Jobs and CCS – the potential impacts of labour supply constraints (Flexible Funding 2022)

Professor Karen Turner at the University of Strathclyde was awarded funding in the UKCCSRC’s Flexible Funding 2022 call to look at the “Jobs and CCS – the potential impacts of labour supply constraints”.

The Centre for Energy Policy (CEP) at the University of Strathclyde has been looking at the potential economy-wide impacts (including jobs and GDP) of deploying carbon capture, utilisation and storage (CCUS) in the UK and the implications of current labour supply constraints. In particular, the project has focused on the emergence of a new CO2 Transport and Storage (T&S) industry, which could draw on and play a key role in transitioning existing capacity and supply chains associated with the oil and gas industry.

Potential jobs and GDP gains from a CCS Transport and Storage industry

Based on our economy-wide scenario simulation analysis we estimate that by the mid-2040s a T&S industry (fully operational from 2030) will potentially:

  • Sustain just over 17,500 full-time equivalent (FTE) jobs
  • Generate a GDP uplift of £1,762M per annum
  • Sequester around 54 million tonnes of CO2

Yet this level of gains relies on action to address current labour supply and skills shortages impacting the UK economy should they persist.  Such supply challenges could see wage bargaining pressures causing labour costs to rise across all sectors.  If that happens, we estimate that the total employment and GDP gains supported will be substantially reduced as follows:

  • From just over 17,500 FTE jobs to just over 4,395 FTE jobs
  • From a GDP uplift of circa £1,762M to an uplift of £960M per annum

Figure 1. Sustained job creation (full-time equivalent, FTE) associated with a new UK CO2 Transport and Storage industry

Policy implications of labour supply constraints for CCUS deployment and other Net Zero actions

Our research suggests a new UK CO2 T&S industry is likely to support thousands of jobs across the UK, including in service sectors boosted by increased income from employment. However, maximising jobs supported by UK CO2 transport and storage, while minimising job displacement in other sectors of the economy, requires policy action on skills and/or to increase the labour supply in ways that limit wage bargaining impacts on costs and prices as workers are induced or enabled to participate in the labour force.

This action needs to be set against the wider context of Net Zero implementation where multiple projects will be competing for potentially constrained resources.  Our research across a number of Net Zero sectors demonstrates that labour market conditions are a key but, as yet, insufficiently researched determinant and driver of the outcomes of a wide range of net zero actions.

We are undertaking further research on how persisting labour market supply constraints and other cost pressures (e.g. continuing energy price volatility) may impact regional CCUS project delivery, and the sectoral/wider economy outcomes thereof as part of an Industrial Decarbonisation Research and Innovation Centre, IDRIC-funded project.

Read the full CEP policy brief from this UKCCSRC project.  More details about the project and outputs can be found on this project’s Flexible Funding 2022 page.