Today economics, finance and data science consultancy Oxera releases Growth Zero: Reframing net zero as a driver of growth, highlighting how net zero could unlock a decades-long growth boom for the EU economy. Oxera’s research shows that – contrary to political narratives focusing on the burden that net zero could place on businesses and households – initiatives to reach net zero could stimulate economic growth across the region.
The study explores four levers to achieve net zero across the EU and the UK —regulation, private sector innovation, carbon pricing and fiscal policy — revealing that regardless of the route chosen, rapid decarbonisation policy packages could unlock trillions in growth for governments and businesses across Europe, while achieving net zero before 2050.
The research shows that Growth Zero levers could create an additional 1.4% growth per year between now and achieving net zero across the EU, unlocking a GDP boost of up to €6.1tn for the EU economy – more than the entire GDP of Germany and Italy combined. The drive to net zero could also support between 1.3 million to 1.4 million European jobs per year.
European Green Deal policy initiatives have been rolling out across the bloc, but the recent EU elections and several national elections have seen a shift to the right, away from environmentally focused parties. Amidst this turbulent political context, where the future of climate policies in several European countries looks uncertain and EU climate goals are under scrutiny, Growth Zero demonstrates that rapid decarbonisation can be a lever of economic growth as well as helping to mitigate the impact of the climate crisis.
| Growth Zero lever | Net zero date
|
Total growth boost | Annual growth rate | Annual jobs supported |
| Regulation
Strict penalties are placed on high-emission sectors and phase-out dates are brought forward.
|
2046 | €6.1tn | 1.4% | 1.4m |
| Private sector innovation
Large-scale deployment of new, green technology-based production capacities accelerates transition.
|
2047 | €5tn | 1.1% | 1.2m |
| Carbon pricing
Carbon prices are increased by around 30% on average year-on-year in the 2020s, by 8.6% in the 2030s and by 4-6% in the 2040s.
|
2048 | €5.3tn | 1% | 1.3m |
| Fiscal policy
Subsidies for established low-carbon technologies are supercharged whilst taxes are increased on carbon-intensive industries.
|
2047 | €5tn | 1.1% | 1.3m |
Dr Giulio Federico, Partner at Oxera said:
“Oxera’s Growth Zero study indicates that achieving net zero could spur substantial growth and job creation across the European Union. Achieving net zero across the EU will require business leaders to understand the microeconomic impacts of significantly reducing carbon emissions across their value chain. Regardless of the policy framework adopted, the macroeconomic benefits – and costs – must be distributed equitably. The journey to net zero will be challenging, but that is only half the reality. A net zero future will present multiple economic opportunities for businesses and economies alike. With new regulations and evolving markets, it is crucial that leaders are prepared to meet these challenges, in order to thrive in a sustainable future.”
Growth Zero: Macroeconomic benefits require microeconomic insight
Growth Zero uses a macroeconomic model to investigate the potential impact of four different levers—regulation, private sector innovation, carbon pricing and fiscal policy — for achieving net zero in Europe. Each lever represents a distinct pathway to net zero, with a specific set of relevant policy assumptions applied as “shocks” to a macroeconomic model to examine their impact.
The results of the macroeconomic modelling have been combined with microeconomic insight from Oxera’s experts to help business leaders understand the potential implications for their business.
To find out more about the methodology underpinning Growth Zero, as well as a full breakdown of the impact of the four growth levers on the EU, UK and global economies, visit: www.oxera.com/growthzero
