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Navigating the path to Net Zero: a closer look at the UK’s low-carbon and renewable energy economy

Published on May 28th 2024

In the race against climate change, the United Kingdom has taken significant strides to uphold its commitment to a sustainable future. Enshrined in law by the Climate Change Act, the UK government has pledged to achieve Net Zero greenhouse gas emissions by 2050, a goal that demands reducing emissions to at least 100% below 1990 levels. It is a daunting task, but recent years have shown promising progress.

The transition to a low-carbon renewable energy economy is instrumental in reducing the UK’s overall carbon emissions by replacing fossil fuels with cleaner alternatives such as wind, solar, hydro, and biomass. Additionally, embracing renewable energy technologies fosters energy efficiency, diversifies the energy mix, creates jobs, stimulates economic growth, encourages technological innovation, and demonstrates global leadership in addressing climate change.

In this article, which draws on Section 5 of the UK Innovation Report 2024, we examine the decoupling of the UK’s economic growth from its greenhouse gas emissions and explore the performance of the UK’s low-carbon and renewable energy economy (LCREE).

Decoupling of the UK’s economic growth from its greenhouse-gas emissions

Between 1990 and 2021, the UK successfully achieved economic growth without increasing greenhouse gas emissions. This remarkable achievement is evident in the 40% reduction in emissions (Chart 1, residence-based, 50% for territorial emissions) despite a nearly doubled GDP during this period. In the international arena, the UK ranked as the 20th largest emitter of greenhouse gases in 2020 based on total CO2 equivalent emissions (World Bank, 2024). However, on a per capita basis, the country stood at a much lower position of 71st (Climate Watch, 2024).

Between 1990 and 2021, only five UK industries did not experience reduced emissions (Chart 2): wholesale and retail trade and repair of motor vehicles; construction; accommodation and food services; administrative and support service activities; and real estate activities.

In contrast, significant emission reductions were observed in sectors such as: mining and quarrying (-66.2%); water supply, sewerage and waste management (-64.7%); public administration and defence (-64.1%); education (-63.6%); and electricity, gas, steam and air conditioning supply (-60.4%), among other.

Unlocking growth in the Low-Carbon and Renewable Energy Economy

To tackle climate change, transitioning to a low-carbon and renewable energy economy (LCREE) is paramount.

LCREE is a term used by the Office for National Statistics to describe a group of 17 sectors that are not typically included in traditional statistical classifications. This group helps us understand more about the UK’s economy related to technology that mitigates climate change.

LCREE turnover has increased from £43.7 billion in 2014 to £54.4 billion in 2021, driven by sectors such as energy-efficient products, low-emission vehicles, offshore wind, and bioenergy.

However, not all sectors have experienced uniform growth. Some, like energy-efficient products and bioenergy, have seen negative compound annual growth rates, highlighting areas that may require additional attention and support (Chart 3).

The LCREE industry has created a lot of job opportunities. In 2021, it has provided employment to 247,400 people through 90,000 businesses. Although the number of businesses has been fluctuating, the employment rate has consistently increased, which means that more people can find work in the growing green economy (Chart 4).

The UK has consistently ranked among the world’s top countries in public research and development (R&D) expenditure on low-carbon and renewable energy technologies (Chart 5). Although trailing behind countries like the US, France, Japan and Germany in total public R&D spending, the UK’s commitment to innovation in nuclear power, energy efficiency, and renewables underscores its dedication to advancing sustainable solutions.

Upon closer examination of research and development (R&D) budgets, it becomes apparent that top public spenders have distinct specialisations. For instance, the US prioritises cross-cutting technologies, while France and Germany focus on hydrogen and fuel cells. On the other hand, Japan and the UK focus their investment on nuclear power technologies, while Canada places emphasis on energy efficiency.

As we work towards achieving Net Zero emissions, it is clear that the UK’s journey is marked by both progress and challenges. While the country has made significant strides in reducing emissions and transitioning towards a low-carbon economy, there is still work to be done. By continuing to invest in innovation, supporting sustainable industries, and implementing bold policies, the UK can lead towards a greener and more resilient future for future generations.

This article draws from Section 5 of the UK Innovation Report 2024. The UK Innovation Report report provides a clear and easy-to-navigate overview of key trends across UK industry. It is an essential resource for navigating the evolving landscape of innovation and technological progress in the UK.

For data, references, and more analysis on the UK’s competitive advantage, including analysis of the machinery and equipment sector and whether the UK is capturing value from the net zero transition, see the full UK Innovation Report 2024 produced by Cambridge Industrial Innovation Policy.




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