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Could concern about climate change scupper Scottish independence?

Pro-independence parties have always assumed Scottish oil will replace the financial subsidies they currently receive from Westminster.

There’s a reason oil is often referred to as “black gold”. As a substance that both powers modern life and is non-renewable (i.e. you can’t make any more of it), oil is in high demand. Countries that own it can use it to turbocharge their own economies; the more fuel you have to burn, the more factories and cars and stadium headlights and supermarket freezers and schoolchildren's reading lights you can keep running. Oil countries can also sell the fuel and spend the money on anything from hospitals to schools to nuclear weapons. Places like the United Arab Emirates have used their oil fields to become amongst the richest countries in the world. Norway invests its oil money and uses the returns to economically boost current and future generations.

Scotland is another example of a place which for a very long time has seen oil as an integral part of its economy. Domestic oil and gas fuels almost four-fifths of the country’s energy consumption, and more than 100,000 jobs are tied to it. Scotland also earns about £25 billion a year from exporting it to other places. Of course Scotland is legally part of the United Kingdom, so the economic benefits of the oil and gas found off its coastline are shared with the UK as a whole, and control of the oilfields ultimately lies with the national government in Westminster. This has long ticked off Scots who want their country to be independent from the UK.

It has particularly annoyed the Scottish National Party (SNP), who have governed Scotland since 2007. (Scotland, Wales and Northern Ireland all have their own governments which sit under the UK’s national one and have the power to make various local decisions.) In the ‘70s, the SNP gained lots of attention - and lots of votes - by campaigning under the slogan ‘It’s Scotland’s oil’. During the 2014 Scottish independence referendum, SNP leaders pointed to Scottish oil as the way that Scotland could economically thrive without the UK. (Opponents said they’d vastly exaggerated the amount of money oil would generate.)

This argument is important, because Scotland’s fiscal policy (economist-speak for government spending and taxing) is currently subsidised by the UK as a whole. Compared to the average Brit, each Scotsperson received an average extra £1,633-worth of public spending in the 2019-20 financial year. (The financial year finishes at the start of April, so this stat mostly ignores the effect of the pandemic). Over the same time period, Scotland generated £308 less tax revenue per resident than the UK as a whole.

If Scotland went independent, its government would have to find a way to plug this shortfall. But many of the methods available to them are regarded as political headaches. Raising taxes generally is usually unpopular. Raising taxes on businesses and wealthy individuals is more popular but can scare off investment. Cutting government services tends to be widely disliked and hits the poorest hardest. It would be particularly politically awkward if an independent and cash-strapped SNP felt obliged to cut back some of the things that the UK currently state-funds for Scottish residents but not English ones, such as free prescriptions and free university tuition.

For a long time, many pro-independents felt they could sidestep these problems by getting control over the cash cow that is oil. But now this idea is mired in problems of its own. In a world where the effects of climate change are growing more and more apparent, environmentalism is growing rapidly amongst Scots, especially younger ones. If the SNP wants to win their votes, either for independence or in the regular Scottish elections, they cannot be seen to be big fans of fossil-fuels like oil.

At the same time, if they come down too hard against the oil industry the SNP risks angering all those Scots whose livelihoods depend on it. As with any big industry, this will include more people than those who directly work in the oil fields. It includes any family members they support, as well as companies and people who rely on oil workers’ custom: a hard-hat manufacturer, say, or a sandwich-seller. Unless they plan out acceptable economic alternatives for those who have the most to lose from a move away from fossil fuels, an anti-oil SNP is likely to lose a lot of support.

In an attempt to keep both these two big voter camps happy, SNP leader Nicola Sturgeon has remained vague about whether she supports the development of a new Scottish oilfield called the Cambo. But refusing to take a particular stance hasn't gone down well with many Scots. And somewhat ironically, Sturgeon has now been accused of deliberately deferring decisions about how to use Scottish oil to the UK’s Prime Minister, Boris Johnson.

Read our explainer on: what the environment has to do with the economy.

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