Dan Labbad gave evidence.

We will now hear oral evidence from Dan Labbad, who is the chief executive officer of the Crown Estate. For this session, I am afraid that we have only until 2.50 pm. For the benefit of the record, Mr Labbad, could you introduce yourself?

Dan Labbad:

I am Dan Labbad, the chief executive of the Crown Estate.

Q Thank you for giving us your time this afternoon, Mr Labbad. How do you foresee the Bill and the creation of GB Energy impacting on the offices of the Crown Estate? In your answer, could you give some detail on the recent agreement between the Crown Estate and GB Energy, and what that will mean moving forward?

Dan Labbad:

First, thank you for having me here this afternoon.

The Crown Estate has been operating in the offshore renewable energy space for a long time—roughly 25 years—and, working with Government, the private sector and the third sector, we have created what is the second largest offshore wind capability in the world. That is something that we as a country should be very proud of, but obviously what got us here will not get us where we need to be.

When you look at the Climate Change Committee’s report on what is required from offshore wind and other renewable and zero-carbon technologies into the future, you see that we need to accelerate our deployment in a way that is balanced with other marine uses, including the environment, and ensure that we are deploying at a rate that meets the targets that were set for good reason. We have been organising the Crown Estate for the last five to 10 years in order to do that, accelerating leasing and starting the de-risking process for developers.

We also have a Bill before Parliament to enhance our powers to do more in this space. For example, we have something called the marine delivery route map, which looks at all uses on the seabed to ensure that we can create spatial co-ordination for different uses. That is fundamental to being able to achieve deployment, but even with our new powers we cannot do it alone. We need support, certainly support from Government.

There are three key areas that we would have called on had GB Energy not been announced, but Great British Energy offers a number of things. First, there is the co-ordination of all the agents involved in what is a very complex energy sector, both within and outside of Government. One of the big encumbrances at the moment is that everyone is working in slightly different directions; you do not achieve targets if everyone is working in slightly different directions.

Secondly, there are the increased investment powers to ensure that we are additive to what the private sector needs and ensure that we can achieve the acceleration throughput that we are talking about and invest in new technologies.

Finally, it can ensure that we are evolving policy around areas that are not limited to planning and grid, for example, so that we have the pathways not only to lease seabed for renewable deployment but to deliver generating capacity. We see GB Energy bringing those things.

Q We have spoken with previous guests this afternoon about the necessity for the Secretary of State and the Minister here to have strategic priorities and plans to engage with Scottish and Welsh Ministers and all the devolved Administrations. Obviously, the Crown Estate is an area that is devolved in Scotland. You said that within the market right now there are different plans, priorities and timescales and people are moving in different directions. How are you co-ordinating with Crown Estate Scotland to ensure that your work with GBE will be uniform and joined up across the United Kingdom? Otherwise, none of the targets will be met.

Dan Labbad:

Consultation across the country is fundamental. In fact, if you look at our Celtic sea round 5 tender, which is live at the moment, you will see that we consulted heavily with the Welsh Government and with Welsh stakeholders. In fact, we evolved our approach quite considerably in the deployment of that tender approach through that consultation, adding a lot of value.

I should say that to get a leasing programme out like round 5—which is the 4.5 GW floating wind programme that we have at the moment live in the Celtic sea—you engage with many stakeholders. The count in the case of the Celtic sea was more than 70 stakeholders from global and local environmental groups, developers across Government, the third sector again and a whole host of users of the seabed. Without doing that we do not deploy, because we do not get everybody’s buy-in. If we are talking other parts of the country, there is no difference whether it is Northern Ireland or Scotland.

We enjoy a good relationship with Crown Estates Scotland and with the Scottish Government. They are partners in our marine delivery route map and we are co-ordinating on systems issues, because obviously some of the environmental issues and deployment and grid issues do not have borders, so that consultation is, as you suggest, fundamental.

Q In relation to clause 1(5), about the statement of strategic priorities, you just mentioned the Celtic sea round 5 tenders. I think I am correct in saying that they did not have any mandatory social value element. What would be your thoughts on social value being mandated as part of the strategic priorities for local coastal communities, particularly deprived areas such as Cornwall?

Dan Labbad:

First, as regards the Celtic sea, there are social requirements as part of the tender process. I obviously cannot talk about them too much, given that we are in a live tender for procurement purposes, but there are social requirements as part of that tender.

To your question, it is fundamental. It will be a real failure if we end up deploying renewable energy on the seabed in the way we need to in the next 20 years and are not able to capture a fair proportion of that industrial complex for ourselves as a country. It would be a real pity if we did not build new jobs and new futures for young people across the country and if we did not support the distribution of that benefit across the country, including to coastal communities.

We have to bear in mind that there is a role for developers and a role for Government and the Crown Estate. For example, in the Celtic sea a 4.5 GW tender does not build a supply chain. It is not enough; the critical mass is not there. Again, that is why it is so important that Great British Energy and the Crown Estate work together, with our additional powers and being able to provide forward commitments to, for example, the Celtic sea. We estimate at the moment that it has the potential for another 12 GW of offshore wind, predominantly floating but also fixed. You need that type of scale so that both Government and private sector investment in the supply chain, including in coastal communities, will stick. That is why this partnership is so important and why we have to remember the size of that prize, so to speak.

Q GB Energy’s objectives as set out in the Bill make it quite clear that it is intent on becoming a producer, distributor, supplier and storer of energy, and to achieve that the Crown Estate will be absolutely crucial. Can you provide a little insight on the recent powers on borrowing provided to the Crown Estate, and how that will help you and GB Energy to meet the Bill’s aims?

Dan Labbad:

First, from the Crown Estate’s perspective —I know this is a little out of scope—we operate under an Act of Parliament and have an obligation to enhance the value of our portfolio nationally, on behalf of the country, into perpetuity. We must ensure that we, like any business, balance safe investments with more risky investments. There is no doubt that investing in the seabed in the way we are talking about is a higher risk activity than other things that we do.

The increased borrowing powers do two things. First, they give us the capital throughput to do more—to accelerate and offer more. Secondly, because we know that we will have a line of credit, they allow us to make commitments. To use the Celtic sea as an example, as we move from what we envisage we can do about 12 GW to the reality of knowing that we can do that, we can then say to the market that we are committed to that leasing programme over the next 10 years. That is huge. From a developer perspective, they are not chipping away. For argument’s sake, let us say that we have 4 GW divided into three bits. You are talking about small gigawattage for companies of the scale of Equinor, for example. Being able to provide a pipeline where we know there is more to come means that they invest more—that is what that does.

The other thing that comes with the borrowing powers is a broader investment remit, which allows us to turn our attention to supply chain opportunities and to support the industrial complex and jobs. Again, we have been restricted in what we can do there in the past, so that is fundamental. With regard to GB Energy, as I said earlier, the Crown Estate cannot do it all on its own. We need additional capital support, support with co-ordination and support with policy evolution. All those things are required, which is why the partnership is so fundamental.

Order. The issue of scope has raised its head again. I gently say that while this Chairman is not in the business of seeking to tell witnesses what they can and cannot say, he is in the business of making sure that Members, at least, stay within the scope.

Q Thank you, Chair; I will try to stay in scope. I was really pleased to read about the £2-million tidal energy project at Morlais off the coast of Ynys Môn. Clause 3(2)(d) talks about GB Energy improving the security of our energy supply here in the UK. Is that the kind of project that you see benefiting from and being supported by GB Energy?

Dan Labbad:

Yes. Both the Crown Estate and GB Energy moving forward will support that type of thing. It is an example of a local community energy project, and I think there needs to be more of that, as I said in my answer to the earlier question. Where we can build community support for renewable projects, we should. The Crown Estate and GB Energy will be looking to that as part of our core mandate moving forward. I am very excited about that type of thing because it benefits everybody, so it is fundamental to what we do moving forward.

Q We have heard how, working together with the Crown Estate, we could be accelerating GB Energy’s investments, particularly through accelerating the consenting process. It was reassuring to hear you say that there are multiple values and that you have a multiple delivery group, with environmental values being part of that, and how critical it is to have consultations around the environmental requirements.

Within the scope of the Bill, under clause 3, we also heard in evidence this morning the request that we seek a duty towards nature and nature recovery and the achievement of the Environment Act 2021. Would that provide the reassurance that while we are dealing with the climate emergency, we are not disregarding the nature emergency and the environmental value of the seabed and the sea?

Dan Labbad:

While I cannot comment specifically on the Bill, I would say that the Crown Estate already has a responsibility to protect the environment and look at nature recovery. In fact, this week we launched our nature commitments, which have undergone significant consultation. You can find those live on our website. We are obligated under our Act to do that. That obligation maintains in the partnership, so we will be doing that as part of what we bring to the GB Energy partnership.

This will be the final question.

The aim of GB Energy, among other things, is to decarbonise the grid. The 2030 date has been thrown around. Practically, in terms of timescales, no matter what happens with GB Energy, the Crown Estate and land leases, it would not impact the Crown Estate’s ability to bring more wind farms online by 2030. What is in the Bill at the moment that can bring on the transition and help to decarbonise?Q

Dan Labbad:

If you look at where we are today, we have just under 12 GW generating. The Crown Estate in England, Wales and Northern Ireland has about 42 GW in the pipeline. The first thing is: how can we bring as much of that to generating as possible? That is really important. Where and how do we remove immediate encumbrances? That is something we can work on immediately. From there, even to bring 20 GW to 30 GW to market by 2030 needs a lot of work and co-ordination.

To put it another way, we have delivered 12 GW of generating capacity in 25 years and if, as informed by the Climate Change Committee, we are to move up to 125 GW of generating capacity by 2050, that means we need a five to tenfold increase in the next 25 years. What we do in the next few years is incredibly important to ensure that we are laying the foundations for that to be a successful deployment.

I said that that would be the final question, but we have a couple of minutes left, so, very briefly, I call Torcuil Crichton.

Q Hello, Mr Labbad. I realise that Crown Estate Scotland is devolved and under different jurisdiction, but it was in the water first, so to speak, with its Scotland licensing round. What lessons did the Crown Estate learn from that Scottish experience, in terms of what came out of it and co-investing in future with the UK Government?

Dan Labbad:

We are looking to learn all the time from what happens around the country and around the world. One thing that it is worth saying quickly is that sometimes we are too focused on interior discussions and debates about how and what goes on where in the UK. The elephant in the room, in some ways, is losing the first mover advantage we have had in this sector to the rest of the world. It is essential to demonstrate that as a country we can do floating wind better than anyone else, and to build the integration and maintenance capabilities in this country, because that is what will bring the jobs, for example. We are always focused on that.

We have learned a number of things. Obviously, focusing on the supply chain is fundamentally important. That has been a learning over the past 10 years. The other thing that has been a learning is that we need to work to de-risk the sector for the private sector as much as possible, because in a world that has a growing offshore wind pipeline, even the companies that you are listening to today all work internationally, and we need to retain the UK as a competitive place for them to want to deploy renewable energy. The way that to do that is to build the pathway to the future, so that they can see the pipeline using the marine delivery route map. We must de-risk such projects up front so that they still put their capital in and earn the requisite return on it for the risk that they take, but we are not asking them to take a disproportionate risk on projects that are being stalled. Those are all learnings over the past 25 years.

I will also make a final point. The industry and Government—the Crown Estate and others involved in this sector over the past 25 years—have been exceptional at course correcting when things have not gone exactly to plan. The innovation capacity in the sector is there, and all we need to do through things like the partnership with Great British Energy is empower that capacity. Then, I think, we have every chance of meeting those deployment targets.

Thank you. Mr Labbad, it may seem like a long way to have come for a very short period of time, but your evidence is extremely valuable to the Committee.