Under-Investment in Scotland’s Oil and Gas Sector: Employment, Economic and Energy Transition Implications through CGE Modelling

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Abstract

This study employs a computable general equilibrium (CGE) model to examine the employment, economic and energy transition implications of under-investment in Scotland's oil and gas sector. Under current forecasts of declining upstream investments through the end of this decade, the study finds substantial job losses across multiple sectors, with an estimated total loss of about 19,509 jobs in Scotland by 2030. This includes 11,193 direct oil and gas sector jobs, with the sector expected to experience the fastest annual decline, losing about 1,865 jobs each year. Other affected sectors include manufacturing, construction, finance and insurance activities, and wholesale and retail trade. Adverse shifts in key macroeconomic indicators include a 2.11% decrease in GDP, a 0.37% increase in inflation, and declines in government income, capital formation and household consumption budgets. These findings have significant implications for an emerging renewables sector within the context of the broader energy transition in Scotland. Research shows that 90% of oil and gas roles have direct transferability to renewables, making the skills and experience of oil and gas workers critical for the successful development of Scotland's growing renewables industry. Policy implications are clear: mitigating the decline in oil and gas investment levels slows job losses and facilitates an orderly transition of sector expertise to Scotland's burgeoning renewables sector. This approach supports the energy transition, enhances energy security, fosters technological innovation and maintains the competitiveness of Scotland and the wider UK in the global energy space. It also ensures a smooth, inclusive and just transition in Scotland.
Original languageEnglish
PublisherSSRN
Number of pages43
DOIs
Publication statusPublished - 9 Jul 2024

Publication series

NameDiscussion Papers in Economics and Finance
PublisherUniversity of Aberdeen Business School
No.24-3
ISSN (Electronic)0143-4543

Keywords

  • Scotland
  • oil and gas
  • Investment
  • employment
  • energy transition
  • CGE

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