Could a new Scottish CO2 Transport and Storage Industry deliver employment multiplier and other wider economy benefits to the UK economy?

Turner, Karen and Race, Julia and Alabi, Oluwafisayo and Calvillo, Christian and Katris, Antonios and Stewart, Jamie and Swales, Kim (2021) Could a new Scottish CO2 Transport and Storage Industry deliver employment multiplier and other wider economy benefits to the UK economy? Local Economy: The Journal of the Local Economy Policy Unit, 36 (5). pp. 411-429. ISSN 1470-9325 (https://doi.org/10.1177/02690942211055687)

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Abstract

In 2021 the UK Government commenced a ‘cluster sequencing’ initiative to identify early movers in delivering carbon transport and storage (T&S) services to proximate regional industry clusters with capture potential. A Scottish proposition focussed primarily on linking the Grangemouth industry cluster to North Sea storage, and the potential to transition Oil and Gas industry capacity to deliver CO2 T&S, has devolved policy support. This is in terms of potential to transition and create new direct industry and supply chain jobs, set against risks of displacing jobs in different sectors and regions of the UK. We introduce a Scottish CO2 T&S industry to a UK multi-sector economy-wide model, assessing the extent of potential expansion and job creation in the presence of supply-side and funding constraints. We find that large employment ‘multiplier’ gains registered in previous studies only apply over the very long term and in the absence of such constraints. Crucially, any need to recover demands on the public purse via socialisation of costs severely constrains possible gains, while imposing ‘polluter pays’ leads to net economy-wide contractions triggered by competitiveness losses concentrated in Scottish cluster industries, leading to offshoring of production and jobs, potentially skewed within the localities hosting the clusters.

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