How the UK’s economy can grow with net zero and establish global climate leadership
Emily Murrell, IIGCC Policy Director, outlines the current net zero landscape in the UK and its future trajectory in response to the government’s ‘net zero call for evidence.’
For all the uncertainty, make no mistake; net zero can be a growth engine for the United Kingdom.
The new government inherits an unenviable trilemma of energy security, energy affordability, and climate change. The fact that other OECD nations are facing similar challenges offers little consolation and so far, no country has found the perfect solution.
In such challenging circumstances, financial markets and companies operating in the real economy urgently need clarity from policymakers.
Read: IIGCC response to UK net zero call for evidence.
Although net zero is recognised in current government policy, it must go further. Research from the London School of Economics estimates that under current levels of policy ambition, the total cost of climate change damages to the UK are projected to increase from 1.1% of GDP at present to 3.3% by 2050. This will be accompanied by devastating economic and social consequences.
However, in moments of crises lie opportunities. Decisive policies can stimulate economic growth and deliver new high-paid quality jobs, all while limiting global temperature rises.
The UK is well-placed to capture these opportunities. With a ready supply of natural resources, and around 40% of its energy mix already coming from renewables – particularly wind – the benefits of a transition to clean energy are just beginning to be realised.
To make the most of this win-win for the economy and for the planet, the new Cabinet should double down on net zero commitments and accelerate the clean energy transition. It’s this message that we deliver in response to the government ‘net zero call for evidence.’
Doing so successfully could bring down household energy bills by around 7% in 2025, 28% by 2030 and 50% by 2050 compared to a ‘business as usual’ scenario, according to recent industry analysis.
“The new Cabinet should double down on net zero commitments and accelerate the clean energy transition.”
In addition, recent research estimates that the growth of new green industries could create 600,000 jobs by 2030 – jobs which would be spread across the country, supporting a just and fair transition to net zero for UK communities.
Investors of all sizes have committed to net zero and are working hard to translate these into credible transition plans. Their investments could deliver as much as 70% of the total capital needed to reach net zero.
But to unlock these transformative trillions they need clearer, near-term signals from government.
Forecasts can predict the consequences of inaction, but they cannot predict how far the UK could go. There is almost unlimited potential if the public and private sector work in tandem with the end goal of establishing the UK as a world leader in green finance.
A world leader
Capitalism, competition, and the right regulatory frameworks have previously encouraged innovation in the private sector. Whether our priority is to ease public pockets, wean ourselves off energy supplies from unstable regions or create a greener, more sustainable economy to pass on to future generations, the potential is limitless.
Buildings, power, transport, industry, agriculture. These are just some of the sectors where tactical and bold policies could catalyse growth. Connected, electric, and autonomous vehicles alone are estimated to deliver up to £51bn by 2030 if the industry adapts at speed.
These developments could be funded by the world’s first net-zero aligned financial centre: delivering the UK ambition of ‘greening finances’ which in turn finance green developments.
“Our hope is that this response serves as motivation, not a measuring stick.”
In 2019 the UK led the way on the international stage, pledging net zero by 2050 and priming businesses and partners to do the same. In 2021, the UK hosted COP26 in Glasgow and made green finance a priority in their G7 Presidency. Now, as 2023 approaches, the UK Government can again lead the way by showing the world ‘how’ it can get to net zero, and this UK Net Zero Review is a good start.