UK spends least among major European economies on low-carbon energy policy, study shows

<span>A growing body of evidence suggests green spending could provide a greater boost than tax cuts.</span><span>Photograph: Mike Powles/Getty Images</span>
A growing body of evidence suggests green spending could provide a greater boost than tax cuts.Photograph: Mike Powles/Getty Images

The UK spends less on low-carbon energy policy than any other major European economy, analysis has shown, despite evidence that such spending could lower household bills and increase economic growth more than the tax cuts the government has planned.

Spending on low-carbon measures for the three years from April 2020 to the end of April 2023 was about $33.3bn (£26.2bn) in total for the UK, the lowest out of the top five European economies, according to an analysis by Greenpeace of data from the International Energy Agency.

Italy topped the table for western European economies, having spent $111bn in the period. Germany spent $92.7bn, France $64.5bn and Spain about $51.3bn.

The data includes spending on electricity networks, energy efficiency, innovation on fuels and technology, low-carbon and efficient transport and low-carbon electricity.


In addition to spending on these measures, all the countries spent substantial amounts on holding down energy bills for households, in many cases more than was spent on low-carbon measures. The UK spent about $42bn on energy affordability in the period, through measures such as the energy bills rebate and payments and discounts for the vulnerable.

Only about $13.3bn was spent on energy efficiency for homes and industry, $12.8bn on low-carbon transport and less than $6bn on renewable electricity and innovation in the UK.

When spending on energy affordability was stripped out, per capita spending was also much lower in the UK, at just under $500 per person across the three years, compared with more than $950 in France, $1,115 in Germany and $1,880 in Italy.

On Wednesday, Jeremy Hunt, the chancellor of the exchequer, will deliver the last budget of this parliament, which is likely to centre on tax cuts that economists have said will mainly benefit better-off people.


Hunt is expected to devote little resource to energy or green issues, despite a growing body of evidence and expert opinion suggesting that government spending is needed to kickstart the UK’s flagging economy and dismal productivity, and that green spending could provide a greater boost than tax cuts.

Bob Ward, the policy and communications director at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, said: “There is now very clear evidence that the UK has been investing much less than its competitors across a range of areas, including on tackling climate change, biodiversity loss and environmental degradation.

“This low investment explains why productivity has stagnated in the UK and growth has been so feeble. It also explains why our homes and businesses are vulnerable to climate change impacts, our countryside and seas are becoming depleted of wildlife, our cities have dirty air, and our rivers and beaches are covered in sewage.”

A study from the LSE earlier this year found that investing about £26bn a year in the low-carbon economy would reduce household bills, attract about twice as much additional investment from the private sector, and do more to boost the economy than tax cuts.

Georgia Whitaker, a climate campaigner at Greenpeace UK, said the UK was losing out to international rivals in the race for the economy of the future.

“It’s clear that despite the government’s bluster, we are utterly failing on the world stage when it comes to green investment. Not only are the US and China leaving us in the dust in the race on green technology, we’re also doing terribly compared to our European neighbours,” she said.

She called instead for a green industrial strategy and infrastructure investment. “Jeremy Hunt should use the spring budget to address this embarrassing failure, but instead he’s flirting with tax cuts that disproportionately benefit the wealthiest. Meanwhile, the rest of us struggle on with the cost of living,” she said.

A Department for Energy Security and Net Zero spokesperson said: “This report fails to recognise our progress compared to European allies. We are the first major economy in the world to halve our emissions, and we have the second largest renewables capacity in Europe.

“We have a clear strategy to boost UK industry and reach net zero by 2050 – backed by £300bn in low carbon investment since 2010.”