Written evidence submitted by the European Marine Energy Centre Limited (EMEC) (NRG0005)

Introduction

EMEC was set up in 2003 in Orkney, Scotland, to kick start an ocean energy sector in the UK and boost economic development in the Highlands and Islands.  

As a not-for-profit plug-and-play facility, EMEC helps reduce the time, cost and risk of testing innovative sustainable technologies and is the world’s leading centre for demonstrating wave and tidal energy converters in the sea. More marine energy devices have been tested at EMEC than at any other single site in the world: EMEC has hosted 22 wave and tidal energy clients (with 35 marine energy devices) spanning 11 countries.  

Over the last 20 years EMEC’s facilities have put early stage, pre-commercial technological solutions to the test spanning ocean energy, green hydrogen and e-fuel R&D. Furthermore, the centre is leading projects exploring floating offshore wind and island decarbonisation. Building on our experience around offshore demonstration in ocean energy sector, EMEC is exploring options for developing a National Floating Offshore Wind Test Centre to the west of Orkney. 

An economic impact assessment commissioned in 2023 showed that, as a result of EMEC’s operations over the last two decades, £370 million GVA has been generated into the UK economy, with £263 million benefiting Scotland. Orkney alone has seen £130 million in GVA and the creation of 224 jobs.  EMEC’s activity has fostered a cluster of activity in Orkney that is enabling other companies to develop and thrive.

EMEC welcomes the opportunity to provide evidence on GB Energy and the Net Zero Transition. Our submission is informed by our experience of how technology innovation has been a catalyst for economic development, creating jobs and a world-leading supply chain now exporting skills and knowledge around the globe.

EMEC written submission in response to the following questions

1. What impact will the UK Government’s approach to net zero have on Scotland’s oil and gas industry?

- What state of readiness is the oil and gas sector in for the net zero transition?

There is now more widespread acceptance that the energy system of the future has to be sustainable, and that will mean a renewables-based system. Naturally the oil and gas sector will want this change to be as late as possible to maintain their very successful, but unsustainable, extractive model and to maximise the value of the investments made so far.

The oil and gas industry is therefore beginning to show some interest in renewables, but given the appallingly low base we are starting from; the scale of renewable deployment seems remarkable to those steeped in oil and gas. There has been a tendency to cast it as great progress, all the while being keen to keep the extractive model running.

Oil and gas companies are capable of deploying more renewables, but do not do so because of the presently poorer profit margins. Pushing the sector to do more is a critical role of government.

- Is the scaling up of the clean energy sector keeping pace with the decline of jobs and investment in the oil and gas sector, or does the UK Government need to do more to close this gap?

No. The costs of climate change are not being levied on the processes that give rise to it and the carbon price remains below the true economic cost of the atmospheric fly-tipping underway. Government needs to enforce the ‘polluter pays’ principle and this will both reduce demand for oil and gas and encourage the renewable alternatives.

The continued profitability of the oil and gas market is inhibiting the scaling up of the clean energy sector, as we see increasing skills shortages in renewables projects, coupled with an inability to attract workers to make the transition.

2. What UK Government interventions will be necessary to maximise the ability of oil and gas workers to find jobs in clean energy?

Skills are needed before they need to be deployed and so the retraining/upskilling of oil and gas workers to the needs of the renewables industry should be undertaken now. This will mean trained workers will be available for renewables jobs when they become available. However, matching this supply and demand smoothly will be impossible. The alternative must be to train workers now and then return them to oil and gas jobs to await the opportunities.

If training is only delivered when it is needed, the risk is that there will not be the locally skilled workers available and so labour will be imported at peak times. This then supresses demand for locally skilled employees and so effectively exports jobs.

Having a locally skilled workforce will dramatically help the UK secure and retain the work and will also provide opportunities to use the skills overseas when those counties follow the UK’s lead.

In fact the skills may well be largely transferrable and this may be more a matter of re-ticketing for a new industry than of significant re-training. The bigger issue is probably the generally higher wages in oil and gas than renewables, however with appropriate encouragement the sunset industry could enable this transition ahead of need.

3. Are Scotland’s energy industry and associated supply chains well-placed to transition to clean energy generation, or is more support needed?

Yes they are well placed, but as outlined in 2. there is a very real risk of workers not being locally available. The UK also historically has weak labour laws compared to the USA and this leads to imported labour working in the UK and displacing locals. This needs to be tightened by Government to ensure local employment and upskilling.

In addition, the public sector needs to fully grasp the need to develop and nurture an indigenous workforce. This will require the public sector to preferentially employ/commission local contractors as part of strategic development activities. Best Value needs to be sufficiently and robustly re-defined for the public sector to recognise the benefits of this sort of supply chain support and allow its buying power to develop the markets.

4. What actions should the UK and Scottish Governments take to ensure the necessary generation and transmission infrastructure to support the development of Scotland’s renewables sector?

There are several specific actions:

a. Assess the options for the transmission of energy by means other than the electrical grid. EMEC has undertaken work to demonstrate the practicality of turning renewable energy into fossil free liquid hydrocarbon based e-fuels. In addition, EMEC’s involvement with the direct use of hydrogen from electrolysis (we were the first to produce hydrogen from electricity generated by tidal power in 2017) has led us to conclude that the applications of gaseous or liquid hydrogen are vanishingly small, especially in the transport sector. EMEC therefore sees a need for fossil free liquid transport fuels (especially in aviation and maritime) that could well be fulfilled using renewables.

The conveyance of these e-fuels by pipeline will be able to be accomplished more easily than the conveyance of the electricity that made them. In this case either the scale of deployable renewables in the north of Scotland will be greater than the scale of grid that is built or else the grid could be smaller than planned because energy will flow by pipe rather than just by cable.

The danger is that the UK builds an oversized grid, or more likely it fails to build grid at all because the size it thinks it needs would be too epic, because it fails to recognise that pipes will be part of the solution alongside grid cables.

b. Grid needs to be laid to where there are tidal resources in the expectation that they will be deployed. The UK knows where the suitable tides are, so if the UK is going to use these dependable resources then it needs to recognise the infrastructure needs to be built. In some cases, it will be sufficient to lay the ducts into which cables can be pulled at a later date rather than laying the cable themselves. In some cases, laying additional ducts to serve wind farms’ grid needs could also reduce the final costs of marine energy’s deployment. Orkney has a specific example where the investment by GB Energy in works that are out with present business cases would accelerate the deployment of 200MW+ by several years and at trivial additional cost on the present scheme of the same size. Further details can be provided upon request.

c. The principles of community benefit need to be progressed to adoption in order to be able to incentivise communities to accept necessary infrastructure. It is understood that these were partly written some time ago but failed to be adopted. There is a consultation out at present and this needs to lead to an output.

5. How can GB Energy, and other ways of backing industry (including funding), most effectively support employment, economic growth and the development of clean energy supply chains in Scotland?

Risks need to be taken and commitments made to back the UK’s development of a supply chain. This needs to be undertaken at lower levels of certainty than seem to be required by the public sector at present. The danger of this present highly sceptical mind-set is that it takes too long to convince funders of the merit of an investment and by the time it is made; the opportunity has passed or else the client has had to go to an overseas supplier of the service. This has to change.

GB Energy can make interventions in pre-commercial projects to attract further investment and expedite the scaling up of projects.  It should be empowered to do so due to the greater value to the energy system, supply chains, and UK economic impact in coastal communities that emerging offshore renewables technologies offer.

6. How should GB Energy work with the Scottish Government and other Scottish bodies to identify appropriate funding and other mechanisms?

Neither party has perfect insight, but it is noticeable that neither the UK supply chain nor Crown Estate Scotland are mentioned. Co-creating the mechanisms with suitably demanding (but workable) supply chain obligations is critical and this will only be achieved by setting up a ‘big tent’ to convene the design and delivery work. Restricting this to the public sector will fail.

GB Energy must be empowered to drive investments which are smart at futureproofing, but also flexible enough to accommodate innovation.  We know, for example that the wave and tidal energy resource around the UK holds huge value for the right technologies, and being ready to facilitate the path to commercialisation is critical.

7. What does a just transition look like for workers and communities across Scotland’s highland and island communities, and what role might community energy and community benefits play in this?

EMEC provides an example. The centre’s establishment was led by Highlands and Islands Enterprise and brought together support from across the UK. An economic impact assessment commissioned in 2023 showed that, as a result of EMEC’s operations over the last two decades, £370 million GVA has been generated into the UK economy, with £263 million benefiting Scotland. The economic impact in Orkney alone has been significant, adding £130 million in GVA and the creation of 224 jobs.[1] This shows what could be achieved in other communities. 

This is significant as creation of high value jobs helps to retain young people in Orkney, attracting back those who had previously moved away for work or study, as well as enticing new people to move to the county. This is particularly important as the working age population of Orkney is projected to decrease by 13% between 2021 and 2043. 

Regarding community benefits, as mentioned in 4., the principles of community benefit need to be progressed to adoption in order to be able to incentivise communities to accept necessary infrastructure.

8. Can the UK learn lessons from international examples about how to effectively manage Scotland’s energy sector transition?

Yes. Denmark encouraged participation in onshore wind through the mobilisation of the public though the establishment of ‘wind-guilds’ which encouraged private investment in local projects at small scale. In doing so it drove a diverse number of companies into the market and built industrial engagement. It did not do this in a showy way, but just by assiduous application of policy across a range of parts of the nascent wind industry.

Working on the social acceptance of renewables is going to be critically important and Government has an important role in helping shape the public mood about the transition. Part of this shaping will be by leadership, some by demonstration, but some could be through selective investment in enabling activities such as grid and other infrastructure.

France seems to take a more interventionist approach to driving infrastructure and strategic investment. It provides loans to participants that seem to neither require security to be put up, nor seem to be repaid at the end. It is hard not to see this as a form of grant, but they seem anecdotally to be able to provide greater levels of public support than the UK seems willing to consider. The USA is making significant investments in renewables through the IRA, but with up to 90% support levels in R&D. Unsurprisingly, R&D in green technology is being drawn to the US.

January 2025