Marine Renewables: Government Support

Philip Hollobone Excerpts

Wednesday 7th December 2022 Westminster Hall

[Mr Carmichael]

If the hon. Member wants to send me his CV, I will keep it on file for when I next have a vacancy for a speech writer. I am at risk of being too consensual, but he knows my views on this and we have to find a way to recognise that in energy security there is no silver bullet. Contributions will be made by all sectors on the journey towards net zero.

The Offshore Renewable Energy Catapult estimates that the UK’s tidal stream industry could support 4,000 jobs by 2030 and 14,500 by 2040. Those high-wage, high-value jobs would be focused on coastal areas. UK tidal stream projects use an average 80% UK content in the world-leading arrays, creating supply chain with high rates of return on public investment. As with offshore wind, the supply chain is widely dispersed across the UK—for example, Leask Marine is a vessel charter, commercial diving and international marine construction service based in Kirkwall, but it operates around the world.

Being the world leader in developing tidal stream technologies, the UK is well placed to capitalise on exports to future global markets, including Canada and Japan, in which the sector has already secured export orders. Nova Innovation has a presence in Shetland, but, from its Edinburgh base, it is already working to export to Nova Scotia and Canada—part of a 15-turbine order.

Marine energy provides a particularly competitive solution for countries with islands or remote populations that depend on expensive and polluting diesel generation. The energy innovation needs assessment of tidal stream, commissioned by the Minister’s Department, estimated that growth of UK tidal stream exports could add more than £540 million gross value added and nearly 5,000 jobs per annum by 2050.

I hope the House will forgive me for labouring the point, but that is the potential that sits within our grasp. That is where we want to get to. The question, then, is how. The marine renewables sector has a number of clear and well-formed asks of the Government, one short term and three for the longer term. The most immediately important is the need for an early indication of the Government’s intentions with regard to the continuation of the ringfenced pot for tidal stream in their upcoming contracts for difference allocation round 5.

The creation of that £20 million pot has been enormously important to unlocking private sector finance for the sector, and the sector itself has been able to be creative in the financial instruments it has devised to take advantage of that. Maintaining that investor confidence is critical, and an early and positive announcement on allocation round 5 is essential for that confidence. I would be delighted to hear something about that from the Minister today, although I am prepared to be realistic even though it is almost Christmas. However, an indication of when an announcement might be made would be welcome not just in the House, but in the wider industry.

In the longer term, the industry is looking for contracts for difference options to be reformed in a way that rewarded projects with significant UK content, which would enable it to trigger new manufacturing investment or support innovation in the supply chain. It also seeks a commitment from the Government to a target of 1 GW of marine energy by 2035. Again, that would give confidence to investors that the UK intends to remain the leader in tidal stream.

That 1 GW represents a significant threshold, because it is the point at which it is forecast that tidal stream is expected to become lower cost than new nuclear. The United Kingdom, Scottish and Welsh Governments should work together to expedite the process for new tidal stream sites to ensure development can continue at pace. Pace is important, and the Minister can use his office to work across Government and between Governments to remove some of the forces that are currently a drag on the pace of development.

In its briefing for this debate, Nova Innovation called for the speeding up of CfD timescales and consent processing for tidal stream sites. Section 36 consent, which is required to qualify for a CfD, takes at least three years. That is driven by the requirement for two years of bird and mammal surveys and the nine-plus months it takes to receive a consent decision—it is often much longer in practice. In contrast, the EU target is three months for renewable energy project consent. Section 36 is required only for onshore projects greater than 50 MW, but the offshore limit is 1 MW.

Overall, it takes at least six years from conception to the commissioning of a UK tidal energy site. That timeline is similar across the nations of the UK. In contrast, developers in Canada can go from a greenfield site to first power in two to three years. That puts the UK at a competitive disadvantage for project investment and we risk losing our lead in tidal energy. We should also increase the pace and scale of investment in the UK’s electricity grid so it does not remain a constraint on renewable energy development.

EMEC provides state-of-the-art testing facilities for tidal stream and wave technologies. It plays a pivotal role in supporting the development of the UK’s marine energy sector. The UK leads the way in marine energy as a result of our innovative UK tidal and wave companies, our well-developed project portfolio and our excellent natural resources. EMEC’s activities have been made possible by the support it receives through EU structural funding—specifically funding from the EU Interreg programme. Between 2016 and 2020, that was £17.4 million.

Interreg projects account for 51.9% of EMEC’s overall funding. Obviously, that funding will soon come to an end, so it is imperative that a clear replacement is established to secure its long-term future. The discontinuation of our participation in the EU Interreg programme has presented EMEC with a cliff edge in access to the grant funding supporting the operation and growth of the test centre.

EMEC is taking proactive steps to mitigate the lost funding from Interreg, but—let’s be serious—it will not make good all the lost funds. Direct revenue funding of £1.5 million a year for four years to replace the Interreg gap will enable EMEC to preserve the high-quality jobs and the growth sector, supporting levelling up, protecting that internationally accredited and strategically located facility, and providing recognition as a national asset in pursuit of the UK’s aspirations to be a global research and development superpower. It will allow EMEC to enable further growth and diversification in new technology areas, including wave and tidal array testing, green hydrogen integration, maritime and aviation decarbonisation, and floating offshore wind research and innovation, all with the aim of developing the domestic supply chain and the manufacturing capability of UK plc as a whole in the pursuit of economic growth and reaching net zero.

The replacement of Interreg funding is something of a lonely child when it comes to Government responsibility; it seems to sit between a number of departmental responsibilities. Although the response today is from BEIS, I am aware that the Levelling Up Secretary has an important role. He will be coming to Orkney in January for the final signing of the much-welcomed islands growth deal, and I look forward to raising Interreg with him then if we have not been able to make progress beforehand. Officials in the Minister’s Department have been fully apprised of the situation, so I hope we will be able to work together to ensure EMEC’s critical work is allowed to continue and that the cliff edge in the funding set-up can be avoided.

The marine renewable sector’s asks are far from extravagant. This is the time to capitalise on the lead that the sector has given us as a country, commit to the policies that will expand our reach and make tidal stream innovation the icon of the UK economy that we know that it can be.

[Mr Philip Hollobone (in the Chair)]

The debate can last until 11 am, and I am obliged to call the Front Benches no later than 10.27 am. The guidelines are to allow 10 minutes for the SNP, 10 minutes for His Majesty’s Opposition and 10 minutes for the Minister. Alastair Carmichael will have three minutes or so at the end to sum up the debate.

--- Later in debate ---

[Wera Hobhouse]

I absolutely agree, and I thank the hon. Gentleman for making that exact point. How can we make sure that renewable energy technologies get the same support that the Government are giving to other forms of energy? I like to think that we all agree on the need to accelerate and turbocharge our renewable energy sector. My criticism of the Government—and the Minister is aware of this—is that we are not prioritising getting away from fossil fuel energy as soon as possible. That is my point, and it needs to be made again and again. I make that point at every opportunity to ensure that the Government understand the urgency that the climate emergency requires.

While we are at it, I want to quickly mention one of my particular interests, which is community energy—

[Mr Philip Hollobone (in the Chair)]

Order. I have been generous in allowing the hon. Lady some breadth in her contribution, but this is a debate about marine renewables—I am struggling to see how community energy could possibly fit in. The hon. Lady might want to consider what she says next.

[Wera Hobhouse]

Thank you for your advice, Mr Hollobone.

I will wind up by saying one thing: I absolutely support the development of marine energy and welcome all the support the Government can give it. I look forward to the Minister’s response.