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THE SCOTTISH NATIONAL PARTY
RESPONSE TO THE EUROPEAN COMMISSION GREEN PAPER ON A
EUROPEAN STRATEGY FOR SUSTAINABLE, COMPETITIVE AND
SECURE ENERGY
September 2006

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Introduction
The Scottish National Party (SNP) welcomes the opportunity provided by the
Commission's Green Paper to contribute to the debate on Europe's energy future.
Scotland has a unique interest in what the European Union is doing in terms of
securing future energy supplies. As an important provider and supplier of energy and
given the global interdependency of Scotland's energy market, the development of a
European energy strategy is of key strategic importance to Scotland.
Scotland is an energy rich country and has massive energy potential to meet our
future energy needs through clean, green energy. Scotland is a major exporter of
energy, exporting more than 10 times the oil we consume, 6 times more gas, nearly
30% more electricity and producing almost twice as much coal as we use. With more
than 60% of Europe's oil reserves and with remaining reserves set to last for at least
another three decades, Scotland continues to be the EU's leading oil producer. That
makes Scotland unique among EU countries. With 25 per cent of Europe's wind
potential, 10 per cent of Europe's wave potential and 25 per cent of Europe's tidal
potential, Scotland has one of the most viable renewable energy resource bases in
Europe, if not the world, and is home to some of the most pioneering and innovative
energy projects.
Scotland's energy sector has approximately 2,000 businesses ranging from
multinationals, large Scottish global companies, and a highly regarded SME base.
Scotland's energy industries employ around 110,000 people and our energy sector is
estimated to be worth £7.4 billion of output to the Scottish economy. Estimates for
renewable energy put output at £63 million, with direct jobs at 1500 persons. These
figures are forecast to rise to £353 million of output and 8600 jobs by 20151
The SNP's Scottish Energy Review, published in July 2006, makes clear our vision of
a non-nuclear, clean and green energy future for Scotland. With the right approach
and the appropriate policies the SNP believes Scotland has what it takes to retain its
current energy independence, remain a major energy exporter, ensure affordable
energy prices and a low carbon society and achieve international leadership in the
development of clean energy technologies. In this regard, Scotland is in a very
different position from the rest of the UK.
Although the SNP has a clear policy for the development of Scotland’s energy
resources it is unable to implement all its policies because energy policy is a
reserved matter and remains, for the present time, under the control of the UK
Government. If we are to harness our energy potential and manage our resources
effectively to enable us to provide economic prosperity and at the same time meet
our climate change targets, Scotland needs the necessary powers.
The SNP believes that, pending independence, energy policy must be fully devolved
to the Scottish Parliament and that Scotland should control her own future energy
needs. The SNP wants to see Scotland's energy policy decided in Scotland and
based on Scotland's energy interests. The SNP supports a National Energy Policy for
Scotland.
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Scotland's key facts, Scottish Enterprise. February 2006.

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More generally, the SNP believes that Europe's energy strategy must be based on
maximum subsidiarity. Where there are clear advantages to be reaped from a
coordinated EU approach to energy matters – for instance strengthening Europe's
voice on the international stage – then intra-EU cooperation makes sense. At the
same time, however, ultimate authority over national energy policies and national
energy resources has to remain in the hands of the appropriate domestic authorities.
This is not only necessary under the principle of subsidiarity, it is also essential that
as Europe's green energy powerhouse, Scotland's distinctive energy challenges and
opportunities are recognised in this debate.
Moreover, the SNP insists that any EU energy strategy that is agreed to and
negotiated on Scotland's behalf by the UK Government must be endorsed by the
people of Scotland through the Scottish Parliament. This will ensure that EU actions
in this area will be viewed as commanding popular legitimacy.
The SNP Energy Strategy
The SNP's position with respect to the EU Energy Green Paper is based on a
number of key principles set out in its recently completed energy review for Scotland:
(1) A non-nuclear energy policy and a nuclear-free Scotland. The SNP rejects the
case for nuclear power and believes existing nuclear power stations should not be
replaced given that future energy needs can be met by safer and more affordable
alternative sources. Our efforts and resources should be devoted to developing
renewables and other clean technologies.
(2) Maximise diversity of supply through ensuring Scotland's energy mix would be
based on conventional sources of oil and gas, coal and renewable resources such as
wind, hydro, marine (wave and tidal), solar, biomass, as well as the development of
bio-crops and bio-fuels and hydrogen. The SNP is also committed to the creation of
community-based local renewable energy sources, thereby giving communities real
ownership of developments on their doorstep.
(3) Increased research and development investment in clean energy technologies to
turn these into a commercially viable and environmentally sustainable industry and
ensure we can fully exploit Scotland's vast energy resources – for example in carbon
capture and storage using and enhancing oil and gas recovery from depleted oil
reservoirs under the North Sea as well as in "clean coal" utilising our huge coal
reserves through carbon sequestration. The adoption of such technology must be
central to a Scottish (and EU-wide) energy policy.
Central to the SNP's efforts is the creation in Scotland of an EU-wide Renewable and
Clean Energy research centre, building on the expertise that exists in our current
offshore energy sector and the huge renewable energy potential around our shores
and ensuring Scotland's place as the pre-eminent location for clean energy research,
development and delivery in Europe.
(4) Protection of the environment. The SNP will adopt the ambitious targets set for
reducing Scotland's greenhouse gas emissions by 2010 (C02 reduction of 2% each
year), implement a policy of "carbon proofing" to ensure that all policies are assessed
in terms of their carbon impact, set a target of at least 50% of our electricity produced

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from renewables by 2020 and adopt an energy efficiency strategy which will include
ambitious domestic and commercial energy efficiency targets.
(5) Sustainable economic growth. The SNP will develop a green jobs strategy for
Scotland based on the enormous potential of renewable energy and waste
management to contribute to Scotland's economy. The potential exists for Scotland
to become a major exporter of renewable energy and technologies.
(6) Spread of ‘best practice’. Scotland is a country of 'best practice' in terms of
diversity of supplies, renewable energy sources and critical thinking on the future of
nuclear energy. Scotland has important lessons (positive and negative) to pass on to
other EU Member States, and in doing so help shape the single most important issue
for the future of energy supplies - sustainability.
Based on these principles the SNP offers the following views on some of the themes
outlined in the Commission's Green Paper.
A. Competitiveness and the internal energy market
A key priority area for EU action in boosting the competitiveness of the European
energy industry is to ensure the enforcement and full implementation of all existing
legislation in this area, and in particular the EU electricity and gas directives. The
SNP welcomes the investigation by the Commission's DG Competition into the
functioning of the European gas and electricity markets, particularly in relation to
pricing and trading practices. Many of the problems in the EU energy market stem
from anti-competitive practices of continental companies, which have contributed to
higher energy prices.
Rapidly rising energy prices across the EU are bad for business and are increasing
fuel poverty especially among low income households and other vulnerable groups
as well as remote areas. The SNP believes that the people of Scotland should be
able to enjoy the economic benefits of living in an energy rich country through
affordable energy prices and should not be put at a disadvantage. Scottish
consumers should be able to benefit from lower fuel prices as a result of their
nation’s energy resources.
The SNP firmly believes that considerable public investment is needed in two broad
areas of policy. The first is tackling energy waste and inefficiencies. To the extent
that a real effort is made in this direction, some part of the forecast shortfall in
supplies can be met. Although this is primarily a matter for Member States rather
than the EU level, it must form a central element in any comprehensive energy
strategy.
The second area is significantly increasing EU-wide research and development
investment in alternative energy sources. Scotland is pioneering much of this work,
but considerably greater effort is needed. We have established new and innovative
public-private partnerships to assist bringing some of these alternative (clean and
sustainable) energy sources to commercial viability.
The SNP acknowledges greater cross-border trade in energy will require a degree of
regulatory harmonisation between authorities across the EU. It is essential that any
such harmonisation of regulations as is necessary does not diminish industry

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standards or the protection of the consumer and the environment. To the extent that
the EU does establish an internal market for energy, characterised by cross-border
trade in energy, it is important that this does not result in divergent regulatory
standards in the generation of energy or its distribution leading to an ‘energy
dumping’ effect – i.e. where companies establish generating capacity in countries
which have weaker regulations covering such issues as environmental protection of
disposal of waste.
The SNP supports the development and increase in capacity of the electricity grid,
and expanding the degree of inter-connection between Member States across the
EU. Domestically we recognise an urgent need to improve the supply of electricity
(via access to the grid) to and from the Western Isles, Orkney and Shetland and
other outermost parts of Scotland to the mainland.
The SNP wishes to bring to the Commission's attention again the devastating threat
to Scotland's renewable energy sector by the transmission 'locational' charges
agreed by the UK Energy Regulator, Ofgem. Under the 2004 Energy Act the UK
Government created BETTA, a UK wide charging scheme that included transmission
charges for electricity generators. This scheme is based on proximity to population
centres rather than generating potential, with the result that generators in remote
parts of Scotland are charged more than producers in the South. Under the new
scheme Scottish generators could see their transmission prices rise from £5.441 to
as much as almost £25 per kW, while generators in the south of England could
receive subsidies of up to £9 per kW2. Remote areas are among the most efficient
locations for renewable energy generation but currently face being penalised.
The SNP urges the Commission to ensure that the conditions outlined in Article 7.6
of Directive 2001/77/EC requiring Member States to ensure that the charging of
transmission and distribution fees does not discriminate against electricity from
renewable energy sources, including in particular electricity from renewable energy
sources produced in peripheral regions, such as island regions and regions of low
population density, are fully complied with by the UK government. These charges will
continue to undermine Scotland's renewable energy potential.
The SNP also urges the Commission to take the necessary action to ensure the
ending of the discriminatory system of transmission charges and to support inter
connectors allowing island and remote energy suppliers access to the mainland grid.
While Scotland needs access through the inter-connector to England, the SNP
considers there is a need for a European offshore grid capable of taking at least 10
times the current amount of electricity from energy rich Scotland to the energy
centres of Europe.
B. Solidarity (Security of Supply)
The recent gas disputes between Russia and Ukraine underline the importance of
securing a diverse range of energy sources, transit countries, different types of
energy and technologies, etc. The SNP considers the key to ensuring there is
security of supply is to diversify energy sources and transit routes for Europe's
energy supplies.
Whilst it is true that the EU is one of the world’s largest importers of energy, and as
such enjoys some ‘buyer power’, it is also true that the emerging energy market in

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China is likely to dominate the world energy market within the next 20 to 30 years.
The EU’s dependence on imported gas from Russia highlights this problem. There is
a need to develop a common policy towards external sources of energy supply. The
current fragmented approach prevents the EU from exploiting its economic status to
best effect.
Equally, however, there is also an urgent need to invest heavily across the EU in the
prevention of energy waste, on technologies that increase the efficiency of energy
usage and, crucially, on developing alternative and sustainable sources of energy.
For at least the next thirty years Scotland will have an abundance of fossil fuels. On
DTI estimates there are up to 43.8 billion barrels left in the UK continental shelf. This
includes proven, potential additional reserves and undiscovered resources. Even the
most conservative estimates suggest there are 28 billion barrels left under the North
Sea. New technologies have created the potential for more recovery with the UK
government projecting as much as 2 billion barrels of additional oil could be
recovered as a result of C02 injected into depleted reservoirs in the North Sea
(carbon capture). With 62% of the EU's proven oil reserves, Scotland will remain a
net exporter of oil and gas production for many years to come.
C. Diversification of the energy mix
Decisions concerning the energy mix should be left up to the EU Member States and
respect the principle of subsidiarity.
Energy policy cannot be determined solely at the EU level. For the SNP Scotland
should and will control its own energy future but where cooperation with our
European partners makes sense then it should examine it. And while this will be our
approach in an independent Scotland, in the meantime the devolution of energy
policy to the Scottish Parliament is an essential first step in ensuring Scotland has a
secure energy supply and a vibrant energy mix that fits its own future energy needs
and values.
The main responsibility in promoting the diversification of energy supplies rests with
Member States. Member States need to prioritise alternative energy sources, and
provide incentives to the private sector to intensify their research and development
efforts in this regard. The market itself is unlikely to generate the necessary level of
activity in this respect. Further, left to itself the market is bound to take a time-limited
view on costs and benefits. This is especially true in the case of nuclear power where
the enormous uncertainties surrounding safety and disposal of hazardous waste are
simply discounted.
Similarly, Member States need to do more to promote energy conservation and
avoidance of energy waste. Once again this comes down to a judicious combination
of regulation and incentivisation.
A key role for the EU-level of governance in these matters is to promote cross-border
private and public sector partnerships in the search for commercially viable
alternative energy sources and the control of inefficiencies and waste.

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D. Sustainable development
The SNP welcomes the Commission's proposal for a renewable energy roadmap. An
independent Scotland could play a key role in efforts by the Commission to increase
the use of renewable energy sources and encourage the development of new clean
energy technologies. There is a wide range of projects already underway in Scotland
which could be adapted across the EU and which would contribute to a sustainable
energy strategy. Some of these are small-scale and aim to achieve self-sufficiency in
some outermost areas. Other projects are of a larger scale, and are pioneering new
technologies for delivering commercially viable wind and wave power in
environmentally sensitive and sustainable ways. With over thirty million tons of coal
reserves and carbon capture technologies, the role of "clean coal" in meeting our
energy needs must be examined.
Scotland has almost 90% of the UK’s potential for small hydro. The SNP's Scottish
Energy Review concludes that Scotland has one of the best climates in Europe for
using solar heat in buildings. At least 20% of our transport fuels could come from
Scottish-grown bio-sources and farm wastes. There are further opportunities for
Scottish forestry in the development of biomass renewable energy schemes –
particularly the use of wood fuel to generate heat. The SNP also supports the case
for a Scottish hydrogen strategy and notes that many other countries have assigned
greater priority to the development of this technology than the UK.
The SNP wants to see renewables and clean technologies meet Europe's future
energy needs and ensure sufficient funding for micro-renewables and community
energy initiatives, for example the EU-funded RESPIRE project on the isle of Islay to
make the island energy self sufficient is producing remarkable and innovative results.
Scotland is at the forefront of developing marine renewables (wave and tidal), for
example the technology for the world's first full-scale grid connected wave energy
converter - 'Pelarmis' - was developed in Orkney.
Scotland is among the countries best placed in the world to fully exploit the clean
carbon potential of carbon capture schemes. Scotland is also a world leader in the
development of clean energy technologies, for example carbon capture and storage
using and enhancing recovery from depleted oil reservoirs under the North Sea.
Depleted oil reservoirs have the capacity to take hundreds of years of Scottish CO2
output and storing the CO2 will release as much as 2 billion extra barrels of oil from
the North Sea. Given the need to use conventional energy, it is vital that steps are
taken to reduce carbon emissions to mitigate climate change. This can be done by
using carbon capture and storage technology
As this brief review demonstrates, Scotland is, and can develop further as, a clean
energy ‘laboratory’ from which other EU Member States can learn.
The SNP rejects the case for nuclear power and opposes any new nuclear power
stations in Scotland.
The challenge for Scotland, however, is that it is failing to exploit its critical renewable
and clean energy resources at anywhere near the potential or indeed appropriate
level. Partly this is because Scotland does not at present have what Europe is aiming
for - a Scottish Energy Strategy. This will be a key area of action for an SNP-led
government. The SNP believes Scotland has the potential to become Europe's
renewable energy powerhouse – a view endorsed in the report presented by the

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Scottish Renewables Forum in June 2006. The SNP wants to see Scotland
producing at least 50% of our electricity from renewable sources by 2020 –
substantially above the target set by the Scottish Executive.
A key obstacle is the unfair transmission charges, which as outlined earlier remains
one of the biggest threats to the further development of the Scottish energy industry,
together with the delays for transmission capacity and an ageing grid.
EU financial assistance has played a crucial part in many of the clean energy
projects underway in Scotland, not least the Beatrice Demonstrator offshore wind
farm in the Moray Firth which the EU Energy Commissioner, Andris Piebalgs, visited
in July 2006. This demonstrates where the EU-level has been a significant element in
the process of developing alternative sources of energy.
The SNP believes there is a clear role for the EU to take a further lead in supporting
further research and development efforts similar to those underway in Scotland. As
an example of tangible support, it may be desirable to consider further developing
intra-EU networks of excellence to assist in the spread of best practice in the
development of alternative energy sources of supply.
The SNP is also committed to a clean air energy policy to cut Europe's greenhouse
gas emissions.
Central to this are measures that will reduce energy demand by promoting greater
efficiency in energy use. Steps are urgently required to raise public and business
awareness of the benefits of greater investment in energy-saving technologies, and
support has to be put in place to achieve this. The entire range of energy use has to
be targeted – enhancing energy efficiency in housing, business, and office buildings,
and transport. It is estimated that energy saving alone could reduce energy demand
in Scottish buildings by at least 30% and in terms of the energy used for transport in
Scotland by at least 25% over the next 30 years.
If returned to power, the SNP will implement a national energy efficiency strategy,
which will include ambitious domestic and commercial energy efficiency targets. We
will aim for a 40% improvement in energy efficiency by 2020. We will also introduce
higher standards of building construction and insulation methods in all sectors. And
we will ensure that all major public construction projects incorporate energy efficiency
design elements.
E. Innovation and technology
A recurring theme throughout this submission has been the importance the SNP
assigns to investing in new energy-producing technologies that are both
commercially viable and sustainable. At the heart of any such strategy has to be
research and development, and innovation. These are two distinct activities which
will require complementary strategies if they are to be implemented to full effect.
Public funding is an essential element in the search for alternative energy sources of
supply, whether this is at the EU level through such sources as the framework
programme for research and development, the European Investment Bank, Trans-
European Energy Networks, etc. The scale of the financial commitment involved and
the attendant risks are such that the private sector alone is unlikely to assign
sufficient resources to this activity. It falls to the public sector not only to provide

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strategic leadership, but to support activities through public expenditures. The SNP
fully endorses this general approach. Inevitably there is scope for networks of
excellence to be supported where these are working towards the broad objectives of
energy sustainability.
However as experience has shown the challenge facing us is not only knowledge-
based, it is also a challenge of social adaptation. People have to be persuaded to
adapt their energy consumption to the new global situation of energy shortfall and
environmental damage. Simple steps can be taken by everyone that – if taken today
– would significantly change the energy and environmental balance sheet in favour of
sustainability. An EU-wide energy strategy has to find a place for changing
behaviours and attitudes towards energy. There is a role for public authorities to
provide incentives to energy users that will have the desired effect. This becomes all
the more important to the extent that cross-border trade in energy increases.
Otherwise, the environmental costs of producing energy may be imposed on some
areas because of the unconstrained consumption demand of other areas.
The SNP wishes to see Scotland, and firms based in Scotland, at the forefront of EU
efforts to increase the use of renewable energy sources and to encourage the
development of new, clean energy technologies. The SNP supports a strengthened
EU-wide research effort in these areas and to this end is proposing to make the
creation of a European Renewable and Clean Carbon Energy Research Centre,
based in Scotland, a key priority for an SNP led Scottish government.
F. External policy
The EU relies heavily on imports of energy from non-member countries, especially
imports of gas from Russia. It is essential that ensuring security of supplies plays a
role in the current review. The current situation makes this difficult to achieve as
Member States individually are responsible for sourcing their imports of energy.
While the SNP recognises that the matter of sourcing energy supplies – like the issue
of energy mix – is a competence that should remain with Member States, it also
recognises that external energy policy is an area where enhanced coordination and
cooperation between member states is likely to be beneficial.
There are two aspects to the possible shape of this external energy policy. The first
is, as the Commission proposes, a coherent EU policy line with respect to countries
from which we import energy – particularly Russia – and a collective effort to upgrade
the infrastructure essential to maintaining uninterrupted supplies.
The second is that external energy policy should form one element in the broader
external trade policy of the EU. This is implied in part by the Commission in its Green
Paper where it proposes establishing energy partnerships with producers. However it
may be necessary to consider energy as one element among many that define our
economic relationship with supplier countries. The EU may have some ‘buyer power’
with respect to sources of supply. It certainly has considerable ‘buyer power’ as the
world’s largest single market for goods and services and as a source of capital via
foreign direct investment. An external energy policy should not be considered in
isolation. Instead, it could and should become part of a broader discussion about EU
external economic relations.

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Conclusion
The SNP has set out its response to the Commission’s Energy Green Paper. The
SNP welcomes the Green Paper as an important and necessary first stage in
developing a more coherent EU-wide energy strategy. The scale of the challenges
facing the EU in terms of securing sustainable energy supplies at affordable prices
while protecting the environment cannot be underestimated.
Scotland has much to offer the debate in a practical sense. Under an SNP-led
government, Scotland would have much more to offer the global strategic and EU-
wide policy debates.