Who is Peter Atherton and why do we care?

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by Hazel Lewry

Peter Atherton could be described as a prime mover at Citibank in London, his portfolio includes energy investment.  The mainstream Scottish media and political opponents of the Scottish government pounced on his recent pronuncement : “Renewable investors risk seeing their assets stranded in a newly independent Scotland.”

Secretary of State Michael Moore jumped on the bandwagon, calling for an immediate referendum, stating: “It is vital that we maximise the potential of Scotland’s renewables sector by providing the stable environment in which that can happen.”

Labour MP Tom Greatrex added: “This is an astounding warning and shows the grave flaws in the SNP’s energy policy.”

Scotland’s ministers have set a goal of 100% of Scotland’s energy needs to be met from renewables by 2020.  That’s a goal, not a requirement and nothing was ever achieved by not trying.  Not trying is what Unionism and Mr Atherton appear to suggest, or at least that we shouldn’t try quite so hard.

Holyrood says the move to a green and re-industrialized economy would create investment and jobs and although ministers have described present targets as ambitious they believe them to be achievable.

Critics have described the target as impossible and questioned how many new positions would actually be created.  Westminster has proven itself comprehensively anti-Scots and pro-nuclear when it comes to energy.  The green generation connection fees in Scotland and London’s insistence on ongoing nuclear testify to that.

Citigroup analyst Peter Atherton has now warned that hitting the 100% target would cost around £46bn, because of the need to build more onshore and offshore wind turbines.  His inference was obvious, funding might not be there – at least from Citibank.  He and our mainstream media don’t seem to worry that this £46bn isn’t public money either.  It’s a big scary number so ‘fit for use’, fit for propaganda.

Mr Atherton based his statements on the fact that even beyond the size of the capital investment, the green energy sector would still need another £4bn a year of public subsidy, probably by way of increased billing.  He believes Scotland’s consumer base is “far too small” to support this industry.  He’s ignoring exports.

Mr. Atherton’s stance is that England and Wales will have to subsidise Scotland’s green energy drive.   “But Scotland seceding from the UK would clearly place this subsidy stream at grave risk,” he added.  This seems like more posturing on the “too poor, too wee, too stupid” stance often thrown up by the Union.  It requires examination.

He also warned utilities and other investors, particularly Perth-based SSE and Scottish Power, to exercise extreme caution in committing further capital to Scotland with the bombshell statement that they “may already be over exposed to these risks”.

Mr Atherton concludes that Mr Salmond’s twin flagship policies, independence and providing 100% of energy from renewables by 2020, are incompatible.  His perspective was validated for him because the referendum will create uncertainty during investment periods, therefore the potential for Scotland to hit its targets was “remote”.

Independence – referendum – uncertainty, a trifecta of words that are often sounded from London but which are never further investigated.  It almost sounds like a Union press release.

Professor Tony Mackay also described the 100% target as impossible, suggesting that 40% would be more achievable.  We’re close to 40% already and there’s 8 plus years to go.

Looking to London’s Mr. Atherton we find he does not actually speak for Citibank, as he told a recent commons select committee: “I am Peter Atherton from Citigroup.  For the lawyers, my usual proviso is that I speak for myself and not for Citigroup.”

In examining the brief of Mr Atherton’s day job, he’s there to maximize investment return for Citibank and its investors.  His concern is only for their profit.

Mr. Atherton’s input on carbon capture and green energy proposals together with an energy mix and funding package were solicited by the UK government in February of this year, his response: “My answer is that I have no idea; it is way too early to tell.  These are very big, complex reforms, interacting with a whole series of other, very big and complex policies.”

Citibank’s energy representative clearly stated recently that he “has no idea” how issues surrounding energy will work out on a UK basis, yet he feels qualified to comment on Scotland, based as he is in London.

Peter Atherton did go on to tell the UK government that things might be workable but:“investors have to be able to imagine is a situation where, in 2018 or 2019, the Secretary of State is standing up to the media and Parliament and saying, ‘It is a really good thing that your bills have just gone up by 15%, and will be going up 15% next year, the year after and the year after.  And it’s a really good thing that SSE and the other utilities have just reported record profits, and will be reporting record profits for the next 10 years.'” He appears to then feel confident of energy funding.

Digging more deeply into Mr. Atherton’s history on issues indicates satisfaction with any situation that produces maximum returns for ideally no risk to his investors.  Anything with guaranteed returns like PPI and PFI would appear to be an ideal situation for him.

In short, he wants guarantees his investors will profit, and profit substantially.

Speaking on the energy mix, specifically referencing the “green deal” under consideration by the UK government, Mr Atherton noted: “Scottish and Southern Energy last year did 105p of post-tax earnings, so I thought I’d run through my model how much profit they would be making by the end of the decade if they were to do their proportional amount of this investment-around £4 billion a year.”

“In 2015, their profits would have risen to 155p, but by 2020 they would be at 225p.  Therefore, their profits are going up 15% or 20% a year at the end of the decade, just as bills are rising.”

Notably Mr Atherton completed that section of his oratory with the statement : “The Green Deal is not a grant; it’s a loan.  You are paying for the loan.  Your overall energy bill may fall, but when you add the loan price back in, the cost doesn’t actually fall for the consumer.”

Based upon Peter Atherton’s figures above, the price of a green energy mix may not fall for the consumer, but the power companies more than double their profits.

The last noteworthy statement was when Mr Atherton told the committee: “The current systems struggle where you have big construction risk and big technological risk, such as with offshore wind and, even more so, with new nuclear.  In our view, new nuclear is un-investable for private equity investors.  Under the current mechanisms there is too much construction risk and too much power price risk.  Offshore wind is in a borderline area, but onshore wind, for example, would be fine.”

Balancing Mr. Atherton’s comments about investment and viability, investments by major international corporations, such as Mitsubishi, Doosan and Repsol, as well as domestic firms, are providing jobs and growth for the future in Scotland’s world leading renewables industry.  This process has not appreciably changed since the Scottish government confirmed plans for an independence referendum in the latter half of the parliamentary term.  Four of the five world leading turbine manufacturers now have a significant presence in the country.

The Scottish government issued a statement saying: “The analysis also fails to understand that much of the renewable energy which will be produced in Scotland will be for export.”

What does ‘generate 100% of Scotland’s energy from renewables’ mean, when much of it will be exported?  Scotland is energy rich, we already export energy.  We will generate our basic needs from renewables if the goals are met, then export our excess capacity when available to England or other markets.  If the goals are not met, we in an independent Scotland will simply have less to export, our lights will not go out.  We will maintain a mix of renewable and fossil energy.

Scotland will phase out nuclear as those facilities age and reach the end of their life.  Mr Atherton agrees with this as he clearly states “new nuclear is un-investable”.  Clearly something other than nuclear must replace our current nuclear plants.  In or out of the UK that fact does not change.

Scotland is in energy surplus, England is in energy deficit.  England imports energy from Scotland and forces Scotland to pay for the privilege of exporting it.  Out of the Union we get market rates, inside the Union we get exploited.  Ofcom has shown no eagerness to change therefore that looks like it will be an ongoing situation unless independence changes it.

Our nation has invested £750 million in renewable energy in the last year alone.  Our government at Holyrood realises that fossil fuel will continue to increase in price and pollute our planet.  Wind and wave, solar and tidal energies with emerging green technology don’t increase their fuel costs over time.  If we wish to prevent the children of our nation from living in perpetual fuel poverty there is only one viable way forward at present.

Our investment in renewables like our nation’s size in comparison to China is minute.  Last year China promoted £37b investment in solar alone. In spite of Peter Atherton’s obvious fears, much of green energy is now largely mainstream and proven technology.

As stated in Wiki – Scotland’s future is truly bright on renewables: “The natural resource base for renewables [in Scotland] is extraordinary by European, and even global standards.”  Scotland possesses 25% of European wind capacity and 10% of tidal capacity.

The direct profit could go straight to our own communities.  Now it pads Treasury coffers in London while Westminster and its friends tell us we’re too poor to develop its potential.