Offshore Renewables Wind Sector

Neale Hanvey Excerpts

Tuesday 30th November 2021 Westminster Hall

[Kenny MacAskill (East Lothian) (Alba)]

I beg to move,

That this House has considered securing employment and community benefit in the offshore renewables wind sector.

It is pleasure to serve under your chairmanship, Mr Betts. Today is St Andrew’s day, Scotland’s national day, when Scots at home and abroad celebrate their native land. There should be much to celebrate, as our nation has been blessed with natural bounty. Sadly, that bounty has not always been used for the benefit of the Scottish people. Decades ago, oil and gas were discovered off Scotland’s shores, as they were, across the North sea, off Norway’s. However, although Norway now possesses, from the proceeds, a fund for future generations that the world rightly envies, Scotland has seen its assets stripped and child poverty soar. Areas that should have been revitalised were instead deindustrialised. Nature’s bounty, which should have provided for all, was taken by the few, and what should have transformed our nation was squandered by Thatcher on smashing the unions and by Blair on waging illegal wars.

However, nature’s good fortune has seen another bounty come Scotland’s way, and once again the country has been blessed. For long, our geography was an impediment, seeing us distant from markets and facing additional costs, and our climate was a bind or even a danger, as last weekend’s winds displayed. However, our geography and climate are now also a natural bounty and blessing, offering opportunities and advantages held by few others. Onshore wind is well-established, wave and tidal energy are being developed, and offshore wind offers huge potential.

The Prime Minister has stated that he wants the UK to become the “Saudi Arabia of wind”. Indeed, the wind blows around the shores of the British Isles, as elsewhere, but Scotland has 25% of Europe’s—not just the UK’s—offshore wind potential, and it is off Scotland’s shores that the real boon is located. Where is the benefit for our country and communities? Where are the onshore jobs that should follow in its wake? Where are the industries that should be lured to locate and invest here? Moreover, where are the benefits for communities where the turbines can be seen from, are serviced by or where the energy comes ashore? What will accrue to them?

In many ways, East Lothian is a microcosm of Scotland in regard to this energy bounty. The Seagreen field is coming ashore at Cockenzie, as well as Neart na Gaoithe at Thorntonloch and Berwick Bank at Branxton, near Torness. These are not one or two turbines, or dozens, but hundreds. It is not only the numbers, but their size that is hugely impressive. These offshore turbines are almost 50% bigger than those sited onshore that people currently recognise. The power generated by them is massive too. It is claimed that Berwick Bank alone will boost Scotland’s renewable energy capacity by almost 30%. Such is its scale that Berwick Bank alone will be capable of powering 5 million homes. That is just under the population of Scotland, but more than double the number of Scottish households.

For Scotland is blessed with a surfeit of energy, as it had and indeed still has with oil and gas. It is capable of providing for all our own needs, but also providing for others beyond our borders. That is not just south of the border, but beyond the shores of these islands as it is a global energy market now. Having lost out on its oil and gas bounty, Scotland must not lose out on its offshore wind. Fool me once, shame on you; fool me twice, shame on me. It is why there must be action.

Scotland and its communities must benefit. Jobs must be created in providing for offshore wind generation. Work and industries must spring from being the point where the energy lands and where energy costs should be cheaper, and where it should be logical and economical to base a business. Communities that will face some disruption from the siting of the turbines offshore or the construction of transmission stations onshore must see tangible benefits from the wealth that will flow through them.

Sadly, that has not been happening, which is why the debate is required and the issues must be urgently addressed. I accept that not all responsibility or culpability rests with the Minister or his Government—although much does; I accept that the devolution landscape sees energy reserved, but planning devolved. Similar divides apply to industrial and fiscal policy. Accordingly, I do not exculpate the Scottish Government, who have failed to use their powers or demand the powers that are necessary. Their failure to deliver manufacturing jobs at BiFab or Arnish is shameful, but many more levers rest with the UK Government, which is why they too must act.

East Lothian may not have the yards, but Fife and almost every major Scottish estuary most certainly has. Scottish yards should be booming, building the turbines that are required. Some were shipyards, others came along through oil and gas installations, but all of them exist and others could be established. The skilled workforce is there, and it is crying out for this work and these jobs. The orders should be going to these yards, although I accept that such is the number of turbines required that not all of them could be constructed in Scotland. But as it is, only a few are being built in Scotland and most will be built south of the border in England, or abroad. That is simply not acceptable.

The UK Government are funding offshore wind manufacturing in Teesside and on the Humber. Around 1,000 people are employed at Siemens in Hull, and 750 people are employed at GE Renewable Energy on Teesside, with even more people indirectly employed in other jobs. They are providing for the Dogger Bank wind farm and other developments off the coast of north-east England. Good on them, I say, but where is the money for our yards and where are the jobs for the wind farms off our coasts? Levelling up seems to stop at the border.

Moreover, as the energy comes ashore, how will Scotland benefit? At the moment, there is cabling work going on at Branxton and in East Lothian. A cable is being constructed to take the energy directly from East Lothian to Redcar, in the north-east of England. A similar cable south is planned for energy coming ashore further north in Scotland from offshore wind farms located further north in the North sea. It is one thing sharing a bounty with others; it is quite another to be exploited and to see our natural resource being taken, with little benefit accruing to our land or our communities.

As well as the turbine manufacturing jobs, where is the onshore industry that should be springing up from being near to where clean and cheap energy is landing? Such industry will not locate in Scotland if the energy is just being cabled south, yet that seems to be what is planned.

Also, where is the benefit for the communities? One place in Scotland that did benefit from oil was Shetland. There, the council negotiated a small payment from the companies landing the oil at Sullom Voe. That impeded neither exploration nor extraction, having been set at a modest rate, which was a boon for communities without being a burden for developers. As a result, Shetland has facilities—such as schools and sports centres in small communities, and bus and ferry services—that larger and urban communities in Scotland can only look at and envy.

At present, onshore wind turbines attract community benefit from developments. Even a single turbine or just a few turbines onshore can see individuals and communities benefiting. But as it was no doubt never imagined that turbines would be sited offshore, no such system exists for offshore turbines. Why not? Surely communities are as entitled to benefit from those turbines that are off their shores as they are from those located on their land.

I know that communities on both sides of the border have entered into arrangements with developers, but two aspects remain outstanding and they must be addressed. First, community benefits should apply whether turbines are onshore or offshore; requiring such payments to be made to communities should be statutory and not made through guidance, or simply being voluntary or discretionary for the operator.

Secondly, the rate to be paid should also be set nationally and the money should be paid to the local council or community. It should be for them to decide where and on what they wish to spend their money; they should not be handouts from a developer, subject to the developer’s whim or fancy. Shetland shows that it can be done, and the benefit for Shetland’s communities shows why it must be done.

In summary, I seek to ensure that Scotland benefits from the renewables revolution off its shores, as it failed to do with the discovery of oil and gas. The North sea bounty must come to Scotland this time. First, what steps will the Minister take to ensure that funds are available to develop turbine manufacturing in Scotland, and to ensure that contracts for fields off Scotland’s shores go to local yards, as is happening in north-east England?

Secondly, what will the Minister do to ensure that Scotland benefits from job creation where the energy comes ashore, and not simply see the energy cabled south and the benefit enjoyed elsewhere?

Thirdly, what will be done to end the discrimination against Scottish sites caused by the absurd contracts for difference pricing regime that prejudices Scotland and will be referred to by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Neale Hanvey) in his comments?

Finally, will the Minister meet me to discuss how communities, whether in Scotland or elsewhere in the UK, can benefit from offshore wind as they do onshore wind through a regulated regime, and a set fiscal regime that will benefit those communities? This is a huge opportunity for Scotland. Our nation lost out on the benefits from its oil and gas; it must not lose out on this renewable windfall.

[Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)]

rose—

[Mr Clive Betts (in the Chair)]

I had not been informed that the hon. Member wished to speak. Has the hon. Member informed the mover and the Minister?

--- Later in debate ---

[Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)]

It is a pleasure to serve under your chairmanship, Mr Betts. I would like to thank and congratulate my hon. Friend the Member for East Lothian (Kenny MacAskill) on securing this important debate. On St Andrew’s day, it serves as a poignant opportunity to consider how right can prevail over might. Might and power can be used to silence and incarcerate, such as in the case of Craig Murray in Scotland, who tastes freedom once again this St Andrew’s day.

However, power and control can also be utilised to either stymie or enable the potential of a people and of a nation. My Kirkcaldy and Cowdenbeath constituency has a proud history of industry and endeavour, from the world-renowned Adam Smith to the linoleum factories of Nairn, and the Francis, Seafield, Kelty, Benarty and Cowdenbeath pits, to name just a few. Our folk do not fear work; indeed, they relish it.

In my youth, our folk worked doon the pits, on the ships, in the shipyards and on the docks of Methil, Burntisland and Rosyth, building rigs, servicing the naval fleet and working offshore. It was great industry, but this was crumbs from the table. From the Thatcher and Major Governments who put profit and privatisation before people at every turn, who put tax cuts for the wealthy before the financial security of a people, to the Blairite disaster capitalist adventure of illegal war-making in the middle east, and moving the Scottish maritime boundary, making 6,000 square miles of Scotland’s waters English.

I often hear Members from the Government Benches, and indeed Government Ministers, crow about our how our campaign for Scottish independence is a grievance. Well, they are right, and it is a fully justified grievance. All the evidence needed exists in the UK Government’s own archive, in the shape of the McCrone report that Scottish economist Gavin McCrone presented to the Heath Government in 1975, which revealed how North sea oil would make an independent Scotland as prosperous as Switzerland.

The facts show that Scotland has been robbed of the embarrassment of riches that North sea oil and gas could have provided to her people. We just have to look to Norway to see that reality. Why should the Scottish people believe a single word that any Westminster Government utter when history provides every bit of evidence necessary to demonstrate how easily false promises and vows can be discarded and broken?

Instead, we have escalating child poverty; a pernicious and vicious welfare state; and threats to the little control we do possess through Trojan horse policies such as the United Kingdom Internal Market Act 2020. None of this is helped by a supine devolved Government who seem to have given up on even talking a good game. The people of Scotland deserve so much better than this.

Just off the Fife shore, a green industrial revolution is taking place, but all that my constituents can do is observe. It has delivered no meaningful employment to our communities, and the only announcement to date from this Government was more crumbs from the table in the shape of offshore jobs for service engineers. That lack of ambition is sadly reflected back from organisations such as Renewables Scotland, which claims that Scotland has missed the chance to lead the charge on renewables and can only hope for domestic service engineer jobs. This is scandalous. Scotland is being plundered yet again, while our people suffer real harm as a consequence of the acts and omissions of their supposed Governments.

Scotland is replete with natural resources that, with focus and investment, could lay the foundations for national prosperity, as the transition towards a greener, more sustainable future gathers pace. Fife’s skilled workforce, proximity to offshore development sites and established fabrication facilities mean that the kingdom is perfectly placed on the Forth estuary to be at the forefront of the marine and green energy revolution. Harnessing the established and potential assets on all shores of the firth of Forth is key to enabling Scotland to end its dependency on fossil fuels and establishing a thriving, green energy-based economy.

In the context of the climate emergency, there is growing evidence that political, public and corporate priorities are beginning to align. Thus, a compelling case now exists for Scotland to further its ambitions towards a prosperous, zero-carbon economy. For this to be truly realised, any such prosperity must seek to build tangible local results, such as high-quality employment, world-leading research and development, and a national prosperity fund. We must not allow the Scottish people to be denied the benefits of an energy boom by remote or disengaged Governments again.

My constituency has the potential and is bursting with ambition. Brexit has neutralised the excuse of state aid, but there has been no change to contracts for difference and no conditionality on local employment or supply chains. Transmission costs are driving investment away, so there is a need to rapidly consider viable alternatives, such as microgrids, which generate and deliver energy locally, creating jobs and driving community prosperity.

In the green energy revolution, Scotland is again well positioned to benefit and lead the charge. With less than 1% of Europe’s population, Scotland possesses 33% of Europe’s carbon storage potential, 25% of Europe’s offshore wind resources, 25% of Europe’s tidal energy resources and 10% of Europe’s wave energy potential, but yet again it is Westminster that stands in our way.

Scotland’s oil and gas sector has been unbelievably badly managed by successive UK Governments and we cannot allow this opportunity to be squandered by yet more Westminster Governments that see Scotland’s wealth as something to be exploited, rather than stewarded and safeguarded for future generations. Only by taking full control of our future will the renewable sector reach its full potential, so our people can lift their gaze and realise their full potential.

[Mr Clive Betts (in the Chair)]

Order. The Minister needs a reasonable amount of time to finish and he was unaware that you were going to speak in this debate, Mr Hanvey. Can you conclude now please?

[Neale Hanvey]

I am concluding now and I have fewer than 50 words to say.

I do not expect a particularly constructive or useful response from the Government, but that is okay because any indifference, dismissal or vague commitment serves only to strengthen the argument in favour of independence as a route to prosperity. Scotland’s natural wealth will be one of the key foundations of our future prosperity as an independent nation. There is much work to do but opportunities galore for Scotland, for Fife, and for Kirkcaldy and Cowdenbeath.

[The Minister of State, Department for Business, Energy and Industrial Strategy (Greg Hands)]

I begin by congratulating the hon. Member for East Lothian (Kenny MacAskill) on securing this important debate.

We know that renewable electricity generation is essential to the decarbonisation of the power sector and the UK’s efforts to reduce greenhouse gas emissions and reach net zero, which was recently discussed in Scotland at COP26 in Glasgow, which I was delighted to attend on behalf of the UK Government. Offshore wind will be a vitally important tool in creating the low-cost, net zero energy system of the future.

We can be enormously proud that the UK offshore wind industry has already made great strides, in terms of both the production of major turbine components and their deployment, moving from installing about one turbine every week to about one every single day. Turbine sizes have grown by 700%, from 2 MW to 15 MW. Alongside this, the costs of offshore wind have fallen dramatically since 2015. The first contract for difference allocation round cleared at around £114 per megawatt-hour. In the last round, in 2019, that fell to less than £40 per megawatt-hour. That is a reduction of around two thirds to 70% in the cost of offshore wind. It has been a resounding success, and we expect both the increasing scale of turbines and cost reduction to continue.

I agree with the hon. Member for East Lothian that it is absolutely right that local communities should benefit economically from major new manufacturing infrastructure projects. We want to see thousands of people all over the country working in new green, high-quality jobs in our renewables sector. Therefore, the Government are investing heavily to support the offshore wind sector, from innovation to the manufacture of major wind turbine components, all the way through to the deployment and connection to the grid.

Let me deal with a few of the points raised. I will first stress that these decisions taken by the UK Government have brought huge benefits. When I was at the Treasury in 2015, a lot of the decision making behind contracts for difference was controversial. Working with the Department for Business, Innovation and Skills, as it then was, we thought that the CfD regime would lead to a big boost in the UK’s renewable energy and, by scaling up, would reduce costs, both of the energy produced and that of building the infrastructure. We turned out to be right on that.

There was also investment brought in by the UK Government. When I was at the Department for International Trade, for four or five years, I was going around getting investment into the UK offshore wind sector, particularly from European countries, such as Spain and Denmark, and companies looking to invest in this country. A key part of that has been to ensure that the supply chain also benefits the United Kingdom overall, including Scotland. About 60% or more of the supply chain is based in the UK. A lot of the key decisions have been the right ones taken by the UK Government.

The hon. Member for East Lothian raised a point about Wick harbour. We have seen that harbour revitalised by the development of the Beatrice offshore wind project. As more projects are developed north of the border, we expect similar benefits to be realised for other harbours. We heard from the hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey), who provided a long history—a tour de force—that started with Ted Heath, moved through Margaret Thatcher and John Major, and ended with him describing the Scottish Government as a “supine devolved Government”. The hon. Gentleman mentioned the word “grievance” and said it was not one, but I think he is lumping grievance on to grievance. His latest grievance is with the Scottish Government, not just that of the UK.

Offshore wind has a central role in the Government’s decarbonisation and levelling-up ambitions. Developing the economic benefits that the UK derives from offshore wind took prime position in the Prime Minister’s 10-point plan for a green industrial revolution, published this time last year. The 10-point plan also includes a target to deploy 1 GW of floating wind in the UK by 2030, as a stepping-stone to further growth through the 2030s and beyond.

The hon. Gentleman for East Lothian mentioned the potential of the sector, but it is not just the potential; it is the reality. The UK has the world’s largest installed offshore wind capacity—we are No. 1. As the Prime Minister says, we are the Saudi Arabia of wind. It is not just potential but a realised thing that is happening every day. We are not content with just 10 GW; we have a commitment to quadruple that over the next decade, to 40 GW. Scotland will play a massive role in that commitment.

Last month the Prime Minister announced up to £160 million in new funding to support the development of large-scale floating offshore wind ports and factories all over the UK. That follows on from the success of the offshore wind manufacturing investment support scheme, which has so far this year enabled the announcement of two major port hubs, and six offshore wind manufacturing investments, representing £1.5 billion in public and private sector investment, and set to support up to 3,600 jobs in deprived areas of the UK by 2030.

Scotland, as we know, has a very rich industrial heritage, and I am confident that the skills already present in Scotland, proven over the decades in the oil and gas sector, will be transferred into a world-leading capability in manufacturing for the offshore wind sector— a key part of our North sea transition deal. Yesterday I chaired the North Sea Transition Forum with the industry, Oil & Gas UK, the Oil and Gas Authority and the Scottish Government.

The point is that to make that transition means recognising the fantastic skillset. One of my first visits in this role was to Aberdeen, where I saw that skillset at first hand, working with a lot of the incredible universities—I visited Robert Gordon University, for example, whose transition unit is working on how we transfer the skills that have been vital for the UK as a whole and Scotland in particular for the past 50 years over to sectors such as offshore wind. The answer is that there is a lot of overlap between offshore hydrocarbons and offshore wind, but making that transition is a key part, and there are many people helping to deliver that.

That is why the North sea transition deal announced in March contains key commitments on skills, including a commitment from the oil and gas sector to develop an integrated people and skills plan by March 2022, to support the sector’s transition and diversification. Both Government and the sector have also committed to supporting the work of the Energy Skills Alliance. Its work will address, among other things, future skills demands of new energy sectors, all-energy training and standards and all-energy apprenticeships.

In particular, Scotland could benefit greatly from nascent technologies on the horizon. I mention floating offshore wind again, but just last week we announced a £20 million ring-fenced contract for difference fund for tidal. There is huge potential for Scotland to take advantage of its excellent geography. The same extends to parts of Wales and the Isle of Wight and other particular parts of the UK that have excellent tidal resources. We announced a ring-fenced pot within the next CfD auction for tidal energy.

[Neale Hanvey]

Will the Minister give way?

[Greg Hands]

I do not think I have time—I am afraid I only have one minute, and the hon. Gentleman got a pretty fair crack of the whip earlier, to be frank.

Floating offshore wind is an area that has already inspired huge interest from developers in Scotland—hardly surprising, given the rich deep-water resource and manufacturing capability in Scotland. It is no coincidence that the world’s two largest floating offshore wind arrays, Hywind and Kincardine, have been developed in Scottish waters. The Celtic sea is also a major development opportunity.

Decisions on how specific projects can deliver local benefits are generally a matter for developers—a point raised by the hon. Member for East Lothian. However, we want developers and operators to provide community benefits consistent with relevant guidance and good practice principles, building on experience in other renewables sectors.

This debate is testament to the strong cross-party agreement that we want to leverage the UK’s world-leading offshore wind sector, to maximise the economic benefits enjoyed by our coastal communities across the UK, including in Scotland. I close by thanking the hon. Gentleman again for securing this enlightening and important debate.

Motion lapsed (Standing Order No. 10(6)).