Two new ‘green’ freeports to be created in Scotland, but likely benefits scrutinised
The UK and Scottish Government have today (14 February) made an agreement to establish two new freeports "with net-zero at their heart" in Scotland.
Freeports are dedicated economic zones where there will be more infrastructure funding from public coffers. Businesses there will also benefit from lower tax rates and a streamlined planning process.
Building on the eight English Freeports announced by Chancellor Rishi Sunak at his Budget speech in March 2021, Westminster and Holyrood have agreed to open the bidding process for two Scottish freeports this spring and to jointly vet applications. Successful locations will be announced later this year, in the hopes of readying the sites for operation by the second quarter of 2023.
Correspondence between the UK’s Secretary for Levelling Up, Housing and Communities Michael Gove and Scotland’s Cabinet Secretary for Finance and Economy Kate Forbes confirms an intention for net-zero to be “a key requirement of the [Freeports] programme”.
Applicants will need to evidence how their city or town is planning to reach net-zero by 2045 – Scotland’s legally binding deadline. They will also need to explain how freeport status would help “build internationally competitive clusters of manufacturing excellence in technologies that will deliver net-zero benefits”, thus creating green jobs. In other words, they must have their own plans to decarbonise, and plans to grow the private sector in a way that enables decarbonisation elsewhere.
Gove and Forbes have agreed to market the two new areas as “Green Freeports”.
Forbes said: “Scotland has a rich history of innovative manufacturers and so as we look to grasp the many opportunities of achieving net-zero, the establishment of Green Freeports will help us create new green jobs, deliver a just transition and support our economic transformation.”
On the social sustainability piece, Gove and Forbes have agreed that it will be a requirement for all applicants to evidence plans to ensure that new jobs offer good salaries and working conditions.
Gove called the announcement “a truly exciting moment for Scotland” and promised that the Green Freeports will “help inject billions of pounds into the local economy”. Westminster is claiming that it expects the 10 Freeports already confirmed for the UK to unlock £35.3bn in private investment.
Economic commentators have been quick to question whether these financial benefits will materialize.
Replying to 10 Downing Street’s Tweet announcing the Green Freeports news, several commentators are pointing to a 2020 study from the University of Sussex’s Trade Policy Observatory, which found that only 1% of UK imports by value could benefit from the tariff changes offered at Freeports. The study was commissioned by the Financial Times. The thread also saw concerns voiced about whether Freeports simply relocate jobs rather than leading to additional job creation.
The UK first opened Freeports under Margaret Thatcher in the 1980s in an attempt to combat the economic impacts of de-industrialisation. In 2012, under David Cameron, the Government decided against renewing the licences of remaining Freeports.
Levelling Up White Paper
The news on the Freeports comes shortly after the UK Government unveiled its long-awaited Levelling Up White Paper. The plans generally received a muted response and, subsequently, Prime Minister Boris Johnson completed a mini cabinet reshuffle, appointing Stuart Andrew as the eleventh Housing Minister since 2010.
Detailed in the Levelling Up White Paper is a commitment to boost public investment in R&D in the Midlands, North, South West, Scotland, Wales and Northern Ireland by 40% this decade. The importance of clean technology hubs is noted, but there are ultimately no new targets or funding pledges for sectors such as wind energy, heat pump manufacturing, nuclear energy, electric vehicle (EV) manufacturing, and carbon capture and storage (CCS).
Thought leaders from trade bodies, think tanks and environmental groups have generally agreed that the White Paper does not have the thread of net-zero running throughout it. Ministers are under particular pressure to do a better job of communicating the opportunities of the low-carbon transition against the backdrop of the energy price crisis, which has led to an uptick in pro-fracking and pro-coal sentiment and increased scrutiny of the cost of the energy transition.
As Green Alliance’s executive director Shaun Spiers wrote in his most recent blog: “With the exception of Alok Sharma, ministers have largely stayed silent on climate since COP26. But they need to start making the case. They need to set out the attractions, as well as the necessity of a zero-carbon, nature-rich future. This battle will not be won by facts alone.”