UK's 'Net Zero Economy' Skyrockets to £74 Billion in 2023, Underlining Sustainable Economic Surge

A recent analysis from the Confederation of British Industry (CBI) sheds light on the remarkable growth of the UK's emerging 'net zero economies,' which surged by nine percent last year to reach a staggering £74 billion valuation. The report underscores the pivotal role of green industries in driving economic prosperity, especially against a broader UK economy that has struggled with stagnation in recent years.

Collaborating with the Energy and Climate Intelligence Unit (ECIU) think tank, the CBI's analysis highlights the stark disparity between the robust expansion of businesses supporting the net zero transition and the lackluster performance of the broader UK economy, which slid into recession late last year.

Key findings reveal that the total gross value added by the UK's net zero economy soared to £74 billion in 2023, propelled by a nine percent growth surge. These sectors, pivotal in facilitating the transition to a sustainable future, now contribute around 3.8 percent to the national economy.

In stark contrast, the UK's overall GDP growth averaged a mere 0.1 percent in 2023, plunging into a technical recession following two-quarters of contraction in the latter half of the year.

Moreover, the report unveils a sustained trend of investment influx into net zero-focused sectors, with nearly £21 billion poured into these businesses between 2018 and 2022, demonstrating a clear investor appetite for sustainability initiatives. Notably, foreign direct investment (FDI) injected an additional £14 billion into UK net zero businesses in 2022-23, fostering the creation of over 20,600 new jobs.

Highlighting the economic vibrancy of the net zero economy, the report emphasizes the productivity and financial benefits of jobs within this sector. On average, net zero economy jobs generated £114,300 in economic activity last year, surpassing the broader UK average by 1.6 times and boasting higher average salaries of £44,600 annually.

Louise Hellem, chief economist at the CBI - representing some 170,000 businesses - said the UK's net zero transition promised to bring "immense opportunities for our economy," boosting jobs, industry, and energy security while helping to reduce the country's emissions.

However, Hellem stressed there was still "much work to be done to fulfill the UK's potential and accelerate our journey to net zero," as she warned that without a stable and ambitious policy framework to boost much-needed green investment, future growth across the entire UK economy would be jeopardized.

"Businesses continue to face difficult headwinds this year, leading many to pull back on investment plans," she said. "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."

The analysis also sheds light on geographical disparities across the UK, with Scotland, Wales, and the Midlands emerging as the net zero economy strongholds while London lags. This divergence underscores the need for targeted policy interventions to ensure equitable growth across regions.

As the UK gears up for the upcoming General Election, the report underscores the critical role of the emerging green economy in shaping electoral outcomes, particularly in crucial battleground constituencies.

RenewableUK's Nathan Bennett highlights the tangible benefits of clean energy investment in local communities, emphasizing the potential electoral impact of green growth policies.

Amidst calls for greater political clarity and ambition on net zero policies, the report underscores the urgent need for a cohesive strategy to unlock the full potential of the UK's green economy and secure a sustainable future.

Juliet Phillips, UK energy lead at E3G, said the UK had targets in place for tackling fuel poverty and carbon emissions by 2030, and as such, upgrading homes "must become a national infrastructure priority" if these goals are to be met.

"This will require a commitment to long-term funding to make clean heat and warm homes available for everyone - while providing industry with much-needed certainty to invest in skills and supply chains," she said. "Whichever party wins the general election will need a laser focus on boosting sluggish delivery rates, as well as providing the enabling regulations to spur action and investment."