Net zero economy grows 10 in a year with 83bn boost to UK report says

The “net zero” sector has grown by 10% in the past year, adding £83 billion to the UK economy and boosting regional growth, a report suggests.

A study commissioned by think tank the Energy and Climate Intelligence Unit (ECIU), with analysis from CBI Economics and the Data City, also found employment in green industries and businesses had grown 10% in the past year, supporting the equivalent of 951,000 full-time jobs.

The report comes amid pushback in some quarters against the efforts to meet a legally binding goal to cut the country’s greenhouse gas emissions to zero overall – known as net zero – by 2050 to tackle climate change.

It suggests the UK net zero economy – which includes sectors such as renewables, electric vehicles, low carbon heating, green finance and recycling – is a significant driver of growth, innovation and productivity.

And it finds that the net zero economy is growing significantly in regions beyond London and the south east, such as Yorkshire and the Humber and Scotland, and is boosting some of the most deprived areas of the country.

The study found net zero is particularly important in Scotland, making up around 4.9% of the country’s gross value added (GVA) – adding some £9.1 billion to the economy – and supporting around 3.8% of its jobs.

UK-wide, there were 22,800 businesses classed as part of the net zero economy by the end of 2024, the majority of which were small and medium-sized businesses, the analysis found.

The sector generated £83.1 billion in additional value to the economy, with £28.8 billion being generated by the activity of net zero businesses, and a further £54.3 billion in the supply chain and wider economy.

And it supported 273,000 full-time equivalent jobs directly in the sector – overtaking the telecommunications sector in the past year – along with 679,000 in the supply chain and wider economy, the analysis found.

Jobs in net zero industries are typically better paid than the UK average, with employees in the sector earning an average of £43,076 a year, compared with £37,430 for full-time employees across the UK as a whole, the report found.

Net zero jobs are highly productive, with each full-time role generating £105,000 in economic value, well above the UK average, and attracted public, private and foreign direct investment worth £23 billion in 2024, it said.

Louise Hellem, chief economist at the CBI, said: “The net zero economy continues to demonstrate that there are huge emerging markets for green technologies that the UK must capitalise on.

“It is clear, you can’t have growth without green.

“At a time when the cost of doing business has squeezed appetite for capital investments and high energy prices are being cited as a drag factor across the economy, investments in clean technologies can significantly bolster competitiveness and productivity.”

She said the report underlined why net zero needed to be at the heart of the UK’s growth strategy, and pointed to the Government’s strategy to achieve clean power by 2030 as signalling the investment needed to decarbonise the power sector.

But ministers should prioritise decarbonising sectors including transport, buildings, industry and manufacturing in the spending review and industrial strategy to significantly boost the net zero economy and reduce emissions, she urged.

Peter Chalkley, director of the ECIU, said climate change laws and resulting relative policy stability had been a “foundation for this sustained net zero growth, but it cannot be taken for granted and political signals matter for investors”.

“Nearly a million British livelihoods now depend on the net zero economy, which has at its core thousands of small businesses based all around the UK, from Grimsby to Gateshead to Glasgow, insulating homes and manufacturing equipment,” he added.

Commenting on the report, Labour MP Luke Murphy warned that the country was at a “moment of risk”, with less of a cross-party consensus on climate than in the past, as some Conservative and Reform politicians criticise net zero, electric cars and renewables.

“There are huge economic costs of not seeing this transition as an economic opportunity,” he said, adding he thought the Government was determined to keep it at the heart of its “growth mission”.

Energy Secretary Ed Miliband said: “Clean power and accelerating towards net zero are the economic opportunities of the 21st century – and the Energy and Climate Intelligence Unit’s findings show this clearer than ever.

“These numbers speak for themselves. Net zero is essential to growth, a strong economy and money in working people’s pockets.

“Our mission to make Britain a clean energy superpower is the route to energy security, good jobs and investment in our communities.”

Published: 24/02/2025 by Radio NewsHub