Economic Impact Scenarios for Scotland’s Energy Transition

The report aims to provide an outline of the potential economic benefits associated with Scotland’s Energy Transition which is consistent and comparable across a range of low carbon technologies. It does this through the development of two possible scenarios:

• “Strong Ambition” – where high levels of renewable deployment are driven by societal change and supportive government policy.
• “Business as Usual” – where there are low levels of consumer engagement and Scotland misses its net zero targets, leading to greater use of negative emissions technologies to mitigate the outcomes.

These insights are used to support the development and delivery of Scottish Enterprise’s mission to create an internationally competitive energy transition industry in Scotland. Additionally, it explores both the company base and research strengths in these technologies to illustrate where Scotland has opportunities to grow and innovate.

The report includes:

• A qualitative assessment of the Scottish company base by Scottish Enterprise sector specialists.
• An analysis of Research and Development (R&D) strengths, including awarded funds by research bodies and the number of Principal Investigators (research team leaders).
• Two scenarios for domestic deployment of 18 low carbon technologies alongside the investment, employment, turnover and GVA which could be generated from this.

• Scotland’s energy sector is well equipped for the transition to net zero, with sectors where the market opportunity is large such as offshore wind and clean hear also having strong company capability. Emerging sectors such as hydrogen, carbon capture and storage, sustainable aviation fuels, and marine energy have a strong R&D base.
• The projected scale of the low emission energy sector is set to increase significantly between now and 2050. For example, Scotland’s offshore wind sector has a capacity of less than one gigawatt (GW) in 2020 (the baseline year in this report) and could grow to over 40 GW capacity by 2050 in the “Strong Ambition” scenario.
• Attracting external investment will be a critical enabler of success with over £122 billion required between 2020 and 2050 to deliver the scenarios outlined in the report.
• Scotland’s low carbon employment could grow significantly and exceed current employment in the oil and gas industry. By 2050, direct hobs in the 18 sectors assessed could increase to be three to four times larger than the 2020 baseline of 8,500 FTEs
• Capturing supply chain opportunities is key to anchoring increased investment and employment across Scotland with most of the growth in all 18 sectors still to commence meaning there are significant opportunities to increase the economic benefits for supply chain businesses, regions, and communities.
• Growth by sector is staggered with some expected to expand quickly such as onshore and offshore wind, while others such as the deployment of clean heat technologies sees steadier growth continuing out to 2050.

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