This hydrogen deal is another disaster

by | 12 Nov 2023

Once again Scotland is giving away its future potential to foreign owners, meaning Scotland gets almost nothing out of it. When will we learn that you make your assets work for the public good or you fail?

Dear god, here we go again. When Common Weal looked at a hydrogen strategy the second worst possible scenario that we could devise was for the generation of the hydrogen to be privately-owned by an overseas company selling via pipeline to a continental market.

Let me explain why. First, the development of Green Hydrogen will involve ‘engineering gain’ – the process will be refined and improved, and whomever owns it will therefore own the intellectual property that is developed.

And then obviously the company that owns the hydrogen production gets all the profits. If it owns the electricity generation that is used in the production process it basically gains all the profit at every stage of the process.

Shipping it to the continent in a pipe is the next problem; it limits us to a single market. If Scotland wants to join the EU as an independent country or if it wants to maximise the value of its hydrogen industry, it needs to be able to seek out markets and frankly hold cards in our hand in negotiating with the EU. If we give them monopsony (single purchaser) status on our hydrogen, we don’t have any cards to play.

So the producer takes all the profit and the buyer gets all the energy potential. Scotland would then get only a tiny handful of jobs and any supply chain work which it manages to negotiate into the deal. The rest is simply lost, it is literally a pipeline that takes Scotland’s assets away and then ships their value back to a totally different country.

(In fact the only way to make this worse is by making the hydrogen from oil and gas and pretending that Carbon Capture and Storage works, which it doesn’t.)

It isn’t good news, this is just another embarrassing step in the process of a nominally nationalist government asset-stripping Scotland for the benefit of rich lobbyists

Would it therefore surprise you to discover that in its constant search to be as serially useless as it possibly can, this is exactly the model that the Scottish Government has chosen. Angus Robertson has negotiated for Norwegian state-own Equinor to set up the hydrogen facility and pipe the product to Germany.

I can see what Norway gets out of this – lots of money for public services or to add on to their national wealth fund. I can see what Germany gets out of this – simple, cheap access to energy. I can see what the UK Government gets out of this – more or less the only tax raised on this will be corporation tax which will flow to London.

And I can see what Angus Robertson gets out of this, which is his favourite thing – not getting the census delivered or tackling the crisis in Scotland’s arts sector, but rather swanning around pretending to be competent.

But can anyone explain to me what Scotland gets out of this except more humiliation? As there appears to have been no conditionality on the deal we don’t seem to be getting any manufacturing and there doesn’t appear to be any real job promises included. We’ll get a wee bit of flat rate business rates on whatever facility is built, and a tiny amount of income tax. That’s it.

This is the idiocy of the ScotWind deal all over again, or rather this is taking the legacy of ScotWind and making it worse. It’s not just that the Scottish Government has learned nothing, it seems like the media has learned nothing either, the Herald having splashed this like its good news.

It isn’t good news. This is just another embarrassing step in the process of a nominally nationalist government asset-stripping Scotland for the benefit of rich lobbyists. What is particularly egregious about this deal is that all the gain goes to the government of a nation state – Norway. I can’t emphasise enough – for a Scotland that wants to be taken seriously, this is another humiliation.

In the 1950s and 1960s a wave of nationalism swept the Middle East based on the awareness that vast petrochemical riches had been discovered in countries which were not benefiting from them. They sought a domestic industry to gain the benefit and saw nationalism as the only route to achieving that.

In Scotland we have a ‘nationalist’ government that seems intent on doing precisely the opposite – looking at a great opportunity anywhere in Scotland and giving it away to anyone powerful for next to nothing. It’s pathetic. We’re becoming pathetic.

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