Six economic benefits of Scotland's net zero transition
Want to know more about how a shift to renewables will benefit Scotland? Hear from David Rennie, our Head of Energy Transition. He discusses six findings from a recent report on the economic impacts of Scotland’s energy transition.
In September 2024, the Scottish Government published its Green Investment Strategy, which aims to help Scotland realise the economic benefits of the global transition to net zero.
In connection with the Scottish Government's strategy, we published our ‘Economic Impact Scenarios for Scotland’s Energy Transition’ report, which looks at two possible scenarios for Scotland’s transition to net zero emissions, from now to 2050, across 18 key sectors.
The report looks at the following two scenarios:
- The 'Strong Ambition' scenario – where Scotland has high levels of renewable deployment, driven by changes in society and government policy.
- The ‘Business as Usual’ scenario – where Scotland misses its net zero targets and more negative-emissions technologies are used to try and reduce the effects this will have.
In these reports, we wanted to understand the scale of economic opportunities for Scotland in both scenarios, looking at areas such as sector turnover, jobs and investment requirements.
When we put this in context of Scotland’s existing company and research base, it gave us a better understanding of the relative strengths, weaknesses, opportunities and threats for key parts of the net zero and climate economy in Scotland.
The evidence the report has produced is shaping our strategy to support companies in the energy transition. It's also been used as an input in the design of Scottish Government net zero economic policies including Scotland's Green Industrial Strategy.
Let's look at six key findings from the report.
1. Scotland’s strong energy sector is well equipped for net zero
Scotland’s company and research and development (R&D) capabilities are well positioned to address emerging energy transition economic opportunities.
For example, sectors assessed as having the largest market opportunities, like offshore wind and clean heat, have strong company capabilities.
Emerging sectors such as hydrogen, carbon capture, storage, sustainable aviation fuels, and marine energy are relatively small-scale right now. But we've found that they have both a capable company base (often able to leverage Scotland’s oil and gas sector) and a strong R&D base.
2. Scotland’s low carbon energy sectors are set for massive expansion
The projected scale of the low emission energy sector increases significantly between now and 2050.
For example, Scotland’s offshore wind sector had a capacity of less than one gigawatt (GW) in 2020 (the baseline year for this report) and was estimated to employ 2,200 direct full-time employees (FTEs) in Scotland, with a turnover of £600 million.
In the report’s ‘Strong Ambition’ scenario, this could grow to over 40GW capacity by 2050, enabling the employment of 6,700 direct FTEs and generating a turnover of £1.8 billion.
Beatrice Offshore Wind Farm, Moray Firth
3. External investment will be crucial for success
External investment will be central to the success of Scotland's energy transition. To deliver the scenarios described in the report, more than £122 billion of investment will be needed between 2020 and 2050.
According to the report, annual investment requirements will peak in the mid-2030s at more than £7 billion per year.
4. Scotland’s low carbon jobs will surge between now and 2050
The report suggests that low carbon employment could see significant growth. It could even exceed current employment in the oil and gas industry.
By 2050, direct jobs in the 18 sectors assessed will potentially increase to be three to four times larger than the 2020 baseline of 8,500 FTEs.
This is expected to peak around 2035, during the main construction phase, at more than 100,000 direct FTEs in the ‘Strong Ambition’ scenario and more than 55,000 FTEs in 2040 in the ‘Business as Usual’ scenario (these numbers include construction workers).
5. Supply chain will be a vital part of Scotland’s low carbon economy
Capturing supply chain opportunities is key to anchoring increased investment and employment across Scotland.
Most of the growth in all 18 sectors has still to commence, and there are significant opportunities to increase the economic benefits for supply chain businesses, regions and communities.
In the scenarios described by the report, offshore wind is the largest sector across all economic across all the impact metrics,
Offshore wind is the largest sector across all economic impact metrics in these scenarios over the next 10 to 15 years, accounting for one third of overall investment. Its relative importance grows up to 2035 when construction peaks, after which it becomes one of several leading sectors.
While export growth wasn’t captured in this report, it does provide a means of sustaining economic benefits once Scottish construction and manufacturing activity develops further.
Learn about energy transition supply chain opportunities for manufacturers
6. Scotland’s wide range of low carbon opportunities will create resilience
A portfolio of opportunities across the energy transitions sectors will help to support a just transition to net zero and build a resilient Scottish economy.
In terms of maximum construction jobs, for example - some are expected to expand and peak and peak earlier (such as onshore and offshore wind). Others (including clean heat) are expected to experience gradual growth or later grow
Hydrogen shows a relative increase in importance over time, growing from around 1% of jobs across these sectors to around 18% by 2050, making it one of the larger sectors in the ‘Strong Ambition’ scenario by 2050.
How to take advantage of energy transition opportunities
This report shows the clear economic opportunity of Scotland's energy transition over the next few decades.
They also highlight that a significant change in activity is required. Industries will need to ramp up very quickly to meet projected delivery timescales, which could peak around 2035 to 2040 across Scotland.
Delivering on the scenarios modelled and described in this study would also enable Scotland to leverage further economic benefits through exports of equipment and experience globally.
To learn more about the economic opportunities of energy transition you can download the full report.
Get in touch
We can help you access opportunities in the energy transition supply chain. Get in touch with our team to get started.
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