Britain Warns Scots: Independence would Hurt Energy Industry

Britain on Tuesday warned Scots that voting for independence would put jobs and investment in the Scottish energy industry at risk, threatening the commercial viability of North Sea oil and gas fields and renewable energy projects.

In September Scotland will hold an referendum on whether to sever its 307-year tie with England, with Scottish nationalists arguing that a split would give them greater economic freedom.

The British government wants to keep the union intact and has produced a series of analysis papers arguing its case on issues such as the currency, security and finance.

The latest paper, due to be released on Wednesday, will say that independence would deter investment in low-carbon renewable energy and make it unprofitable for firms to extract increasingly hard-to-reach oil and gas in the seas off Scotland.

"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," Energy Secretary Ed Davey said ahead of the report's release.

A government briefing note said that Britain's wide tax base meant it could afford to offer incentives which made it profitable for firms to tap into dwindling oil and gas reserves, generating investment and creating thousands of jobs.

It also said Scotland accounted for 10 percent of electricity sales in Britain, but received 28 percent of consumer-funded subsidies that support renewable energy.

"The reality of independence is that Scottish low carbon energy is unlikely to be able to rely on the current levels of financial support provided by all U.K. energy bill payers," the briefing note said.

The government also warned that an independent Scotland would have to compete with other countries to sell electricity into England and Wales.

Speaking earlier on Tuesday Alex Salmond, the pro-independence leader of the Scottish National Party, said Scotland was the most energy-rich nation in the European Union on a per-head basis.

"Independence would give responsibility for Scotland's natural resources to the people who are most likely to harness them wisely - the people who live and work in Scotland," he said.

"It would allow us to adopt policies which meet our priorities and specialisms. That would benefit Scotland, and it would also benefit our energy industry."

(Reporting by William James and Karolin Schaps; Editing by Robin Pomeroy)