A full throttle approach to reaching Net Zero will maximise the benefits the UK can expect from the transition in terms of investment, productivity and job growth, according to a new report.
Path to Prosperity is the latest report in Energy UK’s Clean Growth Gap series produced in partnership with Oxford Economics. It looks at four different scenarios for reaching Net Zero, ranging from the current state of play (baseline) to others where government policy can either help stimulate investment, innovation and technological advances or, in contrast, where delayed action and reduced ambition has the opposite effect.
The most ambitious scenario (Net Zero Transformation) delivers the greatest benefits in terms of boosting the UK economy in which UK Gross Domestic Product (GDP) could be 6.4% or £240 billion higher by 2050 compared to the baseline. The same comparison would see private investment boosted by £165 billion and 226,000 extra jobs created as sectors like manufacturing, construction, automotive and the supply chain, (as well as electricity generation, transmission and distribution) all grow their GVA (Gross Value Added contribution to GDP) – by as much as £30 billion in the case of manufacturing.
Oxford Economics estimates that total UK investment needs to increase by over two thirds from current levels in order to reach Net Zero by 2050. Providing the right incentives to enable that increase can create a virtuous circle that stimulates further innovation and technological advancements, in turn lowering costs – as has been seen with huge falls in solar and offshore wind – and boosting productivity.
By contrast, if the UK delays action until the 2030s, this would mean much lower private sector investment as well as a fall in economic output and employment compared to the baseline scenario.
Today’s publication follows earlier reports in the series which have highlighted the need for the UK to incentivise investment in clean energy in the face of growing competition resulting from measures introduced recently by the United States and the European Union, as well as other countries like China, Japan and India. These have revealed that the UK is forecast to have the slowest growth in low carbon electricity generation of the world’s eight largest economies between now and the end of the decade – with the low levels of expected investment as a significant factor in this outlook.
Energy UK’s Deputy Chief Executive Dhara Vyas, said:
“As this report again underlines, attracting investment is the key to reaching Net Zero in a way that maximises the benefits to our economy in terms of growth, productivity and job creation. Committing fully to the transition will reap rewards by incentivising private investment – so reducing the amount needed from the public purse – and creating a virtuous circle which will drive further innovation and technological advances to bring costs down further.
“Far from being a burden on the economy, a proactive and ambitious approach will boost incomes, expenditure, profits and tax receipts over the long-term – all of which will leave more money for Government spending on other priorities like health and education.
“In contrast, delaying action would mean blunter and more stringent measures further down the line that would have the opposite effect on the economy. This report shows that we can’t afford not to seize the opportunities offered by transforming to a Net Zero economy.”
A webinar to discuss this report – and the next in the series titled “Community Capital” – will be held next week on Friday 8th September at 10.00am Taking part will be Andy Logan, Director, Oxford Economics; Alex Veitch, Director of Policy, British Chambers of Commerce and Dhara Vyas, Deputy Chief Executive, Energy UK.
Further reports in the series will consider:
- The potential of clean investment for people, communities and local economies across the UK.
- What the Government needs to do to unlock private sector investment and realise the potential from clean growth.