A systemic transition to net zero can power UK economic growth 

This week, the Labour Party Conference reiterated the opportunity which exists within the UK’s transition to net zero. The Government has reaffirmed the importance of its Clean Energy Mission and the vital role it sees for investment in the green economy.

Achieving this vision will demand a strong partnership with the private sector. Estimates indicate nearly $4.35trn of global investment is needed in clean energy infrastructure by the early 2030s to keep the world on a 1.5 degree pathway. Much of this is expected to come from private investment.

The National Wealth Fund proposal exemplifies this partnership approach. Banks of the size and reach of Barclays play a critical role in helping to finance the transition.

Barclays has invested over £166m in climate tech start-ups since 2020 and facilitated $123.8bn of sustainable and transition finance since 2023. We have a broad enough perspective to see both the opportunity and challenge in building the clean energy system of the future. As we await the detail of an overarching industrial strategy, I want to share my thoughts on how we can accelerate decarbonisation in the UK.

First, the country should implement a national transition plan that provides an enhanced roadmap for the transition of key sectors such as power, energy, food and agriculture, industry, transport and housing. This should provide timelines for key activities, expectations of relevant actors, and identify the required investment. Such a plan would demonstrate that the UK is committed to its climate goals, and help attract both domestic and international capital. Ideally, the resulting influx of investment would accelerate the development of green projects, create new jobs and drive economic growth.

Second, the success of the UK’s transition depends on removing structural bottlenecks. As the government has identified, this includes issues related to planning, supply chain, infrastructure and green skills. To meet its 2030 emissions targets, the UK needs to triple offshore wind, fit 2.5 million residential heat pumps, and increase the market share of new electric cars to nearly 100%. However, the country needs better port infrastructure to expand offshore wind at this scale, more trained heat pump engineers, and infrastructure to charge a country-wide fleet of electric vehicles. The scale of the challenge highlights the need for effort, but the Government’s Planning and Infrastructure Bill will help to address some of these obstacles.

Finally, enhancing the use of blended finance can help reduce investment risk. Geopura, a green hydrogen power firm, raised £56m, with a £30m commitment from the UK Infrastructure Bank, led by a follow-on from Barclays and others. There is great opportunity to leverage public finance to increase the flow of capital into technologies. This is not a question of deeper public spending but attracting existing pools of private capital and directing them more intentionally.

The UK’s transition to net zero has the potential to be an engine for economic growth, and Government, financial services and industry must work in lockstep. The early strides we have taken are encouraging. A successful systemic approach to decarbonising the economy will accelerate investment and secure the country’s place as a world-leader in transition and sustainable finance. Importantly, it will improve the lives of millions of people providing them with secure and affordable energy, leading to greater economic resilience and long-term prosperity.