Is net zero reindustrialising the North?

This was originally published on our Substack.

In 2024 then Mayor of Manchester Andy Burnham argued that net zero was “the best chance we will ever have to reindustrialise the North of England, reduce inequality and close the North-South divide”. The Mayor has had a promotion since then but what of his prediction? Sadly, our new research has found that the reality has not lived up to the hype so far – but there are things his government can do to help.

Jobs boom or bust?

Current plans for the next phase of the net zero transition are ambitious, setting out to deliver “up to 860,000 good jobs” by 2030. While many jobs will spread around, some sectors could help ‘reindustrialise’ the places they land, like offshore wind, EVs, and carbon capture. Concentrated in the right places, these jobs would make a real difference to local economies and deliver productivity wins that we all benefit from.

But to make this work, we need to focus our efforts. These industrial jobs are limited: by our estimations under one-in-ten of the total (70,000). Focused on a few hubs this number could make a huge difference. But currently we estimate there are no fewer than 18 towns and cities where clean industries have been promised, totalling 2.7 million workers. Spreading 70,000 jobs across that many places results in an employment share of only 2-3% in each – not enough to make a major impact.

A tale of two places

To illustrate the specific challenges places are facing we looked at how two potential net zero powerhouses – Aberdeen and Grimsby – have fared since clean industry arrived. As well as cranking the handle on a slew of data for these places we also spent time talking to people in those places.

These towns want industry for very different reasons – Aberdeen to smooth the decline of its hugely prosperous oil industry, which is dragging hard on living standards: in 2023 the city’s disposable income dipped below UK averages for the first time in 20 years. Grimsby wants to reverse its fortunes after a poor economic record left it with wages a fifth below the national median in 2017. Both have captured a big share of the UK’s offshore wind industry over the last decade.

But the problem in both places is that green jobs are still thin on the ground – clean industries are struggling to break 2 per cent of employment in either place. Both face bottlenecks to further expansion: Aberdeen is hitting the brick wall of capacity constraints, as we haven’t built the cables to transport energy down south; while failure to build port capacity in Grimsby has resigned it to a small segment of the wind supply chain. Market share is, predictably, going elsewhere.

As it stands, jobs are being spread thinly and places have been left waiting for promised jobs that haven’t arrived. What would an alternative approach look like – one where the Government takes an active role in clustering clean industry in a smaller number of places?

First, the government needs to choose where to invest as well as what to invest in. Clearly, we need to pick places that have the right profile – on skills and geography – but among suitable locations need should be a factor.

Second, these places should be backed by government investment to sort out local bottlenecks, prepare for future industry and give long-term certainty over the pipeline. A more strategic approach could preserve the price competition that makes the current ‘place-blind’ auction approach to clean energy so successful, while signalling where jobs will be so investment can follow suit.

Third, well organised devolution can help places to plan out and execute their economic strategy. But this alone isn’t enough. When pipeline decisions are zero sum – more wind turbines near Aberdeen means less elsewhere – a strong centre is needed to decide who gets what when economic goals conflict.

Inevitably, picking winners also means some places lose out, but this is far better than too many places banking on jobs and investment that never deliver.

Agglomerating in a smaller bunch of places should enable these clusters to be more productive, like we see in Denmark, whose Esjberg has 200 offshore wind companies and 10,000 jobs in a town smaller than Grimsby. Targeted ‘reindustrialisation’ of this scale is what’s needed to lift living standards.

Andy Burnham seems to agree – in 2024 he urged government to designate the North West a “green energy trailblazer”, to “go out ahead of the pack… and build the skills base”. Without taking a view on where should win (we all have our favourites), this is the kind of strategic industrial policy that could help create the net zero hubs the UK currently lacks. Putting more power into the hands of the regions will help, but we’ve also been missing ambition and proactivity in central government. Burnham should take the chance to change tack.

Zachary Leather is an Economist at the Resolution Foundation. You can follow him on Bluesky here.