The Royal Society of Edinburgh - Public Policy Seminars

This report provides a record of the third event in the "Scotland’s Well-being" public policy seminar programme for 2000-2001, held at the Royal Society of Edinburgh on 26 March 2001. It follows up on the Executive Summary previously published.

Pages 3 and 4 provide a background context to the seminar discussion. Pages 5 to 17 report on the presentations, questions and discussion.

The Royal Society of Edinburgh sees the report as making a positive contribution to informing the policy decision-making process. But the report is not the end of that contribution. Rather, the Society sees it is an impetus to further consideration, discussion and development of policy initiatives and implementation.

General Background
The Government policy on renewable energy seeks to stimulate further the development of the UK renewable energy industry; to promote opportunity and encourage innovation so that renewables become cost effective and competitive with our more traditional energy sources both at home and abroad; and to contribute to rural development

Renewables are part of the Government's wider approach to climate change, driven by the United Kingdom Climate Change Programme and the parallel Scottish Programme.

The Kyoto agreement commits the United Kingdom to cut greenhouse gas emissions by 12.5% on average between 2008 and 2012 compared with 1990 levels. Moreover, the United Kingdom Government has a domestic goal to reduce carbon dioxide emissions, the main greenhouse gas, to 20% below 1990 levels by 2010. The Scottish Executive is committed to contributing to the UK's Kyoto target and domestic goal. The Government's proposed renewable energy obligations are an integral part of meeting these targets.

Scottish Background
Scotland already exploits renewable energy sources. For example, existing hydro capacity meets, depending on the weather, 8-11% of electricity demand and the Scottish Renewables Obligation (1995) stimulated renewable development, with the award of over 100 contracts to developers, the projects from which now meet over 1% of electricity demand.

As a means of continuing this development, the Scottish Executive propose to bring into effect, around October 2001, the Renewables Obligation Scotland (ROS) Order. This will place renewable energy obligations on all electricity suppliers in Scotland over the period 2003-2010. The obligation will:

The ROS is one measure to stimulate the exploitation of renewables. Others are new planning guidance (NPPG6) for renewable energy development in Scotland and a review of the capacity of Scotland's electricity network to accommodate this type of electricity generation.

Challenges and Changes
The climate change policy and the statutory obligation bring different economic, operational, technical and wider challenges and changes. These include:

These issues highlight some, but not all, of the matters considered and discussed by the seminar speakers and participants. The report that follows covers that consideration and discussion.

Report
In introducing the seminar, Sir William Stewart, President, the Royal Society of Edinburgh said that renewable energy (RE) had the promise of making a useful contribution to energy supplies and to the environment. It has its place in enabling Scotland to meet its targets under the Kyoto Agreement and the Scottish Climate change programme. Scotland is fortunate in having a lot of the resources of wind, wave, tidal, hydro-electric and even solar energy. There is therefore considerable potential for development. But it is vital that development pays proper attention to the economic, environmental, operational and technical issues associated with increases in the penetration of RE. These were issues to be considered in the course of the discussion.

"From Margin to Mainstream"
Stephen Hampson, Head of Enterprise & Industrial Affairs Group in the Scottish Executive's Enterprise and Lifelong Learning Department

Even more than in most areas of policy, there is therefore a premium on our working closely together with our colleagues in London, and indeed on keeping in touch with world-wide developments. The SE’s policy on the promotion of RE is of course driven by UK commitments contained within the Climate Change Programme. The basic objective is to help reduce global emissions of carbon dioxide and other greenhouse gases. In setting the policy framework for that basic purpose, the Government and the SE seek also to ensure diverse, secure and affordable energy supplies. Renewables play an important part in achieving that goal.

These first "Scottish" results are still subject to review, particularly as regards the very high figures for land-based activities. As would be expected, the energy sector is a significant contributor to Scotland’s greenhouse gas emissions. It contributed 30% of the Scottish total or 6.8mtc in 1998. In the finalised figures, it is likely that the energy sector will replace agriculture as Scotland’s highest emitter. That is scarcely surprising but it underscores the importance of directing our attention to renewables. It is not, however, a reason for an exclusive concern with renewables. Where they can usefully intervene in other areas, Ministers will do so. There are several examples, of which the following are just a couple.

Energy Efficiency
Perhaps the greatest contribution to reductions on greenhouse gases can, however, be made in the apparently prosaic field of energy efficiency. We are all aware of the policy support that has, at one time or another, been given to such areas as better domestic insulation and encouraging people to use low energy light bulbs. These measures, in which the Energy Saving Trust and the Scottish Energy Efficiency Office work together to offer advice and practical help, should not be under-valued. Greater energy efficiency offers multiple benefits by conserving resources and reducing emissions while, in the domestic sector, it addresses the issue of fuel poverty, which is of particular relevance in Scotland.

The above shows our estimate of the total benefits achieved by energy efficiency programmes in Scotland. Although some of the detailed figures may be debatable, the general picture is pretty well established. The work has achieved a great deal, and we are not yet at the end of the road.

The establishment in a few days time, on April 1, of the Carbon Trust is the latest development in this area. The Trust will operate across the UK to recycle £133m of Climate Change Levy receipts into cost effective, low carbon technologies and other energy efficiency measures with a particular focus on medium sized and larger companies. It will have an important role in Scotland where the SE will fund its activities relating to energy efficiency. Ministers are presently considering how best to fit together its work with that of the existing operators and advisers. At Scottish level we shall have a significant influence over it, both through our funding and through the appointment of a non-executive director to its Board.

Of course, they start from a position of strength. The hydro-electric schemes developed before and after the war mean that Scotland already possesses a significant amount of renewable energy accounting for currently some 11% of our electricity demand. Although much of the scope for large hydro schemes is now used up, the relatively high average wind speed in Scotland and the exposure of some of our coast to the open Atlantic give us a favourable base for benefiting from two of the most promising of the newer renewable technologies.

Financial support for renewable generation has been in place for a fairly long period. Since the start in 1994, 109 contracts were awarded under the Scottish Renewables Obligation representing offers of support for a total generation capacity of 336MW. Not all of these will come to fruition, but 20% of them have now been commissioned, with more in the pipeline. As others have noted, the emphasis to date has been on wind power and on landfill gas which together account for some 85% of the capacity developed. But other technologies supported have ranged from power from chicken litter to the burning of forestry residues.

This does not, of course, mean that Ministers are taking a relaxed view. Indeed, proposals to increase Scotland’s renewable resource by a further 5%, to a target of 18% of electricity consumption have been endorsed as part of the transition from the Scottish Renewables Obligation to its successor, the Renewables Obligation (Scotland). It was interesting to note the very wide support that this proposal received during the consultation.

In brief, the system means there will be an obligation on electricity suppliers to demonstrate that electricity has been produced from renewable sources equivalent to a proportion of their generation. Certificates issued by "green generators" will demonstrate compliance. These certificates will be tradable to provide a mechanism that encourages the use of the most cost-effective opportunities for renewable generation. The Government will put a ceiling on the cost by undertaking to issue certificates to the market at a pre-determined price of 3p per unit. If you consider that modern onshore wind farms can generate electricity for around 2p per unit, this represents a massive opportunity for the industry.

We have recently completed consultations on the mechanics of this new system. We are grateful to all those who took the time to respond - their views will help to shape a positive, long-term agenda for RE in this country for many years to come. Our Ministers will be taking final decisions, based on the feedback that we have received, in the coming weeks and this evening’s seminar represents another stage in that process of consultation, albeit not formally so.

There are two other issues that are more directly the responsibility of my Ministers; the treatment of energy from waste; and the planning and environmental consequences of renewables developments.

Planning and Environment
The broader issues: We have all seen the opposition that wind turbines, for example, can engender despite the widespread recognition of their benefits. We need to understand and work around these difficulties if RE is fully to make the transition from the margins to the mainstream. It is clear that some people have genuine concerns, and Ministers take these concerns very seriously.

Awareness and education are key issues. Last year, the SE commissioned an independent survey of public attitudes towards wind farm developments. The results of this survey were informative and encouraging. People living close to wind farms demonstrated a positive attitude towards them, and the survey helped address some of the myths surrounding such schemes. Of course, many developers take a proactive approach to consulting with and involving those who live close to proposed developments. It would be useful if all developers adopted this approach as best practice.

The planning issues are also being addressed. Revised national planning policy guidelines for RE were published late last year. There is a balance to be struck between national policy on renewables and climate change on the one hand, and national policy on landscape and nature conservation on the other. Ministers believe they have achieved that balance. Certainly it is my impression, though I may be over optimistic, that some of the steam has gone out of this debate since the guidelines were published.

I have highlighted the measures being taken by the SE to assist the transition of RE from the margin to the mainstream. The Ministerial commitment to these policies is a real one and it is at the heart of the SE’s Climate Change Programme. Success in achieving these aims will go a long way towards creating a truly sustainable Scotland.

Stephen Hampson : Educated at the Leys School, Cambridge, where he specialised on the science side and Oxford University where he read for a first degree in PPE and a second degree in Economics. After a short spell from 1969-71 as a lecturer at Aberdeen University, he joined the public service as an economist at the National Economic Development Office. While there he carried out a number of projects with a special interest in industrial and regional economics.

In 1975 he joined the Civil Service and was posted to The Scottish Office, initially working on energy matters at the time policy towards the North Sea was being formed. In 1978 he began a four-year secondment to the Diplomatic Service working in India.

His subsequent Civil Service career has had a clear focus on industrial affairs, though with wider experience also. For most of the 1980’s he worked in the Glasgow office of the Industry Department, first as an economist and later as an administrator. He held posts dealing with industrial policy in general (for example industrial closures, mergers issues and the Scottish interest in major defence procurements), and as head of the division responsible for the administration of grants to industry in Scotland. He spent a period as Personal Assistant to the Chief Executive and Chairman of the Scottish Development Agency.

He was promoted to Under Secretary in 1993 and for nearly seven years was responsible for the Environment Group in what is now the Rural Affairs Department of the Scottish Executive. This group deals with policy on sustainable development, countryside issues such as the creation of National Parks, the natural heritage, the water and sewerage industries and pollution control in Scotland. It sponsors the relevant NDPB’s in Scotland, including the Water Authorities, SNH and SEPA.

He is now head of the Scottish Executive Group that deals with enterprise and industrial affairs, including the energy industries.

."The Utilities' Perspective"
Fred Dinning, Corporate Environment Director, Scottish Power

No one can be quite sure what a utility perspective is, because no one is sure what a utility is any more. The Utilities Act aims to promote competition by forcing the segregation of generation activities at the point of distribution and supply. From generation perspective, we have moved from a position where there were one or two generators in the UK prior to privatisation to a position where there are 50 or 60 generators.

Aggressive competition on the basis of price is the key criterion for generation. The function of Ofgen has been to take away barriers to market entry and promote competition by driving down prices. So the competitive picture is of a very aggressive, open, free market, and the new arrangements are designed specifically to achieve that; markets were set up to reflect the constancy of energy, but also to give a premium to those who can provide short-term services in terms of balancing up, and that will extend to Scotland in due course via BETA.

We are seeing a market based on the ability to provide generation, not only bulk energy, but energy when and where it is needed. On the wire side, transmission and distribution are a natural monopoly, so the powers that the regulator has are about driving down costs and making it more efficient. On the supply side, there is a free market, the ability of customers to move is being promoted, the driving down of prices, energy being bought and sold.

The Utilities Act recognised the problems: it was not necessarily delivering RE or energy efficiency, it was not attractive to customers, costs were higher etc. So specific obligations were placed on commercial suppliers of energy to meet targets for renewables and energy efficiency. The market was not a simple or heterogeneous kind as it had been prior to privatisation, when ministers could say: deliver this and justify the case. What was needed was a regulatory structure which encouraged free and open competition to deliver RE -- as already described. There are, however, one or two "wrinkles" in the system and issues to be resolved.

LECs, levy exemption certificates for renewable generation, and ROCs, renewable obligation certificates are tradeable -- a LEC is worth .43 pence, a ROC is worth 3 pence. Electricity is competing at the margin in Scotland -- marginal coal is 1.2 pence, and marginal coal can deliver to time and schedule, whereas RE cannot. So a big generator in a competitive market can legitimately ask: is competition fair here? Are renewables delivering, are they getting a free ride? Has it, in effect, distorted the market? On controllability, here we have levels of fluctuation.

Peak demand in winter shows how variable demand is. So RE is going to want a slender share in that, but it's not predictable, it can't control the level of peaks and troughs. Energy demands fluctuate greatly from winter to summer. RE, with a slender share of the market cannot control those levels of peak and trough. It is entering a market in which there is over-capacity, with heavy exports south. In Scotland, we have low costs, environmentally friendly existing generation, from nuclear, coal and gas, there is a competitive electricity market, into which a lot more RE will be introduced. Electricity will be almost a by-product from the process of taking ROCs. There is a danger of creating a distorted market.

As to electricity networks -- renewable generation has to be built where RE is -- wind energy is mainly on the west coast, down to Galloway. Those areas where the maximum amount of RE is do not correspond to where the existing electricity network is strong. Costs of improving the network are likely to be high -- something like £70 million in one corner, and £130 million in another. These may be considered fair costs, but how will it be funded? Will those costs be funded by developers themselves, or, in some way, by the country? Given there are two independent monopoly wires businesses, would it be fair if as predicted, 1000 megawatts of energy generation were freed up, put onto the network and passed on to those using that transmission system in the area concerned or spread GB-wide? And if GB wide, how can that be done? These are difficult issues that are only now being addressed.

Others say it is a good thing to have more RE on the network, in the event of faults in different parts of the system. Suppose you connect renewables at 11,000 volts or 33,000 volts rather than transmission networks, that would be a good thing because if there were faults elsewhere on the network, that would support it, and you would not have to have a grid in the long term. But the electricity network was never designed in this way. Transmission networks, which are radio networks, reach out to where the power stations are. The amount of intelligence and controllability in the network declines as you move down in terms of voltage, so RE connecting large amounts of energy to the network will require them to be reworked. There will be a large-scale capital cost in building an infrastructure in the Highlands and in Galloway, or if there is to be more RE in the future, in distribution voltages. Somebody will have to pay -- how will that cost be recovered? Should it be "deep" -- whereby the person who connects pays for the complete reinforcement of every voltage -- or should it be "shallow," with the minimum cost in connecting being met, but less being picked up? These are difficult network issues and big challenges, and they will be seen most in Scotland because of the large amount of electricity generation required.

On the supply side, the current margins on supply for electricity customers is probably of the order of £10 - 15. The cost of renewable obligations could be an extra £7-10 per head. The energy efficiency commitment is likely to be from £4 up to £6 or £7. So there is a potential cost of £16 or £17 per customer to meet these extra obligations. So suppliers are increasingly seeing obligations bigger than their current margins per customer, and that will have to be passed through in some way. Buying out and recycling -- yes, you can simply choose to pay the three pence, but there will be an element of recycling for those who don’t comply. It's going to be a risky business in terms of buying and selling these ROCs and trying to clear your position at the end of the period to see whether you get some of the recycled money. It creates an uncertain and difficult market, and you can see the problems from the supplier's perspective. He is having to spend more cash with the risk of being exposed to a market which has not developed and where there is uncertainty. Another potential by-product of the trading issue is the proposal that in the longer term these certificates will be traded on a wider basis, to England and Wales, and to Europe.

How is the UK going to feel if the buyer's level is 4p in Denmark or the Netherlands, and the ROCs all kick off there. If so we will have lots of renewables built in Scotland but other governments claiming that they have beaten their targets that are being built in Scotland, and the generators will say that the electricity is being dumped at low cost and so on.

So there are a number of issues to be fully resolved, and a requirement to see how all this fits together. What exactly is a ROC? Is it greenness or is it carbon dioxide? Because the Government has said that the CO2 saved will not belong to the generators, so in addition to the trading proposed, you won't be able to sell on the CO2. There are complex issues. There are existing green energy tariffs that charge a little extra to enable RE to be built. Customer loyalty has been built up in these main tariffs. What is their status vis a vis this obligation -- do they disappear? The situation is confusing.

The bad news must be countered with the perspective of Scottish Power as a mature player in this area. As Scotland's leading wind developer, we are moving rapidly forward in the area of wind power, with various new developments. We see RE as part of our portfolio, having the capacity to reduce the downside risk of fossil fuels. We embrace the challenge wholeheartedly, and we have a vigorous programme of development. We see it as a good business opportunity.

In terms of developing the infrastructure, we see it as a clear strategic issue that our networks need to be developing in the future -- distributing and generation renewables are the way forward and we need to find ways of finding structures so we can do what is our business -- i.e. to deliver what is a cost-effective management plan which is of advantage to our shareholders.

So apart from imposing network developments we seek ways forward that are funded fairly and equally across the customer base. In generation we need the same thing -- to see the electricity market developed in such a way so that the Scottish fossil fuel generation -- clean fuel generation that we have -- is not unfairly disadvantaged.

Finally, in terms of customer focus, we have just signed a major deal in Scotland that makes us the largest supplier of green energy in the UK. We have a very successful message in tariffs which operate on the basis of small premiums that we fund directly for specific small scale community projects and we're seeing green energy and our environmental track record has been a major selling feature. From our own perspective, as a mature player, we welcome these initiatives. But there are issues which raise challenges and which need debate.

Fred Dinning : Corporate Environment Director of Scottish Power - the UK’s leading multi-utility, and one of the top ten utilities globally.

His key functions are: to keep the Scottish Power Board fully briefed on environmental issues: to set the strategic direction for the group’s environmental thinking; and to ensure that issue management and governance systems are in place and effective.

Within those functions he has responsibility for: the production of the Company Environment Report; organising and leading annual reviews of environmental risk management and governance; and the environmental aspects of due diligence during acquisitions.

A key part of his work involves liaison with UK, EU and US policy makers. He sits on a variety of industry bodies, including the CBI Energy Policy Committee, the Electricity Association Environment Steering Group, the CBI/ACBI Emissions Trading Group and the Governing Council of the Association for the Conservation of Energy. In addition he serves on the Secretary of State for Scotland’s Advisory Group on Education for Sustainable Development; is a Steering Group member of the Church of Scotland Society, Religion and Technology Project; and is a Board Member of the Scottish Environmental Education Council.

"The Developer's Perspective"
Dr Robert East, Commercial Manager, Amec Border Wind Ltd

The developer's job can be described as supplying wind farms to generation businesses. There are three critical issues:

Wind farms are a business like any other, facing the question: are they surviving? Hopefully, this one is. As a business, company survival and growth are critical. We sell products into a market. But they are unusual ones, subject to a very high degree of investment and of risk.

We have found that the best way is the high-risk route, which is opening up new areas for development. You need a site, you need consent, you need contracts, and you need an investor. All of these have risks attached. The question is whether these risks are manageable or not. It breaks down as follows:

The first thing needed is land and a landowner who wants wind development. Then you have to assess technical and wind risk. We have the skill and expertise here. We can assess the risk and determine whether the site is appropriate or not. Ground connections, radio communications, design and layout -- that is our bread and butter.

As to consents: on-shore that is fairly straightforward, you simply need planning permission from the local authority. Off-shore, which is where the market is -- the new frontier -- the consenting process is not mapped out at all. In two recent off-shore developments, we needed six or seven separate consents from different government departments.

Contracts are needed for putting in roads, putting in foundations, and these are all well mapped out activities.

Then we need investors; they are largely conditioned by the market. The planning system determines whether there is a product to sell. The UK success rate is very low, only 25% of total applications are successful, though the figure is higher in Scotland. It can be random, which is the difficulty in calling the planning risk. You can invest £150,000 in getting the information together, then it can founder on the planning application. Odds favour going elsewhere, not the UK.

Work on reviewing the planning process in the UK has been well received. Regional targets are very welcome. The new planning guidance for Scotland, NPPG 6, is also very welcome. It says the planning system has to be "sensitive, effective and consistent" This is a key element in unlocking the development process. It will take time to filter into the system, and it still has to deliver. There are some sites that have been waiting a year for the go-ahead -- there are severe bottlenecks.

The new system of renewable obligations is good, because the price is about right, but the system is highly complex -- valuation of work in progress is almost impossible to estimate, forecasting income over a period of time is hard to do. The technology pull is strengthening. Two North Sea turbines installed off the Northumberland coast this summer cost £4 million to out in place. We are learning every day how to operate in an off-shore environment. The oil industry has a great deal of experience, but the wind industry is new to it. There is a sensible hook-up with oil companies here.

Costs are coming down. Technology is becoming more viable. Investors, however, are going to make decisions based on the market, on what projections are, capital costs etc. There are market risks. Wind turbines are built in Denmark & Germany, not UK, and over the past three months the price of turbines has gone up by 10%. On small sites which are marginal anyway, this kind of hit can be disastrous. We have no control over that. There is no mitigation for foreign exchange.

From the developer's perspective this is a risk market. The policy push that has been evident of late has been a positive thing, and has revitalised interest in the UK market. But uncertainty remains, and policies still have to be put in place. RO has to deliver. Prices are unknown. Will my business survive? I'm optimistic. The political will is there. We want to make it happen. Offshore we have an opportunity to lead the world. The industry will thrive if we all pull together.

Robert East : Graduated from Imperial College, London in 1988 with a Ph.D. in Geophysics. From there went to work for Shell International, based in The Hague, processing seismic data from oil and gas prospects all around the world. He spent a total of 12 years working for Shell in oil exploration and in research and development.

In 1998 he played a significant role in persuading Shell to increase its involvement in renewable energy technologies by developing the business plan for investment in a global geothermal energy business. In spite of this success, in 1999 he left Shell to become involved in the wind industry, returning to the UK to join Border Wind Limited, based in Hexham, Northumberland. Border Wind became part of the AMEC group of companies in March 2000. His specific responsibility at Border Wind is to manage the companies extensive UK onshore development portfolio.

One questioner asked whether the 18% target was achievable given the planning constraints, and the planning issues that have arisen in the South. In response Stephen Hampson said that it is clear that Scotland has advantages, in wind speed and exposure to the Atlantic. It is therefore likely that Scotland will produce more than its share of RE, and England less. But it would be wrong to say there is a specific target figure for Scotland. There are systems to explore, but SE is standing back from what it now sees as a market-led scenario. It is not up to government to choose particular technologies. Previously the Government made decisions about generators, now it is market-led. Fred Dinning added that current applications could supply 2,600 megawatts of connected capacity, which is double the target. But there is a danger of protectionist policies from organisations like Scottish Natural Heritage and other conservationist bodies. RE would only encroach on 2% of land, and if we cannot afford that, then we should examine our consciences. The world will not stay the same, we have to make choices. There is potential for developing an industry. Wind turbines offer the potential for jobs. We need to be brave enough to make decisions.

Surprise was voiced about wind technology being uncommercial, because originally it was UK technology that was used to create wind turbines in Spain and Denmark. Technology can produce a great deal, and the questioner put a powerful case for tidal generation. The tidal stream in Scotland could produce a minimum of 7-8,000 megawatts. It was unseen, silent and elegant, it fits in with our North Sea business. Fibre optics and other cables are being developed which make it viable. So why not make tidal stream a major part of the picture? Scotland could be the largest RE supplier in Europe, and create an entirely new business for the country. In response Fred Dinning said that the market would decide. It was a question of the buyer price. The Government was not going to take the decision, it was up to the market.

Professor Stephen Salter, Chair of Engineering Design at Edinburgh University, claimed that effectively the Government has already decided to back wind not wave. There was no chance that the original wind turbines could have competed under the market we have now. It is because about 6 gigawatts of wind have been put in that you now have a mature technology. The Government will make sure that absolutely nothing else gets its snout in the trough. There is a weird tax arrangement whereby people make money if they do not generate. Because of that enormous incentive in the early days, they have got where they are today. The Government will make quite sure that nothing else succeeds. They will make quite sure that wind is the chosen method. Fred Dinning reiterated that the market would decide if the market can deliver on cost. In his view, the advantage of off-shore wind was that it would drive costs down.

Stephen Hampson said that the SE is considering the flow of R&D into renewable generation, and reiterated that the Prime Minister had recently announced £100 million over three years. It is not certain how that will be allocated as yet. And there is a large sum through the Carbon Trust for new technology. R&D support is continuing, there is a history of growth. We are trying to reconcile that support with a reasonably neutral system that says when it comes to the actual business of generation, fundamentally what we are concerned with is the saving of CO2. It is not for the Government to dictate the form of technology used. The time will come when these technologies have to stand on their own feet.

As an interim measure we have the financial support in the form of green certificates and that offers 3% a unit for anything, plus of course what the electricity is worth. All forms, tidal, wind etc would be considered. The Government has gone half-way towards a mature system. It gives technology-orientated R&D support, which seems a reasonable transition phase.

John Brown, Head of Energy Division at the SE, said the Prime Ministers £100 million was just the icing on the cake. He pointed out that £260 million for RE had been announced in the last nine months. None of it would go to on-shore wind. It will all go to new technology. There's DTI capital grant for bio-mass and off-shore wind. There's £50 million of lottery money for RE. There's £50 million of climate change levy being recycled. There's a DTI budget of £55 million for renewables R&D. There had never been a better climate for RE. Off-shore wind, solar and bio-mass would all benefit. Scotland's forestry gave it advantages in bio-mass, and the opportunity to catch up with Scandinavia.

One questioner was struck by the opportunities for underdeveloped regions. It was normal for development to follow energy supplies. Was it not possible to think more constructively about development in the areas where the energy is. Fred Dinning thought the answer was yes, but it was a question of funding the infrastructure. At the moment none of the technologies are capable of functioning on their own. If you want to attract industry by means of energy development in these areas then you need to have cheaper energy prices, and that does not seem to be achievable yet. Bio-mass had possibilities. But ultimately that should be the goal, the network should be expanded and CO2 targets met.

What are the environmental and wider impacts and issues, and what can/should be done to address these?

Renewable obligations will deliver lots of on-shore wind but not much else. It could be disastrous. The answer was not to put all our RE eggs into the wind basket. We should look again at bio-mass etc and further afield at ocean energy.

There are guarantees and price uncertainty. The Government's policy is still debatable. It has positive points, but there are refinements to be made. Scotland could be the largest RE supplier in Europe.

The greatest incentive has been to existing technologies, so it is not surprising that they should have the greatest market share. We need greater detail about emerging and other technologies. Those who back only on-shore wind question why we need other technologies. But development is needed in other areas.

The issues are complex, and there is a high risk involved. For example, there are network problems and difficulties in transmission. The transmission system should be strengthened.

Where is the future going? Hydro cannot be refurbished to any advantage. Energy efficiency must be considered. Ayrshire and the Highlands are benefiting from £200 million investment. What would that do elsewhere?

Discussions had excluded large-scale Hydro development, and nuclear energy, the ultimate non carbon emitting source, supplying 60% of Scottish energy. As it is phased out it will be replaced by carbon-high sources.

One issue not raised is the intermittent aspect of wind power. Tide power is more predictable than wind. If power becomes cheaper, then there will be more use of power, more wastage, and this accentuates the gap. There are concerns as to where all this is leading. The environmental impact favours off-shore wind, but wave technology does not visually pollute. This is a major factor when considering the environmental impact.

There were hard political decisions to be made if you were to support something that you didn't back to begin with. But environmental considerations have to be weighed up. Conservation bodies like SNH and the RSPB are powerful voices, but there must be a balance between them and the growing need for RE. A total environmental approach is necessary. In considering the environmental dimension local development, social and transportation impacts should not be forgotten. An issue to reconcile is that renewables are of environmental benefit, and Scotland has a much-loved environment. Tourism is another important factor. Faced with a range of technologies, wind has high visual impact, wave less so. Within all of this education is very important. Public awareness needs to be raised.

The winners get all the prizes. Scotland has out-standing potential but the RE targets are unambitious. All incentives relate only to electricity, and that is less than 20% of the total for heating, transport, and heating buildings. There are local benefits from RE. In Denmark the communities and the farmers are willing partners in RE. We would like to see the wider benefit emphasised.

What is driving RE is the climate change. The issue of depletion has almost disappeared from the debate, yet North Sea oil will disappear. This is a bigger issue than has yet to emerge.

Stronger planning guidelines are needed. A way to address the issue of planning is for blanket exclusions in some areas, ensuring that planning bottlenecks were avoided. In the end, it seems, the planners are in charge.

It is too early to withdraw fiscal support for non-wind energy. The capital nature of the grant is not designed to get the best results. There is a high ROC price.

CO2 targets may not be met by renewables. We must also not be seduced by them. For example, bio-mass can generate unpleasant pollutants. There are EC disincentives in its use. We cannot see a way of overcoming these.

There are currently 205 Scottish companies planning to offer parts and technology for RE. Fife employs 200 people in this area. Scotland has a great deal to offer. There are EC benefits. There has been a lot of talk about developers making money, but no one is going to do it unless there is money to be made.

Fred Dinning, Robert East and Stephen Hampson for their excellent presentations and their contributions to the seminar discussion.

Magnus Linklater for acting as rapporteur and for providing the main thrust of the full report on pages 5 to 17 and the Executive Summary of the seminar that was published earlier.

The Scottish Executive for providing the funding and support that enabled the event to happen.