|Growth in UK market size for climate change action over the next 5 years. Click to enlarge.|
New research commissioned by Shell Springboard concludes that the challenge of tackling climate change could create a market of up to £30 billion (US$56 billion) for British business over the next ten years.
Assuming global action to stabilize emissions, the report estimates that the annual global expenditure on carbon emissions reduction will grow by between US$10 and $100 billion per year for the next 45 years and total $1 trillion over the first five years.
Our central estimate is that this market would have to grow by $70 billion a year for the next few decades, if greenhouse gas concentrations are to be stabilised.
Shell’s Springboard program, piloted in 2005, provides a financial boost to innovative, low-carbon business ideas from across the UK.
The research, carried out by independent consultancy Vivid Economics for Shell Springboard, quantifies for the first time the potential size of the market for businesses that develop technologies, products and services that help combat climate change. It also profiles SMEs (small and medium enterprises) which are already developing businesses in this new market.
The urgent need to reduce greenhouse gas emissions offers opportunities to the nimble. There is now scope for a wide range of devices and services, which a decade ago would have made no economic sense, and for which there would have been no demand. Shell has created the Springboard programme to help people to grasp some of these opportunities, and to take the first steps towards turning their ideas into viable businesses and products.—Lord Oxburgh, Chair of the Shell Springboard UK Judging panel
The report notes that, on the basis of the UK Government’s plans, the compliance market as well as the emerging voluntary market, the UK market alone will be worth £4 billion a year by 2010. It projects that the compliance market over the next 10 years will be worth around £30 billion or more.
The compliance market is growing rapidly because the government is tightening building standards, pushing renewable electricity and biofuel schemes, and tackling the energy efficiency of dwellings.
Although the market opportunity is large, the cost of tackling climate change is not unaffordable for the UK economy. If the average UK business met the environmental damage of its greenhouse gas emissions it would amount to less than 0.8% of its value added.
The research identifies major low-carbon opportunities for SMEs in a wide range of markets. The biggest identified UK markets for SMEs in 2010 will be:
- Building regulations for commercial and industrial use: £950m (US$1.8 billion)
- Renewable electricity: £800m (US$1.5 billion)
- Renewable road transport fuels: £500m (US$927 million)
- Domestic energy efficiency: £400m ($US742 million)
- Building regulations for domestic use: £275m (US$510 million)
For business, tackling climate change is both a necessity and a huge opportunity. This creates a huge new opportunity for British business nationally and internationally. We have to step up to the challenge. Our small businesses and the scientific depth in our universities are going to be vital contributors.—James Smith, Chairman of Shell UK
Opportunities for Innovation (Report for Shell Springboard)