Britain’s economy has been the worst hit of all of the OECD economies (major developed economies) both before and during the lockdown period. Whilst other countries’ economies are now starting to recover, Britain is still in intensive care. There are a number of reasons for this situation. Firstly, a decade of austerity led to cuts in public spending which eroded public-sector infrastructure and good will. Secondly, a poorly timed lockdown meant cases spiked far higher than they should have and led to a tighter lockdown than may otherwise have been required. Finally, the Brexit process was occupying politicians and distracted from the unfolding pandemic. Therefore, Britain must urgently search for ways to stimulate economic growth to avoid slipping into a painful depression, like the Great Depression after the Wall Street crash in 1929. One possible course of action could be a focus on investment in renewable energies.
Britain has some of the best renewable energy resources and some of these have already been developed for extensive use. For instance, during lockdown (2 months) Britain did not generate any coal powered electricity – the longest period since the 1880s. Britain had gradually been phasing out coal in favour of renewable energies even before the start of the COVID-19 crisis. The pandemic has only accelerated this process.
Once built, renewable energy infrastructure increases potential for economic growth. Offshore wind and solar power infrastructure, although expensive to construct, runs free of charge (apart from maintenance), as there is no cost of raw material. They can produce free and almost unlimited energy depending on the conditions. In this respect Europe has renewable energy capacity – the UK is perfect for generating wind as it has a natural advantage as a windy island, whereas Spain produces more solar energy due to a sunnier climate.
The electrification of the economy with renewable sources is also vital in order to achieve net-zero carbon emissions by 2050, as promised in the Paris Agreement of 2016. This would include the electrification of cars, rail, heating and cooking appliances. If the economy is fully electrified, that will account for 60% of total UK energy usage.
There are lots of exciting prospects in the UK energy market, when compared to the economy more widely. Many are confident that there will be fossil-fuel free aviation by 2050 for instance. Investment in renewable energy infrastructure will also create many jobs. National Grid, a major UK electricity and gas utility company, have predicted that they will create 400,000 jobs by the end of the decade as a result of investment in green energy. The UK government is also likely to announce a big program of investment for renewables with a particular focus on hydrogen power. Hydrogen power could even oust major players in renewable energy car technologies such as Tesla as, unlike Tesla’s lithium batteries, hydrogen power is in no way damaging to the environment and quicker to recharge.
Since UK energy utilities were privatised, the UK has had a poor record of investing in its energy infrastructure. So poor in fact that almost all of the supply chains of UK energy projects are now overseas, allowing other countries to benefit from them. Now there are only two UK companies of any significance, National Grid and SSE (Scottish and Southern Energy). Owing to the precarious economic situation in Britain and the Paris Agreement, the UK government is very keen on improving renewable energy infrastructure. The UK also doesn’t want to be reliant on or in debt to other countries, such as China, with regard to crucial energy infrastructure such as nuclear power stations. However, in order to improve renewable energy infrastructure and rebuild the economy, major investment and commitment to a long term plan is needed.
Investing in renewable energy infrastructure is a very exciting possibility for stimulating economic growth. There is going to be an estimated €1 trillion of spending on renewable energy infrastructure in the next 5 years in Europe and the UK and an estimated €3.7 trillion to spend by 2050. The only comparison that could be made is to the oil boom of 1920 when the Texas Oil boom transformed the outlook for the US economy. The access to cheap energy allowed the industrialisation of America in a cost effective way that transformed its prospects for most of the 20th century.
If sufficient investment is achieved, a focus on renewable energies could be the solution to the fears of depression for the UK economy. It could create masses of new jobs, provide security for UK energy for the foreseeable future, build confidence in the UK economy, create trade opportunities with other nations (severely needed due to Brexit), and put Britain in the lead for battling climate change.