The promising growth of the UK’s low-carbon economy over the last five years shows it should play an important part in the new Conservative government’s economic plan, argues Nick Molho, executive director of the Aldersgate Group.
Contrary to poll predictions, the Conservative Party has won a majority in the UK general election. With much of the debate in the run-up to the election centred on the future of the UK economy, now is a good time to look at those sectors that offer some promising prospects of growth and increased competitiveness for the economy.
The often forgotten, yet rapidly growing, low-carbon sector is one of those. This part of the economy is expanding both in size and remit, covering areas such as low-emission vehicles, waste processing, low-carbon electricity and heat, low-carbon advisory and finance services and energy-efficiency products.
According to the most in-depth study on the matter released in March 2015 by the Department for Business, Innovation and Skills, 11,500 firms are now involved in the UK’s low-carbon economy, a sector that now employs 460,000 people when including its supply chain. Its annual turnover (£122bn in 2013) is equivalent to twice that of the UK’s auto-manufacturing industry, and its annual gross value added is already equivalent to that of the foods and drinks industry.
But many parts of the low-carbon economy involve developing new solutions (such as energy storage and smart grids), deploying new technologies at scale (such as offshore wind and low-emission vehicles) or dealing with complex infrastructure projects (such as refurbishing the bulk of the UK’s existing housing stock to make it more energy efficient). To continue to attract potential investors and developers and accelerate the fall in cost of many of these technologies, the new government will need to put forward policies with clear goals to develop the UK’s low-carbon economy, backed by smart regulations, fiscal incentives and well-targeted financial support.
From pledges to policies
Building on the recent pledge signed by the then party leaders of the Conservative Party, the Liberal Democrats and the Labour Party to put climate change above party politics, the Conservatives made some important and positive commitments in their manifesto. These include a commitment to support the UK’s Climate Change Act (which sets out long-term objectives to reduce the UK’s emissions of greenhouse gases, broken down in five yearly budgets), continue to reduce the UK’s carbon emissions cost-effectively and work towards a strong international deal on climate change in Paris in late 2015. More broadly, the party's commitment to put forward a concrete agenda to improve the state of the UK’s natural environment is also welcomed.
These commitments will now need to be backed up by concrete policies in the near future, such as providing clarity on the government’s ambition and level of financial support available to improve the energy efficiency of the UK’s poorly insulated housing stock and rapidly reduce the carbon intensity of its energy system. Delivering on these commitments will also require a pragmatic approach to the deployment of different energy-efficiency and low-carbon technologies (including onshore wind), with an eye on environmental effectiveness, affordability and technologies and services where British industry can continue to build a competitive advantage.
Now is the time for the new government to build on the UK’s low-carbon economy’s recent success. The long-term benefits in terms of growth, employment, exports and environmental protection that the sector has to offer show it deserves a place as part of the UK’s long-term economic plan.