Written evidence submitted by the Carbon Capture and Storage Association (ITS0015)

Scottish Affairs Select Committee inquiry into ‘Industrial Strategy in Scotland’

The Carbon Capture and Storage Association (CCSA) is pleased to provide a response to the Scottish Affairs Committee’s inquiry into ‘industrial transition in Scotland’.

The CCSA brings together a wide range of specialist companies across the spectrum of Carbon Capture, Utilisation and Storage (CCUS) technology, as well as a variety of support services to the energy sector. The CCSA exists to represent the interests of its members in accelerating the commercial deployment of CCUS in the UK, EU and internationally through advocacy and collaboration to achieve net zero emissions by 2050.

The CCSA is submitting evidence to this inquiry due to the Track-2 CCUS cluster Acorn being located in Scotland and the economic and environmental benefits that it can bring to the region. 

*The CCSA has provided answers to questions two and three only.

1. Which industries in Scotland have previously experienced industrial transition, and to what extent were these transitions effectively managed? In what ways did these historic transitions in Scotland differ in their causes, impacts and results? Relevant examples could include (but may not be limited to) coal, steel, heavy engineering, textiles, and shipbuilding.

No response from the CCSA. 

2. Which industries in Scotland today are likely to experience industrial transition or decline in the near future? The Committee is interested to hear from a wide range of industries including, but not limited to, oil and gas and manufacturing, as well as growth-sectors in Scotland such as space and data technology.

To meet clean power by 2030, 81% emissions reduction by 2035 and net zero by 2050, North Sea oil and gas production will decrease as renewables increase and industries seek to decarbonise. However, the decades of North Sea oil and gas expertise that has been developed in the workforce in and around Aberdeenshire, Scotland, needs to transition or risk being lost to low-carbon projects in other jurisdictions. Oil and gas is a sector where the workforce is used to taking up international opportunities. It is therefore important that this Scottish workforce be assisted to transition into new industries, such as carbon capture, utilisation and storage (CCUS) in, for example, the Scottish Cluster.

The Scottish Cluster and industrial decarbonisation not deindustrialisation

The Scottish Industrial Cluster runs from Dunbar and the southern coast of the Firth of Forth, over 160 miles up the east coast to St Fergus, Aberdeenshire. The geographic area of the Scottish cluster covers 80% of Scotland’s industrial emissions and 28 of Scotland’s most heavily emitting industrial sites and sectors such as chemicals and fertilisers, refining, cement production, glass manufacturing, energy generation and energy from wate facilities.

The Scottish Cluster aims to decarbonise this industrial area and brings together Acorn, National Gas Transmission’s SCO₂T Connect Project (a pipeline repurposing project linking the Central Belt with North-East Scotland) and a range of industrial, power, hydrogen, bioenergy and Energy from Waste (EfW) businesses.

Acorn is a CO₂ transportation and storage system which enables decarbonisation by reusing legacy oil and gas infrastructure to transport captured industrial CO₂ emissions from the Scottish Cluster to permanent storage more than 1.5 miles beneath the North Sea seabed. The Acorn stores, which are one of the UK’s most mature and best understood geological CO₂ storage sites, are connected to the Scottish mainland by legacy pipelines.

The projects in the Scottish Cluster have the potential to abate up to 10 million tonnes of CO₂ per year, by 2030. These existing pipelines could transport up to 20 Mtpa of CO₂ to the Acorn stores, during peak operations. Acorn is Scotland’s only CO₂ transport and storage solution and without it, there is no route for Scottish industry to decarbonise, therefore risking jobs and investment. 

The deployment of CCUS in Scotland would generate 4,700 development and construction jobs, with an additional 2,300 operational jobs. Safeguarding 12,100[i] jobs that would otherwise be lost across Scotland.

Additionally, foundational Scottish industries which are essential for meeting clean power targets and the transition to a net zero economy, need CCUS to decarbonise and avoid risk of deindustrialisation. For example, enabling carbon capture and storage at Peterhead will help to realise Grangemouth's long term industrial future —Scotland’s largest industrial emitter. Without CCUS, rising carbon costs will place Grangemouth at a competitive disadvantage, threatening not only skilled jobs but also industrial decline in the region.

Jobs and skills

As CCUS is deployed in Scotland and across the UK, a significant proportion of the demand for jobs for projects is going to be in the onshore and offshore construction aspects. Most of these being existing workforce roles that have established routes to competency and understood skill sets.

A smaller number of jobs will be new and unique jobs to CCUS, with geosciences, process operators and health and safety experts for instance requiring specific skills and training pathways to train workers to competency. This is due to the first-of-a-kind nature of the projects themselves.

The scale of jobs demand across the net zero transition means that the UK does not currently have enough skilled individuals to deliver the infrastructure that is required. The UK Government and Scottish Government needs to play a principal role in skills policy by providing top-down national strategic direction, work to future proof the education system, provide as much certainty as possible around job requirements, and enable the skills system to thrive through targeted interventions and policy changes.

There is scope for national, regional, and sectoral institutions to co-ordinate provision at their respective levels with core objectives filtering down from a national top-down approach to regional levels where co-ordination can be more targeted to the nuances of the local challenges.

Businesses have a key role to play in encouraging the development of skills, both as the ultimate ‘consumer’ of skilled individuals, but also as a direct funder and designer of skills provision to ensure that the skills being developed will result in higher employability in the workforce. Critically industry require market certainty to be able to justify investment in the development of such training courses, knowing that there will be a clear need and demand for such skills in the future.

By deploying CCUS infrastructure in Scotland’s industrial clusters, jobs and industries will be protected and the Scottish economy will benefit from a second North Sea economic output. The CCSA advocates for Track-2 (Acorn and Viking CCS) to be provided with long awaited updates on anchor project selection as soon as possible. This will drive further private sector investment into our industrial regions. Importantly to note, anchor emitter selection can progress right now, with project selection being published ahead of fiscal support being finalised as part of the UK Government Spending Review process. This would provide confidence to the market and enable investment to get underway.

3. To what extent is the UK Government’s forthcoming industrial strategy, Invest 2035, geared towards the challenges and opportunities facing Scotland today?

The UK Government’s Industrial Strategy will be critical to economic success, clean growth and leadership on climate action, and will enable Scotland to transition it’s North Sea oil and gas industry into a carbon capture industry.

CCUS has a central role to play in the industrial strategy and offers an immense opportunity for Scottish industry to decarbonise while delivering energy security, creating high quality jobs, exporting expertise in low carbon products and services, and driving investments to Scotland.

In order for Scottish industries to be able to invest in decarbonisation pathways such as CCUS, it is vital that there is a pro-business and investment environment in the UK to enable clean growth, avoid deindustrialisation and protect existing Scottish industries from the risk of carbon leakage.

Place-based approach

The CCSA stresses the importance of a regional and place-based approach to the industrial strategy. In order to achieve the greatest return on investment, the industrial strategy needs to incorporate cluster or regional perspectives and account for the specific capabilities and growth opportunities that different areas of the UK offer.

One of the UK’s biggest economic opportunities in CCUS lies in its vast offshore CO₂ storage potential, holding nearly a third of Europe’s capacity. By 2050, the UK CO₂ storage sector could generate £30bn annually in taxable revenue, with carbon storage exports projected to reach £2bn a year by 2030.

This would support existing and new jobs in Scotland and position the UK as a leading CO₂ storage hub for Europe. Scotland’s capacity for storage represents 75% of the UK’s total capacity. Scotland is able to provide a hub for storage for the UK and also for imports from Europe. To maximise this opportunity, the UK Government needs to:

• Establish a bilateral agreement between the EU and UK under the Trade and Cooperation Agreement (TCA) to enable mutual recognition of each jurisdiction’s carbon capture and storage regulatory regime;
• Amend EU and UK legislation to accommodate CO₂ storage outside the EU and EEA; and
• Make notifications and agreements under the London Protocol, the international Treaty under the UN Convention on the Law of the Sea (UNCLOS) that governs the cross-border transport of waste between countries.

Barriers to and enablers of industrial growth in Scotland

Stability and long-term certainty in Government policy 

• It’s essential that Government provide stability and long-term confidence in the overall industrial policy landscape. Regarding industries implementing CCUS, the first projects in Merseyside and Teesside reaching Final Investment Decisions (FID) and moving towards construction is a crucial signal to subsequent CCUS projects and investors as well as the international investor community. This is of particular importance for projects in Scotland that require further clarity on the process and await clear next steps from the Government. 
• Additionally, companies looking to deploy CCUS are often multinational and are typically competing internally for funding and investment across jurisdictions. Any uncertainty over the UK Government’s industrial strategy plans can deter companies investing in the UK. 

CO2 infrastructure 

• Delays to the provision of CO2 T&S infrastructure to industrial clusters would prevent industrial emitters from implementing CCUS. This is a particular issue for sectors with process emissions where CCUS is their only route to decarbonisation. Moreover, delays to CCUS-enabled hydrogen production and electrification will have knock-on effects on the ability of other industries to decarbonise through electrification or fuel- or feedstock-switching to low-carbon hydrogen.  

• Having CO2 T&S infrastructure in place could act as an enabler to foreign direct investment, attracting industries abroad to Scotland where they can be certain that they can operate in a way that is aligned with net zero goals.

Planning system constraints 

• Planning departments are resource constrained and do not currently have the capacity to assess all applications that will be summited. CCUS particularly faces these challenges as many new infrastructure projects across different sectors move towards deployment. However, the CCSA is looking at the Planning and Infrastructure Bill in the hope that it will go some way to address barriers to infrastructure delivery.

Permitting and regulation constraints 

• Given the nascent nature of the CCUS sector, the complexities involved in many of the proposed projects in terms of regulatory approval, and the first-of-a-kind nature of the projects, means approvals of this nature have not been done before. The regulators will likely experience unforeseen difficulties in accurately assessing CCUS project applications. Regulator authorities will likely find it time consuming to accurately assess project applications, and externally contracted consultants are often required for their technical expertise, raising the overall cost of assessing projects.  
• This uncertainty in the permitting and regulatory approval timelines is therefore a barrier to investment, and the CCSA is supportive of objectives that will assist with rapid and extensive resourcing of the departments and regulators tasked with making regulatory decisions.  

Access to supply chains and skills

• The Scottish workforce has considerable expertise which will be essential to deliver energy infrastructure by 2030 and beyond. However, there is insufficient capacity to deliver the CCUS project pipeline with domestic suppliers alone, and there is little to no surplus capacity in terms of UK manufacturers. Key reasons for this include: 

• the uncertainty around project pipelines for CCUS and other energy transition technologies; 
• the gradual decline of manufacturing capabilities and capacities over several decades; 
• full order books for existing energy transition and oil and gas projects. 

• As already mentioned, the Scotland (and the UK as a whole) has significant strengths in skills required for the deployment of CCUS, including offshore operations, construction, cross-country pipeline construction, and process design. But the CCUS sector faces numerous workforce and skills challenges including an ageing workforce; inter-sectoral competition for specialist workers; a lack of opportunity awareness for new entrants and existing workers; a need to significantly increase training, retraining, and upskilling provision; and an uncertain foresight of overall employment demands.  

• The scale of demand for skilled individuals to deliver across the whole net zero transition is a critical consideration. For the offshore energy sector, direct and indirect employment will reportedly need to increase from approximately 150,000 in 2022 to 350,000 by 2050[ii]. The National Grid have estimated that the net zero energy workforce will need to recruit 400,000 new people by 2050 (260,000 being new roles, and 140,000 being existing workforce replacements)[iii]. While modelling suggests over 100,000 existing offshore energy workers could transition to new energy opportunities by 2030.[iv]
• It is clear the UK does not currently have enough skilled individuals to deliver the transition, and without this, investment will be curtailed and project deployment severely hindered.
• Through collaborative action between industry, the Department for Energy Security and Net Zero (DESNZ), the Scottish Energy and Climate Change Directorate, Department for Education (DfE) and education institutions, strategic direction and a significant increase in the availability of training opportunities, the skills system can rise to the challenge. 

Coherence with the Scottish Government’s economic plans, including its Green Industrial Strategy and National Strategy for Economic Transformation

As previously mentioned, CCUS has a vital role to play in the forthcoming industrial strategy and the CCSA is pleased that the Scottish Government remains committed to the deployment of CCUS, recognising the economic and environmental benefits. This is clearly set out in the National Strategy for Economic Transformation with the ambition to demonstrate global leadership in delivering a just transition to net zero. It is also evident in two of the Green Industrial Strategy’s five opportunity areas - developing a self sustaining CCUS sector and growing the hydrogen sector.

Effective recognition of and coordination with the Scottish Government’s existing strategic plans will ensure that time and resource is deployed efficiently with work not being repeated unduly. With both the Scottish Government and UK Government committed to utilising CCUS technology to meet climate targets, it is of utmost importance that the UK Government wastes no further time by providing Track-2 CCUS projects, such as Acorn, with long awaited updates on anchor project selection to drive further private sector investment into our industrial regions. Projects have been waiting for over 18 months for this already.

By providing these updates, the CCUS sector can deliver economic growth in Scotland and maintain our critical foundation industries which are essential to the delivery of the UK’s Industrial Strategy and the Government’s Mission to make Britain a Clean Energy Superpower. Track-2 projects have been working together for many years and have spent tens of millions bringing them to a point of readiness. By deploying CCUS at scale across the whole of the UK, a self-sustaining market will emerge with potential to export our storage capacity to European emitters, therefore increasing economic returns and tax receipts.

The Industrial Strategy needs to ensure that efforts remain coordinated and avoid unnecessary repetition of consultation and policy developments that industry has already contributed to in recent years. Existing positions and input should be considered when developing future-proof plans. Failing to do so and redoing processes will result in a stagnation of investment and growth, ultimately hindering the achievements of strategic objectives.