Brexit and Renewables in Scotland

21 Oct 2019

This briefing paper examines how renewables in Scotland are shaped by decisions taken by the Scottish Government, the UK Government and the EU. Drawing on interviews with stakeholders, it explores the potential impact of Brexit on Scottish renewables.

Scottish Renewables and EU Energy Policy

Despite limited constitutional power, promoting renewables has been a key priority for successive Scottish Governments, central to both its environmental and economic policies. The 2017 Scottish Energy Strategy set a target of 50% of the energy required for heat, transport and electricity consumption to be supplied from renewable sources by 2030. Scotland’s disproportionate contribution to the achievement of the UK’s EU renewable energy target – for instance, in 2017, Scotland contributed around 25% of the UK’s total renewable electricity generation output – has allowed the Scottish Government to punch above its weight in this policy sphere. 

This briefing paper examines how renewables in Scotland are shaped by decisions taken by the Scottish Government, the UK Government and the EU. Drawing on interviews with stakeholders, it explores the potential impact of Brexit on Scottish renewables.

At the same time, while the main policy drivers for renewables development rest with the UK Government, the EU regulatory framework, EU funding and finance, and the opportunities EU membership has brought for multinational cooperation are regarded by stakeholders in Scotland as having been crucial in stimulating growth in Scottish renewables.  In particular, EU energy policy is seen as having provided an element of long-term policy stability, compensating for policy instability, and perceived lack of interest in renewables, at the UK level.

The Impact of Brexit

Brexit has the potential to disrupt this relatively supportive policy environment in three ways – in regulatory and policy frameworks governing renewable energy; access to EU funding streams; and trade in energy and related goods and services.  

Our briefing identifies varying levels of concern among key stakeholders in Scotland. Many expect policy continuity, irrespective of the future UK-EU relationship. There is more concern about access to research and project funding, and future research and development collaboration, especially for more innovative renewable technologies. The UK will become a third country for the purposes of EU funding streams, able to participate, but not lead on renewables projects, and there is scepticism about whether lost EU funding streams will be replaced at domestic levels. 

While there is no real risk of being unable to access European markets even in a No-Deal Brexit scenario, trade in both energy and related products and services could become more difficult and more expensive – affecting both the import of specialist labour and kit from the EU and the export of knowledge-based services. Scotland’s attractiveness for inward investment may also be affected.

Putting Brexit in Perspective

Industry stakeholders have differential capacities to manage these risks and uncertainties. Placing Brexit in perspective, however, in the wider context of the global low carbon energy transition, it is just one more uncertainty on top of others. In fact, all of our interviewees pointed to UK Government policy as a more palpable source of uncertainty than Brexit – indeed, the biggest impact of Brexit to date has been the dominance of the issue on the political agenda, leaving little space for policy development in other areas, including domestic energy policy. Thus, although Brexit may slow down and/or increase the costs of the transition to a low carbon energy system, it seems unlikely by itself to bring about major changes in the Scottish renewables sector.

Nevertheless, the political consequences of Brexit are difficult to predict. In addition to uncertainty about the future UK-EU relationship, Brexit has revived debates on Scotland’s constitutional future. Independence for Scotland could usher in a set of potentially more fundamental challenges for the Scottish energy sector, especially if Scotland re-entered the EU internal energy market, disrupting the GB energy market.