7.7. Offshore Socio-Economics

7.7.1. Introduction

  1. This section of the EIA Scoping Report identifies the elements of socio-economics relevant to the Array and considers the scope of assessment on socio-economics from the construction, operation and maintenance, and decommissioning of the Array.

7.7.2. Study Area

  1. Whilst the Array is located offshore, for most of the socio-economic effects, the relevant study areas are onshore.
  2. The socio-economic study areas for the assessment of effects on employment and economy will be defined in line with the guidance on identification of 'local areas' for offshore developments published by the Scottish Government (Scottish Government, 2022c). This guidance identified six principles for identifying local study areas for offshore development:
  • Principle 1 (Dual Geographies): The local area for the supply chain and investment impacts should be separate from the local area(s) for wider socio-economic impacts, including tourism and recreation.
  • Principle 2 (Appropriate Impacts): The appropriate impacts to be considered for assessments should be identified before defining the local areas.
  • Principle 3 (Epicentres): The local areas should include all the epicentres of the appropriate impacts.
  • Principle 4 (Accountability): The local areas used in the assessment should comprise of pre-existing economic or political geographies (community councils, local authorities, development agencies) to enhance accountability.
  • Principle 5 (Understandable): The local areas should be defined in such a way that they are understandable to the communities they describe.
  • Principle 6 (Connected Geography): The local area for the supply chain and investment impacts should consist of connected (including coastal) pre-existing economic or political geographies.
  1. The local socio-economic study area(s) will be defined when more information on the ports that will be used during the construction and operation is known. Based on the principles set out above, it is expected that the local study area(s) will be defined as the local authority area(s) in which the construction and operational ports are located. If the port(s) are close to the local authority boundary with the neighbouring local authority, it is possible that the local study area(s) will be defined as including more than one local authority area. If the construction port(s) and operational port(s) are in different local authority areas, different local study area(s) will be defined for construction and operational effects.
  2. The socio-economic effects will be also assessed at the level of Scottish and UK economies.
  3. Where possible, the socio-economic impact of onshore and offshore elements should be considered together, to allow interlinkages between the two elements to addressed within the assessment. To ensure that offshore socio-economic assessment is compatible with the onshore assessment, epicentres linked to both onshore and offshore elements will be considered when defining the more local economic study area. Impacts related to onshore elements will also be considered as part of the cumulative assessment.

7.7.3. Baseline Environment

  1. This section provides a concise summary of the socio-economics baseline environment for the purposes of the socio-economic scoping report. A more detailed description is provided in Appendix 12.

                        Socio-economics overview

  1. The Scottish population is projected to decrease over time, particularly the working age population, and so the Scottish economy requires new drivers of growth. The offshore renewables sector represents an opportunity of substantial scale for the Scottish economy, and the wider UK economy.
  2. Baseline characterisation of the local socio-economic study area(s) will be undertaken when the ports that will be used during the construction and operation are known.

                        Strategic context

  1. The UK Government aims to ensure that UK companies can benefit from the opportunities presented by the expansion of the offshore wind sector, enhancing the competitiveness of UK firms internationally and sustaining the UK’s role as a global leader in offshore wind generation, as outlined in the Offshore Wind Sector Deal. Offshore wind is also expected to play a significant role in the transition to net zero, creating green jobs as part of the Net Zero, Build Back Greener agenda (UK Government, 2021).
  2. The Scottish Government, as outlined in its Offshore Wind Policy Statement, expects offshore wind projects to play an important role in the transition to a net zero economy, while contributing to sustainable economic growth with new, well-paid jobs. In particular, there are expected to be opportunities in Scotland related to offshore wind projects with floating turbine foundations, like the Array.
  3. The strategic baseline will be augmented with local strategies when the local socio-economic area(s) are identified.

7.7.4. Potential Array Impacts

  1. A list of all potential impacts on offshore socio-economics may occur during the construction, operation and maintenance, and decommissioning phases of the Array in the absence of designed in measures is included in Table 7.21   Open ▸ .
  2. In addition, the baseline analysis of local socio-economic study area(s) and stakeholder consultation may identify other types of socio-economic impacts that should be considered, such as distributional effects and socio-cultural impacts. Any other types of socio-economic impacts identified will be assessed, or if considered not to be relevant, justification will be provided for scoping them out of the socio-economic assessment.

 

Table 7.21:
Potential Impacts Identified for Offshore Socio-economics in the Absence of Designed in Measures

Table 7.21: Potential Impacts Identified for Offshore Socio-economics in the Absence of Designed in Measures

 

7.7.5. Designed in Measures

  1. The following designed in measures, and how these can increase the potential for positive impacts or reduce potential for negative impacts, have been considered in the identification of potential impacts that have been scoped into the Array assessment ( Table 7.22   Open ▸ ).
  2. It is anticipated that measures that have already been undertaken, such as the analysis and commitments underpinning the Supply Chain Development Statement (SCDS) which will be refined over time, as well as future activity such as meet the supplier events and contracting requirements, will increase the share of local/national content, increasing the positive economic impact associated with the Array.

7.7.6. Potential Impacts After the Implementation of Designed in Measures

  1. The impacts that have been scoped into the Array assessment are outlined in Table 7.22   Open ▸ together with a description of additional data collection and supporting analyses that will be required to enable a full assessment of the impacts.

 

Table 7.22:
Impacts to be Scoped In to the Array Assessment for Offshore Socio-Economics. Project Phase Refers to Construction (C), Operation and Maintenance (O) and Decommissioning (D) Phase of the Array

Table 7.22: Impacts to be Scoped In to the Array Assessment for Offshore Socio-Economics. Project Phase Refers to Construction (C), Operation and Maintenance (O) and Decommissioning (D) Phase of the Array

 

7.7.7. Proposed Approach to the Environmental Impact Assessment

  1. The offshore socio-economics EIA will follow the significance methodology set out in section 4. Specific to the socio-economic effects related to the offshore elements, the following guidance documents will also be considered:
  • General Advice for Socio-Economic Impact Assessment Marine Analytical Unit, (Scottish Government, 2022d);
  • Guidance on assessing the socio-economic impacts of Offshore Wind Farms (Glasson et al., 2018);
  • Defining 'local area' for assessing impact of offshore renewables and other marine developments: guidance principles (Scottish Government, 2022c);
  • UK Offshore Wind Sector Deal (UK Government, 2020); and
  • The Green Book: Appraisal and Evaluation in Central Government (HM Treasury, 2022).
  1. In addition, the Scottish Government is in the process of developing guidance on the assessment of the socio-economic impacts of offshore wind energy projects. It is expected that this shall be published in 2023. This guidance will be taken into account, and it is assumed that it shall build on current best practice. In addition, Marine Scotland’s Marine Analytical Unit (MAU) has recently provided general advice on socio-economic impact assessment, which will be taken account of in the socio-economics assessment.
  2. The economic impacts will be considered for each study area and will be reported in terms of:
  • GVA: this is a measure of economic value added by an organisation, industry or region and is typically estimated by subtracting the non-staff operational costs from the turnover of an organisation.
  • Years of Employment: this is a measure of employment which is equivalent to one person being employed for a year and is typically used when considering short to medium term employment impacts, such as those associated with the construction phase of the Array.
  • Jobs: this is a measure of employment which considers the headcount employment in an organisation or industry. This measure is used when considering long term impacts such as the jobs supported during the operation and maintenance phase of the Array.
  1. The focus of the assessment will be on the direct and indirect (supply chain) effects, in line with the UK Offshore Wind Sector Deal (UK Government, 2020). In addition to this, the assessment shall also consider the effects of staff spending and the economic impact that this subsequent increase in demand stimulates (the induced effect).
  2. The socio-economic assessment will consider the lowest, realistic levels of expenditure associated with the Array, since that would represent the ‘worst case’ scenario in terms of the expected positive socio-economic effects. This will take account of the ‘Commitment’ scenario in the SCDS submitted as part of the ScotWind leasing process, though may be revised to reflect subsequent revisions of the SCDS which will take account of any changes or development in the local supply chain.
  3. The impact assessment will include direct, indirect and induced economic impacts and will take account of deadweight, leakage, displacement and substitution. Sensitivity analysis will also be undertaken to account for risk, uncertainty and optimism bias, where they could have implications for the economic impacts.
  4. The offshore elements will include the construction and installation of floating foundations and turbines, the offshore substations and the construction and installation of new inter-array and interconnector cabling. The analysis for the Array will cover three phases:
  • construction;
  • operation and maintenance; and
  • decommissioning.
  1. The impacts during the construction phase will be based on the actual expenditure that has occurred to date as well as the planned expenditure associated with this phase. In addition to the total impact over the period, the assessment will also consider the timings of impacts during this phase to understand the peaks and troughs of this activity.
  2. The impacts during the operation and maintenance phase for the Array will be based on projected operational (including maintenance) expenditure. 
  3. In instances where impacts are expected to occur over a number of years, such as the operation and maintenance phase or the decommissioning phase, a discount rate will be applied. This allows impacts that occur sooner to be valued more highly than impacts that occur in the future, a concept known as time preference. In this instance a discount rate of 3.5% will be chosen, which is in line with the UK Government's Green Book (UK Government, 2022). On this basis it is expected that the decommissioning phase impacts will be substantially lower than for the construction phase.

7.7.8. Potential Cumulative Effects

  1. There is the potential for the identified effects to interact with the onshore elements of Ossian and other projects particularly other offshore wind farms being developed as part of the ScotWind consenting process. Cumulatively, the development of the ScotWind projects is expected to represent a substantial increase in demand at the Scottish level for the industries that will be involved in the construction of these projects.
  2. By contributing to a critical mass, the Array will contribute to the cumulative case for potential indigenous or inward investors, by making it more financially attractive to set up new manufacturing and fabrication facilities in Scotland, as opposed to relying on overseas facilities that may have higher transportation costs. Consideration will also be given the cumulative effects on port facilities during both construction and operation and maintenance phases.
  3. The CEA will follow the methodology set out in section 4.

7.7.9. Potential Transboundary Impacts

  1. A screening of transboundary impacts has been carried out and is presented in Appendix 3. This screening exercise identified that there is the potential for transboundary impacts upon offshore socio-economics and tourism due to construction, operational and maintenance, and decommissioning impacts of the Array. These include:
  • socio-economic impacts taking place outside of the UK, relating to non-UK supply chain during the construction, operation and decommissioning phases. These will be imports from outside of the UK, and are expected to be positive in nature; and
  • impacts on commercial fisheries and other marine users based outside of the UK during construction, operation and decommissioning.

7.7.10. Scoping Questions to Consultees

  1. The questions below are intended to focus responses to the scoping report and inform the scoping opinion, including:
  • Do you agree with the proposed approach to the baseline characterisation?
  • Are there any additional baseline datasets to those included in Appendix 12 that should be reviewed to characterise the socio-economics baseline?
  • Do you agree with the proposed approach to the socio-economics assessment?
  • Are there other types of socio-economic impacts that should be considered in the socio-economics assessment?

7.7.11. Next Steps

  1. When the ports that will be used during the construction and operation are known (i.e. epicentres of impact), the local socio-economic study area(s) will be defined in accordance with Marine Scotland guidance on defining local study areas (Scottish Government, 2022c). The baseline assessment for the local study area(s), will be undertaken, as described in Appendix 12.
  2. At this stage, it will also be possible to identify the appropriate organisations for consultation on socio-economic matters. These consultations will focus on the supply chain opportunities and the capacity of local study area(s), Scotland and the UK to respond to the opportunities, as well as identifying other potential socio-economic impacts that should be included in the assessment. The consultees may include enterprise agencies, port authorities, local authority economic development departments and Marine Scotland’s Marine Analytical Unit.
  3. The socio-economic assessment in the Array EIA Report will take account of relevant comments raised as in the Scoping Opinion for the Array and during the consultation programme.