The UK’s Net Zero Economy Grew By 9% In 2023, New Report Finds

The UK’s net zero economy grew by 9% in 2023, according to a new report commissioned by the Energy and Climate Intelligence Unit (ECIU) and conducted by CBI Economics and The Data City.

The report, titled ‘The UK’s net zero economy: ‘The scale and geography of the net zero economy in the UK’, said the sector comprehensively outgrew the UK’s GDP as a whole in 2023, which by contrast only rose by 0.1%.

The total gross value added (GVA) – a measure of the value of goods and services produced by a sector – of UK businesses involved in net zero projects is now £74 billion, the equivalent of 3.8% of the economy.

Sectors that fall under the ECIU’s definition of net zero industries include renewable energy, energy storage, green finance, recycling, and manufacturing.

The report also found that the net zero economy supports around 765,700 jobs in the UK, accounting for around 3% of UK employment, with the average net zero salary being higher than the average UK salary, £44,600 compared to £35,400.

The net zero economy is concentrated in several regions, where it accounts for over 10% of the local economy. In Scotland, the top spots are Perth and Aberdeen, while Wales as a whole has a high concentration of net zero economic activity.

In England net zero hotspots are in the North West, particularly around Manchester, and the East Midlands. Interestingly, many of the regions in England that are net zero economy hotspots are also seen as “electoral battlegrounds” for the next general election, according to the report..

This could be a signal to individual parties that their perceived favorability towards boosting the UK’s net zero sector will play a key role in shaping votes in these net zero regions.

Unfortunately, there have been several u-turns on net zero policies in the past few months, both from the Tories, who look set to scrap their planned ‘boiler tax’, and Labour, who massively reduced their promised net zero spending budget, to the anger of many environmentalists groups.

This policy uncertainty could slow the growth the net zero sector has been enjoying in the UK, an opinion shared by Peter Chalkley, Director of the Energy and Climate Intelligence Unit, who stated:

“Against the backdrop of economic stagnation, the net zero economy is bucking the trend, but it’s clear that the policy U-turns of the past year have damaged investor confidence at a time when the US and EU are investing billions to compete for clean industries.”

Louise Hellem, Chief Economist at the CBI, had this to say on the findings in the ECIU report:

“Businesses continue to face difficult headwinds this year, leading many to pull back on investment plans. Where firms can invest, they want to see greater clarity on a long-term plan for our energy transition”.

She called on the government to set up a ‘Net Zero Investment Plan’, to help concentrate private investment in green sectors that need it most.

The government’s recent failures to attract applications for onshore wind farms, and a February report indicating that the UK could miss its net zero targets without firm policy changes, all seem to validate the points made by Chalkley and Hellem.

Interest in the net zero sector is definitely present and healthy in the UK, but there are worries it’s being somewhat stymied by the government’s flip flopping.