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               Total growth             Annual growth                Annual jobs
                                                                                     date                   boost                    rate                         supported





            
              
                Regulation                           2046 (EU)          EUR6.1tn (EU)                1.4% (EU)               
     1.4m (EU)


            
              
                Strict penalties are placed on high- 2044 (UK)          BPS765bn (UK)                1.3% (UK)                 309,000 (UK)
    emission sectors and phase-out
    dates are brought forward.



            
              
                Private sector innovation            2047 (EU)          EUR5tn (EU)                  1.1% (EU)               
     1.2m (EU)


            
              
                Large-scale deployment of new,       2044 (UK)          BPS635bn (UK)              
     1% (UK)                   278,000 (UK)
    green technology-based
    production capacities accelerates transition.





            
              
                Carbon pricing                       2048 (EU)          EUR5.3tn (EU)              
     1% (EU)                 
     1.3m (EU)


            
              
                Carbon prices are increased by       2046 (UK)          BPS555bn (UK)                0.8% (UK)                 213,000 (UK)
    around 30% on average year-
    on-year in the 2020s, by 8.6% in the
    2030s and by 4-6% in the 2040s.





            
              
                Fiscal policy                        2047 (EU)          EUR5tn (EU)                  1.1% (EU)               
     1.2m (EU)


            
              
                Subsidies for established low-       2045 (UK)          BPS627bn (UK)                1.1% (UK)                 267,000 (UK)
    carbon technologies are
    supercharged whilst taxes
    are increased on carbon-intensive i
    ndustries.

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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