Humber Energy Estuary

Andrea Leadsom Excerpts

Tuesday 9th February 2016 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I congratulate my hon. Friend the Member for Cleethorpes (Martin Vickers) on securing this debate, as it gives me a fantastic opportunity to set out my vision for the growth and jobs that can flow from the UK offshore industry to the northern powerhouse and across the UK. I am delighted to see the hon. Members for Kingston upon Hull North (Diana Johnson), for Great Grimsby (Melanie Onn), and for Scunthorpe (Nic Dakin) in their places, as well as my hon. Friend the Member for Brigg and Goole (Andrew Percy).

This is an important area, and the Humber estuary has a long history as a driver of jobs and growth in the region, with roots dating back to the 13th century. It has played a key role in our energy infrastructure over many decades—indeed, my right hon. Friend the Minister for Small Business, Industry and Enterprise and I like to call it the northern energy powerhouse. It has played host to vital energy activities, including coal, and more recently offshore wind, not to mention all the other commodities that pass through the numerous ports on the estuary every day. Its location has enabled it to build industries around agriculture, construction, production and energy. My hon. Friend the Member for Cleethorpes is right to point out that it has the potential to deliver much-needed jobs and investment.

There has been a £75 million investment in the Humber international terminal at the port of Immingham, which is receiving some of the world’s largest shipments of biomass destined for Drax. That has the potential to increase to some 6 million tonnes per annum of pellets imported into the UK, becoming a hub for future business, including in the heat sector.

[Andrew Percy]

The Minister is right to mention the huge investment at Immingham in biomass that feeds Drax, which is a massive employer. With the use of coal stopping by 2025, will she commit that biomass will remain an option for energy generation into the future, and that Drax, which has several more units yet to be converted, will be able to bid for that? I have a new role as trade envoy to Canada, so does she recognise the potential growth in jobs in the Humber as a result sustainable biomass coming in from Canada via Immingham? [Interruption.]

[Andrea Leadsom]

My right hon. Friend the Minister for Small Business, Industry and Enterprise is asking whether we can carry my hon. Friend’s bags—I think that is a very good idea. I congratulate him on his new role as trade envoy, and assure him that we are doing what we can to try to secure the future for sustainable biomass, which is important.

We are all aware of the Siemens investment at the port of Hull. That £310 million investment will help to support the industries of the future, and is due to be completed by the end of this year. Of course, we could not talk about the Humber without mentioning Hull, which has been named as the UK City of Culture 2017. We all hope that that will leave a lasting legacy in Hull and the region, as has happened in previous cities.

All those achievements have seen the Humber become a key element of the northern powerhouse, but a key driver for growth in the region will be the offshore wind industry. There has been an incredible expansion in offshore wind which, as my hon. Friend the Member for Cleethorpes rightly pointed out, has been at the expense of bill payers in the UK. Much of that growth is off the east coast of England, generating clean power for hundreds of thousands of homes.

In November 2015, the Secretary of State for the Department of Energy and Climate Change set out our commitment to the future of the UK offshore industry, backed up by the pledge of three contract for difference auctions in this Parliament, provided that we get costs down. Those actions are part of what makes us the greenest Government ever. Alongside our support and commitment to offshore wind, this Government are determined to see higher levels of supply chain content in our energy infrastructure. Our objective is to have a strong, industrialised UK supply chain that delivers higher UK content in offshore projects, and proves its capability, increasing its capacity to win export orders.

[Nic Dakin]

On the supply chain and local content, this is a great opportunity for the Minister, and the Minister for Small Business, Industry and Enterprise who is sitting alongside her, to ensure that the procurement guidelines that the Government have put in place have leverage, and that the development is built with UK steel.

[Andrea Leadsom]

My right hon. Friend and I have spoken about that on a regular basis, and we will continue to work together to ensure that we maximise the procurement of UK content wherever we can. The Humber region has huge potential to contribute to growth in the UK supply chain. Just last week we saw DONG Energy secure financial approval to build what will be by far and away the biggest offshore wind farm in the world, with around 1.2 GW—enough to power 800,000 homes. By its own estimate that will create 2,000 jobs during construction, and 300 long-term permanent jobs in operations and maintenance.

The region has had success in realising many of these jobs already. Grimsby is fast becoming the centre of excellence for operations and maintenance activities for offshore wind farms in the North sea, with DONG, Centrica and E.ON having located their bases there. I enjoyed visiting the E.ON operations and maintenance facility with the hon. Member for Great Grimsby and my hon. Friend the Member for Cleethorpes when I was in the area to open the Humber Gateway wind farm last September. During that visit, I also went to see the site where Siemens is constructing its blade manufacturing facility and service centre at Green Port Hull, which will provide over 1,200 much-needed apprenticeships and skilled jobs in the local area when it opens later this year. I was particularly struck by the export capability of this new factory.

[Melanie Onn]

On that point about skills, and as I mentioned to the hon. Member for Cleethorpes (Martin Vickers) earlier, does the Minister agree there has never been a more opportune time to make sure the national college for wind energy is situated in the Humber estuary? Does she agree that we should all be working together to try to encourage the Government to support the local enterprise partnership in bringing the college to the Humber area?

[Andrea Leadsom]

As I think was pointed out to the hon. Lady, the application was slightly late but the Minister for Small Business, Industry and Enterprise is here. I will make sure that the hon. Lady’s lobbying is passed on to her team.

[Diana Johnson]

Will the Minister very kindly agree to have a meeting to discuss the national college for wind energy? The sticking point seems to be the Minister for Skills not being able to attend the meeting. As it is in the gift of the Department for Business, Innovation and Skills to agree to the name being given, even if it is privately financed, I wondered whether the Minister might have a word with her colleague to see if she can get him to the meeting too.

[Andrea Leadsom]

Absolutely. I am very happy to do that. As I said when we last spoke about this, I will be delighted to meet the hon. Lady.

Like my hon. Friend the Member for Cleethorpes, I want to see the Humber estuary achieve much more. I want developers to do more to share the economic benefits to be gained from building and operating offshore wind farms, and to share the gains of our new offshore wind policy. As he rightly said, it is payback time. I have instructed my officials to set up bilateral discussions with key offshore wind developers, such as DONG, SSE and Scottish Power. As I will make clear to them, the current round of projects provides a clear opportunity to stimulate further UK supply chain activities that will enable us to reap the rewards of our offshore wind leadership, both in terms of securing more jobs in the current projects and industrialising the supply chain. I want the UK to be exporting our technology and skills to projects in Europe and elsewhere. This is my ambition, and I want the Humber estuary to be at the forefront of that ambition.

[Martin Vickers]

What the Minister has just outlined is clearly good news. She has made rapid progress since our last discussions and I compliment her on that. Can she give a timeframe for that? It is critical that we move forward now. We have already lost quite a few months.

[Andrea Leadsom]

Yes, absolutely. I can tell my hon. Friend that it is a very top priority for me to have those meetings. We will be reconvening the offshore wind industry council in the near future and I want to have met each of the key developers before that meeting takes place.

On the Able marine energy park, I agree with my hon. Friend that the proposed facility is a significant opportunity to build on the successes in offshore wind and renewable energy more generally. It would be a fantastic addition to the UK offer. When it is completed, for example, it is well located to be a construction and staging facility, and could open up further port infrastructure facilities for the industry, as well as additional land for quayside supply chain investments. I encourage Able to continue to make the case for the facility, which has the potential to attract a range of developers.

As my hon. Friend pointed out, Able issued a press release on 9 July 2015 announcing the signing of a memorandum of understanding with DONG Energy, which committed to early stage talks on the project. Expectations are high that the facility would provide much-needed jobs. The recent announcement by DONG about Hornsea reaching a financial close last week is timely. I understand the importance of this project to my hon. Friend and to the UK. I therefore wrote and spoke to DONG seeking an update.

I am pleased to tell my hon. Friend the Member for Cleethorpes that DONG has replied saying that it continues to see AMEP as an as an important facility in the development of the offshore wind sector in the UK. DONG proposes to establish and lead a strategic joint industry and Government review to identify opportunities to develop the east coast as a UK construction and staging facility for the UK and European offshore wind industry. DONG would expect the AMEP facility to be a key consideration in this exercise, and I am pleased that DONG has appointed Benj Sykes, who co-chairs the Offshore Wind Industry Council with me, to lead that work. I shall shortly write to other developers regarding their participation in this review.

I am also pleased to say that DONG has told me that discussions on a UK tower manufacturer continue to progress well. To secure the first UK tower facility would be a major achievement, on which developers and the supply chain can continue to build. Let us be clear: the ability of the UK offshore industry to contribute to jobs and growth is a key part of what makes it an attractive industry. It is not the only one: climate change is one of the biggest challenges that we face, and it needs big technologies if we are to achieve our decarbonisation goals. Offshore wind offers one of those solutions.

[Martin Vickers]

Will the Minister confirm that she or her officials will have an input in those discussions, and not leave it entirely to the industry?

[Andrea Leadsom]

I can assure my hon. Friend that this interests me a great deal, and I shall certainly be involved.

When the Secretary of State set out the Government’s new direction for UK energy policy last November, she highlighted the challenge we face in making sure that energy remains the backbone of our economy while we transform to a low carbon system that is secure, affordable and clean. We want a consumer-led, competition-focused energy system that has energy security at its heart and delivers for families and businesses.

Britain is already the world leader in offshore wind, with over 5GW operational, which could double by the end of the decade, with the UK on track to reach around 10GW by 2020. That supports a growing installation, development and blade-manufacturing industry that employs about 14,000 people, but there is clearly potential for many excellent new careers. The Secretary of State has provided what the offshore wind industry has been asking for: clarity. She announced last November that the Government would hold three further contract for difference auctions in this Parliament, with the first due to take place by the end of 2016. If costs come down sufficiently, the UK could support up to another 10GW of new offshore wind in the 2020s, which is a doubling of capacity.

The offshore wind industry must do its part in return for being provided with such long-term clarity. The technology needs to move quickly to cost-competitiveness. There will be no blank cheques. A priority is the UK supply chain playing a full part in enabling the offshore wind industry to drive towards cost-competitiveness. The industry exemplifies what the Government are trying to achieve: creating jobs and apprenticeships, and working towards full employment while delivering our decarbonisation targets—but not at any price.

The Government have set their new energy policy direction. Offshore wind developers fully understand the importance of UK companies securing economic benefit from our programme of development, and they agree that it is not unreasonable to want to see UK companies competing for this work, as they can then use the home market as the perfect launch pad to export their capability and expertise.

In conclusion, the Government are fully committed to the continued growth of UK offshore wind and its supply chain, and to building on the success that the region is already seeing. I congratulate my hon. Friend the Member for Cleethorpes once again on raising this important issue.

Question put and agreed to.