- New Growth Zero report from economics consultancy
Oxera reveals pathways to net zero could unlock significant
economic growth for the EU and UK economies.
- Rapid move to net zero could also support up to 1.4 million
additional jobs per year in the EU, and up to 309,000 additional
jobs per year in the UK.
BRUSSELS, July 18,
2024 /PRNewswire/ -- Today, economics, finance and
data science consultancy Oxera releases Growth Zero:
Reframing net zero as a driver of growth, highlighting how net
zero could unlock a decades-long growth boom for European
economies.
The study explores four levers to achieve net zero across the EU
and the UK — regulation, private sector innovation, carbon pricing,
and fiscal policy — revealing that rapid decarbonisation policy
packages could unlock substantial growth for governments and
businesses, while achieving net zero before 2050.
Key Findings:
- EU impact: Growth Zero levers could create an additional
1.4% growth per year, unlocking up to €6.1 trillion in GDP for the
EU economy, and supporting between 1.2 million and 1.4 million jobs
annually.
- UK impact: Growth Zero levers could create an additional
1.3% growth per year, unlocking up to £765 billion in GDP for the
UK economy, and supporting between 213,000 and 309,000 jobs
annually.
The Growth Zero findings come in the context of a seismic period
for European politics, with recent elections indicating a mixed
picture for green growth across the continent. The EU Parliamentary
elections in June returned a reduced representation of Green MEPs
whilst the UK Labour Party's successful general election campaign
had green growth at the centre of their plan for the country. With
the French electorate also signalling that the environment remains
a priority, Growth Zero demonstrates that rapid decarbonisation can
be a lever of economic growth as well as helping to mitigate the
impact of the climate crisis.
Growth Zero lever
|
Net zero date
|
Total growth boost
|
Annual growth rate
|
Annual jobs supported
|
Regulation
Strict penalties are placed on high-
emission sectors and phase-out
dates are brought forward.
|
2046 (EU)
2044 (UK)
|
€6.1tn (EU)
£765bn (UK)
|
1.4% (EU)
1.3% (UK)
|
1.4m (EU)
309,000 (UK)
|
Private sector innovation
Large-scale deployment of new,
green technology-based
production capacities accelerates transition.
|
2047 (EU)
2044 (UK)
|
€5tn (EU)
£635bn (UK)
|
1.1% (EU)
1% (UK)
|
1.2m (EU)
278,000 (UK)
|
Carbon pricing
Carbon prices are increased by
around 30% on average year-
on-year in the 2020s, by 8.6% in the
2030s and by 4-6% in the 2040s.
|
2048 (EU)
2046 (UK)
|
€5.3tn (EU)
£555bn (UK)
|
1% (EU)
0.8% (UK)
|
1.3m (EU)
213,000 (UK)
|
Fiscal policy
Subsidies for established low-
carbon technologies are
supercharged whilst taxes
are increased on carbon-intensive i
ndustries.
|
2047 (EU)
2045 (UK)
|
€5tn (EU)
£627bn (UK)
|
1.1% (EU)
1.1% (UK)
|
1.2m (EU)
267,000 (UK)
|
Green Growth for Germany
As well as investigating the potential impact of green policy
measures on the whole EU economy, Growth Zero also explored
the impact on Germany, the bloc's
largest economy. The recent EU election results indicated that
German voters are concerned about the cost and consequences of net
zero, but the study shows that a rapid transition could unlock up
to €1.6 trillion in GDP for the German economy and support between
191,000 and 238,000 jobs annually.
Dr Luis Correia da Silva,
Oxera Chair and Partner, said:
"Climate action demands rapid transformation across
industries and economies. Achieving net zero by 2050 is not just
necessary for full-scale decarbonisation, it is a monumental
economic opportunity. As economists, we are tasked with
understanding and navigating the profound economic shifts required
to achieve net zero. It's clear that embracing the net zero
transition is not just a cost exercise; it is an opportunity for
growth. In a time of political uncertainty, our research reveals
that decisive policy and business action can unlock substantial
economic growth and job creation, positioning net zero as the
cornerstone of resilient and prosperous
economies."
Growth Zero: Macroeconomic benefits require microeconomic
insight
Growth Zero uses a macroeconomic model to investigate the
potential impact of four different levers—regulation, private
sector innovation, carbon pricing and fiscal policy — for achieving
net zero in Europe. Each lever
represents a distinct pathway to net zero, with a specific set of
relevant policy assumptions applied as "shocks" to a macroeconomic
model to examine their impact.
The results of the macroeconomic modelling have been combined
with microeconomic insight from Oxera's experts to help business
leaders understand the potential implications for their
business.
To find out more about methodology underpinning Growth Zero, as
well as a full breakdown of the impact of the four growth levers on
the UK, German and EU economies visit: www.oxera.com/growthzero
About Growth Zero
Growth Zero is a thought leadership study from
Oxera, based on a combination of macroeconomic modelling and
microeconomic insights. The study explores four hypothetical levers
that each represent a possible economic pathway to achieving net
zero by 2050, reframing net zero as a driver of growth. It
demonstrates that amplifying key policy interventions and market
mechanisms could achieve net zero faster and drive economic
development. By comparing each of the levers – carbon pricing,
private sector innovation, fiscal policy and regulation – it
considers the most effective ways of decarbonising and aims to
shift the transformation conversation to focus on the growth
opportunities that net zero could bring.
About Oxera
Oxera is an economics, finance and data science consultancy that
advises companies, policymakers, regulators and lawyers on any
economic issue connected with competition, finance or regulation.
We have been doing this for over 40 years, gathering deep and
wide-ranging knowledge in the sectors we specialise in. We have a
reputation for credibility and integrity among those we advise, and
among key decision-makers such as policymakers, regulators and
courts.
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