Siemens vote of confidence in the UK's clean energy sector promises to deliver a major boost to the green economy as a whole
At last. After four long years of speculation and consternation, planning applications and policy U-turns, Siemens today confirmed it will invest £160m and create 1,000 new jobs through its "Green Port Hull" project. It is a "massive vote of confidence", "excellent news for the people of Hull and the Humber", "a huge boost to the UK renewables industry", and "a major coup for the British wind industry". For once, the breathless plaudits feel justified, this really is a very big deal for the UK's green economy, and by extension, the economy as a whole.
The implications of Siemens decision to locate a flagship manufacturing wind plant in the UK are two-fold: practical and symbolic.
On a practical level this is arguably the biggest single boost to the renewables industry since the dog days of the Brown administration were marred by Vestas' decision to slash its wind turbine manufacturing operations on the Isle of Wight. The decision to locate a large scale turbine manufacturing plant in the UK will not only help to maximise the economic benefits from the UK's planned expansion of its already world-leading offshore wind fleet, it will also help cut the costs of that fleet, reducing the impact on bill payers.
This promise of lower cost turbines, helps break the chicken and egg conundrum that has seen manufacturers stall decisions on locating new plants in the UK over concerns about the scale of the market they will serve, at the same time as experts have warned the market can only be maximised if domestic plants help bring down the cost of offshore wind energy. As Siemens' Matthew Knight explained to BusinessGreen a few weeks ago, the company could only justify the investment if it was confident that a sizeable offshore wind market of around 12GW to 14GW would be built by the end of the decade. Confirmation that Siemens fully anticipates healthy growth in the market - and has almost certainly received encouraging signals about future orders from developers - provides a hugely encouraging signal for the wider market.
This signal should drive efforts to develop an even stronger engineering skills base in the north east and help mobilise further investment in the supply chain that will serve Siemens' new factory. Moreover, if Siemens is confident that a large scale market for its turbines is developing then there is a greater chance that other manufacturers will follow suit and move forward with their promised investments in Scotland and the north east, creating a wider domestic supply chain and market competition that will only serve to drive down costs further.
There are legitimate complaints to be made about why it has taken four years to deliver a decision on such a strategically important project, and detractors will rightly point out that we are still a long way from delivering the comprehensive wind energy supply chain that will serve to maximise economic gains and exports from the industry. It will take years to correct the decades of political and policy errors that have left the UK importing so many of the clean technologies it needs to deliver decarbonisation.
But Siemens plant promises to play a major role in correcting some of those errors, in part through the practical impact of its investment, and, perhaps more importantly, through the symbolic power of the UK finally playing host to a flagship renewable energy manufacturing plant.
Rightly or wrongly, symbols matter. Yesterday afternoon, I chaired an event for the Sustainable Energy Association on the potential implications of next year's election during which business leaders from across the energy efficiency and onsite renewables sectors bemoaned the way in which green improvements in the built environment were not treated as a national infrastructure priority. We all know energy efficiency improvements represent the most cost-effective means of cutting carbon emissions and enhancing energy security, but political and corporate leaders all too often have their head turned by the excitement and prestige offered by big green infrastructure projects. It is these projects - projects like the London Array, Hinkley Point, and now Siemens Green Port - that create headlines and photo opportunities, and as such they can tend to marginalise the smaller scale localised green improvements that will also prove crucial to the green economy.
This is a problem that needs to be addressed, but in doing so it would be wrong to dilute the symbolic power of these big green projects. In one swoop Siemens has demonstrated that one of the world's biggest engineering conglomerates trusts the UK's Climate Change Act and Energy Act and is confident that a transition to a lower carbon energy mix will be delivered over the next two decades, regardless of the noises off from the right wing of the Conservative Party. Others will now feed off that confidence.
The company has also provided a boost to an emerging constituency that will champion the green economy in the coming years. With Siemens factory joining Nissan's Leaf manufacturing line in Sunderland and plenty more renewable energy projects planned along the east coast it will be a brave politician from that part of the world that starts to talk down the low carbon transition - their constituents' livelihoods depend on its success. Making the green growth that economic data shows has been building for much of the past decade more visible and tangible, will only serve to reinforce political and policy support for the sector.
It will also serve to generate tax receipts. Much has been written about the Treasury's instinctive and ideological support for oil and gas, but Number 11's institutional fixation on fossil fuels is driven by the historic boost to tax revenues the industry has provided. By showing that large scale clean tech facilities employing thousands of people can generate taxes and economic growth too, Siemens and its peers will help to tilt the balance of Treasury power towards the green economy.
Most of all though, it is clean tech factories from the likes of Siemens and Nissan, coupled with solar panels from the likes of IKEA and Sainsbury's, and backing from the likes of the CBI and all three main political parties that demonstrates that a large scale low carbon economy is both possible and in the country's economic interests. Symbols matter and a bellwether project like Siemens new factory sends waves through a sector in a way that has a wider impact than the simple investment alone, welcome as it is. In offering such a ringing endorsement to the UK's green economy, Siemens has not only served to create more jobs and economic growth in a region that needs both, it has also served to make the economy-wide green transition we urgently need more likely.
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