Green Ports Delivering Freeports for Scotland: Applicant Prospectus (DRAFT)

Section 1. Objectives

Government objectives

1.0.1. This document is the Applicant Prospectus for green ports in Scotland only.

1.0.2. Green ports will be expected to contribute to Scotland's National Performance Framework and its National Outcomes. In particular, to help Scotland's people have a globally competitive, entrepreneurial, inclusive and sustainable economy, which is open, connected and makes a positive contribution internationally, with thriving and innovative organisations, high quality and fair work for everyone. More specifically, the Scottish Government wants green ports to be an exemplar in modelling world class regulatory standards, especially on workers' rights and the just transition to a net zero economy. To achieve this, any newly designated area must demonstrate a clear and practical commitment to adopting fair work practices and working towards a net zero economy, while ensuring that Scotland can be at the forefront of innovation and trade.

1.0.3. To achieve this, the Scottish and UK Governments have developed a model which will deliver on 5 objectives, all of which need to be fulfilled by applicants:

a. Promote regeneration and job creation through inclusive and sustainable growth – our lead policy objective.

b. Establish hubs for global trade and investment.

c. Contribute to a just transition to a net zero economy.

d. Drive fair work practice.

e. Foster an innovative environment.

1.0.4. No two local economies or ports are the same. To meet the ambition of green ports, applicants need to reflect on these characteristics, fully utilise their assets, tackle their weaknesses and set out a strategy for inclusive growth founded on these objectives.

1.0.5. Promoteregeneration and job creation through inclusive and sustainable growth – Operators and businesses in green port designated areas must make links with local communities and wider economic plans being pursued by local government, and its partners, in the area or region to help deliver high quality jobs and fair work, sustainable and inclusive economic growth and regeneration in the areas which need it most. This will involve detailed consideration of how use of local supply chains can be maximised.

1.0.6. Establishhubs for global trade and investment –Establishing hubs for global trade and investment, intensifying the economic impact of our ports and generating increased economic activity across Scotland. Investment in and around green ports, as well as imports into them, will be essential to the success of domestic companies and in delivering clean growth, innovation, and job creation. Businesses in green ports will be expected to contribute to enhancing Scotland's reputation as a vibrant trading nation, ensuring their activity aligns with the core principles in Scotland's Vision for Trade.

1.0.7. Contribute to a just transition to a net zero economy - All applicants must demonstrate clear commitment to a just transition to net-zero emissions by 2045 and set out their substantive plan for doing so. This approach to planning will include: working from established, clearly defined baselines for emissions, environmental impact and climate risk management; setting milestones for emissions reductions, enhanced economic growth and wellbeing; and identifying key actions (enablers, barriers, dependencies), opportunities and partners in support of the transition.

1.0.8. Drivefair work practice – In line with the Scottish Government's Fair Work First approach, fair work practices shall be adopted by both the operator of the designated zone and all of the organisations benefitting from the new incentives offered by both the Scottish and UK Governments. In addition, applicants are asked to propose additional innovative measures they can introduce to support the Scottish Government's Fair Work priorities.

1.0.9. Fostering an innovative environment - Applicants must work to help ensure Scotland can remain at the forefront of innovation by encouraging innovative environments within which to test and trial new technologies.

1.1. Promote regeneration and job creation through inclusive and sustainable growth

1.1.1. Green ports should ensure that they align with the Scottish Government's commitment to inclusive growth and sustainable growth. This means growth that combines increased prosperity with greater equality, creates opportunities for all, and distributes the benefits of increased prosperity fairly. Actions for achieving this include; fair work, promoting equality and tackling inequality, closing the attainment gap, and ensuring that place agendas and regional cohesion are shared across Scotland.

1.1.2. Green ports should seek to help regenerate communities in Scotland by being a hub for driving inclusive and sustainable growth locally, regionally and nationally by attracting global trade and investment to intensify the economic impact of our ports. Green ports should harness ideas and investment from the private sector to deliver jobs, sustainable economic growth and regeneration in the areas which need it most.

1.1.3. The private investment needed to drive this regeneration can be attracted to green ports through a mixture of incentives, good governance, a strong local skills base and the support of government in attracting investment.

1.1.4. In their application document and in subsequent operation of the zoned area, the operators and beneficiary businesses must:

a. Comply with all good practice in procuring goods and services in Scotland (this would be inclusive of community benefit requirements as defined in the Procurement Reform (Scotland) Act 2014).

b. Make links with relevant local authorities to proactively seek to contribute to relevant local and regional plans for inclusive and sustainable growth, including through pursuit of the new community wealth building approach being developed across Scotland.

c. Consider how they can benefit local businesses and supply chains and communities via engagement with the local authority and prioritising local recruitment where possible.

Support emerging industrial clusters

1.1.5. Green ports should catalyse innovation and develop sectoral clusters - this will involve collaboration with Scotland's enterprise agencies, universities and colleges and agreement of a co-operation action plan.

1.1.6. By targeting particular sectors that are present and growing in the local or regional economy, green ports may be able to support emerging clusters. Industrial strengths and clusters can be identified using several methods, from statistics on industries ranked by local job share to "Economic Complexity Analysis".

1.1.7. As green ports attract fresh investment and become increasingly occupied by similar, or complementary firms, both governments expect other firms wanting to expand into green port areas to benefit from the shared inputs, labour market pooling and knowledge spill-overs that clustering provides.

1.1.8. Applicants should give evidence of these emerging clusters in their local economy and how they intend to support them. Evidence of new private sector investment – either from commercial property developers serving those sectors or from occupiers themselves – will be rewarded with a higher assessment against relevant criteria.

Property

1.1.9. Applications that propose commercial property development should show how they will enhance these effects through attracting larger "anchor firms" around which other firms can cluster or ensuring that estates are well-designed to promote beneficial mixing of workers. Given the uncertainty presented by Covid-19, proposals should be tested against a number of likely scenarios and, if appropriate, allow for a range of occupier types.

1.1.10. Ambition to attract new anchor firms should be underpinned by a Community Wealth Building approach.^[3] Evidence should be presented of how an applicant intends to encourage new enterprises to e.g. recruit locally and procure goods through local supply chains.

Transport

1.1.11. Scotland's second National Transport Strategy sets out the vision, priorities and outcomes for our transport system alongside the sustainable travel and investment hierarchies which should be embedded in decision making. We will continue to promote efficient and sustainable freight transport for the movement of goods, including modal shift and decarbonisation through the use of grant schemes, new technologies, and business models. These hierarchies should be considered in relation to future proposals alongside the need to ensure the continued safe and efficient operation of our strategic trunk road and rail transport networks. Applicants should ensure they are well-aligned with existing or planned infrastructure investment, consider increased demand for travel in line with Scottish Planning Policy and address gaps in site-viability themselves, while remaining focused on the needs of target sectors. Applicants should ensure that they are aligned with their national, regional and local transport plans (including the national transport strategy) ensuring there is promotion of sustainable transport and active travel where possible, particularly the shift from road to rail and sea.

Skills

1.1.12. Developing local skills is a vital component of green ports. Applicants must show how they intend to align the skills available in the local labour market to the needs of the firms and sectors being targeted by the green port, including support for upskilling in line with local and national skills strategies. It is important that applicants take into account the Future Skills Action Plan helping to ensure local solutions to skills can be optimised and a sustainable local workforce can access the high-quality jobs created.

1.2. Establishing hubs for global trade and investment

1.2.1. Establishing green ports as hubs for global trade and investment will intensify the economic impact of our ports and generate increased economic activity across Scotland, and the wider UK.

1.2.2. There are well-established interdependencies between investment and the export and import of goods and services, which may benefit existing businesses in affected areas. Investment in and around green ports, as well as imports into them, will therefore be essential to the success of domestic companies and in delivering on wider objectives such as inclusive growth, transition to net zero, innovation, job creation and labour market standards.

1.2.3. Much of what a green port will be able to deliver in terms of economic value will derive from activity within the port footprint. Green ports will reflect on the strategic importance of ports in terms of Scotland's international connectivity and the role they play in ensuring that Scotland's internal supply chains are fit for purpose.

Investment

1.2.4. The economic impact that international investment has on host economies is well established and is particularly important to Scotland with the benefits secured from good inward investment including employment, higher wages, productivity gains, and increased exports spread across many of our regions in a number of key sectors. Inward investment lifts wages across the country, bringing higher wage benefits at both a regional and a national level.

1.2.5. Applicants should demonstrate how the green port will bring new investment into the surrounding areas and increase trade through the designated site, in line with the Scottish Government's inward and capital investment plans, Scotland's Vision for Trade and the UK Government's levelling up agenda.

1.2.6. Applicants should also show how they will work with local and international businesses to enhance the impact of increased investment in the wider region, and the country as a whole, in a way that supports sustainable, inclusive growth which, creates opportunities for all, distributing the dividends of increased prosperity fairly. This should include a view of any investment projects that the green port could help to deliver and a view of the sectors they will target within the region – in particular, how it will support inclusive growth in the nine opportunity areas prioritised in Scotland's inward investment plan, Shaping Scotland's Economy, and how it will align with the UK Government's levelling up agenda.

Trade

1.2.7. In addition to the increased investment, green ports provide businesses and ports with the opportunity to improve current practices and benefit from customs facilitation easements that are not available elsewhere to maximise development opportunities that would not be available elsewhere. Pursuing new trade opportunities should be done in line with the core principles in Scotland's Vision for Trade: inclusive growth, wellbeing, sustainability, net zero and good governance. We expect organisations based in green ports to adopt fair and ethical business practices, conduct appropriate due diligence on business partners and to be aware of local business conditions in export markets.

1.2.8. Applicants should outline how they envisage their green port will further internationalise Scotland's economy, generate sustainable trade growth and enable trade processes to become easier and more efficient. This should be in line with the Scottish Government's export growth plan, Scotland: A Trading Nation, Scotland's Vision for Trade, and the UK Government's levelling up agenda.

1.2.9. Applicants should also indicate which sectors would benefit from having a green port (e.g. to assist with any necessary import/export checks, support their supply chain needs or increase their exporting potential).

1.3. Just transition to a net zero economy

1.3.1. Operators and beneficiary businesses must support Scottish Government climate change ambitions. Applicants will present a robust plan of action setting out how they intend to contribute to a just transition to net zero emissions by 2045, including how they can facilitate decarbonisation of the beneficiary organisations. In support of a just transition, this planning approach will demonstrate support for decent, fair and high-value work; low-carbon investment and infrastructure; meaningful engagement with relevant stakeholders and partners (such as workers, local communities and local authorities).

1.3.2. Planning for just transition will capture a number of elements identified elsewhere in this document, with particular consideration of inclusive growth/wellbeing economy; fair work; engagement with workers and local communities; skills development; the Youth Guarantee; low carbon investment.

1.3.3. An applicant's approach to planning will (a) work from established, clearly defined baselines for emissions, environmental impact and climate risk management; (b) set targets and milestones (in line with Scotland's net-zero ambition) for emissions reductions and economic growth and wellbeing in a net-zero economy and (c) identify and sequence key actions (enablers, barriers, dependencies), opportunities and partners across different actors to enable collaboration. This must include consideration of emerging technologies and supply of alternative fuels. Effective approaches to planning will be developed via engagement with key partners and stakeholders (for example, local authorities and community groups, workers' representatives). Applicants will ensure that the ambition they have set, and the progress being made against those ambitions, are publicly available.

1.3.4. Full details of monitoring of plans for green ports will be set out for successful applicants as part of the final designation process for Scotland. We want applications that detail how potential operators will approach meeting all relevant environmental regulations and Scottish Government commitments. We will look for detailed, achievable action-focused plans for decarbonisation in support of a net zero economy. Applicants must provide both a timeline and realistic programme of work for achieving its decarbonisation goals.

1.3.5. The expectation of a commitment to a just transition to net zero would be placed upon the operator and organisations that operate in the zoned area, and which benefit from the new designation directly. Companies that are extant in the subsequently zoned area receiving no direct benefit would not be in formal scope. However, the beneficiary companies can act as champions and exemplars.

1.3.6. Operators and the beneficiary businesses within the zoned area should support Scottish and UK Government commitments to create new high quality, fair jobs, offering upskilling/re-skilling opportunities especially to those in local communities. Applicants should evidence, in an outline initial plan, how they would support job creation through low carbon investment and infrastructure by both the designated operator and the companies benefitting from tailored governmental assistance.

1.3.7. This approach supports the 2020 Programme for Government commitment to create green jobs in line with the ambitions of the Scottish Government Climate Emergency Skills Action Plan

1.4. Drive fair work

1.4.1. Green port operators and businesses directly benefitting from new incentives shall adopt the Scottish Government's Fair Work First approach, making a commitment to adopting the Fair Work First criteria, specifically:

a. Appropriate channels for effective voice, such as trade union recognition.

b. Investment in workforce development.

c. No inappropriate use of zero hour contracts.

d. Action to tackle the gender pay gap and create a more diverse and inclusive workplace.

e. Payment of the real Living Wage.

In doing so, they will wish to use the Scottish Government's Fair Work First guidance to inform their approach.

1.4.2. Additionally, green port operators and businesses are expected to become Scottish Business Pledge signatories upon being awarded green port status. Both mandatory and optional elements of the Pledge align with the Fair Work First criteria, and also reflect wider objectives for green ports such as innovation, internationalisation, and community and environmental impacts.

1.4.3. We expect to see detailed action plans as part of an applicant's response, setting out the focused action the operator and businesses will take to ensure the Fair Work First approach and criteria are embedded within and across the green port environment and individual organisations. The aim will be to drive a fair work culture and fair work practices for creating and sustaining diverse and inclusive workplaces with high quality jobs and fair work across the green port workforce. We strongly recommend that employers within the green port zone engage constructively with relevant trade unions and where a union is not present, with another appropriate worker representatives to ensure effective decisions are made about workplace matters. We will also seek assurances, in the application to be a green port, that the operator and businesses will work collaboratively with the relevant local authorities to agree their fair work priorities. Their plan should also demonstrate how they will utilise the local skillset (upskilling/re-skilling where necessary) and address the demographic challenges for the area/region and the relevant industries, giving particular attention to improving opportunities and outcomes for minority ethnic and disabled workers and women.

1.4.4. In order to become a green port, in line with the Fair Work First guidance, the operator and businesses must adopt Fair Work First criteria in a manner consistent with the context in which they can be applied. We will expect these companies to advance fair work as they grow.

Committing to the Youth Guarantee

1.4.5. Applicants must consider how they can support the Scottish Government's Youth Guarantee, including incorporating opportunities for young people and producing a specific action plan. Businesses will be asked to apply Fair Work First criteria to young people as part of an incremental and progressive fair work approach.

1.5. Foster an innovative environment

1.5.1. Green ports will focus private and public-sector investment in R&D; they will be dynamic environments that bring together innovators to collaborate in new ways, while offering controlled spaces to develop and trial new ideas and technologies.

1.5.2. Innovation in green ports jointly supports other core objectives as it helps to create new markets for international trade, and helps drive productivity improvements, bringing jobs and investment to green port regions. Innovation at ports will also be a key aim of the UK Government's 2025 Border Strategy.

Innovation in green ports

1.5.3. Innovative activity in green port locations can be characterised into 3 distinct areas of focus. Potential green ports could focus on any, or all, of these in outlining their innovation ambitions.

a. Port-specific innovation – innovation that directly benefits air, rail or maritime ports, e.g. autonomous cranes and cargo-handling equipment, digital security, customs software that can track goods across a broader area, creative use of people and skills to develop innovative solutions that can drive efficiency and effectiveness, etc.

b. Port-related innovation – innovation that indirectly benefits air, rail or maritime ports or their supply chain, e.g. autonomous transport, modal shift, decarbonisation of transport, modern methods of construction, industrial decarbonisation etc.

c. Non-port-related innovation – innovation unrelated to air, rail or maritime ports that can take advantage of port-proximate locations or the green port wider offer, e.g. pharmaceuticals, quantum technologies, advanced materials, robotics, AI etc.

1.5.4. At ports themselves, green port status could allow port operators and businesses to build on the thinking outlined in the UK Government's Maritime 2050 strategy and Aviation 2050 consultation to generate technological solutions which could subsequently be implemented in other green ports / Freeports (in either Scotland or across the UK), ports and other areas across the country.

Innovation activity

1.5.5. In creating a successful innovative environment, a successful green port proposal should consider the following:

a. Capability and Investment: Build and reinforce the capability for Research and Development (R&D) in the green port region, by funding and supporting private and public investment in research, innovation and skills within green ports.

b. Collaboration and Commercialisation: Facilitate translational research, skills development and data-sharing in the green port region, by linking start-ups, businesses and ports with academic institutions, innovation structures and regulators.

c. Novel solutions: Drive the development, testing and application of new ideas and technologies, including developing innovative solutions to problems faced by green ports.

1.5.6. The three innovation levers outlined in Section X.X (innovation funding, collaboration hubs and regulatory innovation) link clearly to each of these areas of focus and contextualise how successful green port proposals should outline their innovation outputs and ambition.

1.5.7. Government is also interested in how innovation ambitions can meet these outcomes in the context of the decarbonisation and net zero agenda, as outlined in Section X.X.

1.6. Logic model

1.6.1. Applicants will be expected to submit a diagram of a logic model. The logic model should provide an overview of the links between the activities and inputs, outputs, outcomes and impact of the applicants' proposed green port model to show how their proposed green port will achieve the programme's objectives. That will mean explaining how the green port would make use of the levers set out in Section X and how these will interact with local characteristics and other inputs (e.g. investment by the port and local area) to achieve measurable outputs and ultimately the desired outcomes.

1.6.2. The Scottish and UK Governments will assess the credibility of each link in the chain from activities and inputs, to outputs, to outcomes, within the logic model underpinning each proposal and using the information provided in question 2.1 (see Section X.X).

1.6.3. The broad structure of a logic model is set out in Figure 1.6.1. This sets out some indicative examples of the sorts of activities applicants may propose, alongside an array of possible outputs. Applicants will be responsible for explicitly making the link between the specific outputs they propose, and the outcomes set by the government.

1.7. Expected outcomes

1.7.1. Each objective is underpinned by a set of key outcomes. Applicants' plans to deliver on government objectives must show how they will deliver outputs in support of these key outcomes. These outcomes will also form the basis for subsequent evaluation of the success of the programme.

1.7.2. Green port proposals will be assessed against all these outcomes as part of monitoring and evaluation process.

1.7.3. Promote regeneration and job creation through inclusive and sustainable growth

a. Increased number of jobs and average wages in deprived areas in and around the green port.

b. Inclusive growth outcomes (Productivity, Population, Participation, People, Place) are better achieved locally, ensuring the green port makes a positive contribution to the local and national economy.

c. Sectoral clusters are boosted by innovation and collaboration with Scotland's enterprise agencies, universities and colleges.

1.7.4. Establishing hubs for global trade and investment

a. Increases in sustainable, ethical trade throughput through the designated green port area, in line with the Scottish Government's Vision for Trade and the ambitions in Scotland: A Trading Nation.

b. Increases in investment within the green port boundary area, surrounding area and nationally, in line with the Scottish Government's Vision for Trade and nine opportunity areas in Shaping Scotland's Economy.

1.7.5. Contribute to a just transition to a net zero economy

a. Clearly defined baselines for emissions, environmental impact and climate risk management.

b. Planning which incorporates measurable progress and milestones against clearly defined targets.

c. Creation of new clean, green opportunities and employment, offering upskilling/ re-skilling opportunities especially to those in local communities.

1.7.6. Drive fair work

a. Operators and businesses in the green port are meeting their commitment to adopt Fair Work First criteria in line with the Fair Work First Guidance.

b. These operators and businesses are working to maintain / become a Living Wage Accredited Employer through the Living Wage Scotland scheme.

c. The operators and businesses are working to maintain / become a signatory of the Scottish Business Pledge.

d. Operators and businesses are actively supporting young people through the Young Person's Guarantee.

1.7.7. Foster an innovative environment

a. Increased local involvement and funding in R&D and innovation.

b. Increased productivity in each target region, through increased capacity to absorb innovation.