An Early Shift to Low-Carbon Fuel Production at the Sullom Voe Terminal ('SVT') Could Provide the Backbone for a Successful Transition of the Shetland Economy

Using our Shetland Economy Model (‘SEM’) to conduct scenario simulations informed by a combination of local authority data and industry projections, this policy brief addresses the question of whether Veri Energy’s proposed Phase 1 of low-carbon fuel production at the islands’ Sullom Voe Terminal could mitigate total job losses across Shetland and local GDP leakage associated with the projected decline in oil processing activity at the terminal. We find that while the more capital-intensive terminal and local supply chain activity means that while job losses can be minimised, there may still be some capacity freed up in Shetland labour market, which could be positive given the need to roll-out multiple low carbon projects in the remote island context (where it can be challenging to bring in and accommodate more workers). However, a central finding and insight emerging is that the net impact on Shetland’s local GDP is positive in all timeframes. That is the positive impacts of Phase 1 of LCF production at SVT more than offset the negative impacts of the decline in oil processing activity on total income generation in each and every year of deployment and operation. Thus, we conclude that early action supporting LCF production at Shetland’s Sullom Voe Terminal is an essential step in laying the foundation for the UK’s net zero ambitions and avoiding negative transition outcomes like those recently experience in Scotland around Grangemouth and Mossmorran.