From renewable energy sources to electric vehicles and greener finance initiatives, the ‘net zero economy’ grew 9% in 2023, contributing £74 billion to the UK economy.

A report provided by CBI Economics and The Data City and commissioned by the Energy and Climate Intelligence Unit (ECIU) shows that the net zero economy contrasts the stagnation of the wider economy, which only saw GDP growth at just 0.1% in 2023.

The net zero economy, including net zero businesses, supply chains, and spending by employees, is worth a total of 3.8% of the overall UK economy, the study found.

The analysis found that jobs in the net zero economy are highly productive, generating £114,300 in economic activity, more than one and half times the UK average of £72,550.

Workers in this industry are typically also better paid by almost £10,000, with the average net zero salary being £44,6000 compared to the £35,400 UK average.

The report showed that Scotland, Wales, and the Midlands have particularly strong net zero economies, with economic powerhouse London having the lowest proportion of its economy based on businesses in the net zero sectors.

In Scotland, the net zero economy added 5.7% to the economy and supported 85,500 jobs. Aberdeen in particular was a stronghold for net zero economic activity, with the net zero economy in both Aberdeen South and Aberdeen North contributing over 10% of local employment.

In the UK, the sector supports around 765,500 full time jobs, the data found.

“The UK’s transition to net zero brings immense opportunities for our economy,” Louise Hellem, chief economist at the CBI said.

“Our report, together with the Energy and Climate Intelligence Unit, highlights how businesses are already seizing those prizes – creating jobs and attracting investment, whilst boosting our energy resilience. But we also know that there’s much work to be done to fulfil the UK’s potential, and accelerate our journey to net zero.”

The survey also discovered that some areas with particularly high concentrations of net zero activity are amongst the most deprived in the country.

Further, around two in three (65%) of the top 25 net zero hotspots and half of the top 50 net zero hotspots in England and Wales are classified as key electoral battlegrounds heading into the general election.

“Against the backdrop of economic stagnation, the net zero economy is bucking the trend, but it’s clear that the policy U-turns of the past year have damaged investor confidence at a time when the US and EU are investing billions to compete for clean industries,” Peter Chalkley, director of the Energy and Climate Intelligence Unit, said.

“Thousands of jobs depend on net zero in constituencies right across the country, including many key battleground seats. The question now is will political parties provide the leadership, stability and investment needed to generate further growth or shy away from the global race for net zero.”

Despite net zero businesses receiving £279m in public InnovateUK funding and £12.3bn of private investment during 2021-2022, the UK has fallen down the EY clean energy attractiveness index in the past year.

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“The UK net zero economy is a vibrant, dynamic area to be a part of, offering huge opportunities for new, innovative businesses to grow. SME’s will be the driving force behind the Net Zero economy, and account for 61% of private sector employment,” Thomas Farquhar, chief commercial officer at cleantech startup Heatio said. “However, for this growth to materialise, it is imperative that Government provide policy consistency and unwavering ambition.

“Frustratingly, we are lagging behind the rest of Europe in the transition to cheaper, more secure and cleaner energy in homes. Countries like Norway have already transitioned 66% of their homes to low carbon heating, Sweden 43% and Finland 41% whereas the UK has less than 1%.

“When it comes to Solar the UK has uptake of 5% of suitable homes behind the likes of Italy at 23%, the Netherlands 16%, Germany 11% and further afield Australia with 31%. The numbers are startling and highlight the scale of the opportunity but necessity for investor confidence.”