Green Freeports in Scotland – a decision

The long-awaited decision on Scotland’s two new Green Freeports has now been made, with sites at Cromarty Firth and the Forth chosen as the first of their kind.

The joint statement was made by the UK and Scottish governments. Five bids were submitted in total, with those from North East Scotland, Orkney and Clyde being unsuccessful.

What happens next?

In their joint statement on 13th January, UK Government Levelling Up Secretary Michael Gove, and Deputy First Minister John Swinney, said job creation, energy transition, and business investment, are the intended outcomes of the Green Freeports programme.

John Swinney said: “Scotland has a rich history of innovation, trade and manufacturing and as we look to seize the many opportunities achieving net zero offers, the creation of these internationally competitive clusters of excellence will help us to create new green jobs, deliver a just transition and support our economic transformation.”

Michael Gove said: “Inverness and Cromarty Firth and the Firth of Forth are fantastic areas for these new Green Freeports to set up, ensuring the benefits are felt right across Scotland. This will help to create exciting new jobs, boost business and encourage investment in the local areas and beyond.”

There was also a commitment to work with the unsuccessful bidders to see “how they can build on the plans set out in their bids to deliver jobs and growth in their regions outside the Green Freeports programme.”

What is the background to the Green Freeport scheme?

The prospect of Scotland’s first freeports first emerged in February last year in a joint statement from the UK and Scottish governments, following months of negotiations. At the time, the announcement said the agreement would see £52m of seed funding invested into the establishment and development of the two freeports in Scotland, in line with the funding commitments offered to freeports in England.

What is a Green Freeport?

Green Freeports are, in essence, the Scottish equivalent to UK freeports, of which eight have already been confirmed.

Freeports, a major part of the UK government’s “levelling up” agenda, are designated free trade zones, where normal tax and tariff rules of the country in which they are based do not apply.  Such zones are designed to boost economic growth and are intended to be located around docks, airports or railway hubs.

In Scotland, the newly agreed zones will be referred to as Green Freeports as a reflection of the Scottish Government’s distinctive net-zero emissions targets – targets that will be considered at the very heart of Scotland’s adoption of Green Freeports.  As a result, and amongst other commitments, interested bidders were required to demonstrate their contribution to a “just transition to net-zero emissions by 2045, delivering net-zero benefits and creating new green jobs”.

In addition to the net-zero focus, the Scottish Government’s Green Freeports model also highlights the commitment to Fair Work First principles, and supporting innovation, trade and inclusive growth.

The prospectus for prospective bidders to become a Scottish Green Freeport outlined four key criteria to address:

• promote regeneration and high-quality job creation
• promote decarbonisation and a just transition to a net zero economy
• establish hubs for global trade and investment; and
• foster an innovative environment.

When will we see Green Freeports established in Scotland?

When the announcement was first made, the intended timeline was that spring 2023 could be achievable in terms of the first Freeport to be established. The bidding process started in the spring 2022, with a summer closing date, with bids jointly assessed by the Scottish and UK governments.

The changes in administration within the UK Government undoubtedly hindered the timeline. It is also fair to say that the announcement of “investment zones” by the short-lived Truss and Kwarteng administration may have added to the confusion as to where Green Freeports stood in that mix.

Following Rishi Sunak’s appointment as Prime Minister, and subsequent appointment of Jeremy Hunt as Chancellor, many expected to see some form of update in Mr Hunt’s first autumn statement in October. This did not materialise.

Now that the successful bids have been chosen, we will monitor with great interest the impact and opportunities for those regions, their immediate communities, and Scotland’s wider economy.