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Reports & Research

UK Economy can Grow by £16Bn by Capitalising on Emerging Energy Opportunities

Whilst most post-election commentary focuses on the potential structure of the Brexit agreement, ongoing efforts to build trade opportunities in emerging markets should not be ignored or underestimated. Recent analysis by the International Finance Corporation (IFC) (2016) indicates that there is USD$23 trillion worth of opportunities for clean energy and low-carbon infrastructure investments in emerging economies up to 2030.1 China has the largest investment potential to 2030 (USD$15 trillion). It is significantly more than other emerging markets, and seven times more than the next largest market of India (USD$2.1 trillion). Growth in Latin American countries and South East Asia present attractive opportunities too. As the UK redefines its international trade strategy following Brexit, a balanced portfolio approach is recommended. This can take full advantage of trade opportunities that exist in these high-growth economies.

Targeting sweet-spots for our best chance of success

Recognising this potential, UK Government initiatives are increasingly targeting opportunities which align to UK capabilities helping companies to achieve a good return on public investment and demonstrating value to tax payers in a post-Brexit era. The £1.3 billion Prosperity Fund2 and £5.8 billion International Climate Fund3 exhibit this trend and are important mechanisms to create stronger exports, whilst continuing the UK’s commitment to champion international sustainable development. The recent ICF Low-Carbon and Energy Study demonstrates ‘sweet-spots’ in matching UK capabilities to market opportunities.

Key Capabilities Exhibit

Potential economic benefits for UK companies

By focusing on key emerging markets and UK strengths in energy and low-carbon services, the UK market access could be worth £2.5-£3.2 billion by 2020 and potentially £12.5-£16 billion by 2030. These figures are based on a modest ambition to grow the UK share of related financial, technical and professional services, already an export market in which the UK is a world leader.

UK Market Access

Positive sustainability impact

Achieving these ambitions will generate significant sustainability benefits. Ensuring affordable and secure access to clean energy is essential to improve the welfare of the poor. Energy has a direct positive influence across many Sustainable Development Goals (SDGs). The energy transformation can boost economic growth and help deliver cost-effective emissions reductions, helping countries achieve their commitments to the Paris Agreement.

‘Through-Brexit’ strategy

The roundtable on our findings with sustainability experts, hosted by Sir David King, prompted a lively discussion on the UK’s role in supporting the global low carbon development. Focusing on emerging economies is an important part of the ‘through-Brexit’ strategy. Given the scale of energy and climate work needed in emerging economies, by focusing on much needed services, advice and expertise, the UK can support sustainable development goals while improving the UK’s balance of payments. Win: win!

1. International Finance Corporation (IFC), 2016. Climate Investment Opportunities in Emerging Markets. [Online]. Available from: http://www.ifc.org
2.GOV.UK, 2017. https://www.gov.uk/government/publications/cross-government-prosperity-fund-programme/cross-government-prosperity-fund-update
3.GOV.UK, 2017. https://www.gov.uk/government/publications/international-climate-fund/international-climate-fund