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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 www.estatesgazette.com 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