IF the ambitious language used in press statements is anything to go by, Scotland can look forward to a bright economic future when its first green freeports are up and running.
The deadline for bids to secure green freeport status for two specially designated economic zones in Scotland looms on June 20, and it is fair to say that none of the candidates have been in the mood to leave anything in the locker.
Bids representing vast industrial areas of the country, including the Clyde region, the Firth of Forth, the north-east of Scotland and Cromarty Firth, are expected to be lodged, each putting forward strong cases for what freeport status could mean for the communities they serve in economic terms.
At a time of such economic difficulty, with consumers mired in a cost-of-living crisis, recession likely and fears over a trade war with Europe, the scale of ambition displayed by the candidates has certainly been encouraging to see. Indeed, with particular regard to the bid from the west of Scotland, where so much economic activity is already generated, it is not often you see such heavy-hitters from a range of different sectors unite behind a common cause.
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A formidable consortium including Glasgow Airport, Clydeport, Mossend International Railfreight and a partnership of Glasgow City Region councils has been established to launch the Clyde Green Freeport bid, pulling together a proposal for an air, sea and rail economic zone that it is hoped will provide an “enormous economic boost” to the wider region. They declare that their bid has the potential to create tens of thousands of new jobs, boost innovation, and tackle climate change across an area that is home to critical elements of the country’s economic infrastructure.
“As Scotland’s economic powerhouse, Glasgow City Region is uniquely positioned to create a highly successful green freeport to put the country at the forefront of global trade and decarbonisation,” said Kevin Rush, Clyde Green Freeport Bid senior responsible officer and director of regional economic growth for Glasgow City Region. “We have everything necessary to make a successful bid: unrivalled connectivity across the UK and beyond; one of the most educated populations in the UK; a GVA (gross value added) of £47.3 billion and 33 per cent of Scotland’s GDP; three world-class innovation districts; home to internationally acclaimed universities and research institutes; and renowned business expertise across key sectors of aerospace, advanced engineering, manufacturing, maritime and medical.
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“Glasgow City Region is at the heart of the Scottish economy, providing almost 30% of the country’s business base and 34% of its jobs.
“As well as the enormous economic boost and competitive advantage a successful bid would bring to Glasgow City Region, it would also support enterprise, regeneration and trade across the rest of Scotland and the UK.”
One of the main ways in which green freeports are expected to stimulate economic activity is through beneficial taxation regimes that will be designed to encourage investment, which in turn will create jobs and boost trade. Freeport areas can often allow raw materials to be imported tariff-free.
“These areas also offer a range of other tax benefits that lower the cost to businesses of operating there, enabling them to become more competitive in the global economy,” Stuart McInytre, senior lecturer in economics at the University of Strathclyde, and head of research at its Fraser of Allander Institute, told The Herald.
“This can cause businesses and economic activity to move to these areas, creating jobs and providing a boost to the local economy. However, whether it generates additional economic activity for the country as a whole, or simply moves around the deckchairs, is uncertain. And it’s important to remember that there are significant costs associated with establishing freeports, including in foregone tax revenues.”
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Mr McInytre added: “If it generates new economic activity that can be a good thing, particularly in an area where economic opportunities are scarce, but if it is simply shifting some jobs from one place to another, it’s debatable whether it is the best use of resources.”
A key consideration for the UK and Scottish government ministers assessing the bids will be the extent to which so-called green jobs can be created, and the contribution such zones can make to support Scotland’s and the UK’s net-zero ambitions. It is hoped that innovative companies can be encouraged to trial technologies within the freeport areas.
The opportunity to establish a renewable energy manufacturing hub, creating the kind of supply chain that Scotland has still to establish despite its advantages in this sector, is central to the hopes of the Opportunity Cromarty Firth bid in the north of the country.
The Cromarty bid cites aspirations to develop the infrastructure required to produce green hydrogen, and to service the offshore facilities that it is hoped to be developed following the recent ScotWind licensing round, as opportunities that can be realised if the area secures green freeport status.
“Green Hydrogen is an excellent example of an industry that can take advantage of the tax benefits associated with green freeports; the tax reliefs will help reduce the initial cost of establishing the UK’s largest electrolyser on the Cromarty Firth (which is expensive, relatively new technology),” said Joanne Allday, strategic business development manager at Port of Cromarty Firth, speaking on behalf of the bid. “This means that the production can be scaled more quickly and the produced cost of the hydrogen can be lower.
“This could kick-start a green hydrogen economy in Scotland; enabling us to better secure our own energy supply, accelerate the move to cleaner fuels to address climate change, and to quickly become exporters of hydrogen based green fuels to other countries to help them decarbonise. It will also create skilled people and businesses who can develop their expertise here and then export their skills and technologies around the world – a once in a generation opportunity for a region like the Highlands.”
The Cromarty bidders say there is the opportunity to create a manufacturing base for the offshore wind industry in this part of Scotland, reducing reliance on components made outside the country.
“We have £20-£30 billion [of] investment opportunities on our doorstep and green freeport status, and its accompanying benefits, is exactly the vehicle we need to ensure they can be fully realised,” Ms Allday added.
“The ports of Invergordon and Nigg have supported more offshore wind projects than any other Scottish ports.
“To date, that has mostly consisted of components imported from other countries that may be ‘bolted together‘ in Scotland.
“Our green freeport proposal aims to completely transform that model for the coming floating wind market; bringing large component manufacturing to Scotland (for example tower sections, floating foundations, blades etcetera) and establishing the UK as world leaders in this industry.”
Critics have argued for many years that the UK has lacked a coherent industrial strategy.
It is to be hoped that the lofty ambitions set out by green freeport bidders make good on their talk, and provide a building block for a strategy that can serve Scotland well in the decades to come.
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