5. Statement by the Minister for Economy: Offshore Marine Energy

– in the Senedd at 3:34 pm on 17 May 2022.

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Photo of David Rees David Rees Labour 3:34, 17 May 2022

(Translated)

Item 5 is next, and it's a statement by the Minister for Economy on offshore marine energy. And I call on the Minister, Vaughan Gething.

Photo of Vaughan Gething Vaughan Gething Labour

Thank you, Deputy Presiding Officer. I want to take this opportunity to update Members on current activity within the emerging offshore marine sector in Wales and to outline the Welsh Government's ambition to deliver real economic benefits from this new and exciting sector. My focus today will be on the sector's potential impact on regional economies in providing sustainable and high-quality jobs here in Wales.

Our support for emerging technologies like offshore marine energy sit at the heart of our programme for government. It allows us to integrate our activity across departments to deliver for the people of Wales. In the short term, offshore wind is likely to provide the most economic opportunity. As an example, we are already home to RWE's three windfarms off the coast of north Wales, which sustain 240 high-quality operations and maintenance jobs at the port of Mostyn. These jobs, near to where windfarms are deployed, are to be expected from these developments. However, we're seeking to aim higher in seeking to attract a wider range of employment opportunities in high-value manufacturing, wind-turbine integration and deployment activities. In south Wales we have four test-and-demonstration projects under review in the Celtic sea. In addition, Blue Gem Wind has received a sea bed licence from the Crown Estate to develop a floating offshore windfarm off the south coast of Pembrokeshire.

Photo of Vaughan Gething Vaughan Gething Labour 3:35, 17 May 2022

To put all of this activity into perspective, we currently generate 726 MW from offshore wind in Wales. We also have a credible pipeline to generate over 2.8 GW of offshore wind from a mixture of technologies by 2030. If we extend the timeline to 2035, then the project pipeline potentially increases to 6.8 GW. This does not include the 5 GW of offshore wind developments that the Irish Government is seeking to deploy by 2030, and this is likely to rise to 30 GW over the longer term.

This is an export opportunity that ports in north and south-west Wales are ideally placed to support and service. Our work to date suggests that up to 1,400 full-time equivalent jobs could be sustained by 500 MW of floating offshore wind projects. The number is lower, however, for the bottom-fixed sector, where the technology and the supply chains are more mature.

These are exciting developments for Wales. However, I'm concerned that they're nowhere near enough to unlock the large-scale investment required to build and grow our port and grid infrastructure. The UK Government and the Crown Estate need to provide long-term market visibility to beyond 2050 to help unlock investor confidence. I recognise that achieving this ambition means that the public and private sector will need to work closer together.

First and foremost, we need to unlock the potential within our ports. The UK Government's proposed £160 million floating offshore wind ports investment fund is a starting point. Our cross-Government initiative, the marine energy programme, is working closely with our four major port operators and project developers to fully understand what is required and, importantly, where the Welsh Government could make a difference.

We know that to unlock additional high-value employment opportunities, we need to ensure that Welsh ports' infrastructure is fit for purpose and offers an end-to-end solution for developers. Last week's agreement between the Welsh Government and the UK Government on free ports in Wales could make a valuable contribution to our broader vision for the economy. I expect that there will be a range of ambitious and innovative bids from across the whole of Wales when we publish our prospectus. I want to encourage strategic collaborations between ports that maximise the opportunities available for our economy.

The importance of proactive investment in our grid infrastructure is the other big-ticket item that lies outside of our direct responsibility. That is why we're leading the future grid in Wales project to work out the strategic grid investment necessary to meet Wales's needs. Welsh Government officials are also working with the UK Government, National Grid and Ofgem to try to ensure that Wales's grid infrastructure receives the proactive investment that is needed. Without this, we will not be able to maximise the economic benefits from the sector and, at the same time, minimise the environmental impact.

Where we have the necessary levers, we will invest to support our businesses to maximise their potential. This includes focusing on fair work and developing the local supply chain within the foundational economy. Aligned to this, I have recently announced investments of £0.5 million in Wales's trade and associated supply chain bodies, including Marine Energy Wales, the Celtic Sea Cluster and the Offshore Energy Alliance. Supply chain activity also sits at the centre of our manufacturing action plan.

Skills and workforce development is another critical area. We've already announced our intention to publish a net-zero skills action plan later this year. We see the development of the plan as a unique opportunity to achieve a just transition towards net zero. To ensure that we achieve success, we'll also need to build strong social partnerships, and we continue to work with trade unions to ensure that we get the best for our workforce. The emerging marine energy technologies of wave and tidal will also make a difference. They will reinforce Wales's credentials as a centre for excellence and help us to build a stronger, greener economy.

Our European regional development fund marine energy fund has invested £105 million across 13 projects. For example, we recently announced a £31 million investment in Menter Môn's Morlais infrastructure project off the coast of Anglesey. When I say 'we', I of course mean the announcement made by my colleague the climate change Minister.

We will also be looking to our new innovation strategy later this year to reinforce the focus on emerging marine technologies, including hydrogen generation from offshore marine energy. We know that innovation drives improvement and rapidly reduces costs. Bottom-fixed offshore wind is a success story of early investment that is now delivering cost-effective and clean renewable energy at scale. This success should be replicated across other offshore marine technologies.

The Welsh Government has extremely high ambitions for the future of this sector and its economic impacts with and for Wales. We will continue to actively work with, influence and lobby the UK Government to ensure that economic benefits for Wales continue to flow from this exciting and vital sector. I trust on that broad objective we will have cross-party support. I want Wales to reap the economic benefits from offshore marine technology and to generate renewable energy that will help to safeguard our natural environment for many generations to come. This is a key part of creating a stronger, greener and fairer Wales.

Photo of David Rees David Rees Labour 3:41, 17 May 2022

(Translated)

Conservative spokesperson, Paul Davies.

Photo of Paul Davies Paul Davies Conservative

Diolch, Dirprwy Lywydd. Can I thank the Minister for his statement this afternoon? Of course, offshore marine energy is something that I'm particularly interested in, given the constituency that I represent and the opportunities that that particular part of the Welsh coastline presents for the sector and, indeed, for the Welsh economy. Indeed, the Minister has mentioned the latest developments in relation to Blue Gem Wind in Pembrokeshire, who I met with very recently, and I'm pleased to be working closely with them on their innovative projects. Of course, we need to see more activity like this across Wales.

According to Marine Energy Wales's 'State of the Sector 2021' report,

'With the right level of support and investment to enable continued innovation, Wales could become one of the best and easiest places to produce offshore renewable energy.'

We know that when Governments invest in offshore technologies and developments, it makes those projects more attractive to private sector investment, and so perhaps the Minister can tell us how the Welsh Government will be prioritising funding in this field going forward? Will a specific pot of funding for offshore renewable energy projects in Wales now be developed, for example?

In the discussions that I've had with stakeholders, they've made it clear to me that marine planning reforms are also needed to deliver projects sooner so that Wales can maintain a competitive edge. In particular, more streamlined processes for marine planning and consenting would help to ensure that projects in Welsh waters are able to be delivered ahead of much larger projects in other parts of the UK. Therefore, perhaps the Minister will tell us what plans the Welsh Government has to reform the marine planning landscape so that we don't miss out on projects here in Wales.

Marine Energy Wales's state of the sector report also tells us that

'Of the companies who have built or are currently building devices in Wales...at least 50% of their supply chain has come from within Wales'.

So, we know that there are huge opportunities for businesses here in Wales. Therefore, I'd be grateful if the Minister could tell us a bit more about the work that is being done to maximise opportunities for supply chain businesses in Wales and how the Welsh Government is supporting that work going forward.

Today's statement rightly refers to our ports and their infrastructure, and if we want Wales to be a global player in the field of marine renewables, then we need to see our ports better supported. To deliver offshore marine energy in Welsh waters and for Wales to realise the economic, social and environmental benefits available, port infrastructure investment is urgently needed to enable the projects coming through to be here in Wales. I'm aware that a current lack of suitable local facilities in west Wales could leave developers with little choice but to tow in technology from other countries such as Spain and France, where port infrastructure is more advanced.

Today's statement refers to the UK Government's £160 million floating wind ports fund, and I'd be grateful if the Minister could tell us how the Welsh Government is supporting port development in Wales and ensure that Wales will capture as much funding as possible from that particular funding.

Now, this brings me on to strong inter-governmental relations, which are integral in identifying and maximising support for those projects. Today's statement refers to last week's agreement with the UK Government on the establishment of a free ports policy in Wales, and I welcome the agreement and the positive inter-governmental engagement that has taken place to get to this point. The Minister is right to say that a free port in Wales will have a significant economic impact and will bring in jobs and attract new industry and innovation to the area. I know that both Governments are now working together to co-design the process for free port site selection and both will have an equal say in all decisions throughout the implementation process. So, whilst it might be early days, perhaps the Minister could just provide some further details about the next stage in that particular process.

The Minister also refers to the importance of proactive investment in our grid infrastructure, which is, of course, outside the Welsh Government's remit. So, perhaps he could also tell us a bit more about the future grid in Wales project and how that work is progressing.

Now, I'm pleased that today's statement confirms that a net-zero skills action plan will be published later this year. The Minister is right to say that the development of the plan is a unique opportunity to achieve a just transition to net zero. I'd be grateful if the Minister could update us on the work that has been done to develop the plan so far so that we can get a sense of how the Welsh Government is planning to develop local labour markets going forward.

Finally, the Minister refers to the Welsh Government's upcoming innovation strategy, which will be important in developing emerging marine technologies. I'd be grateful if the Minister could tell us more about the funding that will be allocated to support that particular strategy so that we can be sure that it has the resources to really make a difference.

Therefore, in closing, Dirprwy Lywydd, Wales has the geography to be an international player in this area, but it needs support from its Governments at all levels, and, on that note, can I thank the Minister for his statement this afternoon and say that I look forward to working constructively with him on this important agenda? Thank you.

Photo of Vaughan Gething Vaughan Gething Labour 3:47, 17 May 2022

I thank the Member for his series of questions. I'll do my best to answer the points as briefly as I can. I'll start with the point of difference and the innovation strategy. We're going to go out to consultation on that, hopefully shortly, so you'll see the draft strategy, and we'll then need to take account of the comments made before we then indicate the sort of funding choices we'll need to make around that. But, as we've indicated before in this Chamber, our innovation strategy previously has been supported by European funds, structural funds, that are no longer available to us, and they haven't been replaced like for like. What we'll need to do, though, is we'll need to be more successful at getting funds out of the UK research, development and innovation funding pot that is available. More than £20 billion is supposed to be available over a period of years, and in previous times that has largely gone around the south-east of England, around the golden triangle, and also to literally a couple of institutions in Scotland. That's an issue for us, where we will need to gain more out of those UK funding pots to replace the money that has not been replaced on a like-for-like basis following our departure from the EU.

On the rest of your points and questions, I think there is a much more constructive engagement to be had that doesn't involve direct criticism of the UK Government. So, I think when you look at the investment choices, there'll be a need for private investment, for the Welsh Government to support some investment choices as well, but also for the UK Government too. For example, your question about the grid: well, the reason why we're going through the future grid Wales process is to understand where and why to make strategic investment choices, and, without those, that will hamper our ability to actually lever not just the power itself but the economic opportunity as well. We don't want all of the landing source for the Celtic sea, for example, to be on the Devon or Somerset coast, so we're going to need to have grid infrastructure that is fit for purpose for what we're doing in the future, and that means proactive investment. It's the point that my colleague Julie James has regularly made, not just in internal meetings but with counterparts in the UK Government. Without that sort of choice being made, it will hold us back.

However, in addition to that, we'll need to see some of those investment choices and the line of sight that I talked about in the statement for how long the future supply line is, for how much licences are going to be made available. That will then mean that investors will have enough confidence to make significant investments in port infrastructure, because you're right, other ports are in a different place in terms of the size and the scale of what they're going to need to handle. Now, that's a real opportunity for Welsh ports, to have that investment made and then to make sure that deepwater ports that are nearer to the opportunities in the Celtic sea and the North sea can actually take advantage of those, and I definitely want to see that happen—so, a clearer line of sight with a longer term that will allow both private investment choices to be made and also the case for public sector investment where needed. And when it comes to us putting our money where our mouth is on that, of course, the announcement I referred to for the European programmes money that we have to agree—the £31 million going to Morlais to make sure the infrastructure is there so they can land the energy—well, that really does show we've been prepared to make significant investments with money that we control to make sure that those opportunities are realised.

The further point that I made and that you asked about, about skills for the sector as well, that will be really important. So, that's both work with providers, it's both work with the sector, and then understanding how we then have a pipeline for skills acquisition. Now, the difficulty there is, without a clearer sight on the pipeline of where the work's going to go, we're going to need to understand how and where we try to give people new skills to ensure that they're ready to undertake the jobs as and when they come. So, being able to plan that successfully together will be really important, and I do think that the net-zero skills plan that we'll provide later this year will be helpful in doing that, but the conversations with the sector will be even more important in advance on it.

On the marine planning landscape, you'll be aware that the responsible Minister is in the Chamber as well—I'm looking forward to her second statement of the day—but we have recently published the first marine plan for Wales, setting out planning policy. But I do know, as well as the advantage of certainty, that the Minister for Climate Change is always ready to look at whether we can have a better system that will deliver on the economic opportunities that are available and the impact we can have on climate change, and at the same time the balance with the natural environment as well.

On what we have done to help the supply chain, I indicated in my statement that we've invested about £0.5 million in supporting the supply chain. That's money we've given to Marine Energy Wales that I've signed off, together with moneys for the Offshore Energy Alliance, dealing with the supply chain across north Wales and north-west England. So, again, there's active conversation between our officials on making sure that those opportunities are real, and the supply chain locally, including many small and medium-sized enterprises, are able to take advantage of that, and us helping to ensure that businesses are ready and able to take advantage of the opportunity.

And I'll finish with two points, quickly, Deputy Llywydd. That is, on the port infrastructure fund, it is a welcome step forward, but the eligibility criteria aren't yet available. So, I'm not able to talk to you much about the criteria, which have yet to be published, but we are hopeful they will be published in the near future this summer to allow people to then think about bidding, and we're very keen that Welsh ports get a proper share of that money that is going to be made available.

And on free ports, it's a good thing that we've reached agreement on terms that are acceptable to both Governments. We'll be joint decision makers, there'll be an equity of funding with free ports in England, and the prospectus for bids will be coming up over the summer. And I do think it'll be important to see bids that help us to achieve our ambitions and are aligned with Welsh Government policy frameworks, including, of course, the opportunities in marine energy as well as fair work. But I'll have more to say on that when we actually are able to provide the joint prospectus.

Photo of David Rees David Rees Labour 3:53, 17 May 2022

(Translated)

Plaid Cymru spokesperson, Luke Fletcher.

Photo of Luke Fletcher Luke Fletcher Plaid Cymru

(Translated)

Thank you, Deputy Presiding Officer, and I thank the Minister for his statement today.

Photo of Luke Fletcher Luke Fletcher Plaid Cymru

As we already know, Wales is well positioned to play a global leading role in marine energy, with 1,200 km of coastline and up to 6 GW of generating capacity through the potential for wave and tidal stream. If we are to reach net zero by 2050, or perhaps before, we need to massively increase renewable energy generation in Wales. The Minister and Deputy Minister said in a letter to the Climate Change, Environment, and Infrastructure Committee that, since 2019, work has been under way to stimulate renewable tidal power generation in the seas around Wales and to help to support other forms of marine energy generation. As a recent report on the Welsh Government's marine policies by the Senedd's climate change committee makes clear, with reference to evidence from Jess Hooper, there has been a lack of policy support for tidal range developments from the UK Government, and that the large scale of some projects meant that they did not fall within the competence of Welsh Government, such as the north Wales tidal lagoon project. What's clear is that a lack of powers, a lack of policy support and a lack of financial resources, not to mention severe grid constraints, skills gaps and insufficient port infrastructure, are seriously holding us back when it comes to fully realising our marine energy potential, our ability to respond to climate, and our ability to build a greener and fairer economy in the process. Is now not the time to seek greater powers over large-scale renewable energy projects? I'd like to ask the Minister what conversations he's had with his ministerial colleagues in Welsh Government as well as the UK Government, regarding the further devolution of powers over large-scale energy projects, so those that are above 350MW, does he agree that we need further powers in order to realise our potential for offshore energy development?

Now, the report also notes the number of jobs that will be created through offshore renewables, with Marine Energy Wales stating that floating offshore wind alone is expected to generate 3,000 jobs by 2030, if the early mover opportunity is seized. David Jones of Simply Blue Energy said that, because of the predicted need for jobs in the sector, which is, by the way, 70,000 by 2026 to deliver the current programme, his company had engaged with local schools and further education, focusing on science, technology, engineering and mathematics and skills development. As part of the Deputy Minister for Climate Change's deep dive on renewable energy, he confirmed that Welsh Government will develop a net-zero skills action plan by spring 2022. Well, of course, we're in spring 2022, and, whilst I welcome the Government's continued commitment to delivering on that plan, could the Minister provide a new rough estimate on when we will see this plan? Because to achieve our ambitions around net zero, I can't emphasise enough how important it will be to get to grips with the skills gap in the green economy, and I would be interested if the Minister could also provide timescales for implementation and the Government's targets with regard to green job creation in the sector by 2050 as soon as possible. 

Finally, according to UKRI's own figures for 2018 and 2019, research councils and Innovate UK spent £5.4 billion across the UK, only £131 million of which was spent in Wales. This amounted to 2.4 per cent of the total and £42 per capita, the lowest such figure among the UK's comparable nations and regions. If research spending were devolved and fed through the Barnett formula, then the Welsh Government could expect to receive an allocation equivalent to around 5.9 per cent of the total. Given that Wales lags behind the rest of the UK when it comes to research and innovation funding, I'd like to hear if, or rather how, the Minister plans to scale up research and innovation funding in the marine energy sector to help them develop and deliver positive outcomes.

Photo of Vaughan Gething Vaughan Gething Labour 3:57, 17 May 2022

Thank you for the questions. I think they're in three or four broad categories. On tidal energy, yes, we think that Wales has a real opportunity still to be at the forefront of an emerging sector. It is a matter of well-understood regret from this Government's point of view that the Swansea lagoon has not been supported previously, including following a review by a former Conservative energy Minister, who described it as a 'no regrets' project. We still need to be able to deploy a significant tidal project to understand and to learn from that about the further deployment and economic advantage that can be gained as well as, of course, the energy generation from it. We're interested in the Blue Eden project that Swansea council are leading the engagement with developers on. They appear to have a private investor who's prepared to do that. The challenge for us is the scale of each project, as you identified. We do think that there should be further powers with this Government in terms of consenting. We've also been clear about our view that we would rather have further powers on the Crown Estate. None of these things are a surprise and have been said on many occasions by the First Minister, by myself, and indeed the climate change Minister, on a regular basis.

However, what we want to do is to maximise the opportunity we have within our current powers to do all that we can in a way that will help to see those first projects take off, because, without the first significant scale project, we're still going to be talking about potential and what if and what may be. We do know that, from a tidal power point of view, we have lots to exploit and lots to look forward to. I certainly want to be in a position where we learn the lessons of what's happened with onshore and fixed offshore wind. The early movers are people who invested early and then took lots of the advantage in both research and development and, indeed, manufacture. I'd much rather that Wales was then exporting that technology and know-how to other parts of the world rather than buying a mature set of technology that someone else has developed and all the economic gain that goes along with that. 

I think that comes back to your point about innovation funding, which was touched on in questions with Paul Davies as well. Given that we have lost money now that we have left the European Union—and it's unarguable that we have less money than we would otherwise have done—our challenge is that, given that we had a funding stream that came from that into the innovation sector here, how we replace that successfully. Now, as I said, the positive is that the UK Government are looking to invest more than £20 billion over a number of years into innovation. The challenge is that if it goes out in the same way that it has done previously—and you've highlighted this—that money will be largely taken up in the golden triangle. And once you start to have a system that repeats itself, well, it's very hard to break in. And the positive aspect of this is that we're not saying, 'Give Wales money because we deserve it.' We're saying, 'Give Wales money because we have excellent research here as well, within our sectors, within our higher education and, indeed, within our business and applied sector as well. So, there's actually a real gain to be made and do it close to where you're going to deploy it as well.' So, I think there are a lot of really sensible and logical advantages in doing that. So, to make real some of the promises that have been made will not just be the right thing from the politics point of view, it will actually be practically the right thing to do from an economic benefit and advantage point of view as well. 

And certainly the Minister for Climate Change and I are very keen to take advantage of Wales being an early mover within these sectors as well. I think we have lots to offer and lots to gain, and the net-zero skills plan will be part of that. But, as I've indicated, we expect to publish that this year. I'm very keen that we get it right. I'd much rather we were in a position to have published it or to give a definitive time for when it will come out now. I can't do that, but what I will do is say that, as soon as we've got it right, we'll publish it, and I'll happily indicate not just to him but to other Members when that plan is expected to be published.

Photo of David Rees David Rees Labour 4:01, 17 May 2022

We have almost reached the end of our allocated time, so I ask Members, because there are still five who wish to speak, to not make speeches, please, but to ask your questions only, and I'm sure the Minister will be succinct in his answers as well, to allow everyone to be able to be called. Huw Irranca-Davies.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour

Dirprwy Lywydd, you were looking directly at me when you said that, then. [Laughter.] I'll try to keep it very succinct, in that case. Can I welcome the tone and the substance of this statement today, because it seems to show that there is a genuine effort to be really constructive and engaged between Governments, but also I have to say in the context of the policy framework here in Wales? The list of things, which I will not go through, all scream that any investment, whether it's in the future innovation from the UK Government, whether it's the free ports development, or whether it's the ports investment, needs to be done hand in glove with Welsh Government, but also the existing regional funding, investment framework, partners in Wales, the skills investment, and so on. And that will provide opportunities for Wales and for the UK in hitting its renewable targets. So, could I ask the Minister for his assurance that what we've heard reflected here today in this Senedd, in this Welsh Parliament, is equally being reflected in discussion with Ministers, in Westminster and on the floor of the Senedd? And finally, can he also make sure that—

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour

—the environmental aspects of this are also safeguarded? All of those organisations want to see this happen, like WWF, like the Wildlife Trusts, like the Marine Conservation Society, but they want, Minister, to make sure that it's done also protecting the wildlife and the biodiversity that we want to safeguard for future generations.

Photo of Vaughan Gething Vaughan Gething Labour

On your final point, that's absolutely the perspective that Welsh Ministers take. We're very, very keen to see the economic benefits. We're very, very keen to see the renewable energy benefits, knowing that will positively impact upon the environment around us. But, creating any form of power generation is something where you need to think about what is the impact on the environment. And so, you see that in bottom-fixed energy, you'll see that in floating, and so that's why we're very keen in the marine planning policy statement to be clear about the balance and what we expect developers to be able to demonstrate about how they will go about deploying and then developing that power.

On your first point, I'm very keen that we see development that takes place within a context where we have agreed frameworks and agreed ways of working already. We have economic regions in Wales that are in line with the climate change Minister's former endeavours as the local government Minister, and those are agreed regions, and we've agreed with the UK Government that, in the shared prosperity fund—. For all the points of difference we have, we managed to agree that the regions of Wales will be those regions and not different ones, to plan and work together economically. That's really important. So, local government and the growth deals will have the same footprint as those regions, so we don't need to design new and alternative structures. And I expect that the policy framework we will carry on developing will be in that way, and we will carry on being constructive partners. We'll stand up for the best interests of Wales, but we've got to look to work with people as our starting point and where we want to get to.

Photo of Janet Finch-Saunders Janet Finch-Saunders Conservative 4:04, 17 May 2022

Thanks, Minister. It is good that we are welcoming this new renewable energy impetus that's coming, but do you think it's enough that the renewable energy deep dive only commits to work with Natural Resources Wales and key stakeholders to identify marine strategic resource areas by 2023, and to provide guidance to signpost appropriate and inappropriate areas for development? Now, you know our views on these benches: we want to see the Welsh Government use its legislative ability to create a legal duty to form a national marine development plan and to keep it under regular review. And that's supported by Wales Environment Link, who did inform our Climate Change, Environment, and Infrastructure Committee that sectoral locational guidance, as currently proposed by the Welsh Government, is not enough. A statutory spatial plan must look cross sector at either a regional or national level to address cumulative impacts on our marine ecosystems from all marine users. And will you also look to—? I could see the Minister for Climate Change actually agreeing that there has to be these close workings between her department and yours, but will you ensure that a spatial approach is taken to marine planning, to guide the siting of these important developments away from the most ecologically sensitive areas? Thank you.

Photo of Vaughan Gething Vaughan Gething Labour 4:05, 17 May 2022

Well, that is the approach that we are seeking to take. We're seeking to make sure that development takes place in appropriate areas that take account of the environmental impact of developments. That's exactly the point that has been made in response to Huw Irranca-Davies; it's exactly the approach that Welsh Ministers will seek to take. We think it's entirely possible to responsibly deploy more of this energy-generating potential and to gain the economic benefit, without compromising our environment.

Photo of Rhun ap Iorwerth Rhun ap Iorwerth Plaid Cymru 4:06, 17 May 2022

Thanks for the statement. I welcome the focus on the potential for ports to benefit from the next generation of offshore energy generation. I've spoken with developers like BP, for example, encouraging investment in Holyhead as an offshore wind hub. The Minister will have heard me many times encouraging an honest debate about free ports and the need, for example, for the UK Government to properly fund free ports in Wales, and I'm very glad that negotiations led to that u-turn, where Wales will now be treated on equal terms with English ports, that Welsh and UK Governments will equally decide on granting free port status in Wales. I think it was well worth holding out rather than accepting the pretty poor and ambiguous offer that was on the table originally. I've written to Isle of Anglesey County Council today and I'm looking forward to working with the local authority and other partners to ensure that benefits for Holyhead are maximised. 

A very brief question about tidal stream, though. I welcome the £31 million in European funding approved by Welsh Government to develop the Morlais tidal stream demonstration zone. The infrastructure is going on, but what can Welsh Government do to make sure that blockages are removed and that the deployment of the tidal stream technology itself can be deployed as quickly as possible?

Photo of Vaughan Gething Vaughan Gething Labour 4:07, 17 May 2022

Okay, so on your final point, it depends which blockages you refer to. We've just had a conversation about the environmental impact, and it depends what other blockages are being referred to, whether it's pre deployment or, actually, the ability to manufacture and generate at scale, and where the interest is from companies. We do know that there is a range of companies already looking at deploying tidal stream turbines—companies from Wales as well. So, we're very keen to see that move forward, because, as I say, we want to generate—. The reason I'm making this statement today is because this is about focusing on the economic benefit from generating power in a much cleaner way. If the Member wants to have a more focused discussion on potential blockages, I'd be happy to have that discussion with him and partners in and around Anglesey, where I know that there is lots of potential.

On your point about free ports, the Welsh Government was never going to agree to a process where free ports in Wales were funded to a lesser degree than free ports in England. We were very clear about that. We've been consistent in our ask, and we've managed to negotiate something that meets our objectives. I would just say, Dirprwy Lywydd, that within the Chamber today a number of people have been championing their own local ports as beneficiaries of any free ports competition. I understand why Members will do that. The agreement at present is that the UK Government are only prepared to fund one free port in Wales, but there is a potential opportunity if more than one compelling case is made that it may be possible for it to happen. And there are strong cases made in the north and the south-west, and others I am sure. I can't quite get into agreeing on one of those cases, given that I could well be a co-decision-making Minister, together with the UK Minister, on a successful bid. I just want to politely make that point to all those people who will carry on making their local case.

Photo of Samuel Kurtz Samuel Kurtz Conservative 4:09, 17 May 2022

Minister, you mentioned wanting to be an early mover on this, which is something that I welcome, and given my constituency I'd like to focus on floating offshore wind. So, how are we best able to utilise the small and medium-sized enterprises that are already available who've been working in the hydrocarbon and petrochemical industries over the years, and utilise their transition away from the energies of the past, and utilise the technologies and the skills that they have to benefit the supply chain to develop these industries off the coast of Pembrokeshire? Diolch. 

Photo of Vaughan Gething Vaughan Gething Labour 4:10, 17 May 2022

Thank you. I think that there is lots of potential for people who have been involved in former industries that are unlikely to be future industries for the longer term. People who have engineering, research and development skills, there are opportunities there. When you think about the potential for hydrogen and the infrastructure that is going to be needed, we are going to need to have significant UK Government investment, as well as private sector investment, to get the infrastructure right.

There are choices to be made around what part—if any at all—non-green hydrogen has to play in getting our infrastructure right, to make sure that we don't hold back the opportunity to develop green hydrogen from this offshore marine energy generation. There are real economic opportunities in all of that, and it's no surprise that there are people who are engaged in current petrochemical industries who are interested in investing in this area.

When you think about the number of people that are bidding for, or have already successfully acquired, licences: British Gas, Centrica, BP and Shell and others are all in this space because they want to carry on being energy generation companies. So, while we are not here to further promote the oil and gas industry, we will need to work with oil and gas companies to properly take account of what they are prepared to do to invest in the future of renewable power, and that will undoubtedly take in the Member's constituency.

Photo of David Rees David Rees Labour 4:11, 17 May 2022

(Translated)

And finally, Darren Millar.

Photo of Darren Millar Darren Millar Conservative

Thank you, Deputy Presiding Officer. Minister, you will be aware that, in addition to the tidal sort of energy that has been talked about in south Wales, there has also been discussion about the prospect of a north Wales tidal lagoon, which could of course create up to 22,000 jobs, according to Wrexham Glyndŵr University, and generate renewable energy for up to a million homes. The scale of this would be from Prestatyn to Llandudno, offering some flood protection benefits as well.

In order to unlock the £7 billion-worth of investment to get that project done, there needs to be some seed funding of about £50 million to undertake some environmental impact assessments. Will the Welsh Government look at making a contribution towards that and working with the UK Government in order to deliver what I believe could be a hugely transformative project for the whole of the UK's energy industry?

Photo of Vaughan Gething Vaughan Gething Labour 4:12, 17 May 2022

Well, I agree that there is significant potential within and around north Wales for tidal energy to be successfully generated at a large level with significant economic return. Our challenge is how we work with the private sector and the UK Government to get that off the ground, and it goes back to the point about needing to have a demonstrator project of significant scale to help unlock those technologies. That's why there's disappointment about the Swansea lagoon not having gone ahead.

But, we will carry on working constructively with the UK Government and others. We have shown—for example, in the investment that we have made in Morlais—that we are prepared to carry on investing, to see that industry come to fruition in the huge potential in north, south and west Wales. So, I can't give you a guarantee about future funding, and £50 million may sound like seed funding to you, but I can tell you that, in managing budgets within the Government, there isn't a spare £50 million around. But, we want to have a constructive conversation, as I say, with the UK Government and with the private sector, to realise the significant economic potential for Wales and beyond. 

Photo of David Rees David Rees Labour 4:13, 17 May 2022

(Translated)

I thank the Minister.