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New Industry Report: Economic Opportunity For A Sustainable Economy

9 March 2023
Reading Time: 5 mins

Sustainability superpower: UK can unlock more than £70bn of economic benefits and export £17bn of renewable energy a year

The race to net zero presents the UK with a once-in-a-generation economic opportunity, unseen since the discovery of oil and gas reserves in the North Sea in the 1970s, according to our latest research report.

We've uncovered that the UK could unlock more than £70 billion of economic benefits a year if it adopts a bold strategy of going “beyond net zero” to become a world leader in clean energy.

And becoming a “sustainability superpower” would create an additional 279,000 British jobs (and support a total of 654,000 British jobs) across clean energy industries.

Just as the UK became a major exporter of North Sea oil and gas during the 1980s and 1990s, Britain’s potential to generate huge amounts of clean energy would turn the UK from a net importer of energy to one exporting “vast amounts” of clean power, worth £17bn a year, to mainland Europe.

Thanks to its proximity to the Atlantic Ocean and competitive advantages in offshore wind generation the report found the UK can fulfil the Government’s ambition of becoming a “clean energy superpower” if it can turn its barriers to growth into enablers.

These barriers to growth, which could become enablers, include:

  • Creating a National Grid that is fit for purpose.
  • Delivering massive energy storage, using a range of technologies, to capture the tens of Terawatts of power lost each year when Britain needs to switch off renewable energy sources because they are generating more energy than the grid can handle.
  • A national programme of retrofit to fix Britain’s stock of old draughty homes, offices, and other commercial properties.
  • Early intervention to catalyse the market for hydrogen.

The report was written by former government economist Chris Walker for UKBCSD, in partnership with Prologis UK and Inspired Plc.

It highlights the potential rewards of sustained, aggressive strategy aimed at maximising the UK’s competitive advantages in generating clean energy.

The report analysed two competing scenarios facing the UK as it heads towards its current target of decarbonising all sectors of the economy by 2050.

It says: “Because we are in a global race with critical tipping points, one version of 2050 sees the UK becoming a world leader in the energy transition by attracting trillions of pounds of global private investment, innovating in key technologies and deploying them at an international scale to become a clean energy superpower. This is the ‘beyond net zero’ scenario.

“In another version of 2050, the UK lapses into clean energy mediocrity and stumbles along. This is the ‘near net zero’ scenario.”

In the “beyond net zero” scenario, the UK achieves economic benefits of £70.3bn a year by 2050 - not including the social value of reduced greenhouse gas emissions and averted climate change.

This includes an additional £36.4bn of Gross Valued Added (GVA) delivered by clean energy generation and a £17.0bn boost to the UK’s trade balance.

There would be a further £2.2bn of agglomeration benefits, while disposable incomes would see a £14.7bn bump as a result of lower energy prices.

The report finds the economic benefits of the “beyond net zero” scenario to be more than twice the £35.0bn benefits of pursuing the “near net zero” path.

The report says: “The UK’s strong competitive advantages in clean energy generation mean it is uniquely well positioned in the race to net zero which can deliver significant and sustained economic growth, raised productivity and increased exports.

“Other advanced economies will undertake similar journeys to the UK at the same time. For the UK to cement its leadership in tackling this challenge, crucial public policy decisions need to be taken, backed up by investment from private sector organisations to ensure that the UK makes and captures the necessary investment to capitalise on its strengths.”

The report includes a number of potential policy options to help fully exploit the UK’s clean growth potential.

These include:

  • An annual quota of government interest-free ‘retrofit loans’ provided to owner-occupier households, as well as residential and commercial landlords
  • Large-scale rooftop solar installations to achieve a five-fold increase in solar capacity by 2035
  • Government innovation funding to leverage private investment, for the development and trialling of alternative storage solutions to hydrogen and electric batteries
  • Use of ‘priority grid connection auctions’ for electricity generators and energy storage providers to raise money for investment in National Grid priority projects
  • Regulating to place an obligation on wholesale or retail gas suppliers to blend all gas supplies with a residual amount of hydrogen

Jason Longhurst, Chair of the UK Business Council for Sustainable Development, said: “It is now almost four years since Britain effectively fired the starting pistol on the global race to net zero by becoming the first major economy to set a net zero emissions target in law.

“Today, more than 90% of global GDP is covered by some form of net zero target.

“We commissioned this report to find out more about the opportunities which net zero can bring to Britain.

"The findings are clear. The UK can unlock more than £70 billion of economic benefits a year if we become a world leader in the race to net zero.

"We have the potential to generate huge amounts of clean energy which would turn the UK from a net importer of energy to a nation exporting vast amounts of clean power, worth £17bn a year, to mainland Europe.

"We believe this paper delivers an evidence base to enable our government to drive new incentives to transition, leverage in further private sector investment and position the UK as one of the world’s most investable markets for companies tackling the challenges created by climate change.

"Having fired the starting pistol on the race to net zero it’s now time for the public and private sector to work together to put Britain at the front of the field again."

Mark Dickinson, CEO of Inspired PLC said:

“Working with over 3,500 businesses on a day-to-day basis to manage their defence against the energy crisis and facilitate their journey to net-zero, we see first-hand the desire within the corporate businesses of UK PLC to make a difference, but also the need for governmental support and incentives, to unleash this potential.

This report makes clear the economic benefits that are available for the country if the combination of the private and public investment can be enabled to realise the opportunity to become a global leader in sustainable development.”

Paul Weston, Regional Head of Prologis UK, said: “This landmark report makes plain the scale of the opportunity that the UK has – alongside the relatively small window that we have to act.

“It is vital that we seize the opportunity, not only for the economic gains - and potential new jobs - but because being a global leader in clean energy will also bring huge societal and environmental benefits.

“We need to make many steps on this journey, but some are relatively small - such as providing a supportive environment for large-scale rooftop solar arrays.”

You can download the report HERE