There are almost 20,000 businesses currently in the net zero economy which are contributing £71bn to the UK economy according to a new report
The total gross value added by businesses involved in the sustainability economy is more than twice that of the energy sector itself, finds the study by the Energy and Climate Intelligence Unit (ECIU), CBI Economics and DataCity.
It also shows that 840,000 jobs are supported by businesses in the net zero economy, with an average wage of £42,600 compared to the £33,400 national average. The sustainability economy is also highly productive, generating £112,300 in GVA per employee, 1.7 times higher than the national average of £64,400.
The net zero economy is stronger and more productive in the UK regions; the report also identifies twenty ‘hot spots’ across the UK where net zero makes up a larger than average proportion of the local economy. These include the Tyneside/Teeside coast, south Yorkshire/North Derbyshire, the Mersey River and Cambridgeshire. London though lags behind, suggesting net zero is playing an active part in ‘levelling-up’.
“From insulation fitters to heat pump engineers and agritech pioneers, businesses in the net zero economy are adding £70 billion to the UK economy,” said Peter Chalkley, director of ECIU. “Billions of pounds of private sector investments are being made in net zero with the hot spots of activity being outside of London in places like Tyneside, Merseyside and Derbyshire.
“The net zero economy is addressing levelling-up and the UK’s productivity problem, but with the EU and US investing heavily in clean technologies, the question now is will the UK keep up or try to stick with industries of the past?”
The businesses within the 16 sub-sectors identified by the report are diverse. They include firms in the energy sector, including renewables, energy storage, demand response and efficiency and low-carbon heating; agritech and carbon capture; waste management and recycling; low-emission vehicles; and low-carbon consultancy and green finance.
Venture investment into the net zero economy is growing at a trend rate of over 30% per year. In 2021, venture funding into the sustainability economy reached £710 million, over 10 times higher than venture investment into the oil and gas sub-industry, which saw a total of £49 million in venture investment.
The economic impacts of the sustainability economy are stronger within each of the regional economies; in some of the hot spots identified, it is contributing as much as 5-7 per cent of an areas GVA, which outperforms London, where only 3.1 per cent of its economy is made up by the net zero economy.
Net zero is also highly productive in regions where productivity is historically lower. For example, the net zero economy in the Midlands (East and West) is over 2.5 times more productive than the regional average.
Net zero also creates high-skilled employment opportunities, reflected by higher than average wages. Further growth of green jobs will require a substantial redistribution from high-carbon to low-carbon jobs. To enable this, re-training and upskilling in many areas will be needed as the average skill requirement for a job in a carbon-intensive industry is 46 per cent lower than the average net zero-related job. Jobs related to net zero are also in high demand, and green hiring overtook non-green hiring for the first time in 2019 and continues to rise.