Net Zero offers real ‘levelling up’, but Government must get behind green jobs

In a new briefing, the CCC finds that the majority of UK workers will see no major impacts from the transition. The largest changes are in sectors with a core role in the delivery of Net Zero – only a fifth of the current total workforce:

• Two-thirds of these core workers are in sectors that can grow over the transition, especially buildings construction and retrofit and electric battery manufacturing.
• Around 7% of UK workers are in sectors that will gradually redirect their products and services. These are largely sectors that will transition from use of fossil fuels to low-carbon methods, including cement and steel.
• Less than 1% of UK workers are in high-emitting sectors that are likely to phase down over the transition. This includes oil and gas, where extraction must decline.

Net Zero offers the potential for significant net employment creation in the UK, with estimates of between 135,000 and 725,000 net new jobs in low-carbon sectors in sectors such as buildings retrofit, renewable energy generation and electric vehicles. But growth of jobs is not guaranteed. It will require active reskilling and upskilling of the workforce in key areas, with the need for government support.

Lord Deben, Chairman of the Climate Change Committee, said: “The UK has committed to Net Zero. The only question is whether the Government intends to get there in a way that benefits workers or leaves them behind.

“This is a unique moment to tailor our approach to skills and jobs, in the certainty of achieving the legal goal. A Net Zero workforce means secure employment for the future. This is an opportunity for the Government to bring real meaning to ‘levelling up’.”

UK is slow to respond

The introduction of the United States’ Inflation Reduction Act and the EU’s proposed Green Deal Industrial Plan have increased the risk to competitiveness of the UK in some key areas of the Net Zero transition.

The UK risks missing out on opportunities to capture low-carbon market shares by not supporting skills that attract investment to the UK. Manufacturing priorities like electric vehicles and battery production face competitive pressure from new ‘green’ subsidies for inland manufacturing in the United States and European Union. The UK must defend its competitive advantage in Net Zero sectors like hydrogen and carbon capture in the face of these new international pressures.

Learning from previous transitions

The UK labour market has seen significant transitions in the past, including the move towards a largely service-based economy which brought opportunities to many across the country. There is also a legacy of highly disruptive transitions from the decline of coal and steel in the 1970s and 1980s, characterised by abrupt business closures in areas of concentrated regional employment.

Net Zero need not carry the same risks. Decarbonisation will reduce demand for certain goods and services, but the few sectors that may see job losses will see a pace of change more gradual than the coal and steel transitions of the past. Clarity on Government’s aims will give businesses and workers time to respond.

Net Zero can offer employment for economically deprived areas through the ability to direct the necessary programme of investment:

• Sectors that are expected to see the largest growth in employment include buildings construction and retrofit, transport, and low-carbon energy supply. These are spread across the UK. They are also the sectors that will see some of the fastest transitions, driven by the roll out low-carbon technology at pace.
• The first major UK sites for decarbonised industry are expected to be in The Humber and South Wales, exploiting hydrogen and carbon capture. Other clusters could be located in Grangemouth in Scotland, Teesside, Merseyside and Southampton. These areas already employ manufacturing workers – the North of England, the East Midlands, and Yorkshire and the Humber represent 16%, 9%, and 21% of energy-intensive manufacturing jobs respectively.
• Energy supply and construction are key Net Zero sectors which have historically had an under-representation of women or ethnic minorities. Through targeted support, Net Zero offers an opportunity to increase diversity in these sectors.

A key finding is that Government intervention is not necessary in every sector of the economy. Clear policy direction for each sector is important however, combined with a responsive education and skill system. Options for developing the Net Zero workforce are not being considered systematically across Government. Strong, targeted support is needed in the Government’s forthcoming ‘Net Zero and Nature Workforce Action Plan’.