How Scotland and its people benefit from its vast reserves of both fossil based and renewable energy was being discussed by the Alex Salmond led SNP Scottish Government as recently released official papers from 2009 have revealed.

The newly released cabinet papers from 2009 reveal that although Salmond was in this restricted position, his cabinet meetings had ambitious plans, not just for the Scotland of the present, but for a future independent Scotland. These discussions would go on to form part of a National Conversation, a substantial policy manifesto for a future independent Scotland, and in 2014 an Independence Referendum.

One of the issues discussed in March of 2009 by the Scottish Cabinet was ‘An Oil Fund For Scotland’. Oil had been discovered in the North Sea as far back as 1966. North Sea production started in 1967 with the first full year of production taking place in 1976. At the time the political landscape of Scotland was very different from today, there was no Scottish Parliament, and the SNP were a minority party with only 11 MPs.

Since then, in comparison to independent Norway where oil was also discovered, a country comparable in size to Scotland, the benefits Norway have from its Oil Fund have completely changed the fortunes of their country. Norway’s Oil Fund fund is now the world’s largest single investor.

The fund was set up to shield the economy from ups and downs in oil revenue. It also serves as a financial reserve and as a long-term savings plan so that both current and future generations of Norway get to benefit from our oil wealth.

Each year, the Norwegian government can spend only a small part of the fund, but this still amounts to almost 20 percent of the government budget.

The fund’s role is to ensure that our national wealth lasts for as long as possible. Norway’s Oil Fund

Alex Salmond and a Scottish Oil Fund

In 2008 Alex Salmond commissioned a study to investigate creating a Scottish Oil Fund. It took its inspiration for how countries like Norway operated an oil fund. How could Scotland manage the income from its oil and gas reserves, much greater than those in Norwegian waters, for the benefit of the people of Scotland? If Scotland was still operating under the limits of devolution UK legislation would be required to devolve power to Scotland to be able “to tax North Sea oil and gas, and to create, invest in, and spend any income generated from a Scottish oil fund.”

The Scottish Government believes that the creation of an oil fund for Scotland would be in the economic interests of this country. It could be established for Scotland as part of the UK, or as the separate fund of an independent or fiscally autonomous Scotland. – Ref SCR14/76/44 ‘An Oil Fund For Scotland’

In 1999 Scotland’s marine boundary line was re-drawn and now looks like this:

Even with the re-drawing of the marine boundary line, the 2009 paper states that “Scotland’s share of oil production has generally exceeded 90%”. The paper goes on to discuss the future reserves of oil and gas in Scottish waters. This question came up during the 2014 Scottish Independence Referendum when Sir Ian Wood queried the figures released by the SNP and stated that “no more than 35 years of oil and gas production remain and that this must be taken into account in the economics of independence.” Scottish independence: Sir Ian Wood issues warning over oil predictions

Sir Ian Wood’s opinion was taken as being ‘expert’ and was extremely damaging to the Yes side, it continues to be rolled out as being correct despite the fact that the UK Government has since issued hundreds of new licenses for oil and gas exploration in Scotland’s Seas.

The vision of ‘An Oil Fund For Scotland’ was to “to transfer a share of the wealth generated from oil and gas production to a separate fiscal account where it can be saved and invested over the long term rather than consumed immediately.“

The fund would also be used to diversify the Scottish economy, including investment in renewables. It was also pointed out during the cabinet discussions that a similar fund could be set up for Scotland’s vast renewable energy resources which in 2009 were only just being developed.

“An oil fund’s income and capital can in theory be channelled to assist the advancement of new techniques and technologies in alternative sources of energy creation, providing benefits not only in terms of economic sustainability but also in the sustainability of a country’s energy supply.” SCR14/76/44

Scotland’s Oil Fund would contribute to the local economies most impacted by the industry.

None of that was to happen. There is no Oil Fund For Scotland. The Head of the Better Together campaign, Labour’s former Chancellor of the UK Exchequer Alistair Darling, rubbished the idea. He also repeated the line provided by Sir Ian Wood that oil reserves were in decline. He said:

“We don’t have to take this risk, we don’t have to face a cut in spending or a rise in taxes because we are part of the United Kingdom and we benefit from a situation where resources are pooled across the UK, resources are directed where they are best needed.

 “We cannot allow ourselves to be in a situation where we end up being so reliant on a volatile and diminishing commodity like oil that you end up having to tax more or cut more in order to make ends meet. It’s a ridiculous position to be in.”

And yet hundreds of licenses were issued to extract oil and gas in Scotland’s waters by the UK Government. Renewable energy projects, especially in Offshore Wind, will bring in massive profits for the companies involved with ‘measly’ sums going toward communities.

Scotland is heading for an offshore energy boom as it transitions to cleaner technologies to tackle the climate crisis. The country is estimated to have a quarter of Europe’s offshore wind and tidal energy resources. Offshore wind farms paid ‘measly’ sum to communities by Paul Dobson, May 29, 2022, The Ferret

It is now over 15 years since that discussion took place in Alex Salmond’s Government on the creation of an Oil Fund for Scotland which would include benefits for Renewables. The Oil Fund could have been set up within the current Devolved arrangement. An opportunity missed which would have enabled Scotland to continue to invest in renewables, eradicate child poverty, invest in NHS Scotland and social care, build houses, and encourage the diversification of the economy.

Fiona Grahame