How time flies. It is two years since the ScotWind licensing round promised 20 offshore windfarms by 2030 and an accompanying Scottish industrial revolution. Time, surely, for a progress report?
We are now one quarter of the way through the intermission between licensing and generation. If there is a revolution brewing, it has been kept well under wraps. Instead, concerns are voiced that we are in the foothills of another missed opportunity.
A lot depends on that not coming to pass. Offshore wind is key to energy transition and the haste to run down North Sea oil and gas will seem even more misplaced if the promised replacement is not shown to be delivering on the schedule that was promised.
The issue is not one of absolutes but degree. The sheer scale of the ScotWind programme means it will create domestic opportunity. The question is, how much? How sustainable will it be? Will the infrastructure exist to support the operations involved? If not, the big work will go elsewhere.
To create any sense that something transformational is happening in the Scottish economy, there has to be a plan against which progress can be measured and issues addressed. Where does public investment need to be prioritised? Where is it going to come from? What are the obstacles to overcome? It needs political leadership.
Personally, I tend to see these questions through the prism of where I live, on Lewis. Within this decade, on current plans, there will be several billion pounds of investment on and around the island. This scale is awesome, onshore and offshore, and obviously needs intensive planning with serious public investment.
What is the current reality? The local authority does its best but has no capital budget to build a peat road, never mind underpin multi-billion pound construction projects. The Highlands and Islands Enterprise budget has just been cut again by 13 per cent. Where will money come from? Where will the workforce live? Where are the guarantees of community benefit?
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Similar questions can be extrapolated throughout Scotland. Surely it is not too much to expect an overview of how this “second industrial revolution” is supposed to join up to maximise the benefits for domestic industry, jobs and communities? Does any such plan exist?
The background is worth recapping. Identifying and licensing the most suitable sites was in the hands of Crown Estate Scotland which, since being devolved in 2017, operates as a branch of the Scottish Government. What could possibly go wrong?
From the outset, the answer was “quite a lot”. In 2021, Crown Estate Scotland offered leases at a capped price of £10,000 per square kilometre. We have never been told who provided the advice on which this ludicrous under-valuation was based but it didn’t exactly inspire confidence.
Fortunately, England and Wales went first with a straightforward auction. International energy companies piled in with massive bids reflecting potential value. The Scottish exercise was suspended for six months and when it returned, the cap was multiplied ten-fold. A significant margin of error!
Potentially, the Scottish approach had merit since it sought to link bids with commitments to the domestic supply chain and community benefit. However, that depends on the credibility of these commitments. Otherwise Scotland stands to be a double loser, getting neither money nor jobs.
We need evidence that this isn’t happening. There is no disputing that the Scottish licences were sold very cheaply. Rest-of-UK and international comparators suggest that ten to 20 times the £700million could have been raised through a straightforward auction. We will never know.
What we do know is that the £700million, a not inconsiderable sum, was banked by the Scottish Government and promptly disappeared into the great black hole of general expenditure – a decision which was careless in consequences and rich in irony.
For decades, we had heard complaints that no Sovereign Wealth Fund was created to ring-fence proceeds of North Sea oil and gas. Yet here was a brand new opportunity, as I and others argued at the time, for the Scottish Government to ring-fence the £700million for investment in infrastructure needed to maximise the ScotWind benefits.
The case for this was the other side of the “cheap licences” coin. Without public sector investment in ports and other infrastructure, it will be impossible to achieve the supply chain benefits that were used as justification for giving the successful bidders such a favourable deal.
Call me old-fashioned but I would have preferred the Micawber school of economics, with a sum adjacent to £700million on one side of a Renewable Infrastructure Fund balance sheet and expenditure on the other. It was, after all, windfall funding rather than part of the normal budget.
That idea was dismissed by SNP ministers who insisted that the £700million would be spread “across the Scottish block grant”. That decision denied us all transparency on how that money was spent and threw away the chance to present the drive for a “second industrial revolution” based on offshore wind as a mission worthy of exceptional treatment – and leadership.
There are major issues outside the control of the Scottish Government and these too need to be highlighted and responded to. They include the need to invest in a programme of transmission links which will connect offshore windfarms in the north to markets in the south. Co-ordinating all of this makes 2030 seem a trifle over-optimistic.
Read more: Brian Wilson: We need a root and branch review of how Scotland spends its money
However, responsibility for creating optimum conditions which will allow the Scottish economy to benefit from the vast sums it will cost to build these offshore windfarms is wholly within devolved powers, just as the decision to sell the leases cheaply in the hope of subsequent benefits was within devolved powers.
After two years, Holyrood should be the place for an urgent, comprehensive debate on how that strategy is coming along. If this truly is Scotland’s biggest economic opportunity in a generation, then it is time for the Scottish Parliament to ask more questions and demand more answers while there is still time.
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