Historia docet: external competition in the marine energy sector and the effects on the Scottish economy

  • Graziano, Marcello (PI)
  • Lecca, Patrizio , University of Strathclyde (PL)
  • Musso, Marta, University of Cambridge (PL)

Project Details

Description

The Scottish Government has long identified marine renewable energy technologies (MREs) as pivotal elements of its industrial and energy strategies. MREs will play a dual role: providing a reliable, low-carbon supply of electricity to Scotland and the rest of the UK; and establishing an industrial base for exporting MREs and MRE-related services. Recent works analysing the economic impact of MREs have projected direct, induced, and related employment up to 6,000 jobs in Scotland during the period 2010-2020, without including the potential positive impacts related to decrease carbon emissions and energy costs.

These results heavily rely on the assumptions of no international competition, a factor that has already severely hampered UK’s efforts in the onshore sector during the late 1970s and the early 1980s. Recent international developments in the MREs sector have seen large investments occurring in France, Chile, and Japan. This new, external source of competition, coupled with the persisting existence of the Scottish conundrum, which is currently hampering the efforts to scale-up MREs electricity investments, may divert further industrial investments, thus replicating the patterns of the 1970-1980, and, overall, a loss in valuable employment and low-carbon energy production in Scotland and in the UK.

In the proposed workshop, we aim at estimating the economic results of MREs in Scotland using historic research grounded in the literature and market data from the 1970-1980 wind-market ‘shifts’, which occurred due to difference in market policies. The proposed analysis will be constituted of three main steps (Fig. 1).

Current and past common policies, along with the historic shifts in the UK market shares of onshore wind will be used to inform a computable General Equilibrium/Input-Output (CGE/I-O) model, AMOS, previously used by both academics and the Scottish Government for forecasting the overall economic contributions of MREs to the national economy. The group has already undertaken initial research on the first 2 stages, and will require support to complete the data integration and for running the modelling stage (See Fig. 1).

AMOS will simulate how the increased international competition, combined with current institutional barriers in the MREs sector could re-shape the overall social, economic and demographic impacts up to 2020, the year for the Scottish Government’s low-carbon targets. If socioeconomic benefits will be reduced by the modelled shifts, the diffusion and acceptance of MREs in Scotland might be hampered, thus limiting the ability of the region to transition towards a low-carbon economy by 2020.

Given the policy and academic relevance of the session will produce two outcomes, the main of which will be an academic paper to be submitted to Regional Studies as part of their new stream of Evolutionary Economic Geography special issues. Additionally, we will produce a policy briefing aimed at informing policymakers in Scotland about the risks of the international competition, and suggesting possible countermeasures. Finally, the results will be presented as part of the seminar series at the SAMS-UHI.

Employing a new, evolutionary approach, the proposed workshop will shed new light over the role of international markets and market policies in shaping socioeconomic benefits even in the presence of valuable resources. Given the high commitment of MASTS members in the MREs sector, the paper will provide a valuable base to re-think the Scottish Government’s support in a full transition towards MREs.

Key findings

1) Low local content could be balanced by attracting foreign direct investment, still producing widespread economic benefit to the UK.
2) Previous experiences from the onshore wind sector suggest risks could arise from the lack a UK major player in the sector, potentially leading to loss of know-how and competitive edge
3) Historic approaches well suited for informing path-dependent scenarios, integrating descriptive policy scenario and quantitative estimation.
StatusFinished
Effective start/end date29/08/151/09/15

Keywords

  • Offshore
  • wind
  • economic
  • impact
  • evolutionary
  • economic geography