Regional focus: UK

Net zero: understanding the long term economic benefits and opportunity  

“Economic development and the net zero transition are not oppositional factors – they can absolutely pull in the same direction,” said Northern Powerhouse Partnership chief executive Henri Murison as the opening statement of the closing keynote speech at Carbon Crunch. “However, if we are going to leverage, particularly private, investment as well as the full focus of public bodies, including government, and other local institutions we need to pull in the same direction.”

According to Henri, demonstrating the economic value to the British public on a personal level will be critical to the success of the net zero transition though. “UK government needs to look back at some of the mistakes made over the last number of years so people in this region – and others – see genuine economic benefits from this transition,” he explained.

Henri said that regions needed to play to their strengths which is something that was identified by government a decade ago but some of the plans laid out then have yet to be realised – and those delays will impact the economic benefit they can deliver.

He explained: “Ten years ago, here in Manchester, George Osborne gave a speech outlining a vision for a more rebalanced country. And that led to some very exciting promises, some of which have happened, in the case of devolution, but some of which are still to happen in terms of improving connectivity across the Pennines.

Playing to regional strengths for productivity   

“Fundamentally the vision was that if you want to create a more prosperous north of England, you will have to make this economy productive.

“The way in which you will then see the benefits of that will be through our prime capabilities. The things that the North is good at historically are energy, advanced manufacturing materials, digital and health and life sciences. That makes about a quarter of the North's economy, but it drives a lot of the other activity that goes on, such as the need for access to financial and professional services with knowledge intensive jobs in those sectors and access to world class universities.

“That transformational scenario outlined that we will create just over a million new jobs in the north of England. And 10 years on from those original ambitions, obviously things have slightly changed, but one that wasn’t clear then was what decarbonisation would mean economically. Now we know more, and we think that 168,000 of those million new jobs will be directly tied and enabled by the net zero transition.”

Nonetheless, Henri underlined that there are different ways to get to net zero but not all will deliver economic benefits alongside decarbonisation.

Global goals but with local benefits   

“One idea for the energy system was to build a lot more interconnectors and get ourselves some good old French nuclear under the channel and that'll solve our problems,” he said. “It’s a credible solution but it doesn't generate very many jobs or opportunities for people, particularly here in the north of England.

“I always argue that if you are going to invest huge amounts of public and private money in doing something for global good, that it would be more easily justified to people who live here in parts of the country, like this one here in Greater Manchester, but across the north, that it will materially improve the lives more generally of them and their families.

“They'll be much more likely to change their own behaviour and to adapt to the new employment market that this will create, if they can see tangibly what the opportunities were for them.”

As an example, Henri pointed to the failure to build a carbon capture network in the Humber in the last five years and the lack of a firm plan to do so, despite ongoing discussions about the need and feasibility. “But if you build a carbon capture pipe along the Humber, it will probably stretch from somewhere like the power station at Drax, which has now switched from coal power to biomass, and past the Phillips 66 oil refinery,” explained Henri.  

“That route would go past Scunthorpe, which is currently home to the UK's last remaining blast furnace. If you want to keep producing virgin steel in the UK for all the many infrastructure projects, including what we need to do to deliver net zero, you need that carbon capture facility. By the time you are ready to connect to that carbon capture infrastructure in order to keep that plant open, it sadly likely won’t be there.

“As a result, many people in Scunthorpe will be looking for new jobs because we didn't make a commitment to build that carbon capture scheme – which we need to do anyway as we can’t decarbonise the UK’s most intensive carbon emissions cluster without it.

“Those people in Scunthorpe are then going to wonder why we are importing dirtier steel from across the world, rather than decarbonising their steelworks. Instead, we will have to wait for investment in an electric furnace, which will employ fewer people.

“This kind of issue is why Northern Powerhouse Partnerships has been putting a lot of thought and energy into how the government can deploy its new wealth funds to accelerate the net zero transition, while also creating the maximum economic benefits in regions like this one.

Infrastructure projects must drive public consent, political will and investor confidence  

“Bluntly there is a big set of choices for those of you who are delivering this net zero transition: to what extent are you going to create economic value, as well as decarbonisation value? And to what extent can you align incentives to deliver both at the same time?

“In every project and in every bit of spend, whether it be by the private sector or the public sector in this country, there are big questions about how we ensure a just transition. The just transition for people in Scunthorpe is not currently being delivered.

“So if you're an unemployed steelworker in Scunthorpe, you are not going to be well-disposed to the net zero transition because as far as you're concerned, you lost your job in order to decarbonise this country – and that was entirely unnecessary.”

Henri urged the infrastructure industry to consider how the projects it seeks to fund, deliver and operate can create a better set of opportunities that people can see and take advantage of. “That can't be an abstract discussion. It has to be a reality, otherwise this transition will just not happen because you will lose public consent, you will lose political will and you will lose the confidence of those investing their own private funding that this is really ever going to happen,” he concluded.