43559.jpeg 2022 Ian Forsyth REDCAR, ENGLAND – AUGUST 12: Sea fret shrouds the EDF energy off shore wind farm on August 12, 2022 by Redcar, England. (Photo by Ian Forsyth/Getty Images)
Arguments for inaction on climate change often focus on the fact that the UK accounts for less than 1% of global emissions. This misses a crucial point: the global transition to net zero is an economic imperative as much as a scientific one.
Last year, $2.1tn was invested in clean energy technologies globally, according to Bloomberg NEF. Of this figure, more than $65bn (3.1%) was deployed in the UK.
According to the Confederation of British Industry (CBI), the UK’s green economy grew by more than 10% last year, supporting 951,000 jobs and contributing more than £83bn of GVA. And, crucially, Britain has built not just a green industrial base but a global financial ecosystem, centred on London, capable of deploying capital into decarbonisation efforts in more than 60 countries.
This race for investment is one in which the UK should aim to finish on the podium. To achieve this, government and finance need to work in partnership and it’s here that fractured politics poses maximum danger.
The geopolitical consensus that delivered the Paris Agreement is broken. Financial institutions are stepping back or deferring their net zero commitments. But the reason for such moves is important. It is not because investors no longer believe in the economic opportunity. HSBC, which has deferred its net zero commitment to 2050, cited “the present lag in policy measures and the overall slower pace of the transition”. In other words, finance is going more slowly because governments are. Instead of partnership, we risk creating a vicious circle of political backsliding and the deferring or cancellation of transformative investment.
This creates an opportunity for the UK. Even as geopolitics fractures, Britain can become the investment destination of choice for the next wave of transition technologies. Much of the $2.1tn invested in 2024 went into mature sectors such as renewables, grids, electric vehicles and storage. In addition to continuing to scale up these 21st-century industries, the opportunity also lies in developing the next wave of climate solutions: hydrogen, sustainable fuels, electrified heat, carbon dioxide removal and nature restoration. It is here that the UK can seek to lead.
These sectors are currently underfunded because they are less mature and harder to finance. That’s where government needs to step in with clear policy and the provision of public capital through institutions such as the National Wealth Fund – to help “de-risk” investment and bring in private capital.
The UK has previously led the world on climate-related governance, with the 2008 Climate Change Act creating legally binding targets. It now needs to lead on the next challenge: delivery. Every UK government since the Climate Change Act has accepted the science and set ambitious goals. Finance and business must rise to meet them – and they need policy clarity, predictability and investable pipelines to do so. The upshot will be an economic imperative set as much by investors as by government.
Claims from politicians that wind power is too expensive are not supported by evidence. Besides being clean, it’s the cheapest energy source after solar. Long-term renewables are an economic opportunity that will defy the political cycle, setting a long-term investment agenda that will deliver growth, jobs and resilience in the face of our changing climate.
Dr Rhian-Mari Thomas OBE is CEO of the Green Finance Institute
Photo by Ian Forsyth/Getty Images