16th May 2009
Buying the odd bottle of whisky could be all the economic support most ‘Scottish’ North Americans will ever give their ancestral homeland. Similarly, most Scots may never exchange their pounds for dollars for a US trip.
But there is a growing minority of people of Scottish ancestry, and Scots working abroad, who are helping shape our green economy and low-carbon industries.
Scots and Americans are fast realising that closer partnerships will drive stronger economic growth and provide secure energy.
Two and a half centuries ago, thousands of Scottish families packed into creaking wooden boats to sail across the Atlantic in the diaspora of the late 18th Century.
They took with them the new enlightenment learnings of medicine, science and economics to help establish the New World.
Today, another new world order is being established. The need to tackle climate change is driving a transformation in the ways that we generate energy, the lifeblood of modern societies and economies.
This year of homecoming coincides with the run up to December’s pivotal Copenhagen summit on climate change. Agreement is being sought on the architecture for global carbon reductions, which will shape the roles that countries and regions play as knowledge centres, green-tech manufacturers, renewable electricity exporters and carbon traders.
California is shaping up as one of the hubs. At stake is a rush for the green gold of low-carbon technologies, bigger than that of the dotcom era, and sustainable, this time. Many of Obama’s policy advisors are prominent Californians.
This hasn’t happened by accident. During the carbon-black years of the White House’s last resident, high-level diplomacy and lobbying has helped pave the way.
Scots have played their part. Doreen Reid, originally based in Glasgow, moved to San Francisco in 2000. On behalf of the Climate Group, an advocacy organisation, she helped encourage the signing of the AB32 Global Warming Solutions Act of 2006.
She described one high level meeting: “Winning hearts and minds with a show of support was really important. To help convince Governor Schwarzenegger we had Sergey Brin of Google, Richard Branson of the Virgin Group and Lord Browne, then Chairman of BP in the room. The eventual outcome was positive, passing of the policy into law.”
Scotland’s, and the UK’s, influence have been due in part to their advanced climate legislation, giving them the upper hand for negotiation. These include the unique Climate Bills of both parliaments, which set a long-term goal of 80% carbon reduction by 2050, and interim targets on the way.
Did being Scottish also help? Perhaps. As Doreen Reid put it: “In general, Scots are well received abroad. From a doing business perspective, having a Scottish accent certainly helped. Some people would call me, just to hear my voice.”
The US is looking to Scotland for investment and expertise, too. Laura Meadors, whose great great great grandparents moved from Scotland to Indiana in 1816, works at the British consulate in San Francisco.
She regularly coordinates with Scottish Development International, a division of Scottish Enterprise. She explained: “Our role is to promote trade of high value renewable technologies between Scotland and the US, both ways.”
Recently, this included organising a trade delegation on wave power from the UK to the US. She continued: “With the US West coast having a similar geography to Scotland, UK companies are looking here for marine energy investments.”
Mrs Meadors was enthusiastic about the potential of this collaboration: “It’s early days, and looking promising. Last year, Pentland Energy, a Californian company, opened an office in Edinburgh. I have 15 active ‘leads’, of which we are confident that 7-8 ‘will land’. We are also looking to widen the pipeline.”
Key to attracting these businesses are incentives. The UK and US have different approaches.
“In the UK, power companies are required to generate a proportion of electricity from renewable technologies (The ‘Renewable Obligation’). For each eligible megawatt hour of renewable energy generated, a tradable certificate called a renewables obligation certificate(ROC) is issued by OFGEM.
Some fledgling technologies, such as wave power, are awarded ‘double-ROCs’, twice the market incentive of established power such as on-shore wind. Scotland is considering ‘quintuple-ROCs’ to attract projects to its shores. In April 2010, a feed-in tariff, guaranteeing a payment for renewable electricity to the grid, will draw further US interest to the UK. Germany has the largest solar PV market in the world as a result of its feed-in tariff.
In the US, the recent stimulus package has helped kick start some technologies. However, with all money due to be spent in 18 months, this is a short-term response.
Longer-term incentives include the production tax credit extension, encouraging renewable electricity generation by 2 cents per kWh, and a loan guarantee policy for large-scale technology projects.
These variances in approach are creating interesting dynamics between the two fledgling green economies.
Andy MacRitchie has worked at a high level in renewable energy on both sides of the pond. He moved from Scotland to California in 1998 to merge Scottish Power and PacifiCorp, and introduced, for the first time in 2003, CO2 costing into PacifiCorp’s decision-making process.
Andy is now a partner in Aequitas private Equity firm, based in Oregon, which invests in smaller US renewable energy markets such as biomass and wind.
With his unique working insight, Andy explained the differences between Scotland and the US: “At the moment, Scotland and the UK are transferring knowledge and knowhow to the US. This will change in the next couple of years. The US is unlikely to lead on policy, there are too many vested interests. But, there is a huge entrepreneurial and technology driven culture. With private investment, green tech will be the next big thing.”
About the big opportunities for Scotland, he continued: “Wave power is still up for grabs. There is no leading technology in this sector, yet, although Oregon is picking up.”
Other nascent technologies include smart grids, waste to energy, fuel cells for backup power and solar.
Curiously, the recession may be a force for positive change in the job market. Mrs Meadors explained: “An unprecedented number of people are showing up to renewable-tech job fairs. They all want to know how they can get a green job. They see it as a sustainable long-term sector. There is tremendous excitement.”
One of the main messages for Scotland is that it must look outward and form close alliances. As Andy McRitchie puts it: “Scotland must invest in wide networks and partnerships. It must invest in intellectual capital.
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