The green recoveryUK newsHarnessing power from sun, wind and sea could spur UK’s post-pandemic economy while tackling climate crisis, say experts
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In the first months of 2020 Britain relied on renewable energy like never before. The power generated by clean energy projects eclipsed fossil fuels for the first time ever, making up almost half the electricity used to keep the lights on.
As the UK emerges from the financial maelstrom of the coronavirus pandemic, analysts, economists and environmentalists argue that the renewable energy industry could – and should – play a greater role, powering a green economic recovery too.
The companies harnessing energy from the sun, wind and sea hold the potential to spur the UK’s economy by attracting billions in investment and creating thousands of green jobs across the UK’s regions while accelerating Britain’s climate ambitions.
Britain’s clean energy sector proved this point in the wake of the 2009 financial crisis and the Confederation of British Industry calculated that the green economy contributed a third of the UK’s economic growth in 2010-11.
Britain’s traditional economic engines – the banks and financial services firms – had continued to flounder, leaving GDP growth struggling below 1% while the economic value of offshore wind climbed by almost 17% and the solar industry’s growth was almost 7%.
The CBI report concluded that the so-called “choice” between going green or going for growth was a false one because green business was already on track to become a major pillar of Britain’s future growth.
“After the last financial crisis, the UK’s green economy contributed substantially to new fiscal growth, supporting tens of thousands of jobs and finding new export markets around the world,” says Nathan Bennett of RenewableUK.
“Once again, our industry will play a proactive role in getting the economy back on track, as we move out of lockdown. Renewables are a UK-wide opportunity to have a sustainable, forward-looking recovery and to boost productivity across the economy.”
The economic and environmental advantages of investment in a green recovery are aligned as never before.Today, much of the risk shouldered by renewable energy investors a decade ago has fallen away alongside plummeting technology costs. The UK’s commitment to pursuing a carbon-neutral economy by 2050 alongside its established financial support frameworks offer far more certainty to willing investors than in the past.
The investment case for renewables is flattered further by the relative gloom shrouding investment opportunities elsewhere: fossil fuels have fallen from favour among a growing number of investors due to climate concerns and the collapse of global market prices for oil, gas and coal in recent weeks.
Oil investors may have been able to count on returns on equity of about 25% when prices hovered at $100 a barrel, according to Bloomberg Intelligence, but today that figure is below 10% and falling. The returns on equity invested in offshore wind is 11%, and for solar it is 8% despite falling electricity bills.
Economists believe the renewable energy industry’s hard-fought financial clout combined with public policy support could create an economic and employment juggernaut capable of spurring the UK’s post-pandemic recovery while tackling the climate crisis too.
“The climate emergency has not gone away,” says Bennett. “If anything, the Covid-19 pandemic has underlined the need to make sure our economy is sustainable and resilient in the long term.”
Globally renewable energy could power an economic recovery from Covid-19 by spurring global GDP gains of almost $100tn (£80tn) between now and 2050, compared with a business-as-usual scenario, according to the International Renewable Energy Agency (Irena).
Irena said the coronavirus outbreak had exposed “the deep vulnerabilities of the current system” and urged governments to invest in renewable energy to kickstart economic growth and help meet climate targets.
Keith Anderson, chief executive of Scottish Power, one of the UK’s biggest renewable energy investors, says it is no overstatement to say that “the economic and environmental advantages of investment in a green recovery are aligned as never before”.
Scottish Power is poised to invest billions in the UK’s renewable energy industry in the coming years, including an onshore wind renaissance after the government’s U-turn on blocking financial support for onshore turbines.
The investment plans mapped out by Scottish Power and other renewable energy giants have remained intact through the pandemic while oil majors have slashed billions from their spending plans and warned that job losses are likely later in the year.
“The best thing about it is that you’re investing for the next 40 years in clean energy,” says Anderson. “There’s a whole load of other infrastructure work you could do in the UK, but the thing about investing in renewables is that it is just as good at creating jobs and kickstarting the economy – but the added benefit is that you’d be tackling climate change at the same time.”
The Social Market Foundation believes there could be long-term benefits for workers too. The thinktank called last week for the government to help train those left jobless by the looming financial recession to work in the low-carbon economy. The government could spur the economy, accelerate its climate ambitions and help kickstart social mobility, it said.
The “net zero” industries, which include clean energy, electricity networks, car-charging infrastructure and energy efficiency, could help provide new jobs for many of the 1.4 million people expected to be left unemployed following the pandemic.
The SMF has estimated that in some parts of the country, the number of green jobs that need to be filled to meet the climate goal is equal to half the number of people who were unemployed before the coronavirus crisis.
“There is a pressing need to provide better support for those who lose work in this crisis,” says Kathryn Petrie, the SMF’s chief economist. “But also an opportunity. A well-designed guarantee of work and training could protect people from lasting damage, support UK skills and support the greening of the economy.”
But the potential upsides could still slip away without decisive action to grasp the opportunity to reset the UK economy on a sustainable green foundation.
The International Energy Agency’s executive director, Fatih Birol, has called on governments to devise stimulus plans that put the green energy agenda at the heart of the economic recovery. Anderson says there is not a moment to lose.
“This is our message to the government: now is the time to do it. Investors are very keen to push money this way, and into these projects. The UK has a fantastic opportunity to grab a huge slice of the world’s renewable energy investment today. Now is the time.”
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