The ocean floor is about to become King Charles’ most profitable asset—and one that could coerce big oil companies to pay for climate action in the UK.
By law, the seafloor surrounding the United Kingdom up to 12 miles off the coast is the property of the sovereign. This property is managed on behalf of the Crown by a private company called the Crown Estate, which also manages 10 million square feet of real estate in London, 175,000 acres of rural land around the country, and a choice selection of racecourses, parks, and other properties.
Although those other properties have traditionally been much more valuable than the seafloor, the boom in offshore wind farms is tilting the scales. In order to build turbines and transmission lines, developers must bid on leases from the Crown Estate. In the 2020-21 fiscal year, the Crown Estate’s total revenue was £490 million ($554 million). Over the next decade, the Estate expects to reap up to £879 million ($992 million) per year from wind farm leasing alone, after it opened a runaway bidding process last year that drew BP and other major energy companies.
Most of the Crown Estate’s net profit gets handed directly to the Treasury; 25% gets directed to the sovereign allowance that the royal family uses to renovate palaces and cover other expenses. The Estate can also spend money directly on things it views as in the public interest, said Ralitsa Hiteva, a senior research on environmental governance at the University of Sussex. For example, it gave rent breaks on some of its London properties during the pandemic.
King Charles doesn’t control the Crown Estate
The King himself has no control over the Estate, so having Charles—a longtime advocate for climate action—on the throne doesn’t change much about how the Estate manages its offshore property or how revenue from it gets spent. Still, Hiteva said, “the Estate has a lot of power and can play a huge role in helping the UK to decarbonize, and is well positioned to do a lot more.”
Specifically, Hiteva said the Estate should set higher standards of entry for companies that wish to bid on offshore wind leases, and require them to spend their own money to advance the country’s climate goals. That might include offering power from the wind turbines at below-market rates, procuring hardware and labor locally (which would boost the country’s overall green energy economy), and investing directly in infrastructure and public services in the coastal towns that have wind turbines in their backyards. The Estate can also facilitate climate investments in other parts of its portfolio—in May, for example, it advocated for London officials to remove red tape holding up the installation of energy-efficient heat pumps in historic buildings.
Should the UK have a green sovereign wealth fund?
Some UK politicians have also suggested that revenue from offshore wind leasing could seed a “green sovereign wealth fund” that could be tapped to speed the energy transition. But Giles Atkinson, an environmental policy expert at the London School of Economics, said that idea doesn’t make much sense, since the Treasury can already make those kinds of investments today.
As the UK’s elected government pushes for more homegrown clean energy, the Estate should do more to help, Hiteva said—even if Charles himself doesn’t have much say.
“I would love if the king can pick up the phone and say ‘we need to do more on this’,” Hiteva said. “But unfortunately it doesn’t work that way.”
Information contained on this page is provided by an independent third-party content provider. This website makes no warranties or representations in connection therewith. If you are affiliated with this page and would like it removed please contact editor @saltlakecityutah.business
