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The CCUS Value Tool was developed by OGCI to create a standardized methodology for estimating the impact of CCUS projects on employment and gross value added, using regional, technological and sectoral parameters to ensure locally relevant, specific and up-to-date results.
The modelling tool is based on the foundation of the United Kingdom Jobs and Economic Development Impacts (UK-JEDI) model, an economic tool that estimates gross economic impacts from a portfolio of energy technology projects in the UK. The CCUS Value has been adopted in a range of case studies (see methodology and references) to quantify the socio-economic impacts of transitioning to net zero.
Building on the original JEDI model, developed by the National Renewable Energy Laboratory (NREL), UK-JEDI characterizes the construction and operation of energy projects in terms of expenditures and the portion of these expenditures made within UK. These data are then used in an input-output (IO) model to estimate employment, earnings, gross value added (GVA), and gross output impacts specific to the UK (which differs to that of other regions and varies over time). These impacts are detailed at regional and sectoral level for the United Kingdom.
IO tables are typically not updated every year, which may introduce errors and uncertainties resulting from overestimating the amount of employment likely to be generated by an increased demand. The most recent data available from the Office for National Statistics website reports data coefficients from 2019, which are very likely to change over the 2020–2030 timeframe. Although such simplification would affect the employment figures, the difference may be small: a study on US agriculture sector employment (12) pointed out that multipliers from IO tables constructed 10 years apart differ by only 2%. This is subsequently however a potential source of estimation error.
The development of new industries (including carbon capture, utilisation and storage) and how they are captured in future iterations of national economic data will also impact the accuracy of model.
This tool is also not designed to provide tailored guidance on specific individual projects. CCS projects will differ in terms of capital outlays and employment patterns where these dynamics are not currently customisable in the tool.
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Building on the original JEDI model, developed by the National Renewable Energy Laboratory (NREL), UK-JEDI characterizes the construction and operation of energy projects in terms of expenditures and the portion of these expenditures made within UK. These data are then used in an input-output (IO) model to estimate employment, earnings, gross value added (GVA), and gross output impacts. These impacts are detailed at regional and sectoral level.
To get a comprehensive coverage of the UK energy systems, the UK-JEDI entails a comprehensive portfolio of power generation technologies (e.g. nuclear power, solar PV, BECCS, onshore and offshore wind, batteries, hydro and bioenergy plants), abatement solutions for key industrial sectors (e.g. cement, iron and steel plants and refineries) and low carbon fuel production pathways (green and blue hydrogen, bioethanol and biodiesel production, biomass gasification. It does not estimate the economic impacts of some novel technologies, like carbon capture and storage (CCUS) or storage batteries.
The overall approach is to combine cost data of a specific energy project with socio-economic indicators from the OECD’s database for structural analysis (STAN), to derive the economic impact of the project to different sectors of the UK economy. For the UK case study, the model adopts macroeconomic data descending from the Office for National Statistics (ONS) at the national and regional levels.
To quantify the economic impacts of a given energy project across different sectors, project data need to be specified in the model. These data include technology capital (CAPEX) and operational (OPEX) cost, project year, total capacity installed and plant capacity factor. For specific technologies (e.g. bioenergy plant) additional information might be required (e.g. type and origin of biomass sources, to derive direct impacts on the agricultural sector).
In UK-JEDI, the direct impact is the set of expenditures to construct or operate an energy facility. For example, a solar photovoltaic (PV) project could include payments to the installer, cost for mounting hardware purchased locally, and engineering costs. Indirect impacts might include things such as accounting services, utilities, and raw materials. Induced impacts are supported by the direct and indirect workers.
Induced
Indirect
Direct
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Within this approach it is possible to specify how much of the value in service and manufacturing products are generated in a certain country as a percentage of the capital expenditure of low carbon technologies. In making the assessment, the lifetime costs of energy projects are disaggregated across main manufacturing and downstream activities. The cost breakdown is allocated to the corresponding industrial sectors, considering only the share of expenditure contributing to the creation of national economic output.
The production structure of energy technologies varies significantly. To capture the status of local supply within specific industries, three criteria are utilized:
In calculating the domestic value of power plants operation, we distinguish between imported and domestic fuels (natural gas, coal, biomass, and nuclear fuel) so that fuel procurement activities are allocated to the mining and utilities sectors following national energy trade statistics. Similarly, for imported biomass, only transportation activities (from seaport and inland ports to the bioenergy facilities) are assumed to generate economic value.
The CCUS Hub is designed to support policy-makers, potential hub developers and emitters interested in setting up a CCUS hub by sharing learnings from the most advanced hubs and identifying new ones.