A major new report has identified the North East as one of the UK’s hot spots for Net Zero projects.
The report from the Energy and Climate Intelligence Unit found that the Net Zero economy is stronger and significantly more productive in the UK regions and it listed twenty ‘hot spots’ across the UK where Net Zero makes up a larger than average proportion of the local economy.
These include the Tyneside/Teesside coast, south Yorkshire/North Derbyshire, the Mersey River and Cambridgeshire. London though lags behind, suggesting Net Zero is playing an active part in ‘levelling-up’.
The report, which used analysis provided by CBI Economics and the DataCity, said there are almost 20,000 businesses currently within the Net Zero economy which are contributing £71 billion (3.7%) in Gross Value Added (GVA) to the UK economy.
The total gross value added by businesses involved in the Net Zero economy is more than twice that of the energy sector itself and 840,000 (3.2%) jobs are supported, with an average wage of £42,600 compared to the £33,400 national average.
The focus is also highly productive, generating £112,300 in GVA per employee, 1.7 times higher than the national average of £64,400.
We are more than just a hotspot – we are the forefront of this change.
Tees Valley Mayor Ben Houchen said: “Green industries will provide for our country’s future – and with Net Zero Teesside, Carbon Capture and Storage, and our world-leading chemical sector on our doorstep, we have all the ingredients to lead the UK’s charge to Net Zero and become the nation’s capital for green jobs.
“We are more than just a “hotspot” for Net Zero – we are the forefront of this change. Our projects at Teesworks, and green industries supercharged through our Freeport, will not only create a better future for our environment but also create the vital well-paid and long-lasting jobs and careers needed in Teesside, Darlington and Hartlepool.”
Peter Chalkley, Director of ECIU, said: “From insulation fitters to heat pump engineers and agritech pioneers, businesses in the Net Zero economy are adding £70 billion to the UK economy.
“Billions of pounds of private sector investments are being made with the hot spots of activity being outside of London in places like Tyneside, Merseyside and Derbyshire.
“This economy is addressing levelling-up and the UK’s productivity problem, but with the EU and US investing heavily in clean technologies, the question now is will the UK keep up or try to stick with industries of the past?”
Tom Thackray, Director of Decarbonisation at the CBI said: “Upping the pace on the UK’s transition will challenge industries, businesses, and policymakers in the years ahead.
“This report underlines the real benefit to firms across multiple sectors – right across the country – of embracing that challenge. We can see how environmentally sustainable economic growth – for example, the development and scaling of renewable energy – will help stimulate economic activity across the UK and in turn help to reduce regional inequality.
Ben Houchen at the SeAH launch at Teesworks (Image: Newsquest)
“And while it is a challenge that businesses need to embrace, green growth is also one of the big opportunities in the coming years for the UK economy.”
New polling by YouGov released alongside the analysis has found that people in the Tyneside and Teesside Net Zero economic hot spot see ‘renewable energy and clean technology’ as the sector most likely to create long-term growth in the local economy.
They also say renewable energy and clean technology is the top sector the government should prioritise support for to generate more growth in the area.
The businesses within the 16 sub-sectors identified by the report are diverse. They include firms in the energy sector, including renewables, energy storage, demand response and efficiency and low-carbon heating; agritech and carbon capture; waste management and recycling; low-emission vehicles; and low-carbon consultancy and green finance.
Other key findings of the report include:
• Venture investment into the Net Zero economy is growing at a trend rate of over 30% per year. In 2021, venture funding reached £710 million, over 10 times higher than venture investment into the oil and gas sub-industry, which saw a total of £49 million in venture investment.
Read next:
• The economic impacts of the economy are stronger within each of the regional economies; in some of the hot spots identified, it is contributing as much as 5-7% of an areas GVA, which outperforms London, where only 3.1% of its economy is made up from Net Zero companies.
• The Net Zero economy is also highly productive in regions where productivity is historically lower. For example in the Midlands (East and West) is over 2.5 times more productive than the regional average.
The diversity of businesses also suggests that, as the UK transitions and more businesses are included in the sector, this will further redistribute economic activity. Already, areas such as the North East have the highest concentration of Net Zero economy businesses as a proportion of total businesses in the region.
Expansion of the net zero economy therefore has great potential as an opportunity for regions across the UK to boost growth and reduce regional inequality.
