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Where will Scotland's green freeports be?

An announcement is expected soon from the Scottish and UK government, taking the shortlist of five potential green freeports down to a chosen two.

The journey to this point has not been without its bumps, hence the 'green' addition to Scotland's versions, following disagreements between Holyrood and Wesminster over the details of the economic zones.

Those in England are defined as areas where customs rules such as taxes do not apply until goods leave, aiming to encourage economic activity and increase manufacturing in the surrounding region.

The Scottish Government will also support these tax reliefs, but added a focus on the net zero economy and a Fair Work First approach, while also supporting innovation, trade and inclusive growth.

Those bidding must demonstrate support for employment with good salaries and conditions; embed fair work practices in the wider freeport area; and contribute to Scotland’s climate ambitions.

With some bidders dropping out - most notably Cairnryan - the 20 June deadline saw five hats in the ring and a promise of decisions by the end of this summer; although a Scottish Government spokesperson told Insider this has been delayed by the recent death of the Queen.

“The Scottish and UK Governments are jointly assessing the bids to become a green port and Scottish and UK ministers will jointly select the winners, following the rigorous process set out in the bidding prospectus,” read a statement.

“The Scottish Government hopes to be able to confirm the winning bids, jointly with the UK Government, soon.”

As a result of recent negotiations, UK ministers are expected to provide up to £52m in seed funding to help establish freeports in Scotland - in line with funding offered to freeports across England - along with a package of support, including:

  • Initial revenue support to establish governance structures and business plans.
  • Capital for land assembly and infrastructure.
  • Reserved tax reliefs in respect of capital, land and structures.
  • Employer National Insurance reliefs.
  • Customs easements.
  • Devolved tax reliefs in respect of non-domestic rates and land and buildings transaction tax.
  • A local non-domestic rates retention scheme.

So lets look at the runners and riders:

The Port of Nigg at the entrance to the Cromarty Firth (Malcolm McCurrach)

Inverness and the Cromarty Firth Green Freeport

The Opportunity Cromarty Firth consortium, launched in 2020, includes the ports of Cromarty Firth, Nigg and Inverness, as well as the Highlands’ largest air terminal and Inverness Airport Business Park.

It is backed by Inverness Chamber of Commerce and more than a dozen businesses, as well as public sector organisations and academic bodies including The Highland Council and the University of the Highlands and Islands.

In an open letter to decision-makers in Westminster and Holyrood at the start of September, former SSE Renewables managing director Jim Smith - now chair of the Cromarty Firth Green Freeport - said freeport status would be the “vital catalyst” required to maximise the renewable sector’s development.

In its bid, submitted in June, the consortium said the area could bring in at least £2.5bn of new private sector investment, creating 25,000 jobs and to ensuring local content targets for offshore wind farm developments are met, rather than the work going abroad.

Smith explained: “The Inverness and Cromarty Firth bid has the backing of the renewables industry - a group of the world’s leading developers has publicly stated that green freeport status in the Highlands would transform the viability of the projects they need to deliver.

“They are united in the view that the Cromarty Firth is the only location in Scotland where manufacturing for floating wind can be carried out at the scale and speed required to meet current targets.”

He added: “The new well-paid, sustainable jobs that will be created in the Highlands will be critical to levelling up the region and reversing the long-term decline in the region’s working age population.”

The consortium has been on something of a promotions drive in recent months, getting its backers to speak out, including renewables company Fred. Olsen 1848, which is exploring the deployment of a mobile quayside as part of the bid.

Chief executive Sofie Olsen Jebsen, said: “By setting up the Mobile Port Solution in the Firth, we would provide an immediate solution for the rapid and cost-efficient installation of floating offshore wind, enabling the creation of new attractive green job opportunities, not only to the firth but also for the UK in general.”

The UK’s largest regional airline has also said the Highlands can provide a “key building block” in the drive to decarbonise the country’s air transport system.

Loganair believes proposed large-scale green hydrogen production in the region would play a crucial role in establishing the range of national infrastructure needed for airlines to switch to clean, zero carbon fuels.

The company's decarbonisation strategy envisages a fleet which is majority green hydrogen fuelled and, due to the nature of the aircraft it uses on a number of routes, it expects to be among the first airlines in the world to operate a zero emissions commercial flight.

Scotch whisky maker Whyte and Mackay also stated that the establishment of a freeport in the Highlands would help achieve its target of becoming carbon neutral by 2030.

The largest distiller in the north of Scotland is expected to be one of the first users of green hydrogen produced from a planned electrolyser on the Cromarty Firth. The company funded a feasibility study for the technology, along with fellow distillers Glenmorangie and Diageo, as well as ScottishPower, Storegga and the Port of Cromarty Firth.

North East Scotland Green Freeport

The bid based around Aberdeen promised it could create around 32,000 jobs, boosting gross value added (GVA) by £8.5bn over the next decade.

The proposals aim to bring large-scale, advanced manufacturing to the region, maximising the economic benefit from Scotland’s offshore wind and hydrogen sectors, while accelerating carbon capture projects on the Buchan coast.

The bid consortium consists of Aberdeen City Council, Aberdeenshire Council, Port of Aberdeen, Peterhead Port Authority and Aberdeen International Airport. It is also supported by the Energy Transition Zone, Net Zero Technology Centre, Storegga, Opportunity North East (ONE), Aberdeen & Grampian Chamber of Commerce, Robert Gordon University and University of Aberdeen.

Among the plans are a sustainable aviation fuel (SAF) plant at St Fergus, that could create up to 920 jobs and £133M in GVA per year. Derived from sustainable feedstocks such as household and post recycling municipal waste, agricultural and forestry residues, SAF generates carbon savings of upwards of 70% compared to fossil jet fuel.

Jon Matthews, group head of capital and planning at Aberdeen International Airport, said: “The SAF production facility at St Fergus is a key part of the region’s bid for green freeport status.

“Securing green freeport status would not only unlock the potential of this SAF plant it would help retain and create jobs at St Fergus which is actively seeking a just transition of workers to clean growth jobs.”

Steve Murphy, chief commercial officer at Storegga, the lead developer for the Acorn carbon capture and storage and hydrogen infrastructure projects proposed for St Fergus, said: “The North East Scotland Green Freeport will accelerate and amplify the Scottish Cluster, including CO2 import facilities at Peterhead Port and Europe’s first at-scale direct air capture plant which can support a new sustainable aviation fuel sector and help abate CO2 emissions from the transport sector.”

More than 100 senior industry leaders, academics, politicians and business owners recently signed a statement in support of the bid - including ETZ chair Sir Ian Wood and Net Zero Technology Centre chair Martin Gilbert.

Consortium bid partner and Port of Aberdeen chief executive Bob Sanguinetti said: “The breadth of support for the bid is incredible, from SMEs to multinationals and across all the region’s key sectors - these types of existing businesses will be supported to invest, innovate, and develop skills as well as attract new investment to deliver a wide range of pioneering new projects.

“We’ll create thousands of high-quality jobs and opportunities for those that need them most, stimulate local and wider regeneration and amplify the value of the green freeport investment to level up deprived communities, enabling and accelerating a just transition.”

Clyde Green Freeport

The bid based around Glasgow also estimates around 30,000 new jobs could be created if it wins, along with attracting £2.5bn of investment and transforming nearly 600 hectares of derelict land along the Clyde.

The partnership between Glasgow Airport, Peel Ports' Clydeport, Mossend International Railfreight Park in North Lanarkshire and Glasgow City Region councils has attracted support from businesses including Caterpillar, Malcolm Group, SP Energy Networks, Morrison Construction and Loganair, plus the universities of Glasgow and Strathclyde.

"Our bid is multimodal, covering air, sea and rail, and will further unlock global trade, doubling capacity to take products from across Scotland to the rest of the UK, Europe and beyond," said Kevin Rush, the bid's senior responsible officer and director of economic growth for Glasgow City Region.

"It will provide an £18bn uplift in GVA to 2034, achieved through fast-tracking our innovation economy and creating tens of thousands of jobs in communities across the region with high levels of deprivation."

Almost 40% of Scotland's most deprived communities are within the Clyde Green Freeport area.

The Clyde Green Freeport aims to achieve net zero by 2040, with a new district heating system, waste to energy projects and renewable energy generation - including a new £1bn hydrogen plant which could fuel 25% of Scotland's HGVs.

Councillor Jim Logue, leader of North Lanarkshire Council, said: “The Clyde Green Freeport would bring major new investment for the Glasgow City Region economy, hundreds of jobs and new opportunities for businesses in the region and specifically in North Lanarkshire to significantly boost their markets both UK and internationally.”

The Mossend International Railfreight Park is home to a decarbonising rail freight hub, with the freeport potentially regenerating 283 hectares of land through £17m of investment unlocked by tax benefits and, in the longer term, £300m to create the infrastructure needed.

Andrew Stirling, director of Peter D Stirling and Mossend International Railfreight Park, commented: "Over the 40 plus years we've been at Mossend, we've employed locals and worked with local partners and clients to build and expand our infrastructure and to provide freight logistics services between Scotland and England.

"In the success of our bid, over 500 jobs will be created at Mossend and business generated that will give our local economy the boost it needs, particularly coming out of the pandemic and moving forward in leaving the EU."

Clyde Green Freeport would also create an opportunity at Mossend for a manufacturing heavy vehicles hub, leading to £120m of investment, as well as for the manufacturing, maintenance and operation of new freight wagons, with an estimated £55m invested.

Forth Green Freeport

The Firth of Forth's bid was submitted in June by a public and private sector consortium led by Forth Ports, which claimed it has the potential to generate 50,000 new green jobs, unlocking £6bn of investment in the area.

It encompasses the three key ports on the Forth - Grangemouth, Leith and Rosyth - along with industrial facilities and logistics centres along the north and south shores of the sea inlet; and Edinburgh Airport.

The consortium also includes: Babcock, Falkirk Council, Fife Council, The City of Edinburgh Council, Ineos and Scarborough Muir Group.

The plan is to drive the manufacture of offshore wind turbines, alongside the shipbuilding and energy systems modular manufacturing at the Babcock sites in Rosyth.

Charles Hammond, chief executive of Forth Ports Group, said: “Our vision is for the Forth Green Freeport to re-industrialise Scotland and spread the benefits of trade widely into the communities that need it the most, through the establishment of a green growth investment corridor creating jobs in renewable energy, green manufacturing and alternative fuels.

“Our team already has a track record of successfully delivering a freeport in England; we have unlocked large, undeveloped industrial sites; and we have credible investors lined up to deliver the innovation required for inclusive and sustainable growth in Scotland’s economy.”

At Grangemouth, Scotland’s largest port and principal export hub handling 30% of Scottish GDP, 226 hectares of under-developed land are being targeted for development, while along the shore in Leith, Forth Ports has already started work on a £50m investment in nation’s largest offshore renewable energy hub alongside BP and EnBW.

The tax incentives should support the redevelopment of the current port structure into the Leith Renewables Hub; an offshore wind manufacturing and marshalling site.

At the Port of Rosyth, Scotland’s largest agri-bulks hub, 168 hectares of underdeveloped land could be turned into a manufacturing site for offshore wind, shipbuilding and energy systems. Not far away, 19 hectares of land at Burntisland have been ring-fenced for designation as a customs site, extending the Leith Renewables Hub across the north and south shores of the estuary.

Finally, a 13-hectare customs zone at Edinburgh Airport’s Global Air Park has been designated for air-related logistics and warehousing expansion, targeted at the growth markets of e-commerce, pharmaceuticals and perishables.

Three local chambers of commerce - which represent nearly 1,500 international and Scottish businesses - have declared their support for the Firth of Forth bid.

Edinburgh Chamber of Commerce, Fife Chamber of Commerce and Forth Valley Chamber of Commerce recently wrote joint letters to the UK and Scottish governments, describing the bid as Scotland’s best opportunity to deliver a just transition to net zero, while building international trade and export capability.

Alan Mitchell, chief executive of Fife Chamber of Commerce, said: “By 2030, the ScotWind revolution has the potential to create up to £30bn in additional investment and revenue from the North Sea.

“The Forth Green Freeport will dramatically drive up UK-produced manufactured content by enhancing strategic sites along the Forth Estuary to ensure that the skills base and innovation assets anchor as many as possible of the 25,000 new offshore wind jobs locally.”

A view of Scapa Flow from the air (Reuters)

Orkney Green Freeport

Orkney’s Scapa Flow, the largest natural harbour in the northern hemisphere, gives the island's bid a unique asset, strategically located in calm waters near major shipping channels and some of the best wind, wave and tidal resource in the world.

The Orkney Green Freeport bid stated that it could attract £26m from government in support of over £300m of investment projects – including additional infrastructure to support the development of the Orkney Logistics Base at Hatston, Copland’s Dock Business Park and the Flotta Hydrogen Hub concept.

Funding would also support the development of key infrastructures in Scapa Flow at Lyness and the site of the Scapa Deep Water Quay, as well as further expansion of aviation innovation at Kirkwall Airport.

Orkney Islands Council documents noted that the bid has a focus on innovation in research and development, with a move away from the traditional idea of a freeport, "which is primarily based on low duties on goods transferring across borders usually from the manufacturing sectors and containerised goods".

It claimed "a lot of interest from potential users of port facilities", in particular the offshore wind sector.

Council leader James Stockan recently told the Press and Journal that the islands must not be bypassed by the bidding process.

“I think the whole idea of the Total announcement about making green hydrogen in an oil terminal at Flotta, that conversation and the opportunities around that for making alternative fuels need encouragement from government.

“There was a lot of reaction against green freeports because it could disturb the job market or lower wages.

“If we were successful, the supply chain elsewhere in the county would really benefit as well.

“We would look more than anything else at not just the financial opportunity, but the possibility of derogation, whether it is energy, shipping or aviation policy, to try and make a real test case that can really accelerate the benefit for everyone.“

Stockan added: “They [other bids] have compelling cases on the hand, but some have geographical restrictions - you could set the whole of the city of Edinburgh inside Scapa Flow - people have no concept of the long-term opportunity of that area of Orkney.”

West of Scotland MSP Ross Greer (Paisley)

The Scottish Green Party has opposed the overall freeport proposals, which are an excluded area in the cooperation agreement that was negotiated with the Scottish National Party.

Green MSP Ross Greer said that freeports are not a new idea, rather an “dated Thatcherite gimmick that offers unjustified giveaways to multinational corporations“.

He cited a recent European Union investigation which found that freeports are often linked to organised crime, including fraud, smuggling and money laundering, as well as being used to drive down wages and undermine environmental standards.

“Despite the branding, the so-called 'greenports' being introduced here in Scotland do not notably differ from the freeports that are being promoted by the Tories in England.

“Under the deal that was struck, there are no solid requirements for the companies that benefit from them to meet climate targets or implement fair work practices - that's why my Green colleagues and I will continue to oppose them.“

Greer added: “Any Scottish freeports will benefit only the big corporations which have pushed hardest for them, many of which are merely paying lip service to workers rights and some are already doing their best to avoid tax.

“The Scottish public certainly won't see the benefit if precedent from across the world is anything to go by.“

Catherine McWilliam, the new Scottish director at the IoD (Mike Wilkinson)

However, Catherine McWilliam, national director for the Institute of Directors Scotland, commented that freeports present an opportunity to deliver long-term regeneration to local areas through the creation of high-quality jobs.

“They will potentially attract additional global trade and investment, which will support the Scottish Government’s Global Investment Plan.

“Freeports also have the potential to be transformational for existing businesses, presenting opportunities to build supply routes, work with other like-minded businesses and create an environment that encourages new skills development.“

She did caution that local jobs need to be prioritised by winning bidders, while the areas should try to avoid becoming overly-reliant on one particular industry, “as we’ve seen previously how this can have negative consequences both for businesses and their workforces“.

McWilliam also suggested a holistic approach to the whole ecosystem that will be fostered by freeports, with adequate housing and connectivity crucial to their practical development.

She wouldn't be drawn on favourites, but said that for Aberdeen there is an opportunity to transition away from the oil and gas industry; in the Highlands a winning bid could tackle depopulation and encourage a mobile workforce; the Clyde could capitalise on the rich heritage of the 'Clydebuilt' brand; while the Forth freeport might replace many of the local sectors that have suffered decline; and in Orkney the various existing renewable projects could be built upon.

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