The seabed is poised to become King Charles’ most profitable asset – and one that could force oil majors to pay for Britain’s climate action.
By law, the seabed surrounding the UK up to 12 miles offshore is the property of the sovereign. This estate is managed on behalf of the Crown by a private company called Crown Estate, which also owns 10 million square feet of property in London, 175,000 acres of rural land across the country and a fine selection of racecourses, parks and other properties.
Although these other properties have traditionally been far more valuable than the seabed, the boom in offshore wind farms is tipping the scales. In order to build turbines and transmission lines, developers must bid on leases from the Crown Estate. In the 2020-21 financial year, the Crown Estate’s total revenue was £490m ($554m). Over the next decade, the Estate expects to reap up to £879 million ($992 million) a year from wind farm leasing alone, after opening a runaway bidding process last year involving BP and other big ones attracted energy companies.
Most of the Crown Estate’s net profits go directly to the Treasury; 25% goes to the sovereign allowance, which the royal family uses to refurbish palaces and cover other expenses. The estate can also spend money directly on things it sees as being in the public interest, said Ralitsa Hiteva, a senior researcher in environmental management at the University of Sussex. For example, it granted rent breaks on some of its London properties during the pandemic.
King Charles does not control the Crown Estate
The king himself has no control over the estate, so the fact that Charles – a longtime climate protection advocate – sits on the throne doesn’t change much how the estate manages its offshore property or how the proceeds from it are spent. Still, Hiteva said: “The Estate has a lot of power and can play a huge role in helping the UK decarbonise and is well positioned to do a lot more.”
Specifically, Hiteva said the winery should set higher entry standards for companies wanting to bid on offshore wind leases and require them to spend their own money to advance the country’s climate goals. That could include offering electricity from the wind turbines at below-market prices, sourcing local hardware and labor (which would boost the country’s overall green energy economy), and investing directly in infrastructure and public services in the coastal cities with wind turbine backyards. The Estate can also facilitate climate investments in other parts of its portfolio – in May, for example, it lobbied for London officials to eliminate red tape preventing the installation of energy-efficient heat pumps in historic buildings.
Should Britain have a green sovereign wealth fund?
Some UK politicians have also suggested that offshore wind leasing revenues could form a “green sovereign wealth fund” that could be tapped to accelerate the energy transition. But Giles Atkinson, an environmental policy expert at the London School of Economics, said the idea doesn’t make much sense because the Treasury can already make such investments today.
As the UK government-elect pushes for more domestic clean energy, the Estate should do more to help, Hiteva said – although Charles himself doesn’t have much to say.
“I would be happy if the king could pick up the phone and say, ‘We have to do more about this,'” Hiteva said. “Unfortunately, that’s not how it works.”