UK Environmental Accounts: Low Carbon and Renewable Energy Economy 2014, First Estimates

• This bulletin presents first estimates from the UK Low Carbon and Renewable Energy Economy Survey for 2014

• A total of 96,510 businesses were active in the Low Carbon and Renewable Energy (LCRE) economy, equivalent to 4.4% of all UK non-financial businesses in 2014. Low Carbon and Renewable Energy activities were the primary activity of 33.6% of these businesses in 2014¹

• In 2014, 233,000 full-time equivalent (FTEs) employees were working directly in LCRE activities, accounting for 1.3% of total FTE non-financial employees in the UK

• LCRE activities generated £45.3 billion turnover in 2014, accounting for 1.3% of total UK non-financial turnover

• Scotland had the greatest percentage of businesses engaged in LCRE activities in 2014, with the equivalent of 5.2% of non-financial businesses in Scotland LCRE active. Of these, 45.5% were active in the Low Carbon Electricity sector

• Scotland had the greatest percentage of turnover generated from LCRE activities, accounting for 2.4% of total non-financial turnover in Scotland in 2014

• Exports in LCRE groups accounted for 1% of total non-financial exports in the UK, with £4.8 billion exported. The vast majority of LCRE exports occurred in the Low Emission Vehicles² group, accounting for 60.4% of total LCRE exports in 2014

• LCRE businesses spent £8.8 billon on LCRE acquisitions of capital assets in 2014, with acquisitions in the Low Carbon Electricity group accounting for 71.3% of this

This bulletin presents first estimates from the UK Low Carbon and Renewable Energy Economy Survey for 2014³. UK LCRE⁴ activity estimates are given for number of businesses⁵, turnover, employment, imports, exports, acquisitions of capital assets and proceeds from disposals of capital assets. Regional estimates for England, Scotland, Wales and Northern Ireland are also provided for LCRE number of businesses, turnover and employment. Estimates are also presented for Low Carbon Groups⁶, both at the UK and regional level.

The Low Carbon and Renewable Energy (LCRE) Economy Survey was despatched for the first time in 2015, for the reporting year 2014, to a sample of 41,483 UK businesses. It achieved a response rate of 84.1%, and of those responding there were 3,291 businesses operating in the LCRE sectors captured by the survey. We designed the survey to provide greater detail on the low carbon and renewable energy economy in the UK. Results from the survey can be used to show business activity in 6 low carbon groups as detailed in the Methodology Annex (778.1 Kb Pdf). These groups can be further subdivided into 17 low carbon sectors. This report presents direct sector activity at low carbon group level. Indirect activity estimates at sector level will be made available at a later date.

In 2014, 96,510 businesses, equivalent to 4.4% of all UK non-financial businesses, were directly engaged in Low Carbon and Renewable Energy (LCRE) activity. Total turnover of £45.3 billion was generated from these activities, accounting for 1.3% of total UK non-financial turnover in 2014. LCRE activities resulted in employment of 233,000 full-time equivalent⁷ (FTE) employees, accounting for 1.3% of UK FTE employees in the non-financial business economy (Table 1).

In total, LCRE activities in 2014 resulted in £5.9 billion in imports (1.1% of total UK non-financial imports) and £4.8 billion in exports (1% of total UK non-financial exports). In terms of capital assets⁸, LCRE activity resulted in £8.8 billion in acquisitions (4.9% of total UK non-financial acquisitions) and £0.5 billion in proceeds from disposals (1.5% of total UK non-financial disposals).

Over 4% of non-financial UK businesses were found to be active in the LCRE economy. For many of these businesses, the low carbon activity was not their main activity. For example, farming businesses may utilise land to generate income from solar panels or wind turbines. Manufacturing companies may utilise excess biomass to generate income from fuel. They may however, only have one person spending 20% of their time working on these activities, and so would be counted as 0.2 FTE. Partly due to this, employment per business is small. Specifically, of the 96,510 businesses operating in the Low Carbon and Renewable Energy economy, the low carbon activity was the primary activity of 33.6% of these businesses¹.

Scotland had the greatest percentage of businesses engaged in Low Carbon and Renewable Energy (LCRE) activities in 2014, with the equivalent of 5.2% of all non-financial businesses in Scotland reporting some activity in the LCRE sectors. This accounted for 8.3% of all businesses working in the LCRE economy in the UK. The greatest proportion of LCRE turnover was also estimated for Scotland, accounting for 2.4% (£5.6 billion) of all turnover generated in the non-financial business economy in Scotland. LCRE turnover in Scotland accounted for 12.4% of all LCRE turnover generated in the UK. A total of 21,000 full-time equivalents (FTEs) were employed in LCRE sectors in Scotland, accounting for 1.4% of all FTE non-financial employees in Scotland.

In England, 83,135 businesses (equivalent to 4.4% of all non-financial businesses in England) were active in the LCRE sectors in 2014. Businesses active in LCRE sectors in England accounted for 86.1% of UK LCRE businesses. Turnover of £36.7 billion was generated, accounting for 1.2% of all non-financial turnover generated in England. An estimated 196,500 FTEs were employed, representing 1.3% of all non-financial employees.

In 2014, 3,397 businesses in Wales (equivalent to 3.8% of all non-financial businesses in Wales) were engaged in LCRE activity, accounting for 2.0% (£2.0 billion) of total non-financial turnover generated. A total of 9,500 FTEs were employed in LCRE sectors (1.3% of all non-financial FTE workers in Wales). In Northern Ireland, 1,961 businesses (equivalent to 3.2% of all non-financial businesses in Northern Ireland) were estimated to be LCRE active, generating 1.5% (£1 billion) of total non-financial turnover, with 6,000 FTEs (accounting for 1.4% of all FTE non-financial workers).

Number of businesses

Businesses operating in the Low Carbon and Renewable Energy (LCRE) economy reported their activity by Low Carbon group. More information on what is included in each Low Carbon group is available in the Methodology Annex (778.1 Kb Pdf) .

Of the 96,510 UK businesses operating in the LCRE economy, 51,764 (53.6%) were active in the Energy Efficient Products sector and 26,570 (27.5%) were active in the Low Carbon Electricity sector (Figure 1).

There is considerable regional variation by group in terms of the number of businesses operating in LCRE sectors. The number of businesses by region shows where the low carbon activity took place rather than where the head office of the business was located¹². The Low Carbon Electricity group made up a large share of LCRE activity in Scotland compared with other regions. In Scotland, 45.5% of businesses operating in LCRE sectors reported activity in the Low Carbon Electricity group, compared with 25.7% in England and 27.5% in the UK overall. This was the single most reported group in Wales, with 34.1% of LCRE businesses working in this sector. The number of businesses working in LCRE sectors in Wales, however, was more evenly distributed across groups compared with other regions.

The majority of businesses working in LCRE sectors in England and Northern Ireland were active in the Energy Efficient Products group (56.3% in England, 62.6% in Northern Ireland). In Wales, the Low Carbon Services group made up 22.5% of businesses operating in the LCRE sector. In contrast, this group made up 4.9% of LCRE businesses in England and 6.1% in the UK overall. Please note however, that Low Carbon Services group estimates should be used with caution due to high Coefficients of Variation, Low Carbon Survey Estimates 2014 (55.5 Kb Excel sheet).

Scotland also had a greater proportion of LCRE businesses in the Low Carbon Services group compared with the UK average, with 12% of businesses active in this group. The majority of businesses in this group were providing consultancy for businesses operating in the Low Carbon Electricity group, which was also larger than the UK average in Wales and Scotland. Some of these consultancy businesses had offices in England, but were providing consultancy services at renewable energy sites in Wales and Scotland. Note however, that although this group was relatively important to the LCRE sectors in Wales and Scotland, the majority of businesses in Low Carbon Services (68.7%) were operating in England.

Figure 2 shows that the majority of businesses (68.7%) operating in the Low Carbon Services group were LCRE active in England. Compared to other Low Carbon groups, this group had the smallest percentage of firms operating in England. Of the UK businesses operating in this group in 2014, 16.3% of this activity was in Scotland and 13.0% in Wales. Many of these businesses reporting activity in this group were registered in England, but were carrying out the low carbon consultancy service in Scotland or Wales.

Of the UK businesses operating in the Low Carbon Electricity group in 2014, 80.4% carried out the activity in England and 13.7% carried out the activity in Scotland. Therefore, although the number of businesses operating in the LCRE in Scotland was dominated by Low Carbon Electricity group activity, the majority of the UK activity was carried out in England.

The number of businesses operating in the Low Emission Vehicles group, was dominated by activity in England (97.4%). Businesses operating in this group in other regions made up a small percentage of total activity in this group.

Further data can be found in Low Carbon Survey Estimates 2014 (50.5 Kb Excel sheet).

Turnover

Low Carbon and Renewable Energy (LCRE) activity in the UK generated £45.3 billion turnover in 2014 and 46.1% of this was in the Energy Efficient Products group (Figure 3). This group accounted for 53.6% of LCRE businesses. Average turnover per business was therefore smaller than other groups. For example, 7.8% of LCRE businesses were operating in the Energy from Waste and Biomass group, but they generated 12.4% of LCRE turnover.

As with number of businesses, there is considerable variation in turnover by LCRE group between regions. The greatest percentage of LCRE turnover in Scotland was generated in the Low Carbon Electricity group (50.3%).

Activity in the Energy Efficient Products group generated the greatest proportion of LCRE turnover in England (48.4%), Wales (36.9%) and Northern Ireland (34.5%). Turnover in this sector however, was relatively smaller than the proportion of business operating in this group. In England, 56.3% of LCRE businesses were working in the Energy Efficient Products group, but they generated 48.4% of LCRE turnover.

In Northern Ireland, the Low Emission Vehicles group generated 27.8% of LCRE turnover. Businesses operating in this group were involved in manufacturing specific technologies to reduce emissions and not necessarily involved in the production of entire vehicles. In terms of the group for the UK overall however, only 7.3% of turnover was generated in Northern Ireland, with 85.9% generated in England (Figure 4). Turnover generated in Northern Ireland for this group, and for all UK regions, was proportionally much greater than the number of businesses operating in this sector.

Of the turnover generated in the Low Carbon Electricity group, 69.9% was generated in England and 22.4% was generated in Scotland. This is consistent with the finding that the Low Carbon Electricity group in Scotland was generating the greatest percentage of total LCRE turnover than any other group. Similarly in the Low Carbon Heat group, compared to other groups turnover was relatively high in Scotland and Wales, with 16.4% of turnover generated in Scotland and 6.3% generated in Wales (Figure 4).

A high proportion of turnover in the Energy from Waste and Biomass (87.9%) and Low Carbon Services (86.6%) groups was generated in England.

Further data can be found in the Low Carbon Survey Estimates 2014 (50.5 Kb Excel sheet).

Employees

Businesses operating in the Energy Efficient Products sector employed 64.6% of Low Carbon and Renewable Energy (LCRE) full-time equivalent (FTE) employees in the UK (Figure 5). This group is the largest in terms of LCRE number of businesses and turnover and a greater number of employees are required for this group’s activity, which includes installation of energy efficient lighting and energy efficient products.

The Low Carbon Electricity group employed 17.2% of LCRE workers in the UK. This is smaller than this group’s relative contribution to number of businesses and generated turnover. This is because the Low Carbon Electricity group includes electricity generation, which requires fewer employees compared with many of the other LCRE activities.

Low Carbon Electricity was the largest LCRE group in Scotland in terms of number of businesses and turnover. However, in terms of employees, this group accounted for 29.5% of LCRE FTEs, with the Energy Efficient Products group accounting for 51.7% of FTE employees in Scotland. The smaller employment estimate for the Low Carbon Electricity group is consistent across the UK. This is due to installation activity in this group requiring a greater number of workers than in the Low Carbon Electricity sector, which includes electricity generation.

In Northern Ireland, 23.3% of LCRE employees were working in the Low Emission Vehicles group. Many of these employees were involved in the manufacture of parts for low emission vehicles. The majority of employment in this sector however, consisted of employees in England. Figure 6 shows that the majority of employees in this group were working in England (81.6%) with 12.6% of employees in this group working in Northern Ireland.

Of employees working in the Low Carbon Electricity group, 79.3% were working in England and 15.6% were working in Scotland (Figure 6). This is similar to the Low Carbon Heat group, with 79.8% of employees working in England and 14.9% working in Scotland.

Further data can be found in the Low Carbon Survey Estimates 2014 (50.5 Kb Excel sheet).

Further information on imports, exports and acquisitions will be presented by Low Carbon and Renewable Energy (LCRE) group, subject to statistical disclosure control.

Exports

In total, LCRE businesses exported £4.8 billion in 2014. Exports in the Low Emission Vehicles group accounted for 60.4% of total LCRE exports in 2014, equivalent to £2.9 billion (Figure 7). This group was one of the smallest in terms of number of businesses and turnover, representing 1.6% of LCRE business in the UK, and generating 8.4% of LCRE turnover.

The Low Carbon Electricity group accounted for 21% of LCRE exports. The export of electricity is excluded from the exports figures and therefore this consists of products used for generating electricity, such as wind turbines and solar panels. This emphasises that activity in this group is much wider than electricity generation.

Imports

In total, LCRE businesses imported £5.9 billion in 2014. The Energy Efficient Products group accounted for the greatest percentage of LCRE businesses, turnover and employment in the UK overall. This group also contributed to 26.5% of the total value of UK LCRE imports, equivalent to £1.6 billion (Figure 8) and is due to businesses in this sector importing equipment to install and parts for the manufacture of energy efficient lighting and products.

Imports in the Energy from Waste and Biomass group accounted for 23.9% of total LCRE imports in the UK. As production of electricity is excluded from the imports definition, this will include specialist equipment and fuel that is used in the process of electricity generation in this group. This is also true for the Low Carbon Electricity group, which accounted for 17.6% of total LCRE imports in the UK.

Acquisitions of Capital Assets

In total, LCRE businesses spent £8.8 billion on LCRE acquisitions of capital assets. The Low Carbon Electricity group accounted for 71.3% of LCRE acquisitions of capital assets in 2014, equivalent to £6.3 billion (Figure 9). For the UK overall, the Energy Efficient Products group accounted for the largest number of LCRE businesses and LCRE turnover. However, this group only accounted for 6.8% of LCRE acquisitions of capital assets. The Low Carbon Electricity group acquisitions are likely to have been one-off large purchases such as wind turbines or solar panels. Similarly, acquisitions of capital assets were relatively high in the Energy from Waste & Biomass group, with £1.3 billion spent in 2014. Acquisitions in this group will also have been large purchases of equipment for electricity generation.

This bulletin has provided first estimates from the Low Carbon Survey at the aggregate and group level. We are continuing to quality assure the sector level data using a number of sources, as outlined in the Annex. Further outputs will be published as follows:

• January 2016: Offshore and Onshore Wind Sector – Article

• February 2016: Solar Photovoltaic Sector – Article

• March 2016: Low Emission Vehicles Sector – Article

• April 2016: Low Carbon and Renewable Energy Economy Survey – Final Estimates¹³

The Final Estimates bulletin will include sector level estimates and information on industry breakdown, subject to statistical disclosure control. In addition to direct estimates, it will also include estimates of indirect LCRE activity, which will be derived using published multipliers.