In the run up to the general election, the Conservative Party pledged to build a stronger and more prosperous Britain and to provide leadership on “some of the greatest challenges of our time”.

It also recognised the importance of increasing support for innovation and skills, improving the competitiveness of British businesses, attracting economic activity to those parts of the UK that have suffered from under-investment and delivering affordable energy for households and businesses. It stressed that new technologies in sectors like energy represented an “industrial opportunity”.

A growing low carbon economy is essential to deliver the Conservative Party’s pledges

Supporting the continued growth of the UK’s low carbon economy will play an important part in the government’s ability to deliver on its pledges and would receive the support of the other main political parties, an important consideration given the hung Parliament delivered by the general election.

The UK’s low carbon economy is already significant in size, generating a turnover of over £77bn and employing around 432,000 people in 2015. An important part of this activity is taking place in parts of Britain that need it the most. For example, 136,000 people were already employed in the North of England’s low carbon economy in 2013, such as at Nissan’s electric car plant in Sunderland. The opening this year of a new offshore wind turbine blade factory in Hull following a major investment by Siemens and Associated British Ports, combined with the investments from Dong Energy in offshore wind projects, will bring over £6bn of investment to the region, create jobs for over 1,000 people and deliver significant investment in skills.

The UK’s strengths in the low carbon economy span many industries, with competitive advantages in areas such as the manufacturing of ultra-low emission cars and offshore wind farms, the development of ICT solutions to cut carbon emissions, resource efficiency expertise and the provision of financial and legal services for clean energy projects across the globe. The fact that one in five electric cars sold in Europe in 2015 was manufactured in the UK and Scottish Power’s recent award of two major offshore wind farm contracts in the US both provide good illustrations of the UK’s low carbon strengths.

Globally, the low carbon market is growing fast

The export market for low carbon goods and services is growing too thanks to a rapid increase in global investment in energy efficiency and low carbon technologies. With the cost of new technologies such as solar power, electric cars and even offshore wind decreasing rapidly and low carbon supply chains growing, Donald Trump’s recent withdrawal from the Paris Agreement is unlikely to dent this momentum.

In 2016, over US$240bn was invested globally in a record amount of new renewable electricity capacity, with 40% of this investment coming from developing economies such as China, India, Brazil, Mexico and South Africa. The International Finance Corporation estimates that there will be around US$23tn worth of low carbon investment opportunities in emerging markets between 2016 and 2030.

The momentum among corporate organisations is high as well. In the last few months, businesses such as Lego, Unilever, Tesco, Walmart and M&S have announced ambitious new targets to cut carbon emissions and grow their use of renewable energy or celebrated significant progress in those areas. Critically, they are also engaging their huge supply chains in this process.

As the OECD recently pointed out in a report, G20 countries that incorporate measures to tackle climate change in their economic policy today will benefit from increased GDP in the near future. In the case of the UK, a strong domestic low carbon policy agenda and economy are central to its future export prospects, the competitiveness of its economy, its innovation agenda and its new trade deals.

Time for tangible policy proposals

In practice, this will require the new Conservative government to publish in the near future a Clean Growth Plan, explaining how it will deliver the UK’s climate targets and how it will attract greater, affordable private sector investment in low carbon energy, energy efficiency and low carbon transport infrastructure. It will also need to deliver on the much awaited publication of a 25 Year Environment Plan, explaining how together with private sector investment, it will improve the state of the UK’s key natural assets on which the health of its economy and society rely.

Working with the EU will also be important in areas where continued collaboration can deliver UK policy objectives more effectively and at lower cost. For instance, the UK is more likely to build an affordable, secure and low carbon energy system by remaining part of the Internal Energy Market. It would also make sense to work with the EU on the development of product standards on energy and resource efficiency given that those will still apply to British businesses exporting their goods to the EU’s Single Market. 

Earlier this month, senior business leaders from major companies active across the UK called on the new government to recognise the importance of the low carbon economy to the UK’s competitiveness and to put in place ambitious and stable low carbon policies after the General Election. Unlike President Trump, the new Conservative government must recognise the economic, social and environmental benefits of a growing low carbon economy and work with business to develop the bold policies needed for a strong and prosperous UK.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.