There is an aphorism about forests which can also apply to industry; if you want to check the health of a place, look down, not up. In a forest the trees that are standing are decades or more old. The future of the forest relies on the smaller new growth that can be seen on the forest floor. If there is no new growth it is a warning that the forest is dying
News that eight out of ten off-shore supply firms is looking outside Scotland for their future is exactly such a warning. It is yet another illustration of the difference between 'uneven, spasmodic lurch' and 'transition'.
Very simply put, a combination of market forces, government action and default economic development philosophy was always going to make the 'transition' to renewables uneven and messy at best. Each contributed.
First, the development of Scotland's offshore industry was mishandled in government policy. Determined to use market forces alone to develop the capacity, the Scottish Government was then persuaded to not allow market forces to guide the initial allocation of options.
Rather than having an open bidding contest in which the bidder drove the value of the development, the Scottish Government chose to put an inexplicable cap on bids. This meant that rather than the market sorting out what was commercially viable or not, low investment costs simply incentivised speculative offers.
In other words, the cost of securing the rights to Scotland's offshore wind potential were so low it was worth buying them even if you had no real intention of developing them. By handing them out for such a low value, the bidding companies were not financially committed enough to the projects.
Then market forces took over; this is complicated and includes everything from a bottleneck in the infrastructure needed to deploy offshore infrastructure (there are shortages of key vessels for example) to lack of grid development on the shore to 'land' the electricity.
But the spike in oil and gas prices resulting from the Iran War is crucial because Scotland let our renewable energy generally be purchased by oil and gas companies which have largely refocussed on that market because they are making stupendous amounts of money out of it.
All of this could have been managed if it had been planned, but it wasn't. This is where economic development theory comes in; because all the policymakers involved were wholly committed to a non-interventionist neoliberal model, and because the operators were not incentivised to do it, no-one bridged or coordinated these disparate issues.
Common Weal has long proposed a Scottish Energy Development Agency the job of which would be in part to help coordinate these moving parts and to support the development of a new industry in a systematic way. Instead the economic development role seems mainly to have been to do whatever oil and gas companies wanted.
The result of this is that we can see quite clearly the difference in meaning of 'jobs' in oil and gas and 'jobs' in renewables. Consider the amount of lobbying and campaigning the Scottish Government did on behalf of Jackdaw purportedly because of the 27 jobs involved. Then consider how little has been done on the issue of the offshore wind industry supply chain.
As Common Weal recently revealed, probably all and certainly most of the winning bidders for ScotWind licenses has badly missed their (nominally contractually guaranteed) domestic supply chain jobs targets. This is supposed to trigger (woefully low) fines for the companies involved – but none have been issued.
In other words, the Scottish Government lobbied hard for the oil industry on the argument that it would create 27 jobs but has refused to fine largely the same companies over breaking commitments they made to create many hundreds of times that many jobs. Now the supply chain companies where those jobs should have been are looking outside Scotland.
This again simply shows the difference between 'economic development' (which should benefit the nation) and 'corporate welfare' (which benefits the corporation which in turn may or may not benefit the nation). Scotland is in the process of losing yet another industry and little seems to be being done about it.