Green UK firms show the potential of a global net zero economy
General view of the Walney Extension offshore wind farm operated by Orsted off the coast of Blackpool, Britain September 5, 2018. REUTERS/Phil Noble
From renewable energy to electric vehicles, net zero businesses offer higher wages and could revive industrial heartlands
Peter Chalkley is director of the Energy and Climate Intelligence Unit (ECIU).
On the banks of the Tyne and Tees rivers in northeast England, set against a backdrop of years of industrial decline, the green shoots of a new kind of industrialisation are growing.
Once famous for the din of shipbuilding and the glow of steel furnaces, these proud communities are building new, cleaner industries. From the manufacture of offshore wind turbine platforms to green hydrogen, new economies are emerging in former industrial heartlands across Britain.
Growing regional economies outside of London has been a decades-old challenge for Britain, but efforts were reinvigorated in the wake of the Brexit referendum. Towns and cities that had been “left behind” by globalisation were promised “levelling up” by then-Prime Minister Boris Johnson’s 2019 election manifesto. The first page of that document also promised to reach net zero by 2050 and invest in clean energy solutions and green infrastructure.
Our new research suggests that those priorities go hand in hand: net zero is actively play a role in levelling up.
The UK was the first major economy to set a net-zero emissions target, but in doing so it helped to kick off an international race. Now, 91% of global GDP is covered by a commitment to reduce emissions to net zero. Global markets for renewables, electric vehicles and other clean technologies are only going in one direction.
The Inflation Reduction Act in the US, and a similar stimulus package brewing in the EU, points to this race speeding up. According to the IEA, the energy crisis following Russia’s invasion of Ukraine has accelerated the net zero transition with countries looking to renewable energy sources which are cheaper and more secure.
This new analysis from CBI Economics and The Data City shows that these global trends are translating into a new purpose for communities in Britain’s midlands and northern regions, including Derbyshire, Yorkshire, Merseyside and The Humber.
There are 20,000 businesses in the UK’s net zero economy, employing 840,000 workers who are 1.7 times more productive and paid almost £10,000 more than the average.
In total, these companies contribute £70 billion to the economy, more than twice that of the energy sector itself. And they make up more of the economy in towns and cities outside of London, bringing cash to areas that need it most.
But for every new growth industry, there is often an old one in decline. The UK has experienced plenty of industrial heartache in the past. Rusting car plants of the 1970s and 1980s are still fresh in many minds, and fresher still as car manufacturing output has since fallen to levels not seen since the 1950s. The silver lining is that electric vehicle manufacturing has grown substantially in some of these areas.
Given it sits across many existing sectors, parts of the net zero economy are diverse and tricky to identify. The businesses are involved in everything from installing heat pumps to recycling metals and manufacturing zero carbon glass. Underpinning this, of course, is cleaner and more efficiently used energy. Research has found that improvements in energy efficiency over four decades were responsible for 25% of growth in the UK economy.
New YouGov polling in the net zero hotspots of Tyne and Tees, in the northeast of England, asked which sector could sustain long-term growth. Respondents said renewables and clean technology. The future is clear to them. The question is: can the government create the right investment environment?
Britain lags globally on green steel, green hydrogen and is having difficulty getting a new gigafactory built. The country risks missing out. But it has built a very successful offshore wind industry and has a strong heritage in science and engineering.
The global race to net zero is here, bringing with it the potential of new jobs and investment for declining industrial heartlands. But which countries will create an environment for the green shoots of growth, and which ones will delay and risk being left behind?
Any views expressed in this opinion piece are those of the author and not of Context or the Thomson Reuters Foundation.
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