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Scottish Independence May Undermine Low-Carbon Energy, U.K. Says

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The Forth rail bridge spans the Firth of Forth in North Queensferry, Scotland, U.K., on March 24, 2014. The debate over whether Scotland should become an independent country is failing to convince voters to switch sides even as the rival arguments intensify in the run-up to this year's referendum, a monthly poll suggested. Photographer: Simon Dawson/Bloomberg

April 8 (Bloomberg) -- Scottish independence risks undermining investment in low-carbon energy because the smaller nation wouldn’t be able to afford the same level of subsidies as the U.K., the Department of Energy and Climate Change said.

Scots would also have to fork out 3,800 pounds ($6,362) per person to match the 20 billion pounds the U.K. has pledged toward decommissioning oil and gas facilities in aging North Sea fields, the department said today in an e-mailed statement.

Energy companies have made investment decisions worth 14 billion pounds in Scotland out of 34 billion pounds nationally since January 2010, the department said. That’s a spending level it stands to lose if Scots vote to end the 307-year union in a Sept. 18 referendum on independence, according to DECC.

“The energy sector in Scotland is booming and growing, with more and more jobs and attracting more investment,” Energy Secretary Ed Davey said in the statement. “I fear the economic and energy progress will be seriously affected by the uncertainty and disruption of independence, as investors will hold onto their cash rather than risk it.”

The announcement fleshes out comments made last month by Davey, when he said Scots would face higher energy bills if they decide to break away from the U.K.

Scotland raked in 560 million pounds of renewable energy subsidies in the most recent tax year, or 28 percent of the U.K. total, while accounting for just 10 percent of electricity sales, according to today’s report.

The department also said that England and Wales may choose to buy electricity from continental Europe in the event of Scottish independence. About 4.6 percent of energy used in England and Wales comes from Scotland, it said.

“If Scotland became a separate country then it would be competing with other countries, who might be able to provide cheaper electricity,” the department said. “This would have a direct impact on Scottish jobs.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Alex Devine, Tony Barrett

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