of Information Act:
- 10 Gavin McCrone, The Economics of Nationalism re-examined, Edinburgh: SNP, 2015 [1974], 16.
This paper has shown that the advent of North Sea oil has completely overturned the traditional economic arguments used against Scottish nationalism. An independent Scotland could now expect to have massive surpluses both on its budget and on its balance of payments and with the proper husbanding of resources this situation could last for a very long time into the future.10
13Meanwhile the SNP gained seats in the House of Commons. In a by-election held in 1973, Margo McDonald was elected in Glasgow Govan, an area that used to thrive thanks to shipyards on the Clyde which epitomized Scotland’s great industrial past. The SNP’s share of the vote increased by 30 percentage points in this Labour stronghold. Then at the following 1974 general elections, the SNP secured 22% of the vote in February and 30.4% in October (table 1) in Scotland. The SNP thus held 11 of the 71 Scottish seats and Gordon Wilson entered the House of Commons.
14Oil contributed to this breakthrough. Indeed, according to surveys, most respondents knew that the SNP wanted oil to be Scottish (table 2). Amongst those who favoured independence, 65% of those who reckoned that oil should be Scottish voted SNP, compared to 40% of those who advocated equal shares for Scotland and England (table 3).
- 11 J. Mariot, T. McAlister, op. cit., 142.
15There was a second SNP campaign in the early 1980s, this time against Margaret Thatcher who represented both a symbol of London and free-market policies resented in Scotland. Her Governments carried out privatisations on a large scale, including those of the BNOC, the remaining public stakes in BP as well as British Gas. While Thatcher’s governments willingly lost all players acting directly in the oil and gas field,11 they maximised the exploitation of soaring oil prices to balance current payments, the deficit of which had required IMF support in the late 1970s. Trade surpluses were recorded between 1977 and 1985, providing no incentive for British politicians to save some of these substantial revenues.
16Later SNP campaigns were not as successful as the 1973 one: the SNP only had 2 MPs in 1979 and it would never exceed 6 MPs in the 1980s and 1990s. The Scots still favoured Labour, a British party.
17Meanwhile the SNP had a new leader, Alex Salmond, in 1990. As a former economist, he was keen to prove with figures that the budget of an independent Scotland would have a surplus. He also intended to rely on oil revenues to save the Scottish steel industry from collapse when the British government refused to bail out ailing industries. He however refrained from promising that an independent Scotland would be wealthy at the expense of England, even in leaflets:
- 12 SNP leaflet, 1992 general election campaign.
Scotland is the only country in the world to discover oil and get poorer. In the last ten years […] the British Government has taken £100 billion from the North Sea in tax revenues. That’s £20,000 for every man, woman, and child in Scotland! And now, with a second oil boom on the way, Scotland will lose out yet again. Scotland won’t supply any of the steel for the 46 new rigs needed in the next four years. […] Only independence in Europe can give Scotland the right to invest our oil wealth in our own future.12
18This strong link between the SNP and oil had an impact on wider constitutional issues.
19In response to the SNP’s breakthrough, the Labour Government devised a devolution scheme in the 1970s. Oil would remain reserved to British authorities but many feared that it might eventually be controlled by Scottish authorities either through devolution or through independence.
20This triggered a reaction in the Northern Isles. One third of Scottish oil was off their coasts, and the Brent field was even used as a benchmark worldwide. Local councils gained permission from the British Government to set up their own funds thanks to a fee on oil companies operating through their terminals, Flotta in Orkney and above all Sullom Voe in Shetland.
21Voters in the Northern Isles favoured the Liberal Party at elections to the House of Commons and they were quite wary of any party likely to set up institutions in Edinburgh, be they a mere devolved assembly as offered by Labour or a fully independent government as promoted by the SNP (table 4). Such institutions would likely focus on the priorities of the working classes living in the central belt. Consequently, their MPs succeeded in securing an amendment in the Scotland Act 1978 to protect their interests against decisions made by a devolved assembly:
- 13 Scotland Act 1978, c. 42, section 41.
When it appears to the Secretary of State for Scotland that any provision of a Bill passed by the Scottish Assembly […] would or might otherwise cause substantial detriment to the social or economic needs and interests of the Orkney Islands or the Shetland Islands or to any of their inhabitants or to the status quo of their councils, […] section 38 would apply [ie he may lay the Bill before Parliament together with a reasoned statement that in his opinion, it ought not to be submitted to Her Majesty in Council].13
22This was not sufficient for voters in the Northern Isles and almost two-thirds of them rejected devolution in the referendum held in March 1979. However, this Act was not enforced as the proportion of the electorate that voted for it was below the threshold set by the legislation.
23In response to the resentment generated by the free-market policies enforced by Conservative governments between 1979 and 1997, Labour established a Constitutional Convention representative of the people, along with the Liberal Democrats and civil society. The aim was to devise another devolution scheme to be implemented as soon as Labour came back to power. The Northern Isles took advantage of debates on the electoral system to make it more proportional, successfully demanding two separate seats in the Scottish Parliament, one for Orkney, one for Shetland, whereas the two archipelagos were represented by the same MP in the House of Commons.
- 14 Scotland Act 1998, c. 46, schedule 1, section 1.
24In the referendum held in September 1997, four months after Tony Blair came to power, voters in the Northern Isles remained cautious: about 60% of them approved of the creation of a Scottish Parliament—compared to 74.3% across Scotland. 48.4% of voters in Shetland opposed the provision that the Scottish Parliament might vary the rates of income tax. Yet corporation tax and most energy policies would remain reserved matters, in the hands of the British government. Devolution was enacted under the Scotland Act passed in 1998.14
25Meanwhile many people in England, and within the Conservative Party, feared that devolution might pave the way for Scotland’s independence. This was the main argument put forward by some Labour and most Conservative opponents to devolution in 1979 and by the Conservatives in 1997. Yet had Scotland become independent then, SNP leaders would have had to cope with diverging interests both within Scotland and within the British Isles.
26The SNP eventually came to power in the 21st century while perspectives were shifting.
27The SNP, whose leaders had often been critical of devolution, came to power thanks to the Scottish Parliament. Alex Salmond formed a minority government in 2007, proved its competence to govern, and then gained an overall majority in 2011. He claimed that he had a mandate to request an independence referendum and after months of wrangling, he eventually signed an agreement with David Cameron, the UK’s Prime Minister. Although independence was voted down, the SNP became increasingly popular in Scotland. However, two years later, when Cameron held a referendum on continuing membership of the EU, Scottish voters praised the EU while a narrow majority of British voters voted for Brexit, leading Nicola Sturgeon’s SNP Government to seize the opportunity and demand another independence referendum, although the economic and political climate was far less favourable for oil.
- 15 Scottish Government, Maximising the Return from Oil and Gas in an Independent Scotland, Edinburgh, (...)
28When the SNP gained an overall majority in the Scottish Parliament in 2011, Alex Salmond argued that he had a mandate to advocate for an independence referendum; however, his party was not prepared for the referendum to be held as early as 2014. The SNP intended to turn oil into an electoral asset and expert groups were thus appointed on economic matters supposed to be key assets. The oil industry that employed 200,000 individuals was a strategic sector and the party intended to reassure both investors and individuals.15
29The 700-page White Paper published in November 2013 was in keeping with previous commitments. Oil and gas in the North Sea would be controlled by the new Scottish state. Their revenues, based on UK tax revenues (table 5), would account for 20% of the nation’s budget. Public deficits, which were expected to be high without hydrocarbons, would thus remain comparable to British ones (table 6). Some of these revenues were to be saved. The SNP still referred to Norway’s sovereign fund which had become the world’s largest—worth $715bn—in contrast to successive British governments’ waste of £300bn. Had these oil revenues been invested through a fund, the surpluses would have amounted to between £17,000 and 23,000 per person living in Scotland. However, as oil production in the North Sea was already declining from its 1999 peak, the SNP took into account the recommendations made by its expert group and contemplated two funds: a long-term one, that would be invested for future generations, and a short-term one, to protect the budget from temporary shortfalls:
- 16 Scottish Government, Scotland’s Future, Edinburgh, November 2013, 302-305.
An independent Scotland will aim to maximise the safe production of oil and gas from the fields off Scotland’s shores, with a stable and predictable fiscal regime. […] The Government will make the creation of a Scottish Energy fund an early priority. […] We will plan Scotland’s public finances on the basis of a cautious forecast for oil and gas revenue, transferring any surplus to the stabilisation fund, and withdrawing resources should receipts come in below forecasts. A long-term savings fund will invest a proportion of the wealth from Scottish oil and gas production in financial assets.16
- 17 Sam Taylor, Wrong with the Wind. Does Scotland Have 25% of Europe’s Potential Offshore Wind Resourc (...)
30The SNP also pointed to renewables arguing that Scotland had a great potential as for hydrocarbon production or carbon capture and storage that could use existing infrastructure from the oil and gas industry. An independent Scotland could thus “drive the most ambitious low carbon economic transformation of any country”. Party leaders were keen to underline Scotland’s overall renewable potential, reportedly accounting for 25% of Europe’s, even though it would later turn out that the figure dated back to the early 1990s when the EU had fewer members.17 In fact, the accurate proportion was below 10%.
31Those who campaigned against independence admitted that Scotland could afford independence. Nevertheless the British Government launched a very negative campaign which aimed at arousing fear. Ministers repeatedly pointed to the volatility of such revenues and to financial difficulties resulting from the 2008 crisis. Establishing a fund then would be risky:
- 18 HM Government, Scotland Analysis. Energy, London: Stationery Office, Cm 8826, April 2014, 58.
Implementing an oil fund in a similar way to ones established in countries such as Norway would imply very significant tax increases or cuts to public spending, over and above the plans that have been set by the UK Government to repair the impact of the financial crisis. As part of the UK, Scotland achieves many of the benefits of an oil fund. The UK’s integrated fiscal model provides a very stable flow of Scottish expenditure, without the need for Scotland to run the onshore fiscal position required for an oil fund.18
32British leaders also quoted the concerns voiced by key figures from the business community about the supposed instability generated by constitutional upheavals. Bob Dudley, BP’s chief executive, declared:
- 19 HM Government, United Kingdom, United Future; Conclusions of the Scotland Analysis programme, Londo (...)
We have a lot of people in Scotland. We have a lot of investments in Scotland… These are big uncertainties for us and at the moment we’re continuing to invest at a pace… but it’s a question mark. I think all businesses have a concern.19
33As for revenues, they soon collapsed because oil prices slumped worldwide and the British Government granted tax reliefs both to large companies that were dismantling the oldest oil rigs and to smaller companies willing to invest in new fields.
34On polling day, independence was endorsed by 44.7% of voters across Scotland, but only 32.8% of voters in Orkney and 36.3% in Shetland. Oil became a secondary issue for Scottish voters. Those who voted for independence wanted to severe links with British institutions and politicians, and to preserve their public services (table 7). As independence was rejected by 55.3% of voters, the matter was supposed to be settled. Yet the outcome of the 2016 referendum triggered another debate.
- 20 There had been some limited sharing of revenues with Northern Ireland and the isle of Man in 1968, (...)
35In the run-up to the 2014 referendum, the leaders of British parties had promised additional powers for the Scottish Parliament, especially tax powers to make it more accountable for its decisions. Plans were devised in Scotland but they did not include corporation tax or taxes on oil companies as recommended by the SNP.20 Such proposals did not command wide support. The Scotland Act 2016 nonetheless devolved licences for shale oil.
- 21 Energy and chemical products and life sciences accounted for 25% of Scottish exports in 2017-2018. (...)
36Unionist leaders had also pledged that Scotland would remain in the UK and in the EU. In the 2016 referendum, even though the Scots voted in favour of continuing EU membership, most British voters favoured Brexit. Nicola Sturgeon, Scotland’s First Minister, thus contended that her nation should be allowed to remain in the EU single market, to take advantage of its four freedoms—the free movement of goods (the EU being Scotland’s largest export destination for them)21, services, capitals and people (immigration being essential for Scotland’s economy and demography). She also wanted her government to be consulted over the negotiations conducted with the EU as until then, Joint Ministerial Committees discussed European matters although the final decision belonged to British ministers.
- 22 Sustainable Growth Commission, The New Case for Optimism, Edinburgh, November 2018, B6.
37However, as Scottish interests were repeatedly ignored by British ministers who made decisions on their own, Nicola Sturgeon requested permission to hold a second independence referendum to enable Scotland to re-join the EU. In order to update her party’s economic program, she appointed a Sustainable Growth Commission led by Andrew Wilson who had worked with Alex Salmond from the 1990s. In its report published in 2018, the commission admitted that the budget of an independent Scotland could no longer be based on oil. Indeed, even though the UK Government had received around £328 billion in real terms from the North Sea production over the past 40 years, revenues had collapsed because oil prices had fallen since 2014 and British policy decisions allowed producers to set decommissioning costs against tax investment to reduce tax liabilities. Oil revenues, “assumed to be zero for planning purposes”, should be treated as a “windfall” resource. There could be only a small Fund for Future generations, “investing to achieve a return on capital but in long-term projects with clear aims”, ie projects focusing on “inclusive growth initiatives, transformational innovation and infrastructure and the green economy.”22
38The SNP was thus vulnerable to questions about the books of an independent Scotland, both in the short term and in the long term, all the more so as its leaders failed to offer reasonable prospects over the currency. They displayed ambitious targets, contending that Scotland should become a net zero country by 2045, earlier than the rest of the UK (2050), which would rely on a boom in renewable energies with a great potential in terms of job creation.
39SNP-led Governments introduced a moratorium on the extraction of shale oil from rocks through the process of fracking before ruling it out in 2019, which forced Ineos (the operator of the Grangemouth refinery) to import this hydrocarbon. But they never set up the public energy company that they had contemplated as a not-for-profit company in 2017, putting emphasis on the difficulties to combine it with the distribution of competences between London and Edinburgh.
40Besides even though the SNP won every election held in Scotland, their candidates failed to gain ground in the two Northern archipelagos. The two constituencies had been less reluctant to Brexit than central Scotland (mostly because of hostility to the Common Fisheries Policy) and remained strongholds for the Liberal Democrats especially in the Scottish Parliament (table 8). Turning to a greener nationalism would prove tricky.
41In 2021, SNP ministers had to deliver greener speeches as they formed a coalition government with the Scottish Greens. Fossil fuels were deemed symbols of a decaying past but renewables raised fears. Once again, the Scottish Government had to cope with an increasingly uncertain global situation and they conveyed an international outlook.
42In 2021, oil revenues remained quite low (£400 bn for 2020-2021) while concerns over climate change were growing. In the campaign for elections to the Scottish Parliament, the two pro-independence parties had diverging views about how to handle the transition to a green economy.
- 23 SNP, Scotland’s Future, Edinburgh, 2021, 51.
43The SNP still supported offshore oil and gas production—an “important” part of Scotland’s energy mix—that was regulated by Westminster. The party upheld its financial commitments, ie a “£62 million Energy Transition Fund to support businesses in the oil, gas and energy sectors help attract private sector investment in the region”, as well as “£15 million next year to support workers to retrain and learn new skills” in the North-East.23
- 24 Scottish Greens, Our Common Future, Edinburgh, 2021, 18.
- 25 Ibid.
44Meanwhile, the Scottish Greens were more radical as they called for a phasing out of oil production since “the 5.7 billion barrels of oil and gas in already-operating fields that alone would push the UK beyond the limits set out in the Paris Climate agreement”.24 They requested the UK Government to “stop issuing new licenses […], revoke undeveloped licences and instigate a review of current permits [and] end subsidies and tax breaks for the oil and gas industry.” Meanwhile they also intended to monitor the ambiguities of the Scottish Government with the oil and gas industry, such as its “backdoor funding of the oil and gas sector through channels like the Oil and Gas Technology centre [and] greenwashing arrangements, including the sale of carbon from public forests as offsets to Shell and BP.”25
- 26 Scottish Government and Scottish Green Party, Working Together to Build a Greener, Fairer, Independ (...)
45In late August, the Scottish Government and the Scottish Greens signed a Shared Policy Programme for a majority coalition government, committed to “a ten-year £500 million Just Transition Fund for the North East and Moray.”26 The fund was to be used to retrain former oil and gas employees. In September 2021, during a debate held by Conservatives who attempted to divide the two allies, the Scottish Government agreed on a very mild motion contending that oil extraction should no longer be unlimited:
- 27 Scottish Parliament, Official Report, 15 September 2021, motion amended by Michael Matheson, Cabine (...)
The Scottish Parliament […] believes that Scotland and the UK cannot ignore the concern that unlimited extraction of fossil fuels is simply incompatible with protecting the planet; […] understands that the Scottish Government will undertake analysis to understand Scotland’s energy requirements as the country transitions to net-zero; […] welcomes the Scottish Government’s commitment to the £500 million Just Transition Fund; […] calls on the UK Government to match this investment.27
- 28 Le Monde, 2 November 2021.
- 29 David Bol, “Scotland Considering Joining the Global Effort to Turn off Oil and Gas”, The Herald, 12 (...)
- 30 Scottish Parliament, Official Report, 11 November 2021, Mairi McAllan, Minister for Environment, Bi (...)
- 31 Scottish Parliament, Official Report, 6 December 2022, Cabinet Secretary Michael Matheson. Yet the (...)
46The following month, the UN Climate Change Conference (COP-26) was held in Glasgow and provided a major opportunity for the Scottish Government to frame a distinctive Scottish image. Indeed the international press displayed adverts promoting a “greener, fairer and sustainable Scotland, not yet independent, but ready to play its part on the global stage”.28 The Scottish Government intended to join a coalition committed to ending drilling in the not-too-distant future but it refrained from joining the Beyond Oil and Gas Alliance set up by Costa Rica and Bangladesh to advocate a managed phasing-out.29 The Greens were disappointed. Moreover, Nicola Sturgeon announced that her Government would provide £1 million for a Climate Justice Fund, for loss and damage incurred by vulnerable countries that suffer from the worst effects of climate change even though their contribution to it is limited. This was the first pledge made by a government as part of a fund designed in 2012. The Scottish Government would thus act as a “bridge”, even though it could not be party to international agreements separately from the UK.30 One year later, these funds awaited clear-cut criteria before being apportioned, while the Scottish Government pledged an additional 5 million at the COP-27.31
- 32 Jim Sillars, A Difference of Opinion, Edinburgh: Birlinn, 2021, 238.
- 33 Scottish Parliament, Official Report, 16 November 2021. In early December, Cambio plans were put on (...)
- 34 Tom Gordon, “SNP Members Deserve Explanation over Cambo”, The Herald, 25 November 2021.
- 35 Scottish Parliament, Official Report, 7 December 2021, Tess White.
47The Scottish Government was quite embarrassed with new licences, especially regarding the Cambo oil field that had already been explored but not exploited. Nicola Sturgeon was happy to let the British Government make a decision, mentioning a mere review of licences. SNP leaders were not prepared to take out public stakes, while Jim Sillars, a former SNP MP, described the climate emergency of the Scottish Government as “ludicrous”.32 However, in the aftermath of the COP-26, when the First Minister was less exposed, she sounded more adamant: “We have moved away from the policy of maximum recovery. I don’t think Cambo should get the green light”.33 This view aroused criticisms especially from nationalist politicians. Alex Salmond compared her to Margaret Thatcher who had let coal pits close down.34 Conservative politicians were no less scathing, as the “true” defenders of North-East workers—about 64,000.35
- 36 Mark Winson, “Boost for North Sea Oil Industry after High Court Setback for Critics”, The Herald, 1 (...)
48Yet in early January 2022, some SNP members who had brought a legal challenge against the British Government before the High Court were not upheld. They argued that the maximisation of oil and gas was unlawful because it was supported by taxpayers’ money but the Court responded that revenues were still higher than rebates. They also claimed that raising production was irrational but the Court stated that values, rather than volumes, were maximised.36
- 37 “Oil and Gas Checkpoint Welcome New Project”, The Herald, 21 December 2021.
49As for the British Government, it also had its transition deal, made up with the oil industry earlier in 2021, in order to reskill and launch joint investment to cut carbon emissions. Yet even though the Climate Change Committee wanted a presumption against new development, the British Government merely launched a consultation in December 2021 on new tests—checkpoints—that oil companies would have to pass to be granted licences: domestic demand for oil and gas, projection of production levels, the prevalence of clean technologies, progress towards emission reduction targets.37 Oil operators were very keen to point out their progress such as the collapse in the use of flaring—ie burning excess gas that raised carbon emissions.
50While the contentious fossil fuels remained associated with the SNP’s nationalism, renewables were not immune from controversies either.
51The Scottish Government intended to make Scotland a net zero country by 2045. Emissions had to be cut gradually compared to 1990 levels. However, the figure for 2019 (51.5%) was below the 55% target.
52Electricity generation had undergone major changes since 2014. Although it is a reserved matter, planning is devolved. Coal power stations were closed down and nuclear power stations were phased out as the Scottish Government disagreed with the British Government’s renewed support for this low-carbon energy. The share of electricity from renewables—ie hydro and wind—had increased to 60% by 2021, the equivalent of 90% of the electricity used in Scotland.38 25% of Scottish electricity was exported.
- 39 Scottish Parliament, Official Report, 16 November 2021, Kate Forbes, Minister for Finance and the E (...)
- 40 Yell, Hoy, Barra, Islay, Great Cambrae, Scottish Parliament, Official Report, 19 January 2023, Mair (...)
53Funded by the Scottish Government in order to offer loans to investors, a Scottish National Investment Bank was set up in November 2020 to support the transition to net zero39. There were major plans in the Northern Isles—ie wind farms in the Shetland, a hydrogen hub in the Flotta oil terminal and tidal wave (Orkney). Furthermore, five small islands were selected in different local authorities to become carbon-neutral and set examples for other islands.40
54Yet the transition to renewables raised three types of criticisms.
- 41 Roy Foyer, The Herald, 5 March 2022, 12.
- 42 Scottish Parliament, Official Report, 10 January 2023, Liam Kerr.
- 43 Scottish Parliament, Official Report, 7 December 2021, Mark Russell.
55First, renewables were unlikely to create as many jobs as fossil fuels. The Scottish Government had promised 130,000 jobs by 2020, but only 20,500 posts had been created and the trend was decreasing from the peak in 2014 (23,200). The STUC regretted that this was still five times lower than oil-related jobs.41 As the Scottish Government reckoned that all jobs would be replaced by 2050, the Conservatives contended that most workers would be unable to switch.42 But the Greens shed light on the strategy of the oil industry that had dismissed 10% of its workforce over one year and that increasingly relied on contractors.43
- 44 David Bol, “Tories Told to Reverse Carbon Capture Snub”, The Herald, 27 October 2021, 6.
- 45 House of Commons, Hansard, 31 January 2023, 320, Graham Stuart, Minister for Energy and Climate. Da (...)
56Second, the Scottish Government blamed the UK Government for favouring England. Indeed it supported carbon storage in the North-East of England but failed to back the Acorn project in Aberdeenshire which was likely to create 15,000 jobs.44 But this enabled SNP politicians to have a scapegoat for an investment that would be disapproved of by the Greens. In addition, the connection to the National Grid was a major issue. Not only was it more expensive for Scottish companies than for companies in the South of England that were closer to most consumers, but the Northern Isles were lagging behind in spite of their great potential as for renewables. Local demand—including that of offshore rigs—was not sufficient. British ministers responded that the development of renewables was boosted by Contract for Difference, a UK-wide scheme funded by a levy on all UK bills, in order to pay the difference between a price agreed initially to meet the costs associated with investment and market wholesale prices.45
- 46 Common Weal, ScotWind. Privatising Scotland’s Future Again, Edinburgh, January 2022.
- 47 Scottish Parliament, Official Report, 24 November 2022, Richard Lochhead, Minister for Just Transit (...)
57Third, many critics blamed the Scottish Government with failing to learn from the mistakes of the 1970s. Indeed in late 2021, Crown Estates Scotland (although supervised by the Scottish Government under the Scotland Act 2016) launched an auction to lease out the seabed area to produce 100 GW of wind energy. The successful bidders were fossil-fuel companies ones (BP and Shell had more than 20% of all capacity), financial holdings and investment banks. Common weal46 concluded that a new industry with great potential would be controlled by licensed private and foreign interests. Although the Scottish Government would collect fees, it would lose assets. The think-tank also regretted the lack of firm commitment to produce the fixed or floating turbines in Scotland, while the Scottish Government underlined some forthcoming orders for the Scottish supply chain.47
- 48 Alex Salmond, “Oil is King… The Monarch of Energy Still has Plenty of Clothes”, The Herald, 5 March (...)
58Alex Salmond, by then the leader of a new party, Alba, supposed to be more radical than the SNP, called for a new slogan, “It’s Scotland’s renewables”, adding: “Unless we act now to make it real, it will end up as just empty a boast as ‘It’s Scotland’s oil’”.48
59The Scottish Government thus tended to instrumentalize renewables to draw attention to Scotland’s specificities but was not necessarily prepared to defend the nation’s material interests for fear of deterring investors. Besides the international situation was most uncertain with the Russian invasion of Ukraine.
- 49 Rystadtenergy.com, 18 January 2021.
60In 2022, like in the 1970s, Scottish politics were not immune from geopolitics. Oil prices increased fourfold in 1973 and then doubled in 1979 because of crises in the Middle East. They returned to their pre-2014 levels (over $100 per barrel) when Russia, a major producer, invaded Ukraine. Suddenly being a hydrocarbon producer seemed to be an asset again. Indeed 45% of gas in the UK came from the North Sea whereas the rest was imported from Norway and Qatar (through liquefied natural gas). Oil production in British waters was regarded as one of the most profitable in the world by oil companies.49
- 50 Michael Settle, “Nuclear, Renewables, more North Sea Drilling. Where now for Cheaper Energy?”, The (...)
- 51 Three NGOs brought legal challenges against them. Fiona Harvey, “UK Ministers Face Legal Challenge (...)
61Offshore Energies UK, the lobby for the industry, unremittingly contended that over 70% of hydrocarbons would have to be imported by 2030 without any new investment. Oil and Gas Authority, the independent regulator granting licences, was rebranded North Sea Transition Authority. Not only was Cambo’s licence extended to let Shell reassess its position50 but over 100 new licences were endorsed with full approval from British Governments led by Liz Truss and then Rishi Sunak in 2022.51
- 52 Alan Brown MP, House of Commons, Hansard, 1 February 2022, 17 May 2022, col. 586.
62Meanwhile, as the country faced a cost-of-living crisis fuelled in particular by soaring energy bills, the British Government introduced a windfall tax of 25%—then raised to 35%— on the profits made by oil and gas companies, on top of the 30% corporation tax and the 10% additional surcharge. SNP MPs, who were initially wary of a potential waste of money when Labour first mentioned this tax, eventually supported their opponents to respond to rising poverty although they advocated a surcharge on all companies making outstanding profits and demanded additional British funds for the Scottish Government’s Just Transition.52
63In turn, this situation raised new perspectives on independence since the two parties that governed Scotland, the SNP and the Greens, had an overall majority of seats—that is a “mandate” to request a second referendum, which the British Government did not allow. The topic revived bitter division in public opinion.
64Oil was no longer a political asset in the foreground when discussing Scotland’s independence. A poll showed that about 50% of respondents agreed that oil revenues had been “squandered” by the British Government—the same proportion as those supporting independence (table 9). As for other respondents, they either disagreed or did not have any opinion. Moreover even though climate change was on the political agenda, few voters mentioned the future of North Sea oil and gas as an issue that would matter when making a decision over Scotland’s independence (table 10).
65Meanwhile the Shetland council still enforced policies to defend its own interests, using its fund—that was worth £320m—for welfare programmes, arts and leisure, fishing quotas, care homes. Its leaders demanded a local referendum should a second independence referendum be held at Scottish level. But Shetland also had to turn to renewables especially wind farms.
- 53 Scottish Government, A Stronger Economy with Independence, Edinburgh, October 2022, 60.
66Oil was no longer an economic asset for public finances either. The public deficit of an independent Scotland fluctuated between 10% and 20% following unstable oil revenues (table 6). Not only was the deficit twice or three times as high as that of the UK, but oil revenues failed to reduce it significantly. The 2022 Scottish Government paper on independence still advocated a fund rebranded “Building a New Scotland Fund”, thanks to oil and gas revenues when prices were high and supplemented by borrowed money in bad years, in order to finance the transition to green energy.53
- 54 David Bol, “Job Fears after Shell Pulls Support for Cambio Oil Expansion Project”, The Herald, 4 De (...)
67Oil accounted for 5% of Scottish GDP, with an additional 1% for onshore support. Consumption accounted for one-seventh of oil production, one-third for gas. 80% of oil and gas were exported, especially to the rest of the UK, the Netherlands and Germany which intended to cut its dependence on Russian imports. Reserves covered production over thirty years. Patrick Harvie, the Green co-leader, even controversially concluded that Scotland would not have to import any.54
- 55 Kathleen Nutt, “Ewing Fergus Calls for Scotland to ‘Maximise’ Oil and Gas Production”, The Herald, (...)
- 56 Scottish Government, Draft Energy Strategy and Just Transition, Edinburgh, January 2023, 83.
68SNP senior members who hinted that oil and gas production might be increased to cut reliance on imports and carbon emissions55, like Fergus Ewing, the former Minister for Business, Energy and Tourism, , were ignored. Nicola Sturgeon did not think that this would improve security, as a substantial proportion had to be imported into the UK and the EU while it would take decades for new fields to be in full production. The draft energy strategy published by the Scottish Government in early 2023 forecast that oil production in the North Sea would only account for 3% of its 1999 peak by 2050 and pondered over whether the decline should be accelerated, for instance by checking existing licences that had not yet resulted in developments.56
- 57 Offshore Energies UK quoted by Vicky Allan, “When are we Going to Move on from ‘It’s Scotland’s Oil (...)
69Some warned against rapid shifts, arguing that Scottish companies needed time to adapt. The expansion of renewables at the expense of fossil fuels might lead to a slump in GDP because of lower average salaries and declining exports.57
- 58 House of Commons, Hansard, 8 September 2022, 441, Kenny MacAskill.
70As for soaring energy prices, Alba devised another slogan, “energy-rich Scotland, fuel-poor consumers”.58 Some of its members contended that an independent Scotland would be able to break the link between renewables and gas prices—although the link aimed at guaranteeing energy supply at any time. Pro-independence politicians also criticised the UK energy price guarantee that was not sufficient and expected fuel bills to be lower in a new state.
71Oil remains a success story both for Scotland—the Brent field off the Shetland archipelago lent its name to a global price benchmark—and for the SNP with the slogan “It’s Scotland’s Oil”. It used to be a political and economic asset for the SNP. Thanks to the close link established between oil and independence, the SNP achieved a breakthrough, but the momentum was short-lived. In the 21st century, when the prospect of independence was more realistic, oil could no longer be used as a pro-independence argument because of collapsing prices and growing environmental concerns. It might soon become a liability—especially if the Greens had their way. SNP leaders soon displayed some green credentials as they banned fracking and new coal extraction. But they often relied on mere announcements.
72However, they were not allowed to make most of the difficult decisions, especially over the licences to exploit oil as these were reserved to Westminster. “London” remained a scapegoat for the nationalists. Indeed, not only had the British Government wasted Scottish resources but it was also reluctant to abandon them. Independence would force SNP leaders to bear the full consequences of their moves. The Scottish Government postponed the publication of its energy strategy until early 2023, dealing with issues related both to the share of fossil fuels and to the defence of Scotland’s national interests. But it failed to publish an overall update of its economic prospectus to indicate whether an independent Scotland would balance its books. This remained a controversial area that would have to be delved into, separating economic facts and political interpretations—though in a shifting environment.
- 59 Iain MacWhirter, “Sorry Greta, SNP will Fall Back into the Arms of its First Love—Oil”, The Herald, (...)
- 60 Scottish Parliament, Official Report, 7 June 2023, Neil Gray, Cabinet Secretary for Wellbeing Econo (...)
73In the 21st century as in 1973, Scotland was not immune from geopolitics and international events have had a major impact on oil and gas, thus constraining the options of Scottish nationalists. Hydrocarbons remain available off the Scottish coast—and the SNP is a “hydrocarbons party”59, which was further proved by some arguments put forward by the candidates contesting the election to succeed Nicola Sturgeon in early 2023. Tens of thousands of jobs are still at stake. Renewables only offer great opportunities in the long term.60 Humza Yousaf, the First Minister elected in March, renewed the commitment to a “just transition” and added plans to bolster a Scottish supply chain. He maintained the co-operation with the Greens who seemed contented with the mere ending of the unlimited recovery of fossil fuels. But this partnership is overtly questioned within his own party as tax revenues from oil are soaring. Labour who is gaining ground in Scotland in 2023 finds it difficult to pledge a ban on new oil licences.
74Overall, SNP leaders willingly intertwine their own, nationalist goals, with international prospects in order to portray their nation as a good global player and even as a green transition model. They thus envision an independent state to be allowed to re-join international organisations, especially the EU.
Table 1: The SNP’s breakthrough in the House of Commons, 1974
|
1970
|
November 1973 by-election
|
February 1974
|
October 1974
|
Labour
|
50
|
38.2
|
43.2
|
36.3
|
SNP
|
10.3
|
41.9
|
40.9
|
30.4
|
Source: William Miller, The End of British Politics?, Oxford: Clarendon Press, 1981, 28.
Table 2: Oil and party images (SES/BES 1974)
|
Share
|
More for Scotland
|
Most oil for Scotland
|
Scottish oil
|
Conservative
|
81
|
15
|
3
|
1
|
Labour
|
64
|
26
|
9
|
2
|
Liberal
|
50
|
32
|
16
|
2
|
SNP
|
1
|
2
|
14
|
82
|
Source: W. Miller, op. cit., 120.
Table 3: Oil and SNP voting (SES/BES, 1974)
|
Share
|
More for Scotland
|
Most for Scotland
|
Scottish oil
|
Status quo
|
0
|
0
|
0
|
0
|
More understanding
|
5
|
17
|
13
|
20
|
More decisions made in Scotland
|
21
|
21
|
42
|
38
|
Self-government
|
40
|
62
|
58
|
40
|
Source: W. Miller, op. cit.,172.
Table 4: SNP share of the vote, elections to the House of Commons
|
1970
|
Feb.1974
|
Oct.1974
|
1979
|
1983
|
1987
|
1992
|
1997
|
2001
|
2005
|
2010
|
2015
|
2017
|
2019
|
Scotland
|
11.4
|
21.9
|
30.4
|
17.3
|
11.8
|
14
|
21.5
|
22.1
|
20.1
|
17.7
|
19.9
|
50.2
|
36.9
|
45
|
Orkney and Shetland
|
0
|
0
|
17.2
|
4.8
|
15.4
|
0
|
11.2
|
12.7
|
14.8
|
10.3
|
10.6
|
37.8
|
29
|
34
|
Source: Electoral Commission.
Table 5: UK tax revenues from oil and gas in the North Sea (£bn)
Tax Year
|
1980-1981
|
1984-1985
|
1990-1991
|
1994-1995
|
2000-2001
|
2004-2005
|
2011-2012
|
2012-2013
|
2013-2014
|
2016-2017
|
2018-2019
|
2020-2021
|
2021-2022
|
Tax revenues
|
3.8
|
12.3
|
2.3
|
1.6
|
4.4
|
5.1
|
11.3
|
6.6
|
4.5
|
0.036
|
1.1
|
0.4
|
3.2
|
Source: Scottish Government, GERS 2021-2022, Edinburgh, 2022, 24.
Table 6: Scotland’s current public deficits as a proportion of GDP
|
2011-2012
|
2012-2013
|
2016-2017
|
2020-2021
|
2021-2022
|
Scotland excluding oil
|
11.6
|
11.2
|
6.5
|
23.1
|
12
|
Scotland with oil
|
3.1
|
5.9
|
6
|
21.7
|
9
|
UK including oil
|
5.7
|
5.8
|
0.4
|
11.6
|
3.4
|
Sources: Scottish Government, 2022, op. cit., S2; GERS 2012, 2013, 2017.
Table 7: Main issues for voters in the 2014 referendum
|
Yes voters
|
No voters
|
NHS
|
54
|
36
|
Pound
|
7
|
57
|
Jobs
|
18
|
21
|
Prices
|
3
|
13
|
Disaffection with Westminster politics
|
74
|
4
|
Pensions
|
10
|
37
|
Defence and security
|
16
|
29
|
Benefits
|
13
|
7
|
Oil
|
20
|
6
|
Tax and public spending
|
33
|
32
|
EU membership
|
12
|
15
|
None
|
4
|
7
|
Source: Lord Ashcroft polls, 18 and 19 September 2014, in Iain MacWhirter, Disunited Kingdom. How Westminster Won a Referendum but Lost Scotland, Glasgow: Cargo Publishing, 2014, 173.
Table 8: SNP share of the vote, elections to the Scottish Parliament
|
2011
|
2016
|
2021
|
Scotland
|
45.4
|
46.5
|
47.7
|
Orkney
|
25
|
24.3
|
41.9
|
Shetland
|
12
|
23.1
|
29.1
|
Source: Electoral Commission.
Table 9: Do you think that Scotland’s oil wealth has been squandered by Westminster?
Strongly agree
|
Somewhat agree
|
Neither agree nor disagree
|
Somewhat disagree
|
Strongly disagree
|
Do not know
|
26
|
25
|
18
|
10
|
12
|
9
|
Source: Survation, 23 April 2021.
Table 10: Most important issues when determining vote on Scottish independence
Economic consequences
|
52
|
EU
|
36
|
State pension
|
23
|
Hard border between England and Scotland
|
19
|
Public spending
|
17
|
Potential North Sea oil and gas
|
15
|
The pound
|
14
|
Trident
|
12
|
None/Don’t know
|
23
|
Source: YouGov, March 2022.