Insider Brief
- The UK’s net zero economy has grown by 10.8% over the past year, with £28.8 billion in direct Gross Value Added (GAV) to the economy and a broader economic impact total of £83.1 billion, according to new study.
- Private investment has played a key role, with £23 billion raised since 2019, while foreign direct investment surged 46.5% in the past year, reaching £20.1 billion.
- Scotland leads regional growth, with its net zero economy expanding by 20.1% since 2022, largely driven by renewable energy, while Yorkshire, the Humber, and the South West also emerge as major contributors.
The UK’s net zero economy isn’t just advancing environmental goals, , it’s becoming a driving force for overall economic growth and innovation, according to a new report by the Energy and Climate Intelligence Unit (ECIU) and CBI Economics.
“The economic value created directly by the activity of net zero businesses (initial GVA) has grown by 10.8%, or £2.8 billion, over the past year,” the report notes noted. “Since 2022, the initial GVA of the net zero economy has grown by 14.3%, an increase worth an additional £3.6 billion to the UK economy.”
This study, commissioned by the ECIU and conducted by CBI Economics, noted about 22,800 businesse make up the net zero sector, with 15,800 of those employinged people. Of those, 94% are small businesses with fewer than 250 workers.
It broke down the sector into 16 subsectors, with Renewable Energy Planning Database businesses topping the list by a large margin, followed by Renewables and then Waste Management. Carbon capture was at the bottom of the list, below Agritech and Energy Cooperatives.
“Private investment has played a pivotal role in driving this growth, with net zero businesses attracting £23 billion since 2019—alongside £1.1 billion in Innovate UK grants,” the report states. “In 2024, net zero related activity generated £23 billion in investment funding and FDI.”
While last year saw a decrease in total private and public investment in 2024 compared to the previous year, direct foreign investment increased 46.5%, representing £20.1 billion in the 2023-24 financial year. The authors of the study note they don’t see the year-to-year decrease as a trend.
The report also highlights that net zero businesses, including renewable energy, clean transportation, and low-carbon industries, now generate £28.8 billion directly and £54.3 billion through supply chains. With each £1 generated in the sector creating an additional £1.89 in the broader economy. The sector’s economic multiplier effect is one of the strongest in the UK economy, reinforcing its ability to drive sustainable growth, according to the study.
Private investment in net zero businesses has surged, with £23 billion raised since 2019, alongside £1.1 billion in government grants.
Regional and Local Economies See Growth
Scotland leads in net zero economic growth, expanding by 20.1% since 2022, contributing £9.1 billion in GVA for Scotland, representing 4.9% of it’s GVA. That equates to about 100,000 full time jobs, the report pointed out.
“Energy generation was the key driver for this strong economic performance, with 41% of the value Scotland’s net zero economy generates being attributed to this sector,” the report states. “This is unsurprising given Scotland benefits from natural advantages in renewable energy, such as onshore and offshore wind, and is also home to local net zero hotspots, such as Aberdeen, to support the development of new technologies (for example, carbon capture and storage).”
Other strong regions include Yorkshire, the Humber, and the South West, which collectively account for 16.3% of the net zero economy. The impact of net zero businesses extends across all UK regions, creating economic hotspots that leverage local resources and expertise.
Local hubs, such as Aberdeen’s Energy Transition Zone and Teesside’s carbon capture projects, illustrate the regional impact of green investments, the study points out. “These areas have become crucial innovation centers for clean technology, carbon capture and storage, and offshore wind energy. The presence of specialized industrial clusters allows these regions to attract additional investment and strengthen their competitive advantage in emerging clean energy markets.
The report also highlights the potential for smaller towns and rural areas to benefit from the net zero transition. Investment in local renewable energy projects, sustainable agriculture, and circular economy initiatives is expected to create job opportunities and economic diversification in these areas. Policymakers are urged to support decentralized energy initiatives and localized sustainability projects to ensure a balanced economic transition.
Job Creation and Productivity
The net zero sector now directly employs 273,000 people,, and when 678,000 supporting roles are factored in, the overall total is 951,000 people with jobs tied to the sector, according to the report.
The report pointes out there are 22,800 businesses of the 15,600 of those firms that employ people, 94% are small businesses with fewer than 250 employees.
The job growth reflects the sector’s expanding economic footprint and increasing demand for green skills. From wind turbine technicians to energy efficiency consultants, the range of employment opportunities in the net zero economy is diverse and continues to grow.
The study also found jobs in the sector are 38% more productive than the UK average, with employees earning an average salary of £43,076 per year. The high productivity of these jobs is attributed to technological advancements, specialized training programs, and increased automation in key sectors. Scotland, Wales, and Northern Ireland show some of the highest productivity boosts in the net zero economy, with green jobs providing above-average wages and long-term career stability.
The study notes that workforce development and upskilling are critical to sustaining employment growth in the net zero sector. Education and training programs in green technologies, energy efficiency, and sustainable engineering are essential to equip workers with the necessary skills. Collaborative efforts between universities, vocational training centers, and businesses will be key in preparing the next generation of workers for careers in sustainability.
Future Outlook
The UK’s net zero economy is expected to continue expanding, with government policy and private investment driving further growth. However, challenges remain, including policy uncertainty and the need for systemic energy market reforms. While the report acknowledges the progress made so far, it also calls for greater coordination between the public and private sectors to maintain the momentum.
One of the key challenges facing the net zero economy is the need for infrastructure investment. Expanding renewable energy generation, upgrading the electricity grid, and developing efficient transportation networks are necessary to support the growth of clean industries. Government policies that provide long-term certainty and regulatory stability will be critical in attracting sustained investment.
The report also identifies the importance of international collaboration in advancing net zero goals. The UK’s position as a leader in green technology and clean energy presents opportunities for exporting expertise and partnering with global markets. Strengthening trade agreements and cross-border investments in renewable energy projects can help accelerate the transition while bolstering the country’s economic competitiveness.
Additionally, the report emphasizes the importance of continued innovation in green technologies. Breakthroughs in hydrogen energy, battery storage, and carbon capture could further drive economic growth and enhance the UK’s leadership in the global sustainability transition. Investments in research and development will be crucial in ensuring that the UK remains at the forefront of clean energy innovation.
The full report, The Future is Green: The Economic Opportunities Brought by the UK’s Net Zero Economy, a collaboration between CBI Economics and the Energy and Climate Intelligence Unit, provides a comprehensive analysis of how green industries are impacting the UK’s economic landscape.
