There has been a big focus in recent weeks on the impact of some Net Zero announcements on the potential growth in green jobs within the UK. A RenewableUK poll has found that most voters see expanding green industries as a good thing for jobs and the UK economy but that should not come as a surprise, as it has been a clear message from the industry and from Government for the last 10 years.
Although not quite the same, green jobs and local content within clean energy projects are clearly linked and for one reason or another, the UK has failed to realise the full potential of local content in the deployment of projects to this point. As a result there is a slow hardening of local supply chain obligations within for example, Contracts for Difference, grants, seabed leases and new green hydrogen project applications for support.
I have been advising on clean energy projects for the last 2 decades and I have witnessed how difficult it has been both for the developers, local communities and government to get this right. It is not easy and we are in global competition to capture these jobs. In no particular order whatsoever, here are some observations driven from what I have noticed;
- firstly if you deviate or sway from commitments, it inevitably makes investors and companies making decisions on supply chain or manufacturing locations nervous- we have seen this many times and whenever there is one of these points, growth in Net Zero and renewable energy projects (witnessed by the slowdown in transactions and legal investment advice) has slowed because of it.
- if you devise a system of support for Net Zero projects whether it is a CfD or any competition or grant funding, and the overriding criteria to win out is lowest cost, it is no surprise that this has often has a detrimental affect of establishing new supply chains locally. The exception to this is where you have already prepared the supply chain ahead of time (see below). Project developers have to look to the lowest cost if they are bidding. This is particularly the case for new technologies. While there is a nod to supply chain plans and a slow hardening of proper consideration of these by Government it does feel like we need a rethink. The Government's consultation on non price factors for CfD applications is a start but the rules need to change.
- I remember a very interesting comment by a major manufacturer in the green energy space saying that if you want to establish a supply chain for a new industry, you need to get the first projects deployed quickly - if you do that, the manufacturing and industry will come. The UK struggles with this rapid deployment. I am not suggesting we are alone in that, many other countries struggle as well. But some of the reasons for the struggle seem to be;
- applying very complicated legal contract price support mechanisms to early stage projects that just need to be speedily deployed and are never going to be large in terms of MW because they are the first of their kind. I am looking at a 650 plus page legal agreement for the first green hydrogen projects!
- as above, over emphasis on the lowest cost option before something gets support
- a consenting regime that is thorough but time consuming, with regulators who are obliged to consult widely and adopt a precautionary principle. That is not to say that this is wrong, but whether we like it or not it, often leads to prolonged timescales.
- a grid that is jam packed and struggling to to cope with connecting new projects
- the desire in many cases, to hold competition windows for support (which themselves become delayed) rather than deploy projects as they arise
If we are serious about green jobs and industry in the UK we need to look beyond the immediate Net Zero project itself and ask what existing infrastructure do we have already or which could be adapted to support the supply chain development? Here we also need to be realistic yet ambitious, in focusing on the jobs we are likely to get and what the UK can provide. A good example here are our ports. Are they ready and how can we help them prepare and fund, necessary upgrades so they can provide the local supply chain for offshore Net Zero industries. Ports have different business models to clean energy projects. There is a need for coordinated infrastructure and an industrial strategy to provide investor confidence. We have been working with ports and the renewables projects that intend to use them and I can confidently say that everyone sees the opportunity, but ports just like any other investor need to see clear policy and certainty that if they make the investment in their facility the projects will happen. The work that is being done by the Celtic Sea Cluster/Celtic Sea Power is welcome.
It is not all doom and gloom. Every country is wrestling with these issues so there is still time. We must not underestimate the jobs and benefits that have already been created by a concerted Net Zero effort over the last decade. Many will have heard me say that we, Burges Salmon are part of the supply chain as are many other lawyers and consultants. We now employ over 80 clean energy lawyers and these consultancies are world leading in the renewable and Net Zero space. However, going back to my earlier point, we and they have been able to create these jobs and expertise on the back of deployment of technologies in the UK and clear intent and policy.
An “overwhelming majority” of UK voters (82%) believe that expansion of green industries is important for the growth of Britain’s economy, a poll by renewable energy trade organisation RenewableUK has found.