If you happen to be Spanish, Japanese, Chinese, American, Swiss or Indian, then it’s been a great few weeks for good news about the renewables sector.
Before Christmas, it was announced that Mitsubishi was setting up some sort of wind R&D and manufacturing base in Scotland.
Then we heard that a deal had been done with a Chinese boiler-making company already based in Scotland, to produce new biomass burning systems using gasification technology developed Stateside, and now available via a US subsidiary in Scotland.
Shortly after that we were told that Gamesa, the Spanish wind turbine builder, was also setting up in Scotland.
Finally, it was announced that The Hydrogen Office, at Methil, had opened its doors and, amongst other things, was demonstrating the potential benefits of hydrogen produced by wind, as used in a fuel cell to produce electricity.
Because I just love asking the question, I found out that the wind turbine used for that was sourced from a Dutch company, but was manufactured in India.
And, I’m reliably informed that the electrolyser for producing the hydrogen, almost certainly came from a Swiss company. Mysteriously though, the company that supplied both that and the fuel cell refused to tell me where they had come from (“for commercial reasons”), insisting that’s what gave them their edge. Pardon?
Anyway, I’m sure you get the point. Here we have all this interesting stuff going on, but very little originated here. Yes, we’ll get some jobs out of such activity and that is, of course, a good thing and not to be sniffed at, but is that really all we’re aiming for?
A few weeks ago, whilst doing some online research for another project I’m involved in, I came across a submission to a Scottish parliament committee on the economy, and a few other things, for an inquiry they’re doing called A fundamental Review of the Purpose of an Enterprise Agency, and the Success of the Recent Reforms.
Now, to many, this is likely to invoke a sort of “I’ve lost the will to live” response, but it is actually rather important, because it’s all to do with economic growth and, considering the above, why we’re not actually getting enough – economic growth in the form of new renewables technology companies that is.
The submission in question was from Robert Crawford who, some will remember, was head honcho at Scottish Enterprise, but left in 2003 to go and do other things, including running the South East of England Development Agency, which the UK Government has just decided to scrap.
Anyhow, what Crawford said is worthy of note, because it may not just provide a clue as to why good news on renewables is generally about overseas companies rather than indigenous ones. It may also give us some pointers on what needs to be done to reverse that situation.
He started by saying: “The great turnarounds in national economic performance have typically been achieved by a variety of different drivers including: major political change such as the break up of the Soviet Union; or the decision by Deng Xiaoping to unleash China’s vast population resource to support mass manufacturing; or the discovery and exploitation of a major natural resource – think North Sea Oil, or, more modestly, and closer to home, the decision by a country such as Ireland to use corporation tax as a weapon in the fight for mobile investment.”
Well, in oil & gas we’re sort of doing OK, in that we still seem to be generating engineering design-type jobs, and some other service-based employment, but we’re not doing as much manufacturing as we should.
Indeed, in comparison with close neighbours like Norway, and certainly with our American chums, I believe it could be said with full justification that we have not achieved all that we perhaps should have, given the size of the opportunity.
Crawford went on to state that he believed it was time to start applying some serious and radical thinking to our “disappointing track record” on growth, and suggested we remember that Einstein had said: “The definition of stupidity is doing the same thing over and over again and expecting different results.”
In 2009, Scottish Enterprise invested £32million in 106 businesses which levered in £68million in private venture capital. That’s £100m overall. But as Crawford said: “With the best will in the world, it will have virtually no impact on national economic growth”.
Now that’s across the entire economy, including energy, and to be fair doesn’t include other risk capital that came in from other sources.
But Crawford’s right; if that £100million is not having much impact on national economic growth, it certainly won’t have any impact at all on growth in either renewables or the oil & gas sector. That doesn’t, of course, mean to say we shouldn’t have done it, but that we need to do more.
Consequently, Crawford recommended the creation of an investment bank “charged to both simultaneously stimulate and invest in opportunities in Scotland”.
He also recommended that this bank should have an initial budget of the order of £300million, to be reviewed after three years. That means, of course, Scottish Enterprise in its present configuration all but disappears, along with most of its services because we couldn’t afford both. But is that a good thing? I’m not so sure it would be.
In terms of the sums proposed though, he and I would disagree. Crawford is talking about £300 million across all sectors. That may be all we could get by shifting existing budgets around, but, if we’re going to close the so-called growth gap in energy technology companies with Norway, the US, Spain and others, then even the whole £300million would probably not be enough.
A total of £300million is chicken feed compared to what the banks are intending paying in bonuses over the next few months – a total of about £7billion.
I think my proposition is better. It is to tell the banks that they can pay whatever bonuses they want to, but only on the proviso they agree to fund a rolling £500million venture fund, aimed entirely at creating and nurturing new, indigenous energy technology companies.
Add in say £100million of that £300million investment bank capital and we’re then getting closer to what we really need.
We also need to rethink big and supposedly prestigious projects like the Energetica energy corridor. To me, this is nothing more than another property development exercise that matches Einstein’s repetition criteria. We’ve done lots of those and I don’t believe for one millisecond it will make an iota of difference to the level of investment in new energy-related companies.
They want the Energetica project to include a number of hydrogen vehicle refuelling points. Good idea. But where’s the plan for the local company that’s going to design, develop and build them, and where’s the Scottish vehicle manufacturer that can use them?
Serious and radical thinking, remember. Let’s try putting the horse before the cart for a change.
Recommended for you
