Low-carbon sector predicted to outpace GDP

23rd March 2017

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The UK low-carbon economy could grow faster than average GDP up to 2050, according to research undertaken for the Committee on Climate Change (CCC).

Consultancy Ricardo predicts that the sector will experience growth of 11% a year up to 2020, and 4% between 2030 and 2050. This is much higher than the 2.3% growth forecast by the Organisation for Economic Co-operation and Development for the overall UK economy. In its report, Ricardo said it expected the contribution the low-carbon economy makes to total UK output to increase from around 2% in 2015 to 7% by 2030, and 13% by 2050.

The projections are based on the potential size of the low-carbon economy in 2030 and 2050 across 25 areas, and draw on scenarios developed up by the CCC, the International Energy Agency, market research organisations and data on the UK’s share of global exports.

The consultancy said it expected the UK and EU to make the transition to a low-carbon economy around ten years ahead of the world average. Given progress already made and opportunities both domestically and globally, it identified electric vehicles, transport telematics, offshore wind, solar PV, smart grids, energy storage and biofuels as sectors with potential for the UK. Opportunities also exist in the longer term for advanced materials and manufacturing, including design for reuse and waste recovery, and low carbon chemical processes using bioprocessing, catalysts and membrane technology.

Martin Baxter, IEMA’s chief policy advisor, said: ‘This report confirms that setting high environmental standards drives innovation which drives the low carbon sector in the UK, and also provides export opportunities.’ The report was well-timed, given the industrial strategy and upcoming emissions reduction strategy, he added.

Nick Molho, executive director of the Aldersgate Group, said that the government should use the upcoming emissions reduction plan to provide sufficiently detailed policies to boost private sector investment in low-carbon power, heat, transport infrastructure and efficient buildings. It would also need to consider how its policies relate to EU environmental and product standards.

‘For instance, the EU is working on vehicle emissions standards post-2020 and, if sufficiently ambitious, these could help shape the export market for ultra-low emission cars, drive continued innovation and play a significant role in cutting emissions,’ Molho said.

Ricardo’s analysis also considered barriers to the growth of the low-carbon economy. It highlighted a possible lack of funding following the UK’s departure from the EU as a major concern because ignificant sums of money for research and development currently come from European sources. Also, the participation of UK academics and industry in EU projects means that the country’s interests and issues are taken into account, which may no longer happen, it warned.

Baxter said that there was still potential for the UK to continue to invest in research and development after it left the bloc. ‘It will be a political choice for the UK government, it’s just a case of priorities. They have indicated £4.7bn funding in the industrial strategy, there’s no reason why a chunk of that can’t go to the low-carbon economy,’ he said.


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