Download The growth of the green economy

PRACTICE & LAW
COMMENT
The growth of the green economy
What does it mean for real estate and infrastructure, and what are the opportunities?
T
he green, or low carbon, economy can
seem like a hidden sector in the UK. I
hear people talk about environmental
sustainability without understanding
that it is an engine for economic growth,
business innovation and job creation, not
least in the real estate and construction
sectors.
Did you know, for example, that the low
carbon and renewable energy economy in
the UK generates £46bn in revenue and
supports 240,000 “green-collar” jobs? If
you were to expand that to include
infrastructure sectors like waste processing
and water treatment – all of which are
totally dependent on our use of natural
resources – then we could push the figure up
to £121bn, supporting over 450,000 jobs.
Taking the more conservative definition
alone, 25% of the turnover comes from real
estate and construction activities.
What exactly is the green economy?
In venture capitalists’ language, it is “clean
tech”. Bill Gates in 2016 described it as
“building the new companies that will
deliver emissions-free energy, agriculture,
and goods to the world”.
Overall, the green economy is made up of
new and existing companies that generate
renewable energy, provide low-carbon
financing and consultancy, reduce carbon
and pollution, enhance resource efficiency,
and prevent the loss of ecosystem services.
ON
SUSTAINABILITY
VIEW
FROM THE BAR
Sophie
Walker
2011, reaching $318bn (£260bn). There was
a drop in 2012 and 2013, but investment
picked up again in the last three years.
Looking to UK shores, the green economy
was similarly resilient throughout the financial
crisis. One of the most interesting things about
this picture is that green-collar jobs are already
well dispersed across the UK, with the greatest
intensity of these jobs in the North West and
North East of England. These jobs range from
Siemens’ offshore wind turbine factory in
Hull, to Jaguar Land Rover’s aluminium
recycling in Liverpool, to investment in electric
vehicle (EV) production and charging
infrastructure. In other parts of the UK, it is
often at the small- and medium-enterprise
end of the scale, with Bristol hothousing
around 200 businesses innovating in green
technologies and services.
The green economy has been shown to
regenerate UK communities impacted by
green economy merited minimal mention in
the Autumn Statement. The business voice
isn’t strong enough or being listened to,
despite the economic evidence and
opportunities.
However, on the positive side, in Greg
Clark MP we have a business secretary who
understands that the UK has “low carbon
energy systems that lead the world”.
Furthermore, the Autumn Statement did set
aside £390m to boost the EV sector,
including £80m to support charging
infrastructure and 100% capital allowances
for those investing in charging points.
Regardless of Westminster strategy, this
year we will see a new wave of powerful,
regional mayors, with elections in Greater
Manchester, Liverpool and the West
Midlands. If the ambition of Sadiq Khan is
anything to go by – his aim is to make
London one of the world’s greenest cities
– this new tier of leaders could drive green
economic growth. Outside the city level, 67
local authorities committed in 2016 to
generating 100% clean energy across their
boroughs. All these commitments bring
substantial commercial opportunity for those
businesses that can provide green
infrastructure or real estate solutions.
Future opportunities
So what are the opportunities for your
business? There are many, and they depend
hugely on your business model and assets.
Devolution could mean the green economy is more likely to achieve economic
equity in areas of the UK that have long felt neglected at the expense of London
There is a lot of diversity in the sector.
Last year, I attended an annual Clean Tech
event in Rotterdam where 40 start-ups and
growth companies were pitching for venture
capital for innovations from battery storage
anodes to biological indoor air purification.
But what really struck me is that those 40
companies had been shortlisted from 283,
suggesting that the level of innovation is
comparable to the digital innovation
underway in property.
Growth mode
The green economy globally has been in
growth mode throughout the last decade. It
was surprisingly resilient throughout the
financial crisis.
Bloomberg New Energy Finance
produces an annual report estimating
investment in renewable energy. Its figures
demonstrate that there was steady growth
in clean energy investment from 2004 to
66
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losses in heavy industries, as well as creating
vibrant new technology-focused business
districts. But to achieve greater regeneration
benefits, there is a need to devolve
infrastructure funding and decision-making
towards local democratic structures,
consumers and communities.
If this happens, the green economy is more
likely to achieve economic equity in areas of
the UK that have long felt neglected at the
expense of London. It should be at the heart
of the government’s industrial strategy when
it is released.
The role of policy
Signals are very mixed in terms of what the
government’s strategy will be. On the
negative side, our prime minister has
scrapped the Department for Energy &
Climate Change, wrapping it into the
Department for Business, Energy &
Industrial Strategy. Climate change and the
14 January 2017
JLL has been advising clients that 10% of
spaces should be EV-chargeable to futureproof existing car parks – there will be new
revenue or dwell-time opportunities as the
EV revolution takes hold.
Secondly, developers could be looking at
how they could provide low-carbon energy
generation facilities for future tenants and
the co-located community.
Thirdly, those building and fitting out
could consider how materials might be
dissembled for future reuse, netting
additional value.
The green economy is bigger than you
think, but it does require policymakers to
unlock some of the opportunities needed for
it to flourish. Only then will we see affordable
energy, lower emissions and a generation
re-skilled.
Sophie Walker is head of sustainability at
JLL UK