Experts say Scotland will be worse off under UK green energy reforms, while thinktank downplays cost of its ageing population
Two expert reports on Scottish independence have downplayed the costs of green electricity and the risks of Scotland's ageing population, in a significant fillip to Alex Salmond's efforts to win next year's referendum.
In the first paper, a UK-wide team of expert academics retracted their earlier warnings that an independent Scotland would be unable to afford to hit its target for 100% renewable electricity by 2020 without substantial UK subsidies.
In a serious blow to Ed Davey, the UK energy secretary, the academics said because of the energy market reforms and the hefty subsidy for new nuclear power, Scotland's consumers would get cheaper electricity if it had an entirely independent energy policy without UK subsidies.
In the second report, economists at the National Institute for Economic and Social Research (NIESR) challenged claims that Scotland's economy would suffer after independence because its population is ageing more rapidly than the UK's, putting a greater burden on public spending.
NIESR said the analysis by the Institute for Fiscal Studies (IFS) last month had over-estimated the financial impact of an ageing population, as Scotland would need to bear those costs regardless of independence.
While Scotland would be worse off, the overall burden of ageing would be only slightly greater and would be manageable. It stated: "This difference should not be a major consideration when taking the decision about independence."
The first report by five academics from the universities of Cardiff and Birmingham, Queens in Belfast and Robert Gordon university in Aberdeen had warned that Scotland's green energy revolution would be unaffordable without UK subsidy – a position shared by investment banks.
But Dr David Toke, an expert in energy politics, said that since then the UK government's new energy policies had significantly changed the economics of energy investment for Scotland.
The extra subsidy given to nuclear power – which is being guaranteed for 35 years – and the cuts in offshore wind and marine energy subsidies meant it that would be cheaper over 20 years for Scottish consumers to go it alone.
Toke said their new findings actually contradicted the proposals in Salmond's white paper on independence last week, which called for the continuation of a UK-wide energy market and continued UK subsidy of Scottish renewables investment after independence.
Toke said that by 2016 this would not be necessary, since Scotland would have met about 67% of that 100% green electricity target by then, greatly reducing the necessity for hefty UK subsidy of new investment.
Scottish consumers would pay lower subsidies if it was not tied into the UK system, so Scotland should actually seek greater independence on electricity policy, not less.
"We don't fully understand what the white paper is trying to get at," Toke said. "I see it as a negotiating position: it's not a final structure. A final structure is either going to be complete consolidation or independence, and I think it's more likely to result in independence because they're going to get a better deal that way."
There was a contradiction in the Scottish government's proposals because having a UK-Scotland deal on energy co-operation after independence meant Scotland would be helping fund new nuclear power while having a policy opposing new nuclear investment.
He added: "I can't see how the Scottish government is going to work in reality because they can't have it both ways. They can't not pay for nuclear power and then [expect to] get the renewables incentives under the same contract."
Tom Greatrex, Labour's shadow energy minister at Westminster, said Toke was now ignoring his previous report's evidence that Scotland's renewables investment was heavily dependent on UK subsidy.
Scottish power firms get a third of overall UK support for renewables despite having 8.5% of the UK population, so after independence electricity bills would soar or investment would need to be cut.
"This confusion seems to run right through the report. It is highly misleading, cherry-picking statistics and twisting the facts to produce an image of a separate Scotland that is far from realistic," Greatrex said.
In its report on an ageing Scotland, the NIESR analysis, which used different models and population data than the IFS, said that at its worst the extra burden on Scottish finances would be about 1.4% more on average income tax in 2035.
The authors, Katerina Lisenkova of NIESR and Marcel Mérette at the University of Ottawa, calculate that the costs of Scotland's old age population would be greater than the UK's from 2022 until 2060.
The pro-UK Better Together campaign said NIESR had pointed out that Scotland's economy would be heavily influenced still by North Sea oil income, borrowing costs and the wider economy.
But on the single issue of old age, NIESR concluded: "The difference is non-negligible, but is much smaller than the overall effect of population ageing itself."
• This article was amended on 5 December 2013. The picture caption on the earlier version described Dr David Toke as "senior lecturer in energy policy at the University of Birmingham", which was a post he held previously.