Ahead of election manifestos being launched this week, trade body Energy UK is urging all political parties to consider the economic benefits of an accelerated transition to net zero.
Analysis undertaken by Oxford Economics last year on behalf of the association shows an accelerated transition could boost the country’s economy by £240bn in 2050 more than current trajectories, equivalent to the UK’s entire manufacturing sector.
Under this scenario, private investment in the UK could increase by £165bn, freeing up the public purse for other public spending priorities.
It also revealed that under the most ambitious scenario, the GDP of each area of the UK would be 5.4%-7.5% greater in 2050 than under the current trajectory – which would amount to a boost of £141bn for regions outside London and the South-East.
Even in regions with the biggest challenges in terms of moving from fossil fuel industries, such as Scotland and the North-East, GDP is still expected to grow by over 5% under the most ambitious pathway.
However, slowing progress will have the opposite effect, the report found. Previous attempts at removing green policies exacerbated the energy crisis adding £9.8 billion to energy bills in 2022/23.
Helping households to switch to electric heating and better insulate their homes protects them from potential future gas spikes, and the Office for Budget Responsibility states continued reliance on gas would result in the UK being over 40% more exposed to the price spike in the late 2020s, over two times more exposed to the spike in the late 2030s; and over five times more exposed to the spike in the late 2040s. The same analysis shows UK debt could be 13% higher.
“Failure to meet net zero will impose greater costs on UK taxpayers than the investments required to do so,” said Energy UK chief executive Emma Pinchbeck (pictured).
“Both the Climate Change Committee and Office for Budget Responsibility estimate that most of the investment to reach Net Zero will come from the private sector, but capital has a choice of location and investors need regulatory and political certainty.
“This is the economic opportunity of a generation, and the UK has the chance to lead the world in technologies like hydrogen, CCUS and floating offshore wind. But global competition is increasing and urgency is needed to reap the rewards of a globally leading energy sector.
“Above all, a fair transition will improve lives and livelihoods; warmer schools and hospitals can improve experiences and save money by saving energy, cleaner transport reduces the associated pollution costs to the NHS.
“Boosting our domestic clean energy generation alongside a rapid roll out of energy-efficiency measures will make the UK more resilient to global energy price shocks, and bring stability to energy bills. We have seen the cost of slowing progress. We know what we need to do. History will not be kind to politicians too short-sighted to grasp these opportunities.”
Energy UK’s manifesto Energy Matters is a proposal for partnership with the next government. It advocates collaboration between the next government and industry will unlock investment, transform the economy and deliver change.