The transition to net-zero presents a huge economic opportunity for the UK but according to a new report from the IPPR thinktank, the UK’s claims that it is a global leader on these developments are wide of the mark. Although the UK’s territorial emissions have fallen by 46% since 1990, consumption emissions have only fallen 14% between 1996 and 2019 and in economic terms, the environmental sector only represents 3.9% of the UK’s GDP compared to it being 5.8% in the EU. Moreover, the UK employs fewer people in renewable energy as a proportion of its working age population compared to European nations and UK investments in low-carbon technologies are the lowest amongst the G7. However, the IPPR argue that the UK doesn’t have to stay on this track by creating a green industrial strategy which enlists the support of both the public and private sectors to ensure it fully maximises the opportunities it has.
The Challenges the UK Faces in the Race to Net-Zero
- The UK is currently out of sync with the global consensus on the transition to net-zero, with the US introducing the Inflation Reduction Act and the EU introducing import tariffs on high-carbon products, the UK faces a big risk of being left behind in global competitiveness.
- Recent policy changes announced by the UK government do not actually offer more support with upfront costs thereby leaving its population without cheaper access to cleaner technologies and in turn not reducing people’s living costs.
- Balancing the transition with economic opportunity for workers is becoming problematic, the recent steel deal announced by the government for Port Talbot will decarbonise just one steel plant but come at the loss of thousands of jobs.
- Suffering from a lack of economic activity in green industries which has failed to unleash the potential of 1.6 million jobs and delivering between £37-£57 billion toward UK GDP.
Failure to Seize Opportunities
Alongside these challenges the UK has also failed to utilise the opportunities it has according to the IPPR. They argue this is most evident in the wind industry:
- The UK is the second largest installer of offshore wind in the world but has squandered the chance to incorporate this into the economy by not creating manufacturing supply chains and the associated jobs.
- Germany, Denmark and the Netherlands have all progressed, with those three countries accounting for 70% of exports for wind farm components.
- The UK also lacks a sustained long-term plan for turbine industries, unlike Denmark who despite being only the 17th largest installer of wind has one of the world’s largest turbine industries.
- If the UK had followed a similar trajectory to Denmark it could have employed over 98,000 more people to deliver the 27.1GW of wind power the UK produced in 2021.
The IPPR argues that this highlights how support for green manufacturing and supply chains has faltered compared to many other nations. A similar picture can also be seen in other sectors which need decarbonising such as transport as although the UK has a strong manufacturing base to build EVs, its market share is eroding with £3billion potentially being lost in market value to the EU by 2030.
The Way Forward
- The UK must start putting substantial investment into industrial decarbonisation as emissions are currently declining due to deindustrialisation, at a cost to the economy and people’s jobs.
- The IPPR state that the transition to net-zero can remain a big economic opportunity for the UK but that the nation needs a long-term robust green industrial strategy.
Future IPPR research will explore how to develop this and the policies that need to be put in place in each sector, where investment and policy should be directed alongside what effective engagement with stakeholders should look like. The full report can be found here: Inside the black box (ippr.org)