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Navigating the green economy and productivity: Productivity Puzzles blog

Bart van Ark was joined by three experts to delve into the multifaceted aspects of the green economy and how it fits in with the productivity agenda for the Productivity Puzzles podcast. The discussion ranged from the definition of the green economy to its impact on productivity, innovation, job creation, and the UK’s progress towards a sustainable future.

The episode’s guests were:

  • Anna Valero, Senior Policy Fellow at the Centre for Economic Performance at the LSE and Deputy Director of the Programme on Innovation and Diffusion (POID).
  • Antoine Dechezleprêtre, Senior Economist in the Productivity, Innovation and Entrepreneurship Division, Directorate for Science, Technology and Innovation (STI), OECD.
  • Jonatan Pinkse, Professor of Strategy, IMP Innovation, Strategy and Sustainability, at the Manchester Institute of Innovation Research (MIoIR), Alliance Manchester Business School, The University of Manchester.

Net-Zero transition, growth, and productivity

The podcast begins with an exploration of the foundational elements of the green economy, navigating the various dimensions of the transition towards a sustainable future. The guests consider the distinctions between transitioning to low/zero-carbon energy exploration, achieving Net Zero economies, and embracing the circular economy. The discussion examines the potential short-term and long-term effects on productivity, highlighting the possible trade-offs between green initiatives and economic growth, while also considering whether the two goals can work in tandem. Additionally, Bart and the guests challenge the adequacy of conventional productivity metrics like GDP and consider whether there are alternative measures of productivity that are better suited for the green economy.

Innovation and technological change in the green economy

The second segment of the podcast episode revolves around the role of innovation and technological advancements in driving the green economy forward. It examines the relationship between productivity growth and the speed of the Net Zero transition, questioning whether increased productivity can accelerate the shift towards sustainability. The guests discuss how green technology is diffused through the economy and provide examples of industry disruptions, such as the automotive and construction sectors. The conversation also touches upon the policies surrounding green innovation, emphasising the need for ambitious research and development efforts and effective deployment strategies.

Assessing the UK’s progress in greening the economy

In the final segment, Bart, Antoine, Jonatan and Anna analyse the United Kingdom’s performance in greening its economy and achieving its Net Zero targets. They compare the UK’s efforts to those of other countries, highlighting areas of strength and weakness. Specific areas of focus include the UK’s advantage in wind energy and its emphasis on carbon capture, utilisation, and storage. The discussion also addresses the impact of weak investment and slow productivity growth on the Net Zero transition and explores the role of finance in driving sustainable initiatives. Regional disparities within the UK are examined, with a spotlight on low-productivity regions and the opportunities they present. The podcast concludes by identifying critical policy measures, both fiscal and regulatory, that can bolster the UK’s progress towards a greener economy and highlighting international best practices.