The UK’s net zero economy grew 9% in 2023 according to a new report commissioned by the Energy and Climate Intelligence Unit (ECIU), with analysis provided by CBI Economics and The Data City.
The total gross value added by businesses involved in the net zero economy now stands at £74bn.
This is in contrast to stagnation in the wider economy with GDP growth at just 0.1% in 2023.
CBI Economics warned that without further investment and policy stability, the strength of future growth is in jeopardy as the US and EU compete to attract and develop clean industries.
The analysis found that jobs in the net zero economy are highly productive, generating £114,300 in economic activity, more than one and a half times the UK average of £72,550.
They are also better paid by almost £10,000, the average net zero salary being £44,600 compared to the £35,400 UK average.
Scotland, Wales and the Midlands have particularly strong net zero economies, with London having the lowest proportion of its economy based on businesses in net zero sectors.
Battleground constituency seats in England and Wales (based on new boundaries) are three times more likely to be a net zero economic ‘hotspot’.
Some areas with particularly high concentrations of net zero activity are amongst the most deprived in the country, for example, Hartlepool, Nottingham, Redcar and Cleveland are among the top 10% local authorities for income deprivation in England.
In addition, around two in three (65%) of the top 25 net zero hotspots and half of the top 50 net zero hotspots in England and Wales are classified as key electoral battlegrounds heading into the general election.
Chief economist at the CBI Louise Hellem said: “The UK’s transition to net zero brings immense opportunities for our economy.
“Our report, together with the Energy and Climate Intelligence Unit, highlights how businesses are already seizing those prizes – creating jobs and attracting investment, whilst boosting our energy resilience. But we also know that there’s much work to be done to fulfil the UK’s potential and accelerate our journey to net zero.
“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 – or we risk failure to reach our net zero targets and missing out on sustainable, productivity-led growth.
“It is clear that action is required to grow our net zero economy. In the CBI’s Spring Budget submission, we call on the Chancellor to establish a Net Zero Investment Plan – to identify green investment gaps and implement policy aimed at crowding in private finance.
“That’s one of many levers the government can pull to support businesses in doubling down on green growth – but there are many more.
“We hope this report kickstarts a wider conversation about how the UK can realise those opportunities.”
ECIU director Peter Chalkley said: “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.
“Thousands of jobs depend on net zero in constituencies right across the country, including many key battleground seats.
“The question now is will political parties provide the leadership, stability and investment needed to generate further growth or shy away from the global race for net zero.”
The analysis found net zero businesses had received £279m of public InnovateUK funding and £12.3bn of private investment during 2021-2022.