The net zero prize on offer to UK industry

Net zero is driving economic growth with low carbon business activity generating £41.2 billion in 2020, according to Mission Zero.

Mission Zero, the Independent Review of Net Zero, reports that there are already around 430,000 jobs in low carbon businesses and their supply chains across the country with turnover estimated at £41.2 billion in 2020. Government analysis suggests that nearly 68,000 green jobs have been created or supported since November 2020.

The Independent Review of Net Zero highlights economic opportunities of net zero transition; first-mover advantage of investing ahead of the curve, and the significant action gap from the Government. The report also makes reference to green homes, renewable acceleration, the Circular Economy and more R&D funding for climate change related projects.

In 2022, the economic context changed which means the opportunities from net zero have never been greater. High fossil fuel prices are expected to remain high in the short-term and there is uncertainty over their long-term future. As a result, markets are moving to capitalise on this.

It is essential that the UK acts quickly and decisively. There is a new global race to maximise the growth potential from net zero at a time of wider geopolitical uncertainty. We are now at a crunch point where the UK could get left behind.

We are operating in an international environment in which foreign enterprises are being offered incentives to invest elsewhere in the world.

In 2019, there were 2.5 million businesses operating in the UK non-financial business economy; only 1.3 per cent were foreign owned, yet they contributed 28.5 per cent of gross value added. The UK can take a share of the global economic prize from the transition but it must act now.

The UN’s Net Zero Asset Managers initiative recently announced that nearly a third of the $66 trillion of assets managed by their members globally are committed to net zero with tangible decarbonisation goals. Additionally, McKinsey estimate that supplying goods and services to enable the global net zero transition could be worth over £1 trillion to UK businesses between 2021 and 2030.

If the UK wants to be part of this race and reap the benefits, it must act now to seize this opportunity. We know that first-mover advantage means a greater opportunity to secure growth opportunities and expand on the potential co-benefits from the transition.

The UK can seize this opportunity by focussing on the enablers of growth to build a resource efficient economy that utilises its areas of comparative advantage, creates an open investment environment, delivers projects via a highly skilled workforce, using reliable and well connected infrastructure and empowers participation throughout supply chains and small businesses.

The evidence seen by the Review has shown that significant action is required to ensure the UK economy grasps the opportunity on offer.

Firms are seeking regulatory alignment to enable cross-border investment, action to tackle the enablers of economic growth that will affect success for all sectors of the economy. Also needed are business tax incentives, a highly skilled workforce, energy efficient non-domestic buildings and an informed and active small business base. Finally, Government must provide targeted support to individual sectors.