FAI Commentary: Scotland’s Climate Emergency

One of the frustrations with the ongoing Brexit burach is that important debates about the future of our economy have been crowded out.

As we have highlighted in previous Commentaries, Scotland faces a number of significant structural challenges. Our population will age significantly, whilst – for many – the world of work will change radically as existing tasks are increasingly automated.

But there are also opportunities, with new markets opening up and technology helping to support improvements in living standards.

One area that has captured the public attention has been climate change. Across the world, we have seen a renewed desire from governments to step up their response to the environmental challenge.Continue reading

October 23, 2019

Scotland’s climate emergency

This blog was written by Anna Maclean, a 6th year high school pupil, who was at the Fraser of Allander Institute for two week’s work experience.

In April, the Scottish Government declared a climate emergency after Scotland’s First Minister Nicola Sturgeon announced how much she had been inspired by young protesters who went on strike to urge action.

Climate change has long been on agenda in Scotland. In 2009, the Scottish Parliament passed a ground-breaking Climate Change Act which legally bound the government to reduce emissions by 80% by 2050 from the baseline year (1990).

This has now been strengthened to achieving net zero emissions by 2045 – five years ahead of the UK.

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September 13, 2019

An initial exploration of the economy, energy and emissions impact of successful, sectoral-specific export strategies

Grant Allan, Peter McGregor and Andrew Ross

Fraser of Allander Institute, Department of Economics, University of Strathclyde

Policymakers have been understandably active in identifying economic opportunities for the UK through new and expanded trading opportunities. The recent Industrial Strategy and Export Strategy lay out the UK Government’s ambitions for increasing exports, as well as seeking out specific sectors where the UK has comparative economic advantage. The Export Strategy talks of an aspiration to raise exports to the equivalent of 35% of Gross Domestic Product.

A successful export strategy, one which does lead to increases in the scale of exports, will bring economic benefits – this is unambiguous. What is unclear however is how such outcomes might interact with government objectives in other areas, such as the Clean Growth Strategy (2018), with its focus on moving to “cleaner economic growth”, though, for example the development of new technologies.

With colleagues we have explored this trade-off at the economy-wide level for the UK. Through our work, supported by the UK Energy Research Centre, we have focused on simulating a successful policy which raises the level of all exports. Our results from this – reported last month – found that, overall, an across-the-board export stimulus raises economic activity while simultaneously increasing energy use and emissions.

In our results, increases in energy use and emissions are greater than the economic boost (in percentage terms), so that energy- and emissions-intensity of GDP rises as a result. Employment increases in all sectors, but again by less than sectors’ energy use. This important finding also confirms that, absent any offsetting policy, there exist tradeoffs between a successful export strategy’s impact on economic activity, with effects on environmental and energy indicators.

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October 31, 2018

Variation in electricity transmission tariffs…

Jamie Cox is an undergraduate economics student at the University of Strathclyde, about to start his fourth year, and has a summer internship in the Fraser of Allander Institute supported by the Research Interns@Strathclyde scheme. This blog summarises some of Jamie’s research into how electricity charges vary geographically. Following on from his earlier blog last week on transmission charges in the UK (TNUoS), in this blog he explores variation between tariffs for different generator types, with a focus on intermittent generators.

Transmission Tariff Model

To analyse transmission charges, we built a model that approximates the charges levied by National Grid: both on methodology, and in monetary amounts. Using sub-national electricity consumption statistics and generation statistics (from the Department for Business, Energy & Industrial Strategy) we approximate electricity flows, and thereby estimate TNUoS tariffs. An example of the output of our model and how it matches up with actual charges levied by National Grid can be seen in the second figure of previous blog.

In this blog, we discuss how tariffs depend on generator type, in particular: whether the generator is conventional or intermittent.

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August 23, 2018

Electricity generation and transmission charges

Jamie Cox is an undergraduate economics student at the University of Strathclyde, about to start his fourth year, and has a summer internship in the Fraser of Allander Institute supported by the Research Interns@Strathclyde scheme. This blog summarises some of Jamie’s research into how electricity charges vary geographically, and in particular, how the closure of the Longannet coal fired power station in Fife in 2016 may affect the economics of renewable energy in Scotland.

In late March 2016, Longannet power station closed after providing energy for nearly half a century. The station’s closure brought about the loss of 236 jobs, with an estimated 800 indirect supply jobs also affected (figures from the Longannet Task Force Report, March 2017).

So while the closure of a coal-fired power station may be viewed as positive environmental news, on the face of it, this was negative economic news. This blog describes some research conducted at the Fraser of Allander Institute, which investigates whether there is an economic as well as environmental upside to Longannet’s closure.

The mechanism by which Longannet’s closure could have positive economic effects, is via its impact upon transmission charges.Continue reading

August 17, 2018