Philip Dunne writes for The House Magazine
UK Export Finance (UKEF) must pivot from oil and gas to renewables if we are to grasp the full economic benefits and lead the way for clean energy.
Last week the Prime Minister declared his intention to make the UK the ‘Saudi Arabia of wind’ energy, powering every UK home with offshore wind by 2030. This is a visionary ambition. But it misses another massive opportunity - without a substantial rethink of our export strategy, we could fail to grasp the full economic benefits of the brave new world of clean energy which we can lead.
UK offshore wind has come a long way since the first turbines in 2000. New turbines can be almost the height of the Shard and are now the lowest cost means we have of generating electricity. Each sweep of a blade can now power a house for over two days. It has kept the lights on and our economy growing, with renewable energy companies investing £4 billion and creating over 2,000 jobs even during the peak of lockdown.
As our economy recovers from the Covid lockdown, we need to focus on job creation. I was delighted to see the Government announce £160 million to upgrade ports so they can handle the next generation of larger wind turbines, as the Environmental Audit Committee advised earlier this year.
New port infrastructure should help ensure blade, tower, and cable manufacturers choose to set up in Teesside, Hull and Scotland instead of rival European ports.
Furthermore, the Prime Minister’s commitment to floating wind should also be congratulated. In developing this technology earlier than our rivals in France, Japan and the USA, we not only unlock new areas of UK waters for development but we place ourselves at the technological forefront of a global market which will eclipse the market for fixed-bottom turbines in the 2030s.
We cannot afford to squander the export opportunities which could come with our new position as the global workshop for offshore wind. The global market for fixed offshore wind alone is expected to reach at least £30 billion a year by 2030.
Today’s report from Vivid Economics lends fuel to the fire of those long calling for UK Export Finance (UKEF) to pivot from oil and gas support to renewables. By their estimates, if UKEF assumes liabilities for renewable exports to the same scale as it currently does for oil and gas exports, it could help support around 20,000 jobs per year, compared to 8,000 in oil and gas.
Work is already underway to transform UKEF following the Environmental Audit Committee’s report in the last Parliament into its minimal support for renewables. So I was very pleased by the Chancellor’s £2 billion funding allocation to the agency to finance clean energy in March. But this reform needs to continue at pace.
UKEF’s latest success in supporting development in Taiwan is a welcome glimpse of the UK’s role in lowering emissions around the world. However, if this change is limited or slow, the Government should not shy away from demanding a faster pace from UKEF, and a more open and transparent process of reform.
As pressing is the need to recalibrate and resource properly the support given to industry through the Department for International Trade and related bodies. Capitalising on the global market will require DIT to devote more time to outreach and engagement of UK SMEs to understand their products and services, whilst also dynamically adapting where they place resource internationally to help UK companies establish the ‘local partnerships’ and foreign subsidiaries often required to enter other markets.
Furthermore, the ambition of reforming UKEF is made easier if there are DIT officials in target countries identifying opportunities where their new financial tools could be utilised.
In our year as COP26 President, it is right that we lead the world in our commitments to clean energy, decarbonisation and nature restoration. We should be encouraging countries identified by the World Bank and GWEC as having ideal wind and seabed conditions - like Brazil, Mexico, Sri Lanka, and Turkey - to increase their offshore wind ambitions in turn.
By joining up the Prime Minister’s ambitions for offshore wind with a well-funded ecosystem of Government bodies working to increase renewable exports, we can boost both our climate leadership and the UK’s commercial opportunity and renewed vigour as an independent trading nation.