An ambitious path to Net Zero could have large benefits in those areas and communities of the country that are most in need of an economic boost, according to a new report published today.
Community Capital is the latest report in Energy UK’s Clean Growth Gap series, produced in partnership with Oxford Economics. Previous reports in the series have highlighted the growing global competition for clean investment and the resulting risk of the UK falling behind with its own transition – as well as showing that pushing ahead with Net Zero will maximise the benefits the UK can expect in terms of investment, productivity and job growth.
Today’s report looks at how different regions of the UK could benefit from the energy transition by building on existing strengths in industry and manufacturing, as well as leveraging geographic advantages.
For example, Oxford Economics’ modelling shows that the South-West and West Midlands – both areas that currently have a Gross Domestic Product (GDP) per head below the national average – could be the biggest beneficiaries from the most rapid transition to Net Zero, thanks to the specialism of their manufacturing sectors. Under the most ambitious scenario, the GDP of each area of the UK would be 5.4%-7.5% greater in 2050 than under the current trajectory – which would amount to a boost of £141 billion for regions outside London and the South-East.
Areas with concentrations of carbon-intensive industries and proximity to depleted oil and gas fields, such as the North-East of England and Scotland as well as South Wales, are well placed to lead the way in carbon capture and hydrogen projects. Parts of the East Coast of Scotland and England are already benefitting from supplying large-scale offshore wind developments in the North Sea (around 21% of the UK’s operational low carbon energy capacity is situated in the 10% of local authority with highest rates of economic inactivity).
Additionally, the West Midlands and Sunderland could build on existing strengths in car manufacturing to produce Electric Vehicles (EVs) and related battery technology while Tata is set to build a battery plant in Somerset. Cornwall could in turn benefit from supplying lithium, a vital element in low-carbon vehicle production.
Even in regions with the biggest challenges in terms of moving from fossil fuel industries, such as Scotland and the North-East, GDP is still expected to grow by over 5% under the most ambitious pathway than would otherwise be the case – showing that, with the right support, the transition can benefit all parts of the country. In addition, a nationwide drive to improve the energy efficiency of our homes could provide employment right across the country for fitters and installers but again with a particularly notable boost for areas outside London and the South-East
The benefits to these local communities come from not just the direct supply of materials and equipment to projects but the construction and infrastructure work associated with these. Local retail and hospitality sectors also gain from the growth in employment and prosperity that new projects and investments can bring to areas that have lost out economically in recent times.
Dhara Vyas, Energy UK’s Deputy Chief Executive said:
“We’ve already seen how investment in clean energy can bring economic growth to areas away from London and the South-East. Those benefits can reach all corners of the country if we commit fully to the energy transition – especially areas whose traditional industrial and manufacturing bases have declined but also make them well-equipped to lead the way in this next clean industrial revolution.
“Previous reports in this series have shown how an ambitious approach to Net Zero will benefit the whole country and importantly, those areas which could gain the most are the ones most in need of the economic boost.
“It again underlines why our country is best served by wholeheartedly seizing the opportunities that the transition to Net Zero offers and making it the focus of our efforts to deliver economic growth, job opportunities and greater prosperity over the coming years and decades.”
A webinar to discuss this report – and the previous one in the series titled “Path to Prosperity” – will be held today (Friday 8 September) at 10am. Taking part will be Andy Logan and Emily Gladstone from Oxford Economics; Alex Veitch, Director of Policy, British Chambers of Commerce and Dhara Vyas, Deputy Chief Executive, Energy UK.
The last report in the series will be published later this month and will consider what the Government needs to do to unlock private sector investment and realise the maximum potential from clean growth.