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News

Net Zero is an economic opportunity

Ahead of political party manifestos being launched this week Energy UK, the industry’s trade body representing over 100 companies investing in the UK’s energy system, is urging all political parties to consider the economic benefits of an accelerated transition to Net Zero.  

Analysis undertaken by Oxford Economics last year on behalf of the trade association shows an accelerated transition could boost the UK’s economy by £240 billion in 2050 more than current trajectories, equivalent to the UK’s entire manufacturing sector. Under this scenario, private investment in the UK could increase by £165 billion, freeing up the public purse for other public spending priorities.  

It also revealed that 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. 

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. 

However, slowing progress will have the opposite effect. Previous attempts at removing green policies exacerbated the energy crisis adding £9.8 billion to energy bills in 2022/23. Helping households to switch to electric heating and better insulate their homes protects them from potential future gas spikes, and the Office for Budget Responsibility states that continued reliance on gas would result in the UK being over 40% more exposed to the price spike in the late 2020s, over two times more exposed to the spike in the late 2030s; and over five times more exposed to the spike in the late 2040s. The same analysis shows UK debt could be 13% higher. 

Emma Pinchbeck, CEO of Energy UK, which represents the majority of the energy sector, said:

“Failure to meet Net Zero will impose greater costs on UK taxpayers than the investments required to do so. Both the Climate Change Committee and Office for Budget Responsibility estimate that most of the investment to reach Net Zero will come from the private sector, but capital has a choice of location and investors need regulatory and political certainty. 

“This is the economic opportunity of a generation, and the UK has the chance to lead the world in technologies like hydrogen, CCUS and floating offshore wind. But global competition is increasing and urgency is needed to reap the rewards of a globally leading energy sector. 

“And above all, a fair transition will improve lives and livelihoods; warmer schools and hospitals can improve experiences and save money by saving energy, cleaner transport reduces the associated pollution costs to the NHS.  

“Boosting our domestic clean energy generation alongside a rapid roll out of energy-efficiency measures will make the UK more resilient to global energy price shocks, and bring stability to energy bills. We have seen the cost of slowing progress. We know what we need to do. History will not be kind to politicians too short-sighted to grasp these opportunities.”  

Energy UK’s manifesto Energy Matters is a proposal for partnership with the next Government. It advocates that collaboration between the next government and industry will unlock investment, transform the economy and deliver change.  

Notes to editors

  • Energy UK’s Clean Growth Gap Series – analysis with Oxford Economics 
  • Energy UK’s Manifesto, Energy Matters   
  • Fiscal Risks and Sustainability, Office for Budget Responsibility 
  • Carbon Brief updated analysis showing £9.8bn additional cost to bills 
  • Energy UK is the trade association for the energy industry with over 100 members – from established FTSE 100 companies right through to new, growing suppliers, generators and service providers across energy, transport, heat and technology. Our members deliver nearly 80% of the UK’s power generation and over 95% of the energy supply for 28 million UK homes as well as businesses. The sector invests £13bn annually and delivers nearly £30bn in gross value – on top of the nearly £100bn in economic activity through its supply chain and interaction with other sectors. The energy industry is key to delivering growth and plans to invest £100bn over the course of this decade in new energy sources. The energy sector supports 700,000 jobs in every corner of the country. Energy UK plays a key role in ensuring we attract and retain a diverse workforce. In addition to our Young Energy Professionals Forum, which has over 2,300 members representing over 350 organisations, we are a founding member of TIDE, an industry-wide taskforce to tackle Inclusion and Diversity across energy.