With Scottish Government intervention, wind power can be a powerful turbine for Scotland’s economy

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“Wind” by De Gringo is licensed under CC BY-ND 2.0

As part of a series of blogs aimed at getting to grips with the energy market and the failure to ensure workers and communities in Scotland benefit, STUC Policy Officer, Francis Stuart, looks at the role of the Scottish Government.

In the early 1980s, a company called James Howden & Co Ltd in Glasgow was at the forefront of wind turbine manufacturing, supplying the UK’s first wind turbine in the utility industry. However, the company lost Government support and stopped producing turbines in 1989. The main beneficiaries were the Danish manufacturing industry, who were also early adopters of turbine technology and heavily backed by Government.

Unfortunately for Scotland, things haven’t improved much since. The most recent ONS data indicates that the Scottish low-carbon and renewable energy economy imports significantly more in goods and services than it exports; to the tune of -£229 million.

Most recently, we’ve seen the ludicrous situation where work for EDF’s new £2 billion NNG windfarm off the coast of Fife is set to go to Indonesia and be shipped across the world, rather than go to the Bifab yards in Methil 15 kilometres away.

So who is responsible for this?

Last week we looked at the crucial role that UK energy policy plays. Yet while primary responsibility lies at UK Government level, there are also things that the Scottish Government can do.

Currently the Scottish Government has powers over planning consent for certain energy infrastructure application, including projects over 50MW. While a number of consents contain requirements about local construction and socio-economic benefit, in practice these requirements are often not upheld, with the Scottish Government claiming the requirements are not legally enforceable in Scotland. One way around this, given that environmental policy is devolved, may be to include requirements relating to the carbon footprint of construction.

Similarly powers over the ‘Crown Estate’ – the seabed around Scotland’s coast – have recently been devolved. This means that whenever the Scottish Government provide a lease for Crown Estate land, they now have the opportunity to apply supply chain conditions to that lease – ensuring projects provide local socio-economic benefit.

It is only right that as developers cash in on Scotland’s land and resources, workers and local communities should get something back.

We should also consider the role that direct Government intervention and enterprise support could have in yards such as those in Methil, enabling companies such as Bifab to better compete with European competitors.

However, direct and conditional support is unlikely to be enough. Over the last 30 to 40 years, a lack of concern about ownership has led to a plethora of overseas financial interests within the Scottish economy. This has led to the offshoring of jobs and tax revenues, limited transparency, and lessened the accountability that workers, communities and Government hold over multinational companies.

Back in the 1980s, public institutions like the National Engineering Laboratory (the NEL) in East Kilbride supported the development and utilisation of new technologies. While much of that public knowledge has been lost (the NEL was sold off to a German firm in the 1990s) there are still things the Scottish Government can do.

Firstly, the Scottish Government’s proposals for a publicly-owned energy company, could play an important role in developing renewable energy, restoring post-industrial ports, and capturing value from the low-carbon economy. However existing plans for a white-label retail supplier (essentially buying energy from existing producers and then selling it to consumers) are far too timid and will do little to change the generation mix or the nature of ownership within the low carbon economy.

Secondly, the Scottish Government’s plans for a Scottish National Investment Bank could also provide an opportunity to leverage in the huge levels of public investment that will be needed to address climate change. However, existing proposals look like they’d prevent the Bank operating like similar banks in Germany who have full borrowing powers as well as the ability to lend to the public sector.

Thirdly, there has also been talk of a National Infrastructure Company. This is much needed in-light of the collapse of Carillion; issues at Ferguson Marine Energy and the closure of the Caley railworks. However, to ensure workers, taxpayers and public service users are not simply asked to pick up the pieces of private sector failings, this needs to be based on an integrated 10 to 15 year infrastructure strategy which recognises the importance of collective ownership, not simply firefighting at times of crisis.

More radical proposals in these policy areas, coupled with the Scottish Government’s stake in Bifab and nationalisation of Fergusons, could form the basis of a much more interventionist strategy. While the Scottish Government’s Programme for Government framed many of its announcement around a ‘Green New Deal,’ in reality there was nothing on the role of publicly owned energy, transport and infrastructure companies. These are core components of what might make up a real Green New Deal in a Scottish context – one that is capable of decarbonising the economy while restoring good quality jobs to post-industrial communities.

Currently the Bifab yards sit below capacity with hundreds of workers having to choose between sitting on the dole or moving away from their families for work. Scottish Government intervention could, instead, enable these workers look out across the Fife coast and recognise steel turbines carved by their very own hands.

On 14 September, Fife Trades Council are organising a march and rally under the banner ‘Fife, Fighting for our Future’  as part of the fight for renewable jobs in Methil and Burntisland.

They are showing that workers and communities in Fife want to play their part in building a low-carbon economy and meeting climate change targets. If Bifab isn’t to go the same way as Howden’s 30 years ago, we need our politicians to support them.

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What Fife’s renewable yards tell us about UK energy policy

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“Teeside Offshore Wind Farm” by howzey is licensed under CC BY-NC-ND 2.0

As part of a series of blogs trying to get to grips with the energy market and considering who is responsible for the failure to ensure workers and communities in Scotland benefit from offshore wind, STUC Policy Officer, Francis Stuart, looks at the role of the UK Government’s energy policy.

On 14 September, Fife Trades Council are organising a march and rally under the banner ‘Fife, Fighting for our Future’ as part of the fight for renewable jobs in Methil and Burntisland.

As well as the loss of jobs at Havelock, the threat of job losses at Rosyth and attacks on pay at Diageo, the march is being organised in response to reports suggesting that the Bifab yards in Methil and Burntisland are only due to win 8 jackets out of the 54 required for the new Neart Na Gaoithe (NNG) offshore wind farm. The rest are set to be made by the Italian firm, Saipem, in Indonesian yards, before being shipped halfway across the world.

Improving knowledge of the way the industry works is key to building workers’ power and control in the sector. So who is responsible for the situation where a yard with the skills and ability to manufacture content for a windfarm 15 miles away, loses out to an Italian firm operating in an Indonesian ‘free-trade zone’ benefitting from a number of tax exemptions?

With some exceptions, such as planning powers which are devolved, energy policy is largely a reserved matter. That means it is the UK Government’s responsibility to determine the framework for how electricity is generated, transmitted, distributed and supplied to households and consumers.

Introduced by the coalition Government, ‘Contracts for Difference’, are the main mechanism for supporting low-carbon electricity generation. The scheme involves the Government auctioning off renewable projects to private developers to produce energy at a ‘strike price’ – a pre-agreed price aimed at reflecting the cost of low-carbon technology which is higher than the market price of electricity. Coupled with a separate ‘capacity market’ aimed at ensuring sufficient capacity in the system, the result is a complicated market-based system where the Government pays to take electricity generation and pays to refuse it. As Trade Unions for Energy Democracy (TUED) state:

“By locking in both volume and price for sales of new low-carbon generation at non-market prices, for fifteen years, these agreements effectively established a long-term, guaranteed, risk free, publicly subsidised income stream for producers.”

What’s more, these subsidies are funded entirely through a levy on consumers’ bills rather than through general taxation, disproportionately impacting on low-income households.

Given this, one might expect some kind of quid-pro-quo for workers and communities who are ultimately paying for the policy. Yet, despite vague targets for ‘lifetime content’ in an offshore wind sector deal, there is no provision within the funding mechanism to ensure content is manufactured locally.

The STUC and the communities of Methil and Leven want to play their part in building a low-carbon economy and meeting climate change targets. However, until UK Government changes its approach to energy policy – to one built on public control and local benefit – the Bifab yards in Fife are likely to continue to operate below capacity while jobs, tax revenue and carbon emissions are offshored halfway round the world.

The energy landscape is complicated. Deliberately so, following Margaret Thatcher’s privatisations in the 1980s. But upskilling our knowledge and then taking action helps builds confidence among workers and communities. The actions taken by workers at Bifab and the rally in Kirkcaldy on 14 September, gives a glimmer of hope that we can create good quality renewable jobs while tackling the climate emergency.

You can read more about some of these issues in STUC’s Broken Promises report. Further blogs will consider the role and responsibility of the Scottish Government and private developers in ensuring workers and communities in Scotland benefit from offshore wind development.

Bi-Fab, Caley, Fergusons. Only public ownership can deliver the green revolution

News reports suggest that Scottish fabrication firm, Bifab are set to win 8 jackets out of the 54 required for the new Neart Na Gaoithe (NNG) offshore wind farm. The rest look like being made in Indonesian yards before being shipped halfway across the world.

This is a corporate betrayal of the thousands of jobs promised in the NNG contract.

While 8 jackets is paltry, it is more than would have been awarded had trade unions, local community members and environmentalists not mounted the Fife – Ready for Renewal campaign calling for work to go into the fabrication yards in Methil and Burntisland. The owner of the NNG offshore windfarm, EDF, and its Italian contractor Saipem would, in all likelihood, have given all the jackets to Indonesia, while quietly slithering off into the night like sleekit beasties.

Hopefully, the 8 jackets provide a lifeline for those yards, allowing for investment in infrastructural improvements and ensuring Bifab win future contracts for the Seagreen and Inchcape offshore windfarms owned by SSE and the Chinese company Red Rock.

However, unless we learn the lessons from this saga, we risk repeating the mistakes of the past. Like North Sea oil, renewables are being exploited by multinationals intent on providing as little social and economic benefit to workers and communities as they can get away with.

Yet renewables, and energy more widely, is a strategically important industry which the rest of the economy depends on. By its nature the wind is territorially located in Scotland. That means there are levers that Governments at Scottish and UK levels can utilise, whether that be energy policy, planning, licensing, decommissioning or the crown estate seabed.

Ultimately, the wind belongs to us, the people, so it is only right that communities benefit in the form of jobs and economic value.

But social and economic benefit will not come through the present system where multinational companies make large profits on guaranteed, subsidised contracts from the UK Government, get planning consent and support from the Scottish Government, and then go onto offshore jobs and emissions in manufacturing to the other side of the world.

There is a need for a radically different energy system and a green industrial revolution based on public ownership. What might that look like?

The Scottish Government stake in Bifab could form the basis for a publicly-owned offshore wind manufacturing industry, ensuring real benefit to working class communities in post-industrial ports and harbours across Scotland.

Proposals for a Publicly-Owned Energy Company could be radically reformed from a focus on buying and selling energy to consumers to a focus on generation, ensuring profits from renewables come back to the taxpayer.

Proposals for a National Infrastructure Company could form the basis of a publicly-owned, green construction company –retrofitting existing homes and the infrastructure we need to meet the climate emergency.

The Caley Railworks, set to shut today following 163 years of railway manufacturing could be taken into public ownership, building new railway stock and electrifying our network to ensure we have a first class public transport system to rival private car use.

Fergusons shipyard, on the verge of administration, would be taken into public hands, to ensure that we build new, green ferries to ensure our Island communities are connected to the mainland.

None of the above will be delivered by the private sector. Private sector investment in green energy has actually fallen in recent years.

The climate emergency and the failure of multinational companies to deliver strategically important assets presents an opportunity to renew working class communities and tackle climate change through a green industrial revolution built on public ownership.

It is an opportunity we must grasp.

 

Francis Stuart,  STUC Policy Officer

Ready for Renewal: Voices from the community

Last month saw over 130 trade unionists, environmentalists and members of the Fife community come together to demand answers from EDF.  EDF failed to attend, sparking disappointment and anger within the community, environmentalists and wider trade union movement.  However, attendees also expressed their joy at seeing so many from their community come together united in a common cause.

We spoke to two community members who attended the meeting.

Allen Armstrong, from Levenmouth Rail Campaign, a local campaign to reopen the railway track, gave his take on the meeting:

“Representing the Levenmouth Rail Campaign (LMRC) and local regeneration charity CLEAR, several of us turned up at the Fife for Renewal event around the corner in Buckhaven Community Centre. We witnessed an impressively large turnout especially for a community that has become disadvantaged, disempowered and sometimes apathetic.  It was great to see the wide range of organisations involved – not only STUC and Unions, but community groups and councils, environmental activists as well as individuals.

What struck me was the wider issue this campaign focuses on.  It is not only demanding work be brought here to Fife. It is mere common sense, in terms of social justice as well as economic and environmental efficiency, that the local yards should command a major share of the work for the offshore windfarm only 12 miles away (as opposed to Indonesia over 7,000 miles away).

I happened to be away on a work assignment in Indonesia back in January and they need work there too, but it makes sense to have their own turbines and manufacture them locally.  We need to ensure environmental and local economic concerns go hand-in-hand, and the consuming public also deserve to pay a fair price and receive at least some economic benefit from large scale renewable technology now being established.

Calls for a united front to bring work to Bifab also need to reflect the need to support Levenmouth’s reconnection to the rest of Scotland. The Levenmouth Rail Campaign has been battling for 5 years to reopen another mothballed environmental and economic asset in this area – 5 miles of track between Leven and the mainline currently owned by Network Rail.  Future Bifab workers need to travel to work and reopening the rail-link will bring job and education opportunities to the people of Levenmouth currently left out on a limb.  This decision lies entirely in the hands of the Scottish Government.

We can only hope sense and justice prevail and wait to see what happens next with both campaigns.”

Michelle Ratcliffe, Chair of Buckhaven Community Council stated:

“I was proud to stand strong with fellow community members, business owners and representatives from all political parties. We stood in solidarity and proved that we will not go down without a fight. Our Communities matter, our families matter, we matter.

We find it shameful, disrespectful and insulting that no one came to represent EDF to engage with us and give us answers. However we will not let it end there.

We do not appreciate being lied to and we certainly do not appreciate our energy bills rising to pay for work being shipped half way around the world when they could be built on our doorstep.

We deserve explanations and we want answers. We are tired of being side-lined and short changed. Our communities will show solidarity once more when we visit their HQ in Edinburgh on Friday the 5th July.”

Friday the 5th of July will see trade unionists, Fife community members, energy workers and environmentalists gather outside of the offices of EDF in Edinburgh.  EDF refused to come to the community, so we are bringing the community to them.  For more details, click here.

Standing in solidarity with Hong Kong

On our blog today we have Anthea Koon, Chair of the STUC Youth Committee 2018/19, discussing recent events in Hong Kong and why international solidarity is needed.

The people of Hong Kong are to be admired as millions took to the streets to protest the extradition bill, with young people at the helm. Teenagers and elderly alike have gathered to make a stand against the potential erasure of their rights and freedoms. Young people have been continuously supporting protests by being present, and even some students were still studying on the march.

However, it is saddening to find that while people are peacefully protesting, the police took to the unjustified use excessive force and violence, which has been on the rise since the Umbrella Movement despite no previous association with violent action. Protesters were sprayed with pepper spray, beaten up, and shot with rubber bullets, a sight that no one ever wants to see. The peaceful protesters have been labelled as “rioters” by the police and head of government, and some were arrested while being treated in a hospital following clashes with the police.

Three people, a 35-year-old man, a 21-year-old woman and a 29-year-old woman, have even died since the bill was proposed, all of them jumping to their deaths after leaving messages opposing the bill and supporting the protesters. We don’t want young people to lose hope and be weighed down by these deaths. We don’t want any more to follow.

So far, the bill has been suspended but the people demand a full withdrawal. We must never forget the people who lost their lives in fighting for something they so strongly believed in and our hearts go out to their families who have lost their loved ones.

Hong Kong, we stand in solidarity.

Why ownership is crucial to Scotland’s energy future

Last week Scotland’s national academy of science and letters, the Royal Society of Edinburgh (RSE), published a report on Scotland’s energy future. The report is the outcome of a two-year Commission Inquiry and involved taking evidence from a number of stakeholders, including a roundtable discussion which the STUC attended. The Inquiry was financially supported by BP, Centrica, EDF and SSE, although the RSE says these energy companies had no input into the content of the report.

The report is frank about the scale of transformation and investment needed to meet the ‘energy quadrilemma’ of tackling climate change, ensuring affordability, safeguarding security of supply and developing policy that is socially acceptable and economically sustainable.

It uses a traffic light rating system to assess how technologies such as carbon capture and storage, offshore wind and nuclear perform against the four aspects of the energy quadrilemma, highlighting the trade-offs and hard choices that need to be made – and made soon.

There is much therefore in the report to welcome.

Yet the report is silent on some key issues.

While it acknowledges that ‘low-carbon transition requires massive, long-term investment and presents significant challenges to the market model’, it is silent on questions of ownership. Indeed, in response to questions about ownership during the launch event, the Commission Chair, Muir Russell, simply said ‘we are not in that space.’

Ownership isn’t simply an ideological concern. It is an issue of economic efficiency and value for money for the taxpayer.

The energy sector is a capital-intensive business and the cost of capital – through dividends and interest payments – represent a significant part of the cost of energy. Yet the cost of capital is far lower for government who can borrow at much cheaper rates than the private sector.

Take the new nuclear plant Hinkley Point C, funded through the UK Government’s Contract for Difference (CfD) scheme, which is costing more than £20 billion. It is estimated that it would have cost £10 billion if the government had been borrowing at 2%, rather than EDF’s cost of capital, which was 9%.

The CfD mechanism ties the Government into subsidising the private sector based on the current cost of technology rather than future costs. For example, EDF’s Neart Na Gaoithe (NNG) windfarm soon to be built ten miles off the coast of Fife using turbine jackets from Indonesia, is being funded at £114 per megawatt hour (an even higher price than Hinkley Point C). Yet the cost of offshore wind turbines have come down hugely since the 15 year contract was awarded in 2015 and EDF are about to coin it in, while refusing community and trade union demands to bring manufacturing jobs to the local area.

If we are to ramp up investment in energy infrastructure, as the RSE report demands, then it will be far cheaper for the infrastructure to be developed by the public sector rather than the private sector.

Questions of ownership within our energy system are not simply questions of ethics but questions of economic efficiency and value for money. Although a number of companies and shareholders currently benefit from the system as it is, if we are to meet the energy quadrilemma, we cannot afford to neglect the question of who owns our energy.

Fife comes together to stand Ready For Renewal

Last Thursday, over 130 community members, environmentalists, trade unionists and politicians packed out Buckhaven Community Education Centre all with a common aim: to get answers from EDF.

However, despite their own policies to consult with local communities, EDF failed to turn up.

Dave Moxham, Deputy General Secretary of the STUC and chair of the evening’s meeting began by highlighting the empty chair next to him on the panel.  He explained that since EDF has chosen not to come to the community, the community must now pay them a visit at their Edinburgh offices and called everyone to attend a rally scheduled for the 5th of July.

Michael Sullivan, Secretary of the GMB Leven Engineering Branch, then spoke of the history of the yards.  Michael himself first began working in the yards in the early 70s, and has fought many battles in attempts to ensure that work there continues.  He explained his anger at EDF for stating that the yards don’t have the capability for the project, “That statement should be trashed. We do have the capability. We have the workforce with the experience to build to a high safety level. We cannot let them say otherwise.”

Our next speaker, Audrey Egan, spoke on behalf of Methil Community Council. She spoke of the positive impact on the community that EDF could have by awarding this contract to the yards, and highlighted the need for the campaign to continue.

Next we heard from Kate Whitaker from Friends of the Earth Scotland.  Kate expressed Friends of the Earth Scotland’s solidarity with the campaign and highlighted that while we often speak of the “looming” climate crisis, climate change is already impacting on many countries in the Global South, with people in India currently experiencing a deadly heatwave.  Kate spoke of the environmental impact of shipping turbine jackets abroad, stating, “Climate action doesn’t look like offshoring manufacturing work to other countries so we don’t have to count them in our emissions.” This highlighted the urgency of needing to have the wind turbine jackets built locally, deliver a just transition of workers into quality green jobs and start tackling climate change now.

Lastly, we heard from Jimmy Robertson, a Unite member who previously worked in the yards.  Jimmy spoke highly of his experience working in the yards, “We had pride in the work – mines, fishing, oil, gas.  This all created a community identity.  That’s what we’re losing. Some guys from the yards have never found work since, or we have compromised – working away from home, further to travel, impacting on our families.”  Jimmy spoke about workers having to compromise, and take on work in places like Amazon resulting in trained workers who can build ships, bridges and oil rigs moving parcels, “What a waste. What a waste of training and resources.”

The floor then opened for questions and comments, with many community members looking to have their say.  The discussion that followed touched on many key issues facing the yards and the wider community.  One audience member stated, “I was born here, I’ve witnessed my friends unable to work now because opportunities are being denied to them.  Some are having to get help from foodbanks and some are having mental health problems due to the lack of work.  We are being denied the opportunity for our sons and daughters to become engineers.”

The calls from the audience ranged from stressing the need for more investment into the yards to calls for the creation of a national energy company here in Scotland.

Michael Sullivan ended the evening with this statement, “I’m battle weary. I have been disillusioned. But the amount of people who have shown support tonight has lifted my spirits. We have to win this. We will need the support from everyone in here, and we can win this”

The STUC would like to thank everyone who attended the meeting and the staff at Buckhaven Community Education Centre.  Further details on the rally at EDF’s offices will be announced soon.