Some 94% of UK exports, worth around £796 billion, are directed to countries with net-zero targets, highlighting growing export opportunities for low-carbon goods, a new study has found.
The Net Zero-Trade Nexus report by the Energy and Climate Intelligence Unit, has found that some 146 countries that the UK exports to have net-zero commitments in place, including a ‘dark green bloc’ of 26 trade partners with legally-binding net zero laws.
These ‘dark green’ trading partners, including Australia and Japan, imported 54% of Britain’s goods and services exports, worth £454.1 billion, in 2023.
As the study found, these commitments present significant opportunities for the UK to expand its market share in low-carbon goods and services.
The most promising sectors include renewable energy, electric vehicles, green steel, and heat pumps, as well as emerging industries like low-carbon fertiliser production and Transition-as-a-Service (TaaS).
‘Unstoppable global megatrend’
“The transition to net zero is an unstoppable global megatrend with renewables set to dominate power generation and EVs transportation,” commented Peter Chalkley, director, Energy & Climate Intelligence Unit. “The UK is well positioned to capitalise on these growth markets, in part to help offset decline in demand for high carbon products.
“The UK’s recent commitment on the world stage to an 81% carbon cut is a strong signal to foreign investors. Equally, by decarbonising its economy the UK as a whole becomes better positioned for those major companies with ‘scope 3’ emissions targets – which will increasingly need to procure net zero-compatible products and services and goods, with lower embodied carbon.”
Trading partners
Of the UK’s top 10 export markets, which together generate £535 billion in trade, some 412 major companies (representing annual revenues of £10.3 trillion) have adopted scope 3 decarbonisation targets, according to the study.
In terms of major trading blocs, the EU has set in place legally-binding measures to achieve climate neutrality by 2050, while the US, which accounts for 22% of UK exports, has seen substantial state-level net-zero commitments, with half of its states, weighted by GDP, committed to net-zero goals.
Elsewhere, China’s growing demand for electric vehicles and renewable technologies aligns with its 2060 net-zero target, signalling additional trade opportunities.
“Now that net zero targets and the race to lead clean-energy markets are the invisible hands of economic and industrial policies, these commitments are reshaping global trade dynamics,” added John Lang, lead, Net Zero Tracker, part of the Energy and Climate Intelligence Unit.
“As the world’s fourth-largest exporter, the UK’s economic success hinges on its ability to adapt to these shifting dynamics and capitalise on its green comparative advantage in a diverse range of low-carbon goods and services.”
At COP29 last month, UK Prime Minister Keir Starmer announced a new target to reduce emissions by 81% by 2035, from 1990 levels. Read more here and here.
