Offshore wind farm

08 Sep 2022

Scotland – silicon shores and a new enlightenment

Harold Hutchinson

Managing Director, Alternative Energy at Investec

William Richardson

Geography (BA) Graduate from Durham University

In his latest blog, Harold joins Will Richardson to cast an eye over the unique beauty of Scotland, arguing that any successful energy transition must put economic justice at its core.

 

Scotland sits on the periphery of a ‘ring of fire’, an Arctic area where average annual increases in surface temperature have been more pronounced relative to other parts of the world in recent decades. This positioning highlights the thin line between climate stability and dangerous tipping points.

Perspective is important if we are to find sustainable policies to crack the climate threat. We need a synthesis of narrow analytical ‘torchlight’ focus and broader imaginative ’searchlight’ thinking, a point emphasized in the work of neuroscientist Iain McGilchrist, now living on the Isle of Skye. In that context, two insights are critical when thinking about Scotland and net zero.

Firstly, Scotland cannot be a global leader in its climate response, at least in a traditional sense. The borderless nature of the atmosphere implies it does not matter where harmful greenhouse gases are reduced on the earth. As a small country, climate benefits made by reducing national Scottish emissions are almost wholly enjoyed by global citizens, while costs accrue nationally.

Ultimately, international agreements between the world’s largest polluting countries are inescapable if we are to beat the climate threat.

Ultimately, international agreements between the world’s largest polluting countries are inescapable if we are to beat the climate threat.

However, this is not an excuse for domestic inaction. It suggests that local investment might best be directed to higher education and industry R&D – areas where Scotland has natural global leadership built up over centuries. This can spawn lower-cost carbon solutions that not only benefit the Scottish economy but can also have positive spin-offs internationally, by scaling up leading-edge technologies to make the biggest difference.

So, we need to get back to the idea of Scotland as a technology leader, a revived vision of a silicon glen but to do with the sun, sea, wind and tides that are the driving forces behind renewable energy. ‘Silicon shores’ might provide a memorable metaphor.

Secondly, sensible climate policies must be aimed at benefitting individuals’ lives. In practical terms, this will raise some challenges for Scotland. Unlike official predictions of an eventual net population decline, the contrary seems possible. A liberal democracy with a temperate climate and technology-focussed economic base is likely to be an attractive destination for global migrants, driven from their homes by the impacts of climate change elsewhere. We need to embrace them.

This will require not just substantial ‘growth’ investment in Scotland’s education system and other social infrastructure, but ‘maintenance’ investment to ensure the ongoing value of Scotland’s unique heritage, proud home to some of nature’s greatest treasures.

Indeed, any energy transition needs to be fair not just to future generations, but to the present one, in terms of the burden of adjustment. This has important local angles. The Shetland Islands are a microcosm that highlights the issue. The local seas are not just a future home for lumps of capital in the form of windmills, but today sustain lives in the fishing and fossil-fuel industries. Families need to be at the centre of any transition, not the collateral damage. That requires money today to support these communities and ensure longer-term benefits for everyone in the future.

The truth is that a successful energy transition requires the investment of significant capital, but too often we fail to account for the full transition costs and benefits.

The truth is that a successful energy transition requires the investment of significant capital, but too often we fail to account for the full transition costs and benefits.

In summary, Scotland’s net zero path should consider a broad context and put both technology and people at its core. This will allow positive feedback loops not just for the country itself, but for the globe more generally. The biggest danger is narrow thinking. Thankfully, Scotland’s longer-term history is one of enlightenment. The wisdom of the likes of Adam Smith and David Hume is now more important than ever to help steer us to a sustainable future.


William Richardson
William Richardson

William Richardson graduated in June 2022 with a BA in Geography from Durham University. He simultaneously completed a course in Sustainable Finance given by the University of Cambridge’s Institute for Sustainable Leadership. He worked as an Intern at Investec with Harold in the summer of 2022, looking at renewable energy issues in Scotland.

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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.