1 in 5 jobs across the UK will be affected by the UK’s legally binding target to a Net Zero economy according to a new report by the London School of Economics and Political Science (LSE) Grantham Research Institute on Climate Change and the Environment, funded by HSBC and LSEs’ KEI Fund.
The report estimates that the capital required to achieve net-zero for buildings, energy, industry and transport to be around GBP47 billion annually or 1.6 per cent of GDP per year through to 2050, a total of GBP1.4 trillion over the 30-year period. Although large in total, these investments, nationally and locally, are entirely manageable. Over the last 30 years’ overall investment has ranged between 15 and 24 per cent of UK GDP. Furthermore, the costs of key net-zero technologies have been steadily falling and are expected to fall further. Investment in the nation’s human capital and skill base will be required. The report highlights the winners and losers of the transition by analysing the impact on sectors, and details which sectors will have transferable skills and those that will suffer and result in ‘stranded workers’.
The transition to the net-zero economy needs to be inclusive and place based, ensuring that climate decisions take account of key stakeholder needs, notably workers, communities, small businesses and consumers. In addition, the transition needs to respond to the different requirements across the country, enabling local action and investment.
The report reviews the socioeconomic impacts of the low carbon transition across selected regions as well as identifies how the COVID-19 crisis has amplified the need for a just transition, making a series of recommendations to the government and the banking sector to advance the creation of a ‘levelled-up’ net-zero emission economy.It makes clear the important role of financial services in the just transition, noting that it cannot be successfully managed without finance and finance will play an even more critical role in the sustainable economy of the future in terms of both the quantity and quality of capital it provides.