Reframing the Value Case for CCUS : Evidence on the Economic Value Case for CCUS in Scotland and the UK (Technical Report)

The key message emerging from our research is that CCS could play a key role in sustaining over 26,000 direct jobs in the on-shore support industry that have traditionally associated with oil and gas, and around another 18,000 supply jobs associated with this industry and the emerging offshore renewables sectors. This would be through delivery of infrastructure and capacity for CO2 transport and storage around Scotland associated with off-shore geological sites. The research also highlights how having access to CCUS services could help our process industries decarbonise, thus helping sustain jobs in those industries and offering opportunities to attract inward investment in low or decarbonised industrial clusters. In this context the Scottish Petroleum and Petrochemicals industry already supports over 6,650 direct and supply chain jobs. CCUS, and in particular CO2 transport and offshore geological storage, could therefore could be crucial to Scotland in the context of the ‘just transition’ from fossil-based economies to a ‘clean’ energy and industrial future. The research has been conducted with reference to, but aims to add to, the evidence base on potential political economy value generation that may be associated with CCUS in Scotland and the UK. We highlight the ‘just transition’ focus that underpins the Paris 2015 agreement and is of immediate concern in a Scottish context, where the Scottish Just Transition Commission has been established in December 2019. We review a range of studies on the economic impacts of CCUS and conduct a new preliminary analysis of the potential jobs multiplier impacts associated with CCUS for Scotland. We conclude that ‘techno-economic’ measurement of CCUS project metrics are important but insufficient, and not the first consideration in considering the broader political economy value statement and narratives around the role of CCUS. In meeting long term climate ambitions at regional and national levels, there is a need to retain and ultimately grow jobs and production activity therein. Thus, a fuller political economy perspective becomes necessary. We demonstrate that economic multiplier methods enable a transparent and rigorous initial assessment of how many direct and indirect supply chain jobs and GDP may be sustained and/or created where a solution like CCUS is introduced to allow industries to decarbonise and continue to grow in key regional locations. We report multiplier evidence for Scotland. For example, in 2014, the Scottish Petroleum and Petrochemicals industry had full-time equivalent, FTE, employment of just over 1,900. But, through indirect and induced supply chain linkages, the total number of Scottish FTE jobs supported by the industry’s activity was over 6,650. In the on-shore ‘Mining Support’ industry, which services the off-shore oil and gas industry, just over 26 thousand direct jobs equates to more than 44 thousand Scottish FTE jobs are supported by demand for the on-shore industry’s services. We consider how multiplier results can be set against the spending requirement to compute the ‘cost per job’ (CPJ) metrics for the CCUS scenario in question, enabling comparison with CPJ outcomes can then be compared for alternative CCUS projects and/or a range of other options where government support and investment may be directed. With its high ‘employment multiplier’, the on-shore ‘Mining Support’ industry delivers the most jobs relative to its current expenditure levels, and thus has the lowest final expenditure requirement per job of the CCUS relevant industries considered (just over £86k). We note that the economic multiplier impacts would be larger if fuller links to the off-shore oil and gas extraction sector, currently accounted within the UK Continental Shelf, were included.