The Courier & Advertiser (Fife Edition)
Two paths to recovery from the Covid crisis – green energy and the growing Asian market
The Covid-19 pandemic was never going to be an easy crisis to overcome. Governments face the incredibly difficult challenge of balancing the safety of people’s health against the need to crank up business and the economy to a productive level of activity. It’s going to take a huge amount of creative ingenuity to achieve recovery after a setback on this scale. Fortunately, that’s what entrepreneurship is all about, and here in the north-east we are already on the front foot thanks to the many initiatives we have been putting in place to diversify the economy and take advantage of future market demands. To re-energise the economy we need to spend and invest. If businesses are to recover they need the public to become active consumers again. In a local context that presents some serious problems – we are not going to see packed shopping malls any time soon. But shopping online needn’t mean neglecting local businesses. For the food and drink industry, for example, the supportlocal.scot online directory has enabled consumers in the north-east to source some of our award-winning local products. Other services can similarly be accessed via technology. If we are to make a comeback from the Covid crisis two promising paths to recovery can be identified. They are investment in green energy, and the vast opportunities offered by the growing Asian economy. The Scottish Government recently launched its £62 million Energy Transition Fund to help Scotland move towards net zero energy by 2045. In green energy transition, the north-east is in pole position. The Oil and Gas Technology Centre (OGTC) has formed an alliance with the Offshore Renewable Energy (ORE) Catapult to develop advanced technologies, including the next generation of hydrogen production and floating offshore wind. This new Energy Transition Alliance (ETA) has just launched a programme involving five initial projects. These include a UK supply chain specific floating wind foundation competition, stimulating innovation to reduce the cost of floating foundations by 25-30%; AC/DC footprint miniaturisation, anticipated to generate £7.7 billion savings to industry; and encouraging technologies that reduce the cost of power from shore, to help eliminate offshore platform CO2e emissions, representing 2% of UK CO2e emissions. The remaining projects are a UK offshore renewables supply chain deep dive study, aimed at creating 27,000 jobs in offshore wind by 2030; and sustainable wind turbine decommissioning, developing commercially viable, cost-effective recycling and reprocessing of wind turbine blades, expected to bring $1bn value to market. But there are also promising prospects on the other side of the world. Asia is regaining its historical economic power. Here too, the pandemic has muddied the waters, but prior to that disruption Asian economies were forecast to become larger than the rest of the world combined this year. I’ve always believed in Asia’s potential; Aberdeen Asset enjoyed its greatest success there. The 14 leading nations of the Asia-Pacific region account for 65% of the world’s population – an enormous market. The region contributed around 60% of global growth in 2017. A large population means, among other things, a growing real estate market, inviting investment. South-east Asia is becoming the world’s workshop. With labour costs rising in China, its manufacturers are increasingly outsourcing to countries such as Vietnam and Indonesia. India, with a business-friendly government, is rapidly investing in infrastructure. India overtook China in GDP growth in 2015 and is expected to accelerate that trend. The region is also heavily urbanised: of the 45 metropolitan centres worldwide with more than 10 million inhabitants, two-thirds of them are in Asia. Hundreds of millions of Asians have become middle-class consumers. To any alert entrepreneur, this vista of economic growth, wealth creation and rapidly expanding consumerism cries out for investment. Asian economics are no more immune than others from temporary downturns. But the sheer energy and impetus of Asia’s economic growth offers long-term investors an exciting opportunity for recovery after the crippling economic effects of Covid.