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11 November 2011

UK Government announces extra £100 million for Scottish renewable

The Chancellor and the Chief Secretary to the Treasury today visited Nigg on the Cromarty Firth, where they announced around £100 million of additional funding for Scottish renewable energy, including marine renewables.

This announcement is additional to the existing budget and spending plans of the Scottish Government. It represents a significant boost for renewable energy in Scotland and will help drive the development of this important sector.

The agreement reached between the UK and Scottish Governments will enable the Scottish Government to access and spend half of the Scottish Fossil Fuel Levy fund, which currently holds around £200 million. The remaining £100 million will be made available to support the capitalisation of the £3 billion UK-wide Green Investment Bank.

As any further funds become available in the Scottish Fossil Fuel Levy fund, they will be split equally between the two governments.

This settlement follows a review of the issue in the last Spending Review and subsequent discussions between the UK Government and the Scottish Government.

Speaking from Nigg, the Chancellor said:

“Today the UK Government is making sure that it gives certainty to the renewable sector in Scotland by providing an additional £100 million in funding.

“The UK Coalition Government is committed to creating jobs across Scotland – particularly in the green energy sector. It’s great news that we have been able to cut through the arguments and the wrangling with the Scottish Government that have stopped this money being invested in the past. It shows how serious the UK Government is in its support for Scotland’s green future.”

Danny Alexander, Chief Secretary to the Treasury, said:

“Scotland is a world player in renewable energy and visiting Nigg today has highlighted the potential for developing this sector even further. It has huge potential for creating jobs and driving growth over the next few years.

 “I am very pleased to announce this £100 million in additional funding for the Scottish Government, which will directly help renewable and particularly marine energy development in Scotland. The UK Government is strongly committed to supporting the growth of this sector in Scotland in the long term.”

Notes for Editors

1. This funding is in addition to the existing Scottish Government budget.

2. The Fossil Fuel Levy was introduced in 1996 in Scotland and paid by suppliers of electricity from non-renewable energy sources as part of the Non-Fossil Fuels Obligation. In 2002 the Renewables Obligation was also introduced to support renewable energy. Together, these processes produce a surplus which is held in the Scottish Fossil Fuel Levy fund.

3. The Scottish Fossil Fuel Levy surplus is held by OFGEM and has built up over several years. It is available to be accessed only by the Scottish Government and currently holds a surplus of around £200 million.

4. The UK Government announced in Spending Review 2010 that it was willing to increase Green Investment Bank spending in Scotland by at least £250 million. Today’s announcement follows further discussion with the Scottish Government and replaces that offer. However, the GIB is UK wide and Scotland will benefit significantly from GIB spending.

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