The potential importance of exploiting export markets for CO2 transport and storage services in realising the economic value of Scottish CCS

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Abstract

Previous research investigating the UK economy impacts of introducing a new Scottish CO2 Transport and Storage (T&S) industry linked to carbon capture and storage (CCS) has focussed on supply chain and funding requirements in introducing such a new sector to service proximate Scottish industrial emissions via onshore pipelines. However, Scottish plans extend to shipping CO2 from outside Scotland for storage in North Sea reservoirs by also servicing sequestration requirements from elsewhere in the UK and/or overseas. This will involve investment in greater industry capacity but could ease associated domestic funding requirements. Here, we introduce improved economy-wide structural (input-output) data reflecting how a Scottish T&S sector may emerge from current Oil and Gas industry supply chain capacity to a computable general equilibrium (CGE) model, extending to simulate emergence of an export base. Our central finding is that exploiting overseas T&S export opportunities is crucial where the policy aim is to generate greater economic activity without increasing demands on the public purse. However, any extent of real wage bargaining and consequent producer cost pressure as labour demand increases will act to dampen expansionary power, displacing export production and employment, while driving consumer price impacts that limit real income and public budget gains.
Original languageEnglish
Pages (from-to)264-281
Number of pages18
JournalLocal Economy
Volume38
Issue number3
Early online date29 Sept 2023
DOIs
Publication statusPublished - 29 Sept 2023

Keywords

  • CGE models
  • carbon capture
  • CO2 transport and storage
  • economy-wide impacts
  • export base
  • industrial decarbonisation
  • regional industry clusters
  • nascent sectors

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