The relationship between decarbonisation and economic growth is an increasingly live political debate in the UK: Opposition leader Kemi Badenoch on Tuesday announced she was scrapping her Conservative Party’s commitment to net zero emissions by 2050, saying this couldn’t be achieved “without a serious drop in our living standards or bankrupting us.”

A report by London-based investment bank Peel Hunt argued this month that the UK’s lack of available additional electricity coincided with the start of weaknesses on productivity and in turn “challenges the government’s claim that there is no trade off between Net Zero and economic growth.” Energy costs will only come down — and growth pick up — if the country reduces its dependence on both imported hydrocarbons and renewables, such as by expanding exploration of domestic oil and gas fields, the authors wrote.

Yet while high electricity prices are indeed a factor likely limiting economic growth, increasing fossil fuel production would make “only a very negligible difference” to energy security because the UK has very little gas left and exports the vast majority of its oil, said Joshua Emden, a senior research fellow at the Institute for Public Policy Research, a progressive think tank.

Besides, “the suggestion that [decarbonization] impacts growth is quite drastically wrong, because net zero industries are booming right now,” he told Semafor. A February report by the Confederation of British Industry found that the sector grew 10% between 2023 and 2024, three times faster than the overall UK economy.

These two views — on the one hand, that decarbonization limits growth prospects, and on the other hand, that climate inaction does — are not actually opposing, BCG’s Rhys Jones told Semafor.

“The key differences lie in time horizon and the individual vs. collective action lens,” he said.

Transitioning to a cleaner energy and industrial system requires significant investment, but the overall cost of decarbonisation will likely continue to decline as confidence in future deployment of green solutions improves. Companies and countries, meanwhile, can still benefit from fossil-fuel based business models, while the case for mitigation is largely a “collective action challenge,” he said.