The Debate: Are growth and net zero incompatible?

Net zero can – and must – go hand in hand with growth. 

Sam Hall | Director

Without net zero, climate change or another fossil fuel price spike will have a disastrous effect on our long-term GDP. And without growth, we will not have the resources to invest in clean technologies. 

But, to marry net zero with growth in the near term, we need to take a low-cost, market-led approach to reducing emissions that keeps down costs for businesses. 

Having halved our emissions since 1990 while growing the economy by 80 per cent, the UK has shown that clean growth is possible. Green industries are worth £74bn to our economy and grew by nine per cent in 2023. Commercialising innovative clean technologies offers some of our best prospects both for future growth and limiting global temperature rises. 

Look to Teesside for a tangible example of how the UK’s industrial heartlands can be revitalised by a market-led approach to net zero. Thanks to low-tax freeports, investment in sectors such as carbon capture and offshore wind has poured into the former steelworks site in Redcar, bringing opportunity and good jobs back to the area.

But the Labour government’s statist approach to net zero – symbolised by GB Energy and its centrally-planned 2030 clean power mission – risks damaging growth by pushing up energy costs for businesses.

In fairness they have announced a handful of pro-growth climate policies by reforming environmental regulations and planning rules. But these positive steps risk being betrayed by Labour ministers’ high-tax, high-regulation instincts. 

Only by removing the barriers to private investment in clean technologies and injecting market forces into the energy transition will we achieve faster economic growth and decarbonisation together. 

First published by ConservativeHome. Sam Hall is Director of CEN.