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January 12, 2011

What is community benefit?

In the last Briefing, we trailed the Government’s consultation on proposals to ensure Scotland’s communities extract maximum benefit from the coming expansion in the renewable energy market. LPL supporter, Les Huckfield, thinks the government is confused in its understanding of what community benefit actually means.  Simply diverting financial gain away from the shareholder doesn’t necessarily mean that the community will benefit

A comment by Les Huckfield on the recent consultation paper from Scottish Government – Securing the benefits from Scotland’s next energy revolution

The Government’s Consultation Paper is somewhat confusing on local community involvement, especially in its choice of examples of the Shetlands Charitable Trust, South Lanarkshire Renewable Energy Fund and East Renfrewshire Whitelee Wind Farm Fund. These are administered through local councils. The document appears to be confused about the difference between local community benefit and local government benefit.

Real Community Benefit
Much of the Consultation Paper looks supportable. However some of examples used are not based on real community involvement. Though there is little disagreement that Scotland should receive a fair share of development gain and taxation from renewable energy investments, the paper offers few real ways in which local communities will benefit and through which they may participate and share.
The following examples from the document show a lack of real community involvement.


To illustrate its preferred way forward, the Consultation Document provides unconditional support to the way Shetland Islands have handled community benefit. (Scottish Government 2010)
“29……..Shetland Islands Council showed foresight in securing via, primarily, the Zetland County Council Act 1974, a lasting revenue stream for the benefit of the islands from the development of the Sullom Voe terminal. The result of this Act and subse-quent contractual negotiations is that Shetland today has a lasting legacy of around £216m. This figure is over and above the funds contained in the Shetland Reserve Fund, administered by Shetland Islands Council.
“30. The Shetland Charitable Trust, established in 1974 to manage the income stream accrued to Shetland, today provides funding to a number of charitable organisations and projects where there is a clear benefit to the Shetland community. Over the years, the Trust has made a contribution to creating a modern, positive and healthy community in Shetland. Shetland Charitable Trust’s financial strength has also given it the power to establish joint venture projects to move into the renewable en-ergy generation market.”
Shetland was quick to foresee the possibilities from North Sea oil and gas. 20 years before devolution, the 1974 Zetland County Council Act gave the Shetlands Islands Council full control over oil related developments, enabling a massive oil fund in the following years. Shetland is now one of the wealthiest parts of the UK. Sullom Voe’s oil terminal became the largest in Europe, handling up to 1.4m. Though now past its peak, the terminal is expected to last until at least 2020.
But the Shetland Islands Charitable Trust, set up to administer community benefit, is dominated by Councillors. Most Councillors and members of the Planning Panel are members of the Trust.

The Office for the Scottish Charity Regulator (OSCR) has expressed concern about the close relationship between the Shetland Charitable Trust and Shetland Island Council, which have hired Roy Martin QC to: (Shetland Islands Council and Shetlands Charitable Trust 2010 )

– “determine if the constitution of the Charitable Trust requires to be changed in light of current OSCR opinion and Trust regulations, and
– make recommendations as are necessary for the future governance of the Trust
As a separate issue, the Council is also to ask Mr Martin to provide his legal opinion on the issue of grouping the Charitable Trust and Council financial accounts.”

Viking Energy has been set up as a 50/50 Joint Project between Viking Energy (a subsidiary of Shetland Charitable Trust) and SSE Viking Energy Ltd (subsidiary of Scottish and Southern Energy) to develop a huge windfarm. The relationship of the Charitable Trust, Council and Planning Panel means that Councillors may have difficulty in commenting appropriately on their own planning application.
The revised Viking Energy Windfarm Planning application submitted on Wednesday 29 September 2010 is for 127 turbines with up to 540mw capacity, a development area of 12,800 hectares and projected cost at £800m. Reponses to the 2009 planning application showed 2026 opposing the wind farm and 518 in support.
The Viking Energy windfarm means that nearly 6000 birds will be killed. The Carbon Payback period is 48.5 years. In opposition, the 750 members of Sustainable Shetland, formed in February 2008, have a clear position: (Sustainable Shetland 2010 )
“We believe that the Viking Energy proposals are everything we do not need in Shetland: they are financially risky and potentially damaging to the Shetland en-vironment.
We want to see sustainable renewable energy projects in Shetland which are fit for scale and fit for purpose, and provide real community benefit.
We are not an “anti-wind power” campaign. However we are strongly opposed to the Viking wind farm proposal. Other projects will be considered on their own merits”.
Despite these significant local problems, including difficulties with OSCR and possible conflicts of in-terest for Councillors involved, the Consultation Document believes that Shetland offers the way forward: (Scottish Government 2010 -d)
“31. The example of the Zetland County Council Act 1974 provides a role-model for the rest of Scotland to follow. It offers a model of local people benefiting from the abundant natural resources which surround them; and a model of how a lasting legacy can be created for the benefit of all”

Community Benefit from Offshore Developments (Scottish Government 2010)
“45. The benefits which might be enjoyed in the future by local communities from
offshore projects are similar to those currently being enjoyed by onshore com-munities with many benefiting from increased employment opportunities, in par-ticular in the initial construction stages.
“46. However, local communities in proximity to an offshore development are likely to encounter the same problems as communities hosting onshore developments when it comes to maximising the levels of community benefit available to them. In addition, they encounter the problem of working out how to define the term “local community” with respect to a project which may be many miles from the coastline. However, it’s clear that a significant development off the coast of, for example, Tiree or Islay ought to bring some benefits to those islands. After all, a local community is likely to be more reluctant to be in close proximity to a development if it cannot see tangible benefits coming back in return. This will be all the more the case if it feels that a development will have a negative impact on existing successful industries.
It is difficult to disagree with or contradict these general principles. But there are significant differences between Fintry as an innovatory Development Trust, Drumderg with a Community Fund administered by Scottish Community Foundation, and Shetland, as described above.

Community involvement and empowerment are critical. For those on Tiree or Islay, these develop-ments will change their way of life forever, whether or not they see community benefits. Scottish Power Renewables Argyll Array Scoping Document is rightly cautious: (Scottish Power Renewables 2010 )
“The Argyll Renewables Communities (ARC) Consortium – a partnership between Tiree Community Development Trust, the Islay Energy Trust and the Kintyre Energy Trust – is in the process of commissioning work into the potential socioeconomic impacts of the proposed offshore wind farms in their area. Scottish Power Renewables will engage closely with ARC on this work.
In addition, Scottish Power Renewables anticipates close working with Argyll and Bute Council on these aspects of the project, building on the strength of the Con-cordat between the two organisations”.
But this Argyll and Bute Concordat appears fragile as a basis for ensuring real community benefit. Its real test will be how this works in practice (Argyll and Bute Council and Scottish Power UK plc 2007 ):
“The exploration of the potential for an Argyll and Bute-wide fund which will draw resources from large-scale wind farm and other renewable energy devel-opments in order to ensure that the entire community of Argyll and Bute benefits from renewable energy”
The Consultation Document’s example of Whitelee Windfarm (Scottish Government 2010), with up to £500,000 paid annually by the developers, is one where administration of community benefit is effectively under local council control in East Ayrshire, East Renfrewshire (the Whitelee Wind Farm Fund) and South Lanarkshire (Renewable Energy Fund). As with the Shetland Charitable Trust, com-munity benefit is effectively at the behest of the local council.
As an antidote to these top down examples, there are Community Trust precedents and examples in the “Guide for Community Groups in Investing for Community Benefit” (The Pool in Scotland et al. 2010 ). Apart from providing detailed descriptions of organisations formed by local communities, this Guide promotes foundation principles for Community Trusts. There are also many other examples in research by the Scottish Community Foundation. (Ruck et al. 2009 )

The Document’s proposal for a Register of Community Benefit looks worthwhile. (Scottish Government 2010)
85. The Scottish Government sees merit in the creation of an open and transparent, publicly accessible register where there would be the publication of the community benefit levels that renewable energy developers offer, have offered or will offer, and other opportunities for communities to get involved in their developments. This would promote best practice commercially among developers of all renewables technologies and provide significant leverage to help communities negotiate on an equal footing.
However, previous research by Scottish Community Foundation and others has already provided sig-nificant background information. (Ruck etal. 2009 ; The Pool in Scotland etal. 2010 ). There is also the intriguing precedent of research for Shetland Charitable Trust by University of Strathclyde (McGregor etal. 2010 )
“The deployment of the increased funds available for community purposes proves crucial to the scale of the estimated impacts. Not surprisingly, improvements in Community Benefit have a positive effect on the host region. However, these benefits are very modest relative to those that could be secured from any shared-ownership scheme. Both types of benefit may prove useful in persuading local communities to host renewable energy projects even given some deterioration in their local environment”.
Though this research shows benefits in the joint venture approach adopted by Shetland Charitable Trust and Scottish and Southern Energy, it reveals little about genuine local community involvement.