The development of an underground coal gasification (UCG) industry in the UK is likely to generate as much as £12.8 billion gross value add for the UK economy, according to an independent report published today (21 September).
The report, published by the independent Scottish economic consultancy Biggar Economics, estimates that some 45% of that ￡12.8 billion could be retained in Scotland, assuming first-mover advantage.
The industry also has the potential to create up to 11,900 direct and indirect jobs (in peak years) as well as supporting thousands more in the chemicals industry – with nearly 5,000 of these jobs in Scotland, with more than 1,000 of these in the Firth of Forth area.
The report, Underground Coal Gasification: Economic Impact Assessment, was commissioned by Cluff Natural Resources (CNR). It sets out the potential economic impacts of developing UCG projects from Cluff’s Kincardine licence, elsewhere in the Firth of Forth area and across the UK, supplying domestically produced gas for a new generation of gas fired power stations, industrial heat, and chemical feedstocks.
Forecasts in the report are based on the development of an initial project at Kincardine followed by a conservative estimate of an additional seven UCG projects being developed across the UK, which would consume approximately 3% of the UK coal resource considered to be suitable for UCG.
Graeme Blackett of Biggar Economics, author of the report, said: “Scotland is a hydrocarbon and energy-rich country, and this could be an important new industry on a UK-wide basis, supporting many thousands of sustainable jobs.
“Subject to the robust planning and regulatory processes that we rightly have, there are major advantages in being the first movers in this technology, and becoming a world leader.”
Specifically, the report states that this could result in:
- An initial project at Kincardine contributing around ￡603 million GVA to the UK economy, 71% of which could be retained in Scotland. This project could create as many as 830 jobs in creation and average around 350 jobs over a 30-year lifetime
- Other UK UCG projects could generate ￡5.6 billion GVA for the UK economy and support an average of 3,300 jobs (peaking at 6,100). Over 40% of this could be retained in Scotland.
- UK, and particularly Scottish based companies, will develop specialist experience in UCG technology, which could be exported to other countries with UCG potential.
- In 30 years time, UK based companies could be exporting almost ￡560 million worth of UCG related exports. Long term sales of these goods and services could generate ￡6.6 billion GVA for the UK economy and support an average of around 3,900 jobs (peaking at 7,800).
- UCG projects around the UK could fuel power stations with a total capacity of around 3,600 MW. Constructing these power stations could generate an additional ￡1.2 billion GVA for the UK economy and support around 4,000 temporary construction jobs. Once fully operational the power stations could support around 570 permanent jobs and generate a further ￡203 million GVA/year.
Syngas can also be used to provide a feedstock for the chemicals sector. If used in this way UCG could play a fundamental role in safeguarding 4,800 jobs in the Scottish chemicals sector protecting an economic contribution to the Scottish economy of between ￡307 million and ￡732 million GVA/year.
Algy Cluff, Chief Executive and Chairman, Cluff Natural Resources, commented: “The findings of this report highlight the huge potential of the development a UCG industry in Scotland and the UK.
“UCG has a vital role to play in the diversification of the UK’s energy mix and security and this report demonstrates how the development of UCG would create significant benefits for both the Scottish and wider UK economy.”