Low carbon and renewable energy economy, UK: 2018

• Turnover in the UK low carbon and renewable energy economy (LCREE) was estimated to be £46.7 billion in 2018 (£40.4 billion in 2015).

• Employment in the UK LCREE was estimated to be 224,800 full-time equivalent (FTE) in 2018 (200,800 FTE in 2015).

• The energy efficient products sector remained the largest component of the UK LCREE in 2018, accounting for 36% (£16.7 billion) of UK LCREE turnover, and 51% (114,400 FTE) of UK LCREE employment.

• The largest proportion of total UK LCREE turnover and employment in 2018 was from businesses classified within the manufacturing industry, which account for around one-third of LCREE turnover (32%) and employment (37%).

• The low emission vehicles sector accounted for 59% (£3.1 billion) of total UK LCREE exports (£5.3 billion) in 2018.

• Total investment in the LCREE increased by 48% between 2015 and 2018, to stand at £8.1 billion in 2018; this was mainly the result of a rise in acquisitions by the offshore wind sector (up £3.5 billion between 2015 and 2018).

In 2018, businesses active in the UK low carbon and renewable energy economy (LCREE) generated £46.7 billion in turnover, with employment of 224,800 full-time equivalent (FTE) (Table 1 and Table 2).

The LCREE accounted for around 1% of total UK non-financial turnover and employment in 2018, similar to 2015 to 2017. This figure was slightly higher for Scotland, Wales and Northern Ireland than England and the UK as a whole, suggesting that the LCREE is relatively more important in those countries.

All estimates in this bulletin are given in current prices as provided by the LCREE Survey respondents, with no adjustments made to account for the effects of inflation. To help give an idea of the impact of inflation, adjusting using the Consumer Prices Index (CPI base year of 2018) would provide a 2015 total UK turnover estimate of £42.8 billion, compared with the current price-based estimate of £40.4 billion.

The energy efficient products sector (which excludes energy efficient lighting) remained the largest sector of the UK low carbon and renewable energy economy (LCREE) in 2018, accounting for 36% (£16.7 billion) of UK LCREE turnover and 51% (114,400 full-time equivalent (FTE)) of LCREE employment (Figures 1 and 2). Examples of activity within this sector includes the design, manufacture or installation of energy efficient doors, windows and insulation. For full sector definitions of what is included in each LCRE sector, please see Table 2 of the Low Carbon and Renewable Energy Economy (LCREE) Survey QMI.

The second-largest sector in terms of LCREE turnover in 2018 was the low emission vehicles sector, which includes the design and manufacture of vehicles with specific technology to significantly reduce or remove emissions. This sector accounted for 9% (£4.4 billion) of LCREE turnover and 6% of LCREE employment. These proportions were similar in 2015.

The bioenergy sector was the third-largest UK LCRE sector in relation to turnover, generating £4.3 billion in 2018, similar to the 2015 estimate. This sector accounted for 9% of the LCREE turnover and 4% of LCREE employment. Examples of activity in the bioenergy sector include the production of energy from renewable bioenergy sources such as wood pellets and the design, production and installation of infrastructure for this purpose.

LCREE turnover within the solar sector was £1.8 billion in 2018, with employment of 6,600 FTE. Estimates for turnover and employment in 2015 were £2.7 billion and 9,900 FTE respectively. Changes in LCREE turnover and employment for solar may have been influenced by changes in renewable energy subsidies (feed-in tariffs) that have reduced since early 2016.

Businesses classified (according to Standard Industrial Classification 2007) within manufacturing, energy supply and construction industries accounted for the largest proportion of the UK low carbon and renewable energy economy (LCREE) turnover in 2018 (Figure 3). Businesses within these industries accounted for a turnover of £39.3 billion, 84% of all turnover in the LCREE. The majority of turnover within these businesses related to activity within the energy efficient products sector.

Businesses within the manufacturing industry generated the largest proportion of (LCREE) turnover and employment compared with any other industry in 2018. This industry generated £15.2 billion turnover and employed 83,600 full-time equivalent (FTE), around one-third (32%) of the total UK LCREE turnover, and 37% of LCREE employment in 2018.

Businesses classified within the manufacturing industry include those carrying out activities relating to the manufacture of motor vehicles and their associated components. This would therefore include activity relating to the LCRE sector of low emission vehicles.

The energy supply and construction industries together made up over half of total LCREE turnover – energy supply at £12.2 billion in 2018 (£9.9 billion in 2015) and construction at £12.0 billion (£10.0 billion in 2015).

Businesses classified within the energy supply industry can include activities relating to the generation of energy from sources such as wind, nuclear and bioenergy. LCREE employment in this industry was 16,500 FTE in 2018 (11,500 FTE in 2015). These activities can be less labour intensive when compared with other industries. LCREE employment in this industry was 16,500 FTE in 2018 compared with 83,600 and 82,000 FTE in the manufacturing and construction industries respectively.

Businesses active in the low carbon and renewable energy economy (LCREE) acquired £8.1 billion of capital assets in 2018, an increase of £2.6 billion compared with 2015 (Figure 5). The LCRE sector with the highest level of acquisitions of capital assets in 2018 was the offshore wind sector (£4.2 billion in 2018 compared to £0.7 billion in 2015).

Offshore wind is a growing sector in terms of investment. Businesses in this sector often have contracts for the construction and development of new wind farms, so large one-off items within these sectors are not unusual.

In 2015, the solar sector accounted for the largest proportion (30%) of the UK LCREE acquisitions of capital assets, but by 2018 this had fallen to around 4%. Comparing acquisitions over time is difficult, as a low level of investment in the current year may just reflect high investment in previous years (for example, purchase of land for building a solar farm).

The lower level of acquisitions in the solar sector (around £0.3 billion in 2018, compared with £1.6 billion in 2015), may also have been influenced by changes in renewable subsidies (feed-in tariffs).

Export of goods and services by businesses active in the UK low carbon and renewable energy economy (LCREE) is estimated to be £5.3 billion in 2018, up from £3.7 billion in 2015 (Figure 6). The largest proportion of this income was from the export of goods and services in the low emission vehicles sector, which accounted for £3.1 billion, nearly 60% of the total UK LCREE exports. In 2015, the low emission vehicles sector accounted for £2.5 billion exports.

The import of goods and services by businesses active in the UK LCREE has increased since 2015, with imports of £6.2 billion in 2018 and £4.4 in 2015 billion (Figure 7). The largest proportion of expenditure on imports of goods and services was also within the low emission vehicles sector accounting for one-third of the total UK LCREE imports in 2018.

Acquisitions

Refers to the purchase of capital assets (fixed assets), which are items used repeatedly to facilitate production or provide services, for more than one year.

Employment

Employment is measured in terms of full-time equivalent (FTE), where one FTE employee may be thought of as one person working full-time for a year.

Industry

Businesses are classified into an industry using the current Standard Industrial Classification (SIC) by the type of economic activity in which they are engaged.

Low carbon and renewable energy economy (LCREE)

Economic activities that deliver goods and services that are likely to help the UK generate lower emissions of greenhouse gases, predominantly carbon dioxide.

Low carbon and renewable energy (LCRE) sector

The LCREE Survey asks UK businesses to self-classify themselves into 17 low carbon and renewable energy sectors. A list of these sectors can be found in Section 9. Measuring the data. A business can be active in more than one sector.

Turnover

The amount received in sales from goods and services in a defined time period. It is a useful measure of the health of a business or an economy.

Data sources and collection

The Low Carbon and Renewable Energy Economy (LCREE) Survey was designed to provide greater detail on the low carbon and renewable energy economy (LCREE) in the UK. The survey was despatched for the fifth time in 2019, for the reporting year 2018, to a sample of around 24,000 businesses.

The survey collects information on turnover, imports, exports, employment, and acquisitions and disposals of capital assets, for 17 low carbon sectors. These are:

• Offshore wind

• Onshore wind

• Solar photovoltaic

• Hydropower

• Other renewable electricity

• Bioenergy

• Alternative fuels

• Renewable heat

• Renewable combined heat and power

• Energy efficient lighting

• Other energy efficient products

• Energy monitoring, saving or control systems

• Low carbon financial and advisory services

• Low emission vehicles and infrastructure

• Carbon capture and storage

• Nuclear

• Fuel cells and energy storage

Coverage

Only the portion of economic activity of a business that directly relates to low carbon activities is included.

This bulletin discusses estimates from the UK LCREE Survey for 2018 and revised figures for 2017 to 2015. Data for 2014, the first year of the survey, are included in the dataset only – see “Comparability with 2014 estimates” in Section 10. Results are discussed at the UK level followed by analysis of the contribution of specific countries, LCRE sectors and industries.

Revisions

This release contains revisions to 2014 to 2017 estimates since they were published in January 2019. Revisions are not unusual in the first few years of a new survey and result from a variety of factors, including:

• the incorporation of additional data received from businesses who have been sampled in multiple years of the survey

• changes to data as a result of businesses revising their previous submissions

• developments in methodology

Table 3 shows the effect of revisions to 2017 data on estimates of UK turnover, employment, imports, exports, acquisitions and disposals. Revisions have also been made to 2016 to 2014 data.

Revisions may continue to be made to the entire time series if the survey methodology changes in the future.

Quality and methodology

More quality and methodology information on the strengths, limitations, appropriate uses, and how the data were created is available in the Low Carbon and Renewable Energy Economy (LCREE) Survey QMI. This includes further detail on the methods used to calculate business counts for sectors within the LCREE.

Limitations

Activity in the low carbon and renewable energy economy (LCREE) is spread across a wide range of industries. Many sectors are small but growing, and for many businesses, LCREE activity is secondary rather than primary. For this reason, estimates of the number of businesses are subject to particular volatility and, though provided in the datasets, are not directly considered within this statistical bulletin.

Uncertainty

The figures in this bulletin are survey-based estimates and gather information from a sample rather than the whole population. This means that they are subject to some uncertainty, which can have an effect on how changes in the estimates should be interpreted. Estimates of the level of uncertainty associated with all figures (coefficients of variation and confidence intervals) reported are presented in the bulletin and datasets to aid interpretation.

In general, changes in the estimates reported in this statistical bulletin between 2015 and 2018 are not usually greater than the level that is explainable by sampling variability. This means movements in the estimates should be treated as indicative only.

Sample size

The LCREE Survey was despatched for the fifth time in 2019, for the reporting year 2018, to a sample of 24,118 businesses. It achieved a response rate of 81% and of those responding, 2,572 businesses were operating in the LCRE sectors captured by the survey.

We designed the survey to provide greater detail on the UK LCREE. Results from the survey can be used to show business activity in 17 low carbon sectors which can be aggregated to show activity in six low carbon groups (in the dataset). More information on the sample, groups and sectors is available in the Low Carbon and Renewable Energy Economy (LCREE) Survey QMI.

Comparability with 2014 estimates

Estimates for 2014 are provided in the dataset accompanying the statistical bulletin only. Comparing estimates from 2014 with estimates from later years of the survey is not advised because of changes in the sample methodology in 2015. The survey sample size was reduced from around 40,000 in 2014 to around 14,000 in 2015.

To enhance the sample for 2015, a number of businesses that were known to have activity in the LCREE were selected. As they were not selected through random sampling, the weight applied to them to estimate for non-response is lower than it was in 2014. This partially explains why the estimates for the LCREE are generally lower in 2015 compared with 2014.