After an early lead developing offshore wind, the UK now risks falling behind other countries on the journey to a low carbon economy, warned expert speakers introducing an Energy and Climate Intelligence Unit (ECIU) report, ‘Mapping the net zero economy’.
The report, backed by analysis provided by CBI Economics and The Data City, reveals the overall size of the green economy – 20,000 businesses making up 3% of jobs, adding 3.7% of value to the economy. It also shows that it offers well-paid work. The 840,000 jobs supported by businesses in the net zero economy have an average wage of £42,600, compared to the £33,400 national average.
The net zero economy also supports levelling up. Areas such as the north-east, Scotland, Northern Ireland and the south west have the highest concentration of net zero economy businesses, offering potential to reduce regional inequalities. Venture investment into the net zero economy is growing at a trend rate of over 30% per year. In 2021, it reached £710m, more than 10 times higher than that for the oil and gas industry.
Industry anxiety
However, some trends are less promising. Questioned on the report, Emma Pinchbeck, chief executive of trade association Energy UK, noted: "Ten years ago, the UK was one of the few countries in the world to have a climate change act and to be pushing renewables. Now we’ve got a $2bn green hydrogen plan in India and China’s offshore wind market has gone from nowhere five years ago to being the biggest in the world. They have overtaken us as a market."
Citing the US’s Inflation Reduction Act and the EU’s Fit for 55 green transition plan, Pinchbeck said: "This is not a world in which we are going to be frontrunners, unless we respond. There’s an anxiety from industry that international investors are starting to take their cash elsewhere. We need a response."
"It takes 12 years to build a wind farm in this country. It should take one."
~ Emma Pinchbeck, chief executive of Energy UK
Pinchbeck called for detailed government policies and direct investment in the infrastructure needed to support low carbon clusters, including roads, deepwater ports and grid improvements. She noted: "European countries ran their auctions for renewables to include either grid connections, or mapped out areas where you could locate your wind farm and know that you'd already gone through environmental consents and the planning process. In the UK we’ve been good on market design but less good on industrial policies."
Calling for an urgent speeding up of planning consent for renewables, long duration energy storage, green and blue hydrogen and carbon capture, Pinchbeck noted: "It takes 12 years to build a wind farm in this country. It should take one."
Simon Carke, MP for the ‘red wall’ seat of Middlesbrough south and East Cleveland, one of the UK’s planned low carbon clusters, said that, for onshore wind, the "perverse policy" of the ban effectively imposed in 2015, had "cut across a totally economically rational option, since onshore wind is the cheapest form of energy generation bar none".
Clarke described the slowness of the UK’s planning system as "a disgrace" and the judicial review process as a "besetting curse", because of its ability to slow down infrastructure development.
Risk of investment flight
Henri Murison, chief executive of the Northern Powerhouse Partnership, called for more "firepower" in England’s combined authorities. Reflecting on the collapse of the company Britishvolt, which had been set to build a giant factory to make electric car batteries in Northumberland, he said: "We have sites that are ideally suited to gigafactories yet we haven't, apart from in Sunderland, managed to bring them forward the way we would want to. Central government has a number of competing propositions, but is struggling to understand what can leverage these schemes to make them deliverable."
Murison argued: "In certain fields, like hydrogen carbon capture, we could be world leaders. I don't believe the government needs to spend a penny. All it needs to do is create certainty that it will provide the right incentives, as it did for the offshore wind industry, by putting in place the right policy instruments to leverage investment."
"If we wait," warned Murison, "those people who have come to the UK keen to invest in carbon capture will go to the US. We now have a leadership position. We have some unique assets and great leaders, like Steve Rotheram in the Merseyside cluster, working with HyNet, but we need to make sure we do those deals now."
Pinchbeck said: "Industry is looking for its investment to be as risk-free as possible – the less risk there is, the lower is the need for subsidy. Industry is looking for things like, is there a viable market, are there jobs and skills in the region, is there surrounding infrastructure."
"You need to invest in the key infrastructures to help get supply chains up and running. That is what the US government has decided to do and what the Europeans are now signalling they might do. China has been doing it for a long time and has built up a massive market and now two other markets are following suit. I wonder whether complaining that it's not the way we've historically done things matters, if we're about to lose the race."