The UK’s recently established freeports are seeking to align themselves with government objectives for decarbonisation. This aligns with plans to attract investment into new green projects and technologies.

The latest wave of UK freeports is still in its early days. The Conservative government launched the recent crop in late 2022, with 12 in operation today. They are mostly in England, with a small number in Scotland and Wales. Between 1984 and 2012, there were seven freeports at various times.

Clean energy initiatives developing at the freeports are likewise in their early stages.

However, freeport operators believe that the advantages they offer make them ideal locations for green energy hubs. These, they argue, can play a part in decarbonising local supply chains. But they can also help the broader regions in which they are located.

Economic development

Freeports are free trade zones, located adjacent to or within transport and logistics hubs – often but not exclusively maritime ports. They benefit from tax and regulatory incentives, effectively operating outside the country’s customs borders.

Freeports are aimed at encouraging economic development, including through public-private partnerships and foreign direct investment (FDI).

As of late 2023, government data showed that freeports had attracted £2.9 billion of investment and created over 6,000 jobs. Since then, these numbers will have increased further.

The establishment of freeports has been touted as aligning with the previous government’s other strategic objectives, including the transition to net zero.

“Freeports have the potential to position at the centre of the green energy revolution, setting themselves as centralised hubs for the development and roll-out of the energy transition,” DNV’s global business development director for the UK and Ireland, Stephen Norman, told E-FWD.

“From an offshore/port perspective, as opposed to those set up at airports, assuming allowable water depth and sufficient quay space (which could limit vessel and renewable technology import, export or deployment), they can act as a catalyst”, Norman said.

They allow “green technologies to set up competitively and maximise potential, energising regions to exploit the ebb and flow of technology, supporting renewable manufacturing and the utilisation of sustainable or low-hydrocarbon alternative fuels”.

Operators have also pointed to the advantages of their status, location, established infrastructure and local skills bases.

Felixstowe, another of the freeports — *Felixstowe port*

Alignment

“The skills base we have here in the Humber is very good for what the region is positioning itself for, which is decarbonisation and clean energy,” Humber Freeport’s CEO, Simon Green, told E-FWD. “As the pre-eminent energy cluster in North West Europe, attracting significant global investment into decarbonisation and net zero, the freeport’s decision to align itself with the Humber’s energy transition was a simple one.”

Green expects investments around the freeport to bring in high-value jobs requiring skills and training. This, in turn, can create an uplift for the wider supply chain. He pointed to easy access from the Humber Freeport to Europe and beyond. It also has capacity to grow, with existing skills and companies.

“Those advantages are substantially enhanced by freeport status, making the region an even more attractive location for large-scale investments delivering very significant and long-lasting economic benefits,” he said.

The significance of freeport status was also highlighted by Plymouth and South Devon Freeport’s CEO, Richard May.

“Eligible businesses in the freeport can take advantage of tax incentives to 2031 and beyond, customs benefits, support from further and higher education institutions, training providers, and have access to a wealth of innovation assets,” May told E-FWD.

He cited new opportunities, creating “new jobs for people of this area”.

The model also encourages collaboration, Liverpool City Region (LCR) Freeport’s manager, Giles Jones, said.

“The freeport gives us a platform from which we can foster collaboration between the public and private sectors as well leveraging the key role academia must play in the journey to net-zero,” Jones told E-FWD. “Through this collaboration we can lead by example, pioneering innovative sustainable practices and developing cutting-edge technologies to significantly reduce our carbon footprint.”

Early evolution

Freeports are developing in several ways and at different speeds, given their varying locations and characteristics.

“The freeports are at different stages of maturity,” innovation agency Connected Places Catapult’s associate director, Ibrahim Mohamed, told E-FWD. Mohamed leads the agency’s Freeport Innovation Network (FIN). This supports the 12 UK freeports and wider stakeholders in their innovation objectives.

“In England, the freeports have developed as unique organisations with their own teams, each has successfully brought in new investment and can now look to start reinvesting in local industrial priorities,” Mohamed said.

“Freeports have provided both government and the private sector involved in energy transition with a place to focus their efforts. As such, we are seeing the early results of such projects, based on generation, transportation, transmission and storage of energy to support the UK’s net zero ambition.”

There are various examples of these early projects taking shape across the UK. With the maritime ports, there is a particular overlap with the booming offshore wind industry.

“The freeport programme has taken the opportunity to develop the offshore wind capacity of the UK, combining both international investment and domestic capabilities to ensure long-term sustainable growth of this sector,” said Mohamed. “Teesside Freeport and SeAH Wind is a good example of this. There are several additional investments to be announced in the coming months.”

SeAH Wind is building a monopile manufacturing facility for the offshore wind industry. This is set to enter service in 2025 at Teesside Freeport.

Juggling many plates

While offshore wind is one example, freeports – like other ports and regions – need to take a multi-faceted approach to decarbonising. They can have an impact on different industries through initiatives that can include renewables, low-carbon hydrogen and other green technologies.

Jones described how LCR Freeport is approaching this challenge.

“Much of our focus is on creating multi-modal, multi-gateway sites that reduce carbon emissions, particularly from the freight and maritime sectors,” said Jones. “The LCR Freeport will provide the ability to create zero-carbon manufacturing and industrial hubs, connected by non-fossil freight to the rapidly decarbonising maritime industry; enabling and facilitating decarbonisation at all stages of the manufacturing process,” he added.

“We recognise the role that hydrogen can play in achieving our net-zero goals,” Jones continued. “The City Region has hydrogen assets at scale and the skills and knowledge base to support the industry as it transitions to the production of green hydrogen. Our programme of hydrogen-based interventions is designed to dovetail with the Mersey Tidal Power Project to further strengthen renewable energy diversification for the UK.”

Green hydrogen is also being pursued at Plymouth and South Devon Freeport, among others.

“Net zero tech is one of our target sectors and we are also working with Carlton Power to develop the South West’s first green hydrogen hub based on our Langage site,” said May.

Collaboration

There is also scope for freeports to collaborate with each other. This can be seen by the recent memorandum of understanding (MoU) between Freeport East and the East Midlands Freeport. This aims to support a green freight corridor to decarbonise transport flows between the two locations.

Collaboration is one among a number of different initiatives that the two freeports are pursuing in the energy transition space.

“Whether it’s our offshore wind port expansion at Bathside Bay, our green hydrogen hub or our green freight corridor with East Midlands Freeport, we are driving a number of strategic initiatives to support the energy transition,” Freeport East’s CEO, Steve Beel, told E-FWD.

“A benefit of this is the new domestic and international investment we are seeing in related sectors, from as far afield as Turkey and Australia, as well as major UK players such as Scottish Power and RWE. We will also soon be announcing the outcomes of our Clean Growth Fund and Skills & Innovation Fund, which collectively will broaden the benefits of green industries to our local area.”

East Midlands Freeport is the UK’s only inland freeport. It hosts various industries including aerospace, automotive and clean energy. The freeport says it is addressing some of the hardest-to-decarbonise industries – such as freight, air travel and manufacturing. It has a core objective of becoming a hotbed of innovation, attracting businesses that can support wider decarbonisation.

The freeport is “committed to helping the region make significant steps in the energy transition by investing directly in innovation and skills programmes which will unlock future potential”, East Midlands Freeport’s CEO, Tom Newman-Taylor, told E-FWD.

Next steps

There are further opportunities for freeports to align themselves with government initiatives related to the energy transition.

“As the UK starts to develop green shipping corridors, providing clean transportation across our seas to our near and international neighbours, freeports present an opportunity to act as first customers,” said Mohamed. “An example of this is the corridor through Liverpool to Belfast, Isle of Man and Dublin.”

Many of the energy transition projects associated with freeports at in early stages. There are many factors that will determine whether such projects will reach their full potential. These include the policy environment, public-private collaboration, the successful scale-up of emerging green technologies and others.

The collaboration aspect was highlighted by Thames Freeport’s chair, Ruth Kelly.

“Our comprehensive energy transition plans are already making significant strides, from the development of renewable energy hubs to pioneering green technologies,” Kelly told E-FWD. She called for more to be done. “To fully realise these ambitions, it is crucial to foster strong collaborations across industries and secure continuous investment in innovative projects.”

How investment is directed is also an important factor.

“Crucially the development of the port must be hand-in-hand with regeneration of the area; ensuring that investment in the freeports drives growth and economic development is crucial and we are starting to see numerous companies investing within these hubs, looking to maximise the early opportunity for engagement,” said DNV’s Norman.

The DNV official said the grander plans have “somewhat been hampered by the lack of large-scale project developments that have transpired within the past few years”. He warned this risks other sectors being able to capitalise on the freeport benefits, “over and above those that may be the focus of the energy transition”.

Not exclusive

Alongside competition between the industries located at freeport sites, there is also potential for competition between non-freeport sites and freeports to host energy transition projects. Indeed, Peel Ports Group’s commercial director, Stephen Carr, sees freeports as one way among several of incentivising development. Peel Ports’ network includes the freeport in Liverpool.

“The reality is that there are as many energy transition projects sitting outside freeports as there are inside,” Carr told E-FWD.

“Two of our most active energy transition locations are in Great Yarmouth and King George V (Glasgow), neither of which are in freeports. And we have a really strong example at the former Hunterston coal terminal in North Ayrshire, where we are investing £150m in an offshore wind logistics facility. It’s also not in a freeport.”

DNV also expects the use of the marine environment to grow across the board, not just at freeports.

“Much depends upon the relative positioning, depth of water, quayside strength and acreage available, pilotage and proximity to market,” said Norman.

“Whilst freeports offer many incentives, there are and will be port developments that can substantially benefit from the energy transition driving local or trade advantage to gain strategic leverage and capitalise themselves as hubs for further investment in clean energy.”

*Inverness and Cromarty Firth Green Freeport*

Challenged plans

One major challenge is that new, green technologies need to be proved before they can be scaled up.

However, Mohamed sees freeports as springboards for rolling out clean technologies on a UK-wide basis.

“The freeports have been challenged to create hotbeds of innovation in which green technologies can be tested working with regulators,” Mohamed said. “Once these technologies have been proven they can be rolled out to other places across the UK to move the net zero agenda forward. The vision in freeports to drive green growth is helping promote the right skills and new infrastructure, which is also part of appeal of these becoming green hubs.”

Scrutiny

There has been some uncertainty over how much the new government may back freeports. A report from the House of Commons warned that freeports may simply move industry, rather than stimulate new investments.

Professor Steve Fothergill said that only one third of the jobs created in these zones should be considered new. The remaining “two-thirds being either deadweight or displaced”, the report said.

The new government has talked of devolving power to the regions. The April report called for devolution to go hand in hand with freeports. “All freeports and investment zones should be linked to a single regional leader”, it said.

The aim for Labour – as it was for the Conservatives – is to boost the economy in “left behind places”. This argument continues to be a good one that could help deliver new investment in the energy sector.

Transparency will play a crucial role in demonstrating freeports’ value to both local community members and central government. Get it right, though, and freeports can help attract and drive the investment needed to boost the wider economy and capture interest in the net zero project.

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