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Crown Estate Changes – The Impact on Scotland’s Marine Renewables Industry

Crown Estate Changes – The Impact on Scotland’s Marine Renewables Industry

Criag Whelton

As landlord of the seabed, the Crown Estate has responsibility for granting lease rights to offshore marine developers for wave, tidal and offshore wind schemes.   Later this year that function will transfer on an interim basis to the Crown Estate Scotland Interim Management. This follows the issue of The Scottish Government’s consultation on “The Long Term Management of the Crown Estate in Scotland”.   Consideration is now being given to the long term solution.  This will determine who marine renewable developers must deal with if they are to secure the necessary rights to the seabed.
 
The Consultation puts forward a number of different options as to how these rights are administered.  These include passing control of the seabed to local authorities, or control being retained at a national level, via the Scottish Government.  The Consultation also considers hybrid options, with responsibility for granting rights split between local and national control depending on the distance from the shore (the Consultation considers local control out to 12 nautical miles) or the type of development, with wave and tidal schemes potentially dealt with at a local level, and offshore wind at a national level.
 
Sensibly, the Consultation proposes that rights over cables and pipelines that cross into other national waters (including other parts of the UK) be dealt with at a national level.  However, the position for other offshore cables and pipelines is less clear, with the potential for landing points being retained within local control.  There would be a logic in having the full extent of offshore pipelines and cables being dealt with at a national level with a requirement to take into account the views of the local body where these cables and pipelines came close to a shore. 
 
There has been a perception that the Crown Estate lacked accountability and transparency, which was perhaps exacerbated by its monopoly position – marine developers had no choice but to agree terms with the Crown Estate.  By transferring responsibility to public bodies, the proposed changes may go some way to addressing that concern. 
 
However, it is important that any changes do not complicate the process.  Whilst steps have been taken in recent years to reduce the number of development applications needed for marine renewable schemes, developers still need to submit multiple applications for both the offshore and onshore elements of a project.  This contrasts with the position in England, where the development consent order (DCO) process provides a more streamlined approach.
 
Subdividing the seabed between local authorities, or between local authorities and national government, will increase the number of parties developers will need to contract with.  Depending on the length and route of the export cables to shore, this could require seabed leases with multiple authorities. Much has been done to promote the marine renewables industry in Scotland, but it is imperative that changes to who controls the seabed do not create unnecessary administrative hurdles.  
Perhaps of greater concern to developers, is the potential for local authorities or Scottish Government to seek to increase revenues from leasing the seabed. 
 
The Consultation identifies the significant leasing revenues marine renewables could generate, and projects such as the MeyGen tidal scheme in the Pentland Firth and the Beatrice offshore windfarm illustrate the potential benefits of the industry to Scotland.  But it is an industry still in its infancy, and with revenues from renewables totalling just £700,000 in each of the last two years, the Consultation is careful to recognise the importance of striking a balance between revenue raising, and placing too great a burden on developers, which could risk making Scotland uncompetitive.
 
As landlord of the seabed, the Crown Estate has also played an active role in the marine renewables industry.  It administered the competitive leasing rounds for offshore wind and tidal, and has provided funding for marine energy research projects.  It has also sought to act as a development partner with, and facilitator between, commercial developers. 
 
Subdivision of the seabed will make these initiatives more difficult, perhaps requiring Marine Scotland to take on a more active role.  That would need to be funded, and reconciled with Marine Scotland’s other responsibilities, including as the licensing authority for the Scottish marine environment.
 
The process of transferring management of the seabed away from the Crown Estate will be completed by 1 April 2017.  Where ultimate control ends up at a local and national level will have significant implications for those working in the marine renewables sector. 
 
The Scottish Government consultation runs until 29 March 2017. 

Craig Whelton

Partner

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