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

Karen Turner, Antonios Katris, Abdoul Karim Zanhouo, Christian Calvillo and Julia Race

Local Economy, 2023, vol. 38, issue 3, 264-281

Abstract: Previous research investigating the UK economy impacts of introducing a new Scottish CO 2 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 CO 2 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.

Keywords: carbon capture; computable general equilibrium models; CO2 transport and storage; economy-wide impacts; export base; industrial decarbonisation; nascent sectors; regional industry clusters (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:loceco:v:38:y:2023:i:3:p:264-281

DOI: 10.1177/02690942231203932

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