London (Platts)--14Apr2009

The chance to create up to 70,000 UK jobs in the offshore wind industry
could be lost due to a lack of government support, claimed the UK's Institute
for Public Policy Research in a report published Tuesday.

The think-tank's report, funded by environmental group Greenpeace, said
that without a rapid expansion of offshore wind capacity, the UK will struggle
to achieve its legally-binding target of 15% of energy from renewable sources
by 2020.

Despite having the greatest offshore wind potential of any country in the
world, the UK is poorly placed to benefit from it, said the report. At
present, some 700 people are employed in the sector and there is just one
UK-based factory that manufactures wind turbine components, said the IPPR.

Continuing, the report said that the UK government should learn from
countries such as Denmark, Spain and Germany, who have all been successful in
developing a local onshore wind industry.

The UK could benefit from three lessons from those countries, said the
IPPR, the first of which was that "a stable and sizable domestic market was
needed and achieved through a combination of strong political commitment and
the use of feed-in tariffs as an economic support mechanism."

Secondly, it said that industrial activism was important "in the form of
tax incentives, favourable customs duties, quality certification, R&D support
and--in the case of Spain--local content requirements."

Thirdly, it said that an available skills base was crucial. "Turbine
manufacturers were able to draw on an existing manufacturing skills base in
each country and in many instances, existing local companies diversified into
the wind supply chain," said the report.

The think tank also said that the UK government must be prepared to
adjust its Renewables Obligations if the support mechanism is found not to be
working. It should also consider underwriting investment in the grid if a lack
of finance threatens upgrades, and consider support measures to overcome
bottlenecks in the supply chain.

Finally, the government should develop an offshore wind investment
program consisting of financial and tax incentives, facilities and
infrastructure development, and short-term guarantees, said the IPPR.