By Stuart Crawford
Well, then, what was last week’s much-trumpeted Scottish Low Carbon Investment Conference all about? And what messages did we get from it?
It was a strange affair, that’s for sure. Neither fish nor fowl, and full of contradictions and non sequiturs. Held in the Edinburgh International Conference Centre, with around 200 delegates gathering to hear politicians, businessmen, financiers and assorted hangers-on discuss the opportunities presented by the drive towards “clean energy”.
In other words, a couple of hundred balding, sleek, middle-aged men (and they were nearly all men) grown fat on company expense accounts listening to other balding, sleek, middle-aged men grown fat on company expense accounts talking about something they were all agreed upon already: that renewables is the new Klondike and they don’t want to miss out on any of it.
Or was it? The conference opened with a strangely lacklustre speech by the chief cheerleader for the rush into renewable technology, oor very ain first minister. By Alex Salmond’s usually high standards, this was a poor performance, stumbling in places and with none of the usual verve and humour which has become his hallmark. At his best he is very, very good indeed. On this occasion his delivery was average at best.
Hyperbole there was aplenty. Mr Salmond spoke of renewables as “a fundamental one-off leap in human history” and a “turning point – like the discovery of the New World”, and other such emotive nonsense. There is no doubting the first minister’s enthusiasm for the topic, and his address was lapped up by the faithful in the audience.
But the mood from the business speakers who followed was a bit more sombre. We learnt that globally over the last 18 months the renewables sector had underperformed, and that there had been some notable corporate casualties in the US. So far, we were told, only 5.4 per cent of the world’s energy comes from renewables, and there were worries over falling prices and falling subsidies, with the example given of the Italian tariffs which have reduced dramatically.
We were informed that the outlook for investment for the rest of 2011 looked good, but that 2012 might be “difficult”, despite falling technology costs. The current low price of natural gas was a continuing threat. When they said that the development of electric cars might give a stimulus to the industry, it sounded like straw-clutching. It’s obviously squeaky bum time for many of the investors and developers who have gambled their shareholders' money on something that appears increasingly risky.
What was particularly interesting was that the one growth area within the renewables sector is solar energy. Yet of the 44,000 new UK solar installations completed in the past year, only 2,000 were in Scotland. The reason is obvious: there’s nae sun, hence the generally peely-wally appearance of the bulk of the population. Scotland may indeed have, as the first minister avers, 25 per cent of Europe’s wind and tide energy and more than its fair share of wind, but if the clever money is on solar then it’s beside the point.
We were treated to a “panel of experts” question-and-answer session which threw up some interesting themes. A recurring one was the need for buy-in from the wider public, and there was a lively discussion on “how much [price-wise] the electricity consumer [that’s you and me, by the way] would tolerate”. Apparently, there is a “monumental” amount of noise around renewables which is “putting people off”, with “profiteering and […] mis-selling” – not a good landscape within which to encourage investment. Six to nine months ago, it had all been positive; now there was more negativism around.
None of which should really come as any surprise when you remember that the Scottish government’s almost pathological fascination with the renewables industry is being paid for via subsidies to developers from general taxation plus increased electricity bills to the public. Is it a price worth paying? The electorate will surely have the final say.
All of which brings us neatly to the headline act of the whole conference, the keynote address from former US vice-president Al Gore. I have to be honest and say that I was expecting a slightly different version of Donald Trump. And there are similarities: both are American, seem to have a guid conceit of themselves, and have the air of men used to getting their own way. Both are also big men, and between them may at least partly answer the perennial question of who ate all the pies.
But whereas Trump veers toward a parody of himself, and not a very good one at that, Big Al is a serious player, and is appropriately seriously impressive. He was head and shoulders above everyone else on the stage in terms of presence and presentation. Yes, I know his message has been honed in countless presentations around the globe, and there was more than a hint of “delete South Africa, insert Scotland” in his material, but he is a class act. I almost found myself being taken in and agreeing with him, and it was only the timely intervention of a sceptical voice during questions, in the form of councillor Cameron Rose of Edinburgh City Council, that brought me back to reality and the realisation I was only getting one side of the argument, and very powerfully at that.
So what were my abiding impressions from the two-day conference? The first was that the Scottish government in general, and Alex Salmond in particular, are desperately keen that renewables should be the next big thing for Scotland. They have bet their shirts on it. The next was that the sector itself, in the form of developers and investors, is also desperately keen that it should succeed, because they also have bet their shirts on it. The former have the electorate to answer to, the latter their shareholders. As I said, squeaky bum time.
The third, and lasting, impression I came away with is that what once seemed a sure bet has now got longer odds attached. Will the general public tolerate the increased bills, and will investors risk more capital on a sector where costs seem never-ending and returns ever further off? £30 billion investment is needed for 10 gigawatt installed capacity of offshore wind. Will it be forthcoming?
Perhaps the last word should go to the dour and downbeat presenter from Bloomberg’s, who said there was a “hard climb ahead before Scotland can tak' the high road on renewables”.
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