What you need to know about the opportunities in the UK's green economy

by Startacus Admin

Richard Boothman from Ecoskill continues his seven part blog series on spotting entrepreneurial opportunities in the green economy...

"In the first two instalments in this series of blog posts, I looked at the green economy and why it's a great sector for the entrepreneur to focus on.  I defined the green economy as one which emits few greenhouse gases, uses resources efficiently and is socially inclusive – and it's obvious there's huge scope to rethink our existing products and services and replace them with far greener versions.

So what are the opportunities for the green entrepreneur in the UK?  Does the UK have a green economy and if so how big is it and is it growing?

Speaking before the Rio+20 conference in June 2012, Deputy Prime Minister Nick Clegg said that the green economy accounts for 8% of the UK’s GDP .  There are now nearly 1 million people employed in green jobs in the UK in industries as diverse as biofuel production, electric car manufacturing and wind turbine installation.  More than 25,000 green jobs were created in 2011.  In terms of employment, the UK green sector is now bigger than car manufacturing, aerospace or telecoms.

Many of the roles included in the green economy are conventional, such as 73,000 workers involved in the water and sewage sector and 45,000 in waste management, but there's plenty of innovation too.  Nearly a quarter of a million people are now employed in making alternative fuels and green vehicles such as electric cars; more than 112,000 are employed in green building technologies, including insulation; and nearly 100,000 people are employed in the wind energy business (The Green Alliance - “Green Economy – a UK Success Story”, August 2012).  Alternative fuels and vehicles have brought in some of the biggest returns – nearly £25bn in turnover in 2011, according to the Department of Business, Innovation and Skills.

It's evident, therefore, that the UK has a significant green economy.  Is it growing?

Nick Clegg again, this time speaking at the Rio+20 conference stated that in 2011, the UK green economy grew at 4.7%.  At that time it accounted for one third of the country’s growth and even now it's a rare highlight at a time when the economy overall is either flat or in recession.

What's driving this growth?  There are a number of factors.  The government has to hit legally binding carbon reduction targets of 34% by 2020 and 80% by 2050 and to achieve this has begun a number of initiatives, including:

• The Renewables Obligation to support large renewable electricity projects

• Feed in Tariffs for small scale renewable energy generation

• The Renewable Heat Incentive

• The Green Deal

• Variable rates of car tax dependent upon the carbon emissions from your vehicle

• The Code for Sustainable Homes.

Despite the scepticism of the Treasury, the government will have to do more to achieve its targets so expect more policies to emerge.

Businesses are also driving growth in the green economy.  Some of our larger companies, such as Marks & Spencer and Unilever are responding to consumer demand and looking to green their supply chains.  This affects the multitude of smaller companies who supply these bigger companies.

As well as the marketing and reputational benefits of going green (think of the helpful publicity generated for Marks & Spencer by their successful Plan A programme), companies are also seeking to:

• Reduce costs because increasing efficiency translates to lower unit costs

• Increase sales and find new revenue streams through the introduction of new, greener products and services

• Reduce the risks of adverse reaction from customers affecting sales

• Ensure compliance with legislation and government regulation.

Consumers are also contributing to the growth of the green economy.  It's slow and patchy but there's evidence of an increasing demand from consumers for greener products and services.  This is partly because a growing number of people want to buy from companies with a reputation of being kind to the environment and 'fair' to their suppliers, their customers, their employees and the wider community.  But it's also because they're seeing prices of energy, food and goods rising and are looking for ways to contain the costs.

It's clear, therefore, that we do have a green economy.  But it's also clear that it's in an early phase of growth, fuelled by legislation and other action taken by the government; driven by business; and providing goods and services to a customer base that's increasingly literate about the need to be green.  For the entrepreneur, it's great to ride on the wave of a part of the economy that's still in its early stages and growing.

Next time I'll have a look at how you start on your journey towards green entrepreneurship."

Richard is at various times and sometimes simultaneously a businessman, an environmentalist and an Associate Lecturer with the Open University.  He is one of the founders of ecoskill (www.ecoskill.co.uk), which provides on-line learning for entrepreneurs and intrapreneurs in the green economy.

Cheers Richard and to recap you can read Part 1 of What you need to know about the opportunities in the UK green economy and part 2 of What you need to know about the opportunities in the UK green economy by clicking on the handy links provided! 

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Published on: 26th June 2013