What future for the energy-rich Scottish North? Changes in the economic landscape of the Highlands and Isles, and the rest of Scotland

In recent years the Scottish government has promoted marine renewable energy technologies (MRETs) as a way to achieve energy security, economic development and environmental sustainability (The Scottish Government, 2010; 2011). It is currently thought that the waters around Scotland could host up to 44 GW of installed capacity (FREDS, 2004; IPA, 2010; Allan et al., 2014). These resources are critical to achieve the ambitious targets set by the Scottish government and by the European Union in terms of carbon reduction and energy security (The Scottish Government, 2011). Most of these resources are located off the coasts of the Highlands and Islands region (HIR). Historically, this region has been at the social and economic periphery of both the UK and Europe, and it currently hosts all of the socially fragile areas of Scotland, with high unemployment rates and diffused rural poverty (IPA, 2010; HIE, 2011). MRES offer the opportunity for HIR to complete the rearrangement of the Scottish economy started with the oil boom of the mid-1970s and the subsequent development of the Orkneys and the Shetlands (Johnson et al, 2013). This paper presents and discusses two scenarios for developing MRES resources. The first scenario is built upon the economic history of the HIR region, during which most of the natural resources were exported south. Most of the power produced in the north is transported south, with limited or no investment in local infrastructures and no policy design replicating the Orkney and Zetland County Council Acts of 1974. The second scenario introduces the concept of ‘social entrepreneurship’. Building on the experiences of the Orkneys and the Shetlands, and the works of Johnson et al. (2013), Acemoglu and Robinson (2013), and Allan et al. (2008; 2014), this concept suggests the partial local use of energy for developing innovative economic activities and the re-investment of lease revenues locally in order to promote education and skills-building.
The paper offers an historic perspective, and a conceptualization of economic development reaching towards a new spatial arrangement of the Scottish economy, where socioeconomic and demographic improvements are partially retained in the HIR through a series of institutional and technological changes. Finally, the paper contains recommendations about the institutional, organization and infrastructural changes that the region will necessitate in to follow this second path.