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The inexperienced transition will increase productiveness throughout the UK economic system, new research suggests.
Researchers analyzed the impacts of the low-carbon transition in energy, transport and heating.
With renewable vitality now cheaper than fossil fuels in many of the world – and nonetheless getting cheaper – the findings present these three industries profit immediately from the transition.
However the far bigger knock-on impact is an economy-wide productiveness increase, as all companies achieve from cheaper energy, transport and heating.
The analysis group – led by the schools of Exeter and Manchester – warn that this increase relies on cheaper vitality costs being handed on to shoppers, not saved as earnings by vitality corporations.
The examine is printed to coincide with the launch of Exeter Climate Policy, which advises policymakers on reaching a low-carbon future.
“The facility, transport and heating industries are usually not themselves main sources of productiveness development within the UK,” stated Dr Jean-Francois Mercure, who leads Exeter Local weather Coverage.
“Nonetheless, if these vitality providers develop into any cheaper, each different sector throughout the whole economic system can function extra cheaply, releasing unspent revenue free for different issues, inflicting financial development.”
Commenting on whether or not cheaper vitality manufacturing essentially leads to cheaper vitality for companies and households, Dr Mercure stated: “This isn’t at all times the case at the moment.
“For instance, so long as the price of gasoline is used to set electrical energy costs, the advantages of cheaper photo voltaic and wind vitality will proceed to be captured as earnings by producers, the grid operator or electrical energy distributors, whose shareholders might hold it as wealth and never essentially spend it again once more.”
International race
The examine analyses the UK economic system from now to 2035.
The findings are related to different nations that import substantial fossil-fuel vitality. Nonetheless, for giant fossil gas producers, financial losses may exceed the features.
Dimitri Zenghelis, from the College of Cambridge, stated: “The paper makes the case not only for local weather insurance policies, however for sensible financial coverage extra broadly.
“We offer compelling proof to indicate how it is a world race for aggressive benefit that the UK can’t afford to take a seat out.
“For an vitality importer just like the UK, the clear transition is a win-win. Even fossil gas exporters can profit, although it’s time to diversify quick.”
Economist and co-author Hector Pollitt stated: “It’s time to maneuver on from the previous mind-set.
“The story that there should be a trade-off between lowering emissions and rising our economic system was by no means true – the UK’s offshore wind business proves that.
“Know-how drives productiveness development and inexperienced expertise isn’t any exception.”
Serving to governments
Dr Mercure, Assistant Director of the Global Systems Institute, added: “Exeter Local weather Coverage exists to do this type of work – serving to governments and finance ministers create insurance policies which are resilient, efficient, and country-specific.”
The analysis was supported by The Productiveness Institute, funded by the UK Financial and Social Analysis Council.
The paper, printed within the journal Local weather Coverage, is entitled: “The effects of low-carbon transitions on labour productivity: Analysing UK electricity, heat, and mobility with a techno-economic simulation model.”
Reference: Mercure JF, Pollitt H, Geels FW, Zenghelis D. The results of low-carbon transitions on labour productiveness: analysing UK electrical energy, warmth, and mobility with a techno-economic simulation mannequin. Local weather Coverage. 2025. doi: 10.1080/14693062.2025.2522836
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