Low Carbon


The long-term cost of failing to address climate change is recognised by businesses and governments around the world. The UK aims to reduce its greenhouse gas emissions by 80% (based on a 1990 baseline) by 2050. This challenge opens up opportunities for the UK economy, to achieve more efficient energy use and develop new technologies and skills for export markets.

The latest IPCC impacts report makes it clear that “climate-change impacts are projected to slow down economic growth […] further erode food security […] and will create new poverty pockets in upper-middle- to high-income countries in which inequality is increasing”.


A low carbon economy requires substantial emissions reductions in the most carbon intensive sectors. These include power generation, industrial activity, transportation, housing, services and agriculture.

The Committee on Climate Change has set out measures to reduce emissions from these sectors, ranging from developing more fuel-efficient vehicles and buildings to zero carbon energy generation.


Growth, jobs and competitiveness: Many countries are decarbonising their economies. The green economy already delivers a £5 bn trade surplus to the UK and provides around 940,000 jobs. As the chart below shows, green exports are substantial and expected to halve the UK’s trade deficit in 2014–15.

The UK has an opportunity to lead the transition to a low carbon economy thanks to its industrial expertise and research strength in biotechnology, maths, advanced materials, control systems, electronics, engine technology and energy management.

However, a number of indices demonstrate that the UK is falling behind and being overtaken by competitors. We need to reverse this trend and maintain our leadership position.

Reducing long-term energy costs and risks: Low carbon energy costs will decrease relative to other sources in a number of areas, thanks to a combination of increased energy efficiency, self-sufficiency and the rising price of conventional fuel. For example, the Carbon Trust estimates that savings to the UK from reducing emissions from non-domestic buildings will reach £4.5 bn by 2020, with reductions of 70–75% possible at no net cost.

Security: Fuel costs are rising around the world. Developing greater energy self-sufficiency will help the UK mitigate some of these increases and make us less dependent on overseas providers.

Wellbeing: Reducing the threat of climate change will reduce the risk of potential health effects and inequalities.


UK businesses are clear about the economic logic for tackling climate change. According to the CBI:

“The business response is definitive and emphatic: green is not just complementary to growth, but a vital driver of it.” Benefits to business include:

Revenue growth: Global investment in clean technology is currently around $300 bn a year. Research by the EU demonstrates that strong targets for renewables and energy efficiency in 2030 would create over half a million new jobs and save €258 bn on imported fossil fuels. UK industries that can benefit include finance, automotive, aerospace, ICT, renewables, construction, retail, business services, life sciences, resource management and many more.

Innovation: A low carbon economy will drive the development of new technologies and skills. The UK financial sector can play a key role in funding the necessary investment.

Productivity: Businesses will benefit from reduced costs as greater energy efficiency makes them more competitive globally.

Exports: The UK already runs a surplus on green goods and services. Around the world more countries are investing in low carbon technology.

Finance: There is an opportunity to develop investment vehicles that fully integrate the risks and opportunities related to climate change.

Competitive advantage: Addressing the strategic, regulatory and reputational drivers will enhance a company’s ability to compete.


The three most important areas for low carbon policy development are:

Effective carbon pricing: Emissions trading schemes have merit, in spite of the lack of effectiveness of the EU ETS. But to make real impact we need a trading scheme with the right incentives for business. Adopting a simple carbon tax could also raise the price of carbon. Both have the potential to reduce emissions and raise revenues.

Promote low carbon technologies and innovation: The long-term benefits of low carbon technologies are widely accepted, but the slow shift away from our high-carbon path is limiting the development of these technologies. Addressing this requires:

  • Focusing R&D policies on rewarding low carbon innovation via research grants, innovation prizes, patents and tax credits
  • Supporting low carbon technologies via feed-in tariffs or renewables certificate systems

  • Developing carbon capture and storage
  • Supporting community energy projects
  • Encouraging a shift to low carbon transport technologies and models

Removing barriers to low carbon behaviour and investment:

  • Long-term policy security to support long-term investment decisions
  • Shifting government subsidies away from fossil fuels and towards low carbon alternatives
  • Introducing ambitious low carbon and energy efficiency requirements in infrastructure projects

Strength of the UK’s green export markets

The UK exported low carbon and environmental goods and services to 52 countries in 2010–11, totalling £11.8bn

Source: Please download or view our Report online for a full list




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