Green Energy: Ports

Stephen Kinnock Excerpts

Wednesday 18th October 2023 Westminster Hall

[Stephen Kinnock (Aberavon) (Lab)]

It is a pleasure to serve under your chairship, Mrs Cummins. I thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for securing this vital debate. It has been a real pleasure working with him cross-party in the interests of our two communities, and communities right across the south Wales corridor and the whole of Wales and the United Kingdom. What we are discussing today genuinely has UK-wide significance. We worked together to develop and deliver the successful Celtic freeport bid, and I look forward to further collaborating on maximising the benefits it will bring.

Britain’s ports are both the gateways and the drivers of so much economic activity in the UK and, in turn, are crucial to the prosperity of British people and their families. From the food shipped into Britain’s supermarket shelves to the exporting of British goods sold overseas, our ports play a crucial role both in the everyday lives of families across the UK and in the growth and success of hundreds of thousands of British businesses. As well as adding close to £7 billion to the UK economy, ports employ more than 100,000 people directly, and more than that again in their supply chains, meaning that they are pivotal to supporting local economies and providing communities with good job opportunities. British ports transport around 60 million international and domestic tourists in and out of the country every year.

Today I want to focus on the once-in-a-generation opportunity represented by the new industry of floating offshore wind and the crucial role that the ports will play. The Celtic sea and Wales’s geography offer us a significant competitive advantage that we cannot afford to squander. We must seize this opportunity to place ourselves at the forefront of the green industrial revolution, just as Wales was the cradle of the first industrial revolution two centuries ago. Floating offshore wind has the potential to deliver 16,000 new jobs and could land £1.7 billion of investment in port infrastructure and manufacturing in south Wales. FLOW offers the opportunity to unlock a truly game-changing £54 billion of investment into the UK economy, with the Crown Estate aiming for approximately 25 GW by 2045. Indeed, the first 1 GW of projects alone is anticipated to create 5,000 jobs.

Our Port Talbot port has both the space and the steel to manufacture these giant structures, while Milford Haven, as the right hon. Member has pointed out, can provide energy storage facilities and a whole range of other vital components for this huge opportunity. This is a global market and we are in a global race for green investment. Port infrastructure needs to be ready ahead of time to capture first-mover advantage for Wales, so that we can land investment in port infrastructure and manufacturing to generate good job opportunities and deliver energy security. Without the first-mover advantage, Wales and the UK risk repeating the experience of earlier waves of offshore and onshore wind development, where the jobs and investment ended up going to other countries.

So what do we need to do to seize these opportunities? First, we need to make sure that the port infrastructure is built. The port and the prospective developers need certainty. They need assurances that the market will reach its full 24 GW capacity. Of course, the first round of FLOW, as confirmed by the Crown Estate, is only set at 4.5 GW, but it is the long-term line of sight on this and the pipeline that we really need to focus on. Associated British Ports is developing its plans for Port Talbot at pace, investing more than £500 million in developing a major floating offshore wind integration assembly port and a wider green energy hub. But the length of the leasing window by the Crown Estate is of crucial importance. We need a clear outline of the development window to that 24 GW target for flow in the Celtic sea. This is to act as a clear signal in that FLOW global market. Could I ask the Minister to outline the steps he is taking to secure clarity about the long-term pipeline?

Secondly, Wales must get its fair share of the floating offshore wind manufacturing investment scheme programme. There is a pot totalling £160 million for the whole of the UK. Welsh ports must get their fair share of that pot. It is critical that the UK Government understand the enormous potential for Welsh ports to deliver this game-changing new industry. We need the UK Government to back the two very strong bids from Port Talbot and Milford Haven for FLOWMIS funding. Could the Minister update us on FLOWMIS and assure us that Wales will get its fair share?

Thirdly, Aberavon in Wales will secure maximum benefit from floating offshore wind only if the developers are held to firm supply chain commitments. The Crown Estate must get this right when awarding licences. We must ensure that local supply chains are developed for the manufacture of turbines and their sub-structures as well as their operation and maintenance. We cannot have a situation, for example, where these structures are built in China or somewhere else and merely assembled and serviced at Welsh ports. That is the case with the Scottish SSE wind farms, for example, which use no British steel whatever. We must use local steel. Tata Steel can adapt and reconfigure its production processes if it knows what the order book looks like, but it needs that advance warning. Could I ask the Minister to tell us what steps he is taking to secure those supply chain commitments right from the outset of the Crown Estate licensing process?

--- Later in debate ---

[Judith Cummins (in the Chair)]

The debate may now continue until 4.15 pm.

[Stephen Kinnock]

Thank you, Mrs Cummins. I will try to pick up where I left off.

On the planning side, the Government need to find a solution to the national grid’s capacity issues. The National Grid says it has to develop up to five times as much energy infrastructure over the next seven years as it has developed over the past 30 years, such is the clamour for net zero projects, in terms of both energy generation and demand. How will the UK Government and, more specifically, the Minister work with the National Grid to end the gridlock, and how will they send a clear message to developers that these problems are going to be fixed?

That brings me to my next point, which is about the administrative strike price. Allocation round 5 was a shambles, with no bidders for offshore wind. We need the UK Government urgently to reshape the contracts for difference for AR6 and make them more attractive to developers if we are to realise Britain’s potential to become a world leader on FLOW.

Finally, the UK and Welsh Governments must work collaboratively. We cannot allow bureaucracy to slow us down. Planning and consenting for major infrastructure is devolved. We need the UK Government to look for ways to support the Welsh Government to ensure that current capacity and resource blockages for planning and consenting are resolved to ensure that the seabed licensing is accelerated and that port infrastructure in Wales is ready in time. We also need strong cross-Whitehall co-ordination. I worry that the large number of Government Departments involved means that the process is not as streamlined as it should be. Perhaps the Minister could say what he will do to knock heads together to unlock all of the blockages.

This is a huge, game-changing opportunity for Aberavon, Wales and the entire United Kingdom. Ports play an absolutely crucial role in this opportunity. I look forward to the Minister’s comments so that we can find a pathway towards maximising the opportunities before us.

[Several hon. Members rose—]

--- Later in debate ---

[Graham Stuart]

I will not.

The offshore renewable energy catapult has estimated that floating offshore wind could deliver more than £40 billion for our economy by 2050, creating about 30,000 jobs in the process. We are moving at pace to deliver those benefits, with more than 25 GW of floating wind projects with confirmed seabed exclusivity—the most in the world. The last thing we need to introduce into the excellent track record and system for bringing in private sector investment from all over the world—which we are proud of—is Labour’s plans for Great British Energy clunking into a carefully calibrated set of market mechanisms. That will have exactly the opposite effect of the objectives that the shadow Minister, the hon. Member for Manchester, Withington, set out.

Going further, the Crown Estate has announced its plans to hold a seabed leasing round in the Celtic sea, capable of supporting up to a further 4.5 GW, as we have heard. We also understand the importance to investors of certainty on a long-term leasing pipeline. If they can see the scale, we can get large-scale investment. We are acutely aware of that issue and are working closely with the Crown Estate and with other Government Departments. We must ensure that the multiple uses of our seas are thoroughly considered, so that we can then provide the visibility to unlock investments in ports, which will then unlock further investment.

The Government recognise the critical role that ports will play in achieving our green energy ambitions and the importance of securing investment in the infrastructure. They will also be a big enabler for offshore wind and a catalyst for wider supply chain development.

[Stephen Kinnock]

rose—

[Graham Stuart]

I think I am about to be cut off. Are we finishing at 4 pm?

[Graham Stuart]

Then I would be delighted to give way.

[Stephen Kinnock]

I am sure that the Minister is absolutely delighted that the voting interruption has given us some additional time. He was talking about floating offshore wind infrastructure. I do not know if he is coming to this, but I asked about grid capacity. There are real concerns that there will not be the grid capacity to facilitate all this, which is having an impact on developers’ thinking, too. What comments does he have on that?