Official: UK low carbon sectors growing at almost treble the rate of the wider economy

The green economy is continuing to provide one of the major economic bright spots for the UK, according to new figures from the Office of National Statistics that show the growth rate for low carbon and renewable energy (LCRE) sectors stood at almost treble that of the wider economy during 2016.

The latest official LCRE data out today confirms green sectors grew by five per cent to £42.6bn in 2016, up from £40.5bn in 2015. In contrast, overall GDP growth for the year stood at just 1.8 per cent.

Employment across the green economy also rose, climbing 3.3 per cent to 208,000 full-time equivalents (FTE).

The sector accounted for around one per cent of total UK non-financial turnover and around one per cent of total UK non-financial employees.

The report suggests a marked improvement across the sector, after last year’s ONS figures revealed a slight fall in green industry revenues during 2015.

The ONS report is based on a survey of around 14,000 businesses spread across 17 sectors, including energy efficient products, nuclear, low emission vehicles and infrastructure, and a wide range of renewable energy technologies.

The analysis of LCRE controversially replaced the government’s previous efforts to quantify the green economy by measuring Low Carbon and Environmental Goods and Services (LCEGS), which included a much wider range of sectors and as such put the value of the green economy at £122bn in 2013, employing 460,000 people.

The ONS today again stressed that its new figures were based on survey responses and as such needed to be regarded as “indicative only”.

“In general, changes in the estimates reported in this statistical bulletin between 2015 and 2016 are not usually greater than the level that is explainable by sampling variability,” the report states. “This means that movements in the estimates should be treated as indicative only. All estimates are reported at current prices so no adjustments have been made to account for the effects of inflation.

“Activity in the low carbon and renewable energy (LCRE) economy is spread across a wide range of industries. Many sectors are small but growing and for many businesses LCRE activity is secondary rather than primary. For this reason, estimates of the number of businesses are subject to particular volatility and though provided in the datasets, are not directly considered within this statistical bulletin.”

However, the results are still likely to be broadly welcomed by green businesses, as they provide further confirmation of the sector’s ability to outperform the wider economy – a fact that has been seized on by the government in its new Clean Growth Strategy and Industrial Strategy.

The Clean Growth Strategy, which was published last autumn, predicts the low carbon economy could grow 11 per cent a year between 2015 and 2030, four times faster than the projected growth of the economy as a whole.

Writing at the time, Business Secretary Greg Clark said “the opportunity for people and business across the country is huge”.

“This is spread across a large number of sectors: from low cost, low carbon power generators to more efficient farms; from innovators creating better batteries to the factories putting them in less polluting cars; from builders improving our homes so they are cheaper to run to helping businesses become more productive,” he added.

The ONS report also highlights some of the stronger performing segments and regions within LCRE industries.

For example, the energy efficient product group accounted for almost half of total LCRE revenues in 2016, reaching £20.7bn. Meanwhile, Scotland and Wales outperformed the rest of the UK with total LCRE revenues rising 7.7 per cent and 37.4 per cent respectively. In contrast, growth in England reached just 2.8 per cent and Northern Ireland recorded four per cent growth.

In addition, the figures highlight those parts of the sector that have been hit hardest by government policy changes.

The survey suggests turnover in the solar sector plummeted from £3.1bn in 2015 to £2bn in 2016. Similarly, revenues and employment across a range of sectors, such as renewable heat, hydropower, low carbon financial and advisory sources, and carbon capture and storage account for only a fraction of the market.

The report also confirms the sector’s trade balance emulates the wider UK economy’s reliance on imports. UK LCRE imports soared 38.6 per cent in 2016 to more than £6bn, while exports rose just 1.4 per cent to £3.7bn.

Greenpeace UK senior energy campaigner, Emma Gibson, said the figures are “a clear reminder that our clean energy industry is one of the most thriving sectors of the UK economy, giving jobs to thousands of people and attracting billions in investment”.

But she argued that they also highlighted the “missed opportunity” that had resulted from government policy changes in recent years. “[The figures] also lay bare the damage done to the solar and onshore wind sectors by government cuts and policy confusion,” she added. “Since these are the cheapest energy sources in the UK, this is a missed opportunity not just to boost job creation but also to keep bills down. Instead of supporting a tottering and unpopular fracking industry that hasn’t delivered and may never, ministers should consider giving their full backing to a renewable sector already bringing jobs and investment to Britain.”