Graham Alexander

Uncertainty, largely due to fiscal instability and lack of clear policy direction and decision-making from politicians of all parties, is the biggest barrier to the UK accessing the unprecedented opportunities presented by the blue economy.

At a time when the underwater industry – worth £8 billion to the UK and supporting 45,000 jobs – should be rejoicing in the scale of opportunity, confidence is being shaken by the lack of certainty and therefore visibility of the timelines for the projects coming over the horizon.

Its potential is being held back by the lack of a clear narrative from both governments and opposition on a national industrial strategy – a joined-up approach to the investment and support required if the supply chain is to increase both its capacity and capability to capitalise on the blue economy.

Estimated to be worth $3 trillion (yes, trillion – around £2.4tn) by 2030, the blue economy covers the key markets in which the UK’s subsea supply chain operates and excels: from offshore oil & gas to offshore renewables, defence, telecommunications and aquaculture. All of which are growing at an unprecedented rate and scale.

Whether it’s the underwater engineering, manufacturing, fabrication and assembly along with the dynamic cables, moorings and anchoring systems required in offshore fixed and floating wind, the underwater ingenuity to make wave and tidal energy viable or the advancement of autonomy and technology for underwater operations and real-time data gathering and analysis, the subsea sector is key to unlocking the energy transition. Not to mention its role in ensuring the security of our underwater infrastructure and the wherewithal to allow us to responsibly and sustainably mine under the world’s oceans for food and other valuable resources.

Arguably, no other industry is as well placed to lead the energy transition with a credible message regarding economic activity, employment and an aggressive pursuit of world leading technology that will deliver a carbon neutral, sustainable economy.

At a recent dinner for subsea leaders, hosted by Johnston Carmichael, the conversation was dominated by the mixed messages coming from politicians of all colours and their woeful lack of understanding of the energy industry and what is actually needed to achieve a just transition.

This was unsurprising in a year which will be defined by a general election but disconcerting against a backdrop of a buoyant industry with a global market opportunity that is, arguably, one of the biggest we’ve seen in the UK for decades.

The subsea sector is naturally aligned to the energy transition due to the transferable nature of its skills and technologies. Already extensively diversified across all forms of energy, defence, telecoms and aquaculture and, because of its globally recognised expertise and experience, the subsea supply chain is delivering substantial exports and contributing to creating UK jobs and growing GDP. Indeed, the subsea leaders at our dinner reported that, regardless of the uncertainty, they are investing in skills and technology and pivoting from 20% towards 80% of their business being international. They are flying the flag for the UK overseas whilst our politicians dither and resort to short term sound-bites.

While the ingenious, pioneering, entrepreneurial spirit and resilience of the subsea supply chain will ensure the industry looks after itself in this buoyant global market it could accelerate the energy transition and significantly increase its contribution to UK PLC with a national framework and investment strategy, developed through a meaningful partnership between government, industry and the supply chain.

It’s clear that the subsea sector won’t let fiscal instability and uncertainty become an unsurmountable obstacle but it’s a frustrating diversion that has an unquestionably negative impact on investor sentiment.

No-one will invest in a major asset, be it a port, a vessel or a manufacturing facility, without a clear indication of timelines for utilisation.

When our politicians should be doing everything to help the sector flourish, accelerate the energy transition and our economic growth, they are slow, or unable, to articulate a strategy that will ensure planning and consenting, investment in grid connection and infrastructure are accelerated, the levels of and timing for investment are set out and the necessary fiscal and regulatory environments are in place.

Notwithstanding the politics and the lack of strategic policies, the subsea industry is flourishing. But how much stronger could it be if we had the right national framework and public narrative around securing investment, establishing tax incentives, attracting inward investment and supporting skills development, attraction and retention?

Subsea is one of the country’s major success stories – a great national resource that, if fully exploited, can put GB back on the international stage not only in terms of the energy transition but right across the blue economy.

Our policy-makers must waken up to the need for a clear, joined-up industrial strategy that will enable private and public investment to flow into increasing the necessary capability and capacity to, not just navigate the blue economy, but dominate it.

Graham Alexander is partner and head of corporate finance at Johnston Carmichael