Kenny MacAskill (East Lothian) (Alba) I beg to move, That this
House has considered the level of public ownership in the offshore
wind sector. It is a pleasure to serve under your chairmanship, Mr
Dowd. When a natural bounty is discovered, it is only right that a
nation and its people should benefit from it, not simply
corporations and investors. The fruits of land and sea should
benefit all, not just the few. Scotland has been fortunate, blessed
first with North...Request free trial
(East Lothian) (Alba)
I beg to move,
That this House has considered the level of public ownership in
the offshore wind sector.
It is a pleasure to serve under your chairmanship, Mr Dowd. When
a natural bounty is discovered, it is only right that a nation
and its people should benefit from it, not simply corporations
and investors. The fruits of land and sea should benefit all, not
just the few. Scotland has been fortunate, blessed first with
North sea oil and now renewable energy, in particular offshore
wind, a further natural resource offering great opportunities and
at such an extent that it should be transformative. A recent
Prime Minister even used the phrase, the “Saudi Arabia of
wind”.
Other nations have shown what can and should be done. Scotland
discovered oil at the same time as Norway, but now Scots can look
only with envy, not just at the standard of living of their
Nordic counterparts but at the Norwegian oil fund. Now valued at
$1.4 trillion, it is suggested that it owns, on average, 1.5% of
every listed company in the world. The British National Oil
Corporation was sold off, while Equinor, owned by the Norwegian
state, goes from strength to strength. Funds that should have
seen Scotland bloom were instead used by Thatcher to smash
organised labour and by New Labour to wage illegal wars. That
must not happen with offshore wind. The people of Scotland must
benefit, not just multinationals.
Norway has shown what should be done with oil and gas. Denmark is
showing what can be done with offshore wind by taking a 20% stake
in every new offshore wind development—this is not North Korea,
but a European democracy. It has not seen investors flee. This
also shows that public ownership does not have to be just a state
energy company operating sites, desirable as that is, but can
include actions such as this, which ensure that people and their
nation gain from their natural resources—benefits for the many,
not exploitation by the few.
(Strangford) (DUP)
I thank the hon. Gentleman for securing the debate. The private
sector will invest some £60.8 billion across the UK over the next
five years in developing and operating offshore wind projects.
Does the hon. Member agree—from the way he is talking, I think he
does—that whether investment is public or private, all devolved
nations of the United Kingdom of Great Britain and Northern
Ireland must benefit from any potential funding and that that
would ensure a boost in jobs and increased sustainability for the
renewable energy sector?
Of course; this should benefit our people. As I said, it is not
just down to state energy companies, desirable though that is.
This has to be done through the private sector, but as Denmark
and Norway have shown, the state can take a share and state
companies can be involved. That should be happening here, but the
UK Government remain wedded to a privatisation route that has
created a dysfunctional energy sector that we are all now paying
for.
A Scottish energy company was promised by the Scottish National
party and then shamefully abandoned. It must be delivered.
Publicly owned and state companies are operating in the UK and
the Scottish offshore wind sector. The absurdity is that they are
neither Scottish nor from the UK. They are foreign state firms
operating in Scottish and UK waters, delivering profits not for
Governments in Edinburgh or London, but furth of these shores and
with the wealth benefiting lands far from here.
Let me narrate the situation at the Neart na Gaoithe offshore
wind farm. Despite the Gaelic name, it is located in the firth of
Forth, between my constituency and that of my hon. Friend the
Member for Kirkcaldy and Cowdenbeath (). Pillars and turbines are
now visible, and the energy is coming ashore at Innerwick, just
along from where I reside in Dunbar. That is all good, we might
think, but who owns it? It is operated by two state-owned
companies. One is EDF Energy, the French state-owned energy
company that also happens to own Torness nuclear power station
just along the road and adjacent to where the energy comes
ashore. State ownership is not opposed, it seems, so long as it
is someone else’s.
The other organisation is the Electricity Supply Board, or ESB,
which is the majority publicly owned energy company of the
Republic of Ireland. The Irish consul general in Edinburgh tells
me that ESB’s investment in the firth of Forth is that state
company’s largest ever investment outwith Ireland. We have the
perversity that the wealth and profits that are generated will
not come to Edinburgh or London and will not benefit Scottish or
UK citizens. Instead, they will flow to Paris and Dublin, and the
citizens of Ireland and France will reap the benefit that nature
bestowed upon us.
Of course, big energy multinationals are also involved: SSE,
Scottish Power, which in fact is owned by Iberdrola from Spain,
and BP, among many others. However, state-owned firms from other
lands are also there and many of them are significantly bigger
than the Irish Electricity Supply Board—I do not intend to
denigrate ESB—which has done well to provide for Ireland’s
people. It is a lesson that Scotland must learn. As in so many
other aspects, our Irish cousins, although blessed with less,
have delivered so much more.
Neart na Gaoithe is not alone in this charade, where a Government
opposed to state-owned energy companies allows foreign
state-owned energy companies to profit and perhaps even plunder
with abandon. It is a dereliction of duty and the price is paid
not just in the loss of profits, but in the scandalously high
prices paid by struggling families who are trying to power their
homes. Many of them live in places where they can see the
turbines off their shores or where they are in the lea of those
turbines that operate on the land—energy-rich Scotland, fuel-poor
Scots, indeed.
It is not only France and Ireland that receive a warm welcome,
despite the Government’s political antipathy towards a
nationalised energy sector. Research by the House of Commons
Library has disclosed that in UK offshore waters, the
state-controlled Danish company Ørsted and the Norwegian state
operator Equinor own the largest shares of UK offshore wind, at
20.4% and 9.2% respectively. UK public entities own 0.03%.
(Cynon Valley) (Lab)
I congratulate the hon. Gentleman on securing this debate. I will
make two points and then I would like to put a couple of
questions to the Minister. Today’s debate is very—
(in the Chair)
Order. This is an intervention on the hon. Member for East
Lothian (), not on the Minister, and
you will have to keep the intervention short as well.
Okay. I will address the questions to the hon. Gentleman.
Hon. Members will agree that this debate is timely, following the
confirmation last week that there were no bids for new offshore
wind development in the latest auction round, which means that
the Government are criminally behind the curve when it comes to
reaching 50 GW of offshore wind power generation by 2023. That
has resulted in delays for the Erebus wind farm in my country of
Wales. First of all, does the hon. Gentleman agree that last
week’s announcement demonstrated that—
(in the Chair)
Order. I am sorry—you will have to sit down, please. An
intervention is made to ask a question of a Member; it should not
be a small speech. It has to be very short, because the debate is
only for half an hour. An intervention is not an alternative
method of making a speech—it has to be a question.
Okay. In terms of the future of wind energy and renewable energy
in my country of Wales, does the hon. Gentleman agree that now is
the time that the Crown Estate and its administration is devolved
to Wales, as it is in Scotland, so that we can disburse the
moneys as we see fit?
I think that where Scotland goes, Wales should follow. It is
remiss that Wales does not have control over the money coming
from the Crown Estate, and I certainly hope that Wales follows
Scotland in that regard, as indeed the UK should in the
establishment of a state energy company. The hon. Lady’s point is
well made and correct.
I am concentrating on Scottish waters, where the Scottish
Government’s ScotWind auction sold offshore wind farms at
absurdly low prices, compounding the perversity of failing to
deliver a state energy company, yet Scotland’s offshore wind
resource has six state companies operating within it.
Along the A1 from Innerwick in Cockenzie, in my East Lothian
constituency, energy will land from the Inchcape wind farm,
which, again, is in the firth of Forth. Inchcape is owned by Red
Rock Power, which is a European subsidiary of SDIC Power from
Beijing. SDIC Power Holdings Co. Ltd is a listed company on the
Shanghai stock exchange, but it is a state-controlled enterprise,
with the Chinese Government holding more than 49% of its shares.
The UK Government frown not just on public ownership, but on
communism, yet it is fine for a state-owned company from
communist China to benefit from Scotland’s offshore resource. You
couldn’t make it up!
There are three more. Further north, Aberdeen offshore windfarm,
off the Aberdeenshire coast, has 58 turbines turning and is owned
by Vattenfall, thus generating wealth for the Swedish people.
Vattenfall is 100% owned by the Swedish state. That shows that
not just communist countries, but even ones with conservative
Governments benefit from state ownership.
Sited further north of Peterhead is Hywind, a development in
which Masdar holds a 25% stake, with 75% held by Equinor. Equinor
is a Norwegian state energy company that benefits its people
through the gas and oil resources in Norwegian waters, but adds
to that through expansion into Scotland’s offshore wind. Again,
Hywind is a joint enterprise, with two state-owned companies
co-operating to exploit Scotland’s natural resource. Masdar, also
known as the Abu Dhabi Future Energy Company, is a UAE
Government-owned company, which is securing Abu Dhabi’s future,
not Scotland’s.
In those fields—some already operating and others being
developed—we have the absurdity of foreign state ownership of
Scotland’s natural resource, and it is costing us. The
organisation Common Wealth, in its paper “Power to the People:
The Case for a Publicly Owned Generation Company” noted in 2021
that
“our energy bills combined with Contracts for Difference payments
contributed £2.56 billion in payments to offshore wind generators
owned by foreign state entities.”
Meanwhile, we are told that ownership does not matter, although
it matters to the Governments of Sweden, Norway, France, Ireland,
China and the UAE. They seem to see the benefit of not just
managing their but our natural resource. Why? Because it
underpins energy security, provides affordable energy for
households and businesses, supports a just transition from fossil
fuel to renewables, and allows for investment in technologies.
All that helps hard-pressed households, boosts indigenous
business and creates a more vibrant and competitive economy. It
need not be outright ownership, welcome though that would be; as
Denmark shows, a stake can be taken, allowing the nation and its
people to benefit and prosper from their natural bounty.
It is about not just slippage of profits and wealth to foreign
shores, but loss of control and influence over our natural
resource. The evidence shows that we are losing out in more ways
than simply the profit. Scotland is losing the turbine
manufacturing. A few turbines are to be built at Nigg, but
meanwhile hundreds of commissioned orders are going elsewhere.
Yards such as Arnish and BiFab lie empty, even when proximate to
the site. Not one turbine for a Forth field will be constructed
in Scotland. Assembly is a poor substitute for manufacture,
seeing lower profit and requiring less skilled labour. Every
firth in Scotland should be manufacturing turbines and expanding
to meet growing need, yet other than at Nigg, they lie idle and
our folk face unemployment and our land a loss of skills.
Benefits from the supply chain is a mantra from the UK
Government, shamefully echoed by their Scottish counterparts, but
it is not borne out in practice. In my constituency, where the
turbines offshore are visible and the horizon will change
irrevocably, no work is being generated. What should benefit
current and future generations instead sees folk unable to heat
their homes and youngsters struggling to access skilled
employment. Local business have not benefited and new businesses
in the sector are not being created, either to deal with the
offshore work, or to provide onshore opportunities through long
duration battery storage or hydrogen production.
Let us look one of the sites owned by foreign state companies to
confirm that. Neart na Gaoithe, which is owned by EDF from France
and ESB from Ireland, is seeing the work go elsewhere. The
turbines are being produced at Siemens in Humberside, albeit
assembled in Dundee, with the foundations laid by Saipem from
Italy. They are being taken out to the field by Fred. Olsen
Renewables, and the cabling is being done by DEME Offshore from
Belgium. Where are the contracts for Scottish businesses and the
work for local folk?
There should be a Scottish state energy company and it should
operate and take a share in all the fields that are being
developed. Other nations do it and, as I have shown, are doing it
in our waters. Denmark, with both its company and its public
stake, is showing what can be done, just as Norway showed what
could be achieved with an oil and gas bounty. Scotland has lost
out on the former but must not do so with the latter. The bounty
from the energy off our shores must benefit our people, not just
corporations or even state companies from other lands.
The great Scottish comedian Billy Connolly penned a song,
“Sergeant, Where’s Mine?”, describing the plight of a soldier
with life-changing wounds reflecting on the prospectus the
recruiting sergeant had first given him. Lying in his hospital
bed he says:
“Oh Sergeant, is this the adventure you meant
When I put my name down on the line
All that talk of computers and sunshine and skis
Oh, I’m askin’ you, Sergeant, where’s mine”.
Well, all I’m askin’ you Minister, where’s ours? All that talk of
the “Saudi Arabia of wind” and the work and the jobs, where are
they? And when other nations, whether they are Ireland or France,
Denmark, Sweden, Norway or China, have a share of our natural
bounty, oh Minister, where’s ours?
I conclude by asking the Minister to confirm that his Government
will neither oppose a state energy company nor Scotland seeking
to take a share in its natural wealth. The absurdity of an
energy-rich Scotland yet fuel-poor Scots must end. We demand a
share and a stake in our natural bounty.
11.16am
The Minister for Energy Security and Net Zero ()
It is a pleasure to serve under your—as ever—sartorially elegant
chairmanship, Mr Dowd. I congratulate the hon. Member for East
Lothian () on securing this important
debate, and the hon. Members who have taken part in it.
The hon. Gentleman gave a well-constructed, well-researched and
thoughtful speech from the particular political perspective from
which he hails, and I thank him for it. He will be aware of the
important role that offshore wind and other renewables play in
delivering secure, domestically generated energy, and the boost
that provides for economic growth across the UK. He is right that
we must harness the opportunities of offshore wind for Scotland
and maximise the benefits for our nations—whether that is Wales,
Scotland, England or Northern Ireland.
Where the hon. Gentleman and I differ is on how best to exploit
that opportunity from where we start. This Government believe
that a state-owned model is not the best approach. I am sure
that, if we had allowed some new state company to come in and
dominate our offshore wind sector, we would never have seen the
70% reduction in the cost of offshore wind that we have seen over
recent years. It was the contracts for difference framework that
we created, which allowed companies from all over the world,
state or non-state, to come in, that transformed the economics of
offshore wind and opened up the potential for not only the UK but
the whole world of this important technology in tackling net
zero.
The UK market is open to offshore wind investment, whether from
state-backed or privately owned developers, and it has been
extremely effective. The success of CfD has been in leveraging
private capital to support wider public benefits. Our
market-friendly approach has transformed the economics, as I
said.
The UK encouraged an estimated £50 billion of new investment in
low-carbon sectors in 2021 and 2022 alone. We currently have 14.2
GW of installed offshore wind capacity, the most of any nation in
Europe. The hon. Gentleman made many references to different
countries, but we have more of it than anybody else, and we drove
its changing economics by taking a competitive approach rather
than a protectionist, state-run approach that would never have
delivered such a transformation.
We are committed to our ambition of reaching 50 GW by 2030,
including up to 5 GW of floating offshore wind. We have not only
the world’s largest operational wind farm project—Hornsea 2 off
the Yorkshire coast, which is named after a town in my
constituency—but the second, third and fourth largest
projects.
Will the Minister give way?
I will make a little more progress, if I may.
Properly regulated markets that incentivise private capital—or
indeed state capital—to invest in the energy system provide the
best outcomes for consumers. Market competition is the most
effective driver of efficiency, innovation and value. Private
ownership of energy assets improves performance and reliability,
and offers consumers greater choice and higher standards of
products and services.
Our free market approach means that we have a highly competitive
offshore wind market, which benefits from the expertise and
experience of developers from all over the globe. It has enabled
significant decarbonisation of our energy system, with dramatic
drops in the cost of renewables. In 2010, when Labour left power,
this country had a paltry 6.7% of its electricity coming from
renewables. That was shameful. In the first quarter of this year,
nearly 48% of our electricity came from renewables. Ten or 11
years ago, nearly 40% of our electricity came from coal. Next
year, that will be zero, again because of our market-friendly
policies, which would be at risk were His Majesty’s Opposition to
have their ideas for state-run energy companies wrecking one of
the most successful markets in the world. All over the country
people are benefiting from the growth of the sector, and the
cheap, secure, low-carbon electricity it produces.
Scotland has already benefited from the opportunities in offshore
wind. It is a shame the hon. Member for East Lothian could not
bring himself to recognise any of that. With its strong winds and
plentiful coastline, it has made a significant contribution
towards our offshore wind ambitions: so far, 3 GW is operational
or under construction, and more than 40 GW of capacity is in the
pipeline. The opportunity is enormous. The Scottish taxpayer
already benefits from the Crown Estate Scotland seabed leasing.
All net profit from offshore wind leasing rounds and rent is
passed on to the Scottish Government for public spending.
We welcomed the recent announcement of a potential £200 million
investment in high-voltage direct current manufacturing in the
highlands by Sumitomo of Japan, which could create up to 150
jobs. The offshore wind industry has also supported the
revitalisation of ports from Wick to Dundee. A huge range of
diverse companies in Scotland already benefit from the offshore
wind industry’s growth: crane manufacturers, consultants,
underwater operations experts, turbine maintenance specialists
and more. We know that opportunity will only expand as we grow
the industry further.
The UK, as I have said, leads the world in floating offshore
wind, a new technology that opens up access to new, deeper areas
of seabed. The Hywind Scotland project was the world’s first
floating windfarm. Combined with the Kincardine project, also in
Scotland, it has given the UK one of the largest amounts of
operational floating capacity anywhere in the world, at 80 MW.
The UK has the world’s largest floating wind pipeline, with
around 25 GW already identified, including through the ScotWind
leasing round and INTOG processes. That represents a huge
opportunity for the Scottish economy, especially from
installation and lifetime maintenance activities, which are best
undertaken locally.
I suggest to the hon. Member for East Lothian that, if he is as
passionately committed as he suggests to jobs and benefits for
Scotland, he should not be sending a message that we want to
deter foreign investment, but signalling that we welcome it.
Will the Minister give way?
I will in a moment, if time allows.
To achieve our deployment ambitions and secure high-quality local
jobs, we must continue to build a robust and competitive UK
offshore wind supply chain. We are focused on maximising the
economic opportunity arising from our transition to clean energy.
Our significant strengths, including in wind energy and
innovation, mean we have an essential role in building those
supply chains, as demonstrated by this Government’s investment to
date.
Through the offshore wind manufacturing investment scheme, the UK
Government have made available funding to support investment in
major port and manufacturing infrastructure. We have seen more
than £500 million invested by SeAH Wind and JDR Cable Systems in
manufacturing facilities, which will create or safeguard up to
1,200 jobs. I want to see similar investments in Scotland. That
is why we continue to work with industry as it develops a
long-term industrial growth plan for the sector, following the
publication of Tim Pick’s recommendations.
Government backing attracts the private investment needed to
deliver net zero. That includes research and development, where
we are supporting innovation in floating wind technology through
the floating offshore wind demonstration programme. That uses £31
million of Government funding, alongside £30 million from
industry, to keep the UK at the cutting edge of offshore wind
innovation. We are not stopping there. Just two weeks ago,
applications closed for the Government’s floating offshore wind
manufacturing investment scheme, which will provide up to £160
million to kick-start investment in port infrastructure projects
needed to deliver our floating offshore wind ambitions.
The hon. Member for East Lothian gave a passionate speech
effectively opposing the world’s investing in our renewable
energy, and in offshore wind in particular. I caution him to
think again, send out a more positive line to the world and
recognise the huge investment opportunities here.
Does the Minister recognise that everything that he has said
about private sector investment can and does happen in Denmark,
but Denmark has taken a 20% stake on behalf of the Danish people,
as Norway has done for oil and gas? None of what the Minister has
suggested is impossible in Denmark, and it is happening. Does he
accept that?
Denmark’s situation, size and industrial history are very
different from the UK’s. What I am saying is that the UK is a
European and, indeed, a world leader. We have decarbonised more
than any other major economy on earth, and we believe that it is
making us the best possible investment environment. We do not see
the advantages of taking the state stakes that the hon. Gentleman
suggests.
It remains essential that communities most affected by offshore
wind and its associated infrastructure can benefit from its
deployment. We recognise, for example, that regional distribution
charges particularly impact the north of Scotland. That is why
our cross-subsidy scheme provides more than £100 million annually
to protect electricity consumers in the far north. It is worth
£60 a year to every household in the north of Scotland.
We also want communities and individual families that are not
involved directly in the industry to see benefits. That is why we
have recently consulted on proposals for community benefits for
transmission network infrastructure, including in Scotland,
because we are essentially rewiring the whole UK economy as we
make this transition. We must do it at speed, but in a way that
has community support and in which we recognise the impact on
host communities. Developing transmission infrastructure,
particularly between Scotland and England, will be key for
unlocking the full potential of renewable energy, and offshore
wind in particular. It will mean that we can get electricity from
where it is generated to where it is needed.
Hon. Members will have seen that the first annual contracts for
difference auction completed last week. I am delighted that it
delivered a total of 3.7 GW of renewable electricity. Contracts
have gone to geothermal projects for the first time. There are
record numbers of tidal stream projects, in which Scotland is a
major player; I was delighted to visit the European Marine Energy
Centre in Orkney and see so much of the significant work going on
there. We also saw a doubling of onshore wind from last year’s
record auction, and new solar. We hoped that offshore wind would
be successful in this round, but we recognise that the
challenging macroeconomic pressures felt by the industry around
the world impacted its ability to come through the round
successfully.
We are reflecting carefully on the results of allocation round 5
so that we make appropriate adjustments for AR6. That is how it
works: we get data by trying to understand supply chain costs and
commissioning research, but the most valuable data of all is
actual behaviour in real auctions. That information will come
into adjustments for AR6 to ensure that our evidence base
reflects the true market environment. At the same time, value for
money for the consumer through a competitive process remains an
important feature of the CfD scheme, and I make no apology for
always prioritising protecting the consumer. With annual auctions
now in place, the allocation round is due to open in about six
months, meaning that there is an opportunity to gain a contract
with minimal delay to deployment for projects that were not
successful this time.
This Government have made real progress in delivering the
ambitions set out in the British energy security strategy and our
“Powering up Britain” plan. We are committed to achieving our
ambition of 50 GW of offshore wind by 2030. It has a vital role
to play in delivering a decarbonised power system by 2035,
subject to security of supply, and achieving our legally binding
2050 net zero commitments. We need to celebrate what we have done
to date and recognise that most of the growth is not in the past,
but in the future. The opportunities for Scotland, Wales,
Northern Ireland and England are immense, and we should work
collectively to ensure that we attract investment and create as
many jobs as possible in this country supporting the
transformation of our energy system and our spearheading of the
global move to net zero, which is so important to us and future
generations.
Question put and agreed to.
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