According to a new report commissioned by the Energy and Climate Intelligence Unit (ECIU), the UK’s net zero economy grew by 9% in 2023.
As revealed via analysis provided by CBI Economics, the total gross value added (GVA) by businesses involved in the net zero economy is now at £74 billion.
The research firm did, however, warn that the future growth of this economy is in jeopardy as the US and EU compete to attract and develop clean industries, especially within the context of smaller growth in the UK economy, which only grew by 0.1% in 2023.
Scotland, Wales and the Midlands were cited as key areas for net zero economy growth, dubbed as “net zero hotspots” by the report’s authors.
Notably, some areas with particularly high concentrations of net zero activity are amongst the most deprived in the country; for example, Hartlepool, Nottingham, Redcar and Cleveland are among the top 10% of local authorities for income deprivation in England.
Just under two-thirds (65%) of the top 25 net zero hotspots and half of the top 50 net zero hotspots in England and Wales are also classified as key electoral battlegrounds as the nation heads into a general election.
It is important to note that the report says that jobs within the net-zero economy are more productive and better paid by nearly £10,000 on average than in other economies.
Chief economist at the CBI, Louise Hellem, said: “Businesses continue to face difficult headwinds this year, leading many to pull back on investment plans. Where firms can invest, they want to see greater clarity on a long-term plan for our energy transition – or we risk failure to reach our net zero targets and missing out on sustainable, productivity-led growth.
“In the CBI’s Spring Budget submission, we call on the chancellor to establish a Net Zero Investment Plan – to identify green investment gaps and implement policy aimed at crowding in private finance.”
Triumphs and setbacks
This comes as overwhelmingly positive news for the UK government’s net zero strategy and it joins similarly optimistic milestones which have been recently passed.
For example, the government announced that the UK had become the first major economy globally to halve its carbon emissions between 1990 and 2022. Renewables in the UK now account for more than 40% of the nation’s electricity consumption, marking a 33% rise from the 7% they represented in 2010.
In the same period from 1990 to 2022, the country’s economy grew by 79%, supported by the growth of a renewable energy industry, which can be seen continuing today.
Moreover, the country is reforming National Grid ESO to become the National Energy System Operator (NESO), meaning that this summer it will be responsible for planning Britain’s electricity and gas networks while continuing to also operate the electricity system.
This shift, which has already seen organisational redesign within the company, means the nation will be able to take an enhanced ‘whole system’ approach to planning and operating the energy sector.
Nevertheless, the UK has seen some setbacks in the last year. The country’s prime minister, Rishi Sunak, announced in September 2023 that the target date for a ban on all petrol and diesel car sales was being moved from 2030 to 2035.
This new, later date was passed into law in January 2024 and delays the electrification of the country’s transportation.
Also, the Environment Agency, which is an executive non-departmental public body, sponsored by the department for environment, food and rural affairs, has delayed its own net zero target date by at least 15 years.
Its previous ambition of net zero by 2030 is now estimated at any time between 2045 and 2050. This was because the Science Based Targets Initiative (SBTi), which sets climate ambition standards for the private sector, now requires a 90% reduction in emissions with no more than 10% offset by 2050.
Considering the fact that the Environment Agency’s initial roadmap relied on a carbon emissions reduction of 45% by 2030 and offsetting the remaining 55%, the plan was no longer viable in accordance with the SBTi’s new regulations.
