“Unleashing the UK’s Green Growth Potential: Harnessing Strengths for a Sustainable Future” 

Esin Serin and Pia Andres set out evidence on the UK’s sectoral and technological strengths to assist policymakers as they consider how to allocate support across the economy in a way that maximises green growth opportunities.Green industrial policies have been on the rise in recent years. Countries are using such policies to develop domestic capabilities to tap into growing global markets for green technologies and services as the world tries to limit global warming to 1.5 degrees. With the UK progressing its own green industrial policy agenda, policymakers need to understand where best to allocate support.While not a ‘magic cure’, evidence suggests supporting green sectors and technologies can be growth-inducing for an economy. For example, the International Energy Agency has found that 10% of global GDP growth in 2023 was attributable to the manufacturing, deployment and sales of clean energy technologies. Policymakers looking to implement industrial policies to drive green growth need to appreciate their local context and act with a hard-headed understanding of the sort of economy they are dealing with. For the UK this means a tight fiscal position, a productive but small manufacturing base, and a relatively small domestic market. These factors imply the UK would be best served by a targeted approach to allocating support that is informed by a comprehensive understanding of the technologies and sectors in which the country has existing or latent strengths.The Centre for Economic Performance (CEP) and the Grantham Research Institute at LSE have been working together for several years[i] to shed light on the UK’s strengths relevant for capturing green growth opportunities by analysing data on trade and innovation activity. In our current work[ii] we are pulling together evidence on how a set of selected technologies stand to contribute to national objectives such as reducing emissions, enhancing energy security, capturing growth opportunities through firms serving growing domestic and global demand, creating jobs across the country, and delivering benefits to consumers. As well as their relevance for decarbonising the economy, we have evidence from our previous work that our selected technologies contain areas of existing strength for the UK. These technologies are:Tidal stream energy
Carbon capture, usage and storage (CCUS)
Offshore wind
Advanced nuclear
Green hydrogen
Grid flexibility and smart systems
Buildings (including heating, cooling and building fabric)
By making the various trade-offs involved in the allocation of public support more visible, this work has potential to assist policymakers to make more informed choices when designing green industrial policies.Our assessments so far point to tidal stream, CCUS and offshore wind (particularly Floating Offshore Wind [FLOW]) as potential priority areas for green industrial policies in the UK. These are the UK’s top three strengths in innovation (see Figure 1) measured by