Sectoral export promotion impacts on economic and environmental indicators: A multisectoral modelling analysis for the UK

In this working paper, we look at the economic, energy, and emissions consequences for the UK of non-energy or invisible energy policies (Cox et al, 2019). These are policies which, while not explicitly energy-focused, impact on energy use and emissions. We examine this from a sectoral perspective, looking at differences in consequences when policies are successful in raising exports for individual sectors of the UK economy.

The central purpose of this paper is to extend that previous work and reflect the detailed industrial focus of the UK Government's Sector Deals" by looking below the aggregate level. We wish to focus on the incremental changes in economic activity, territorial industrial emissions and energy use (as well as the indicators of emissions- and energy-intensity of GDP) that could arise from success in increasing exports in specific industrial sectors. The opportunities and challenges for the UK to benefit at a sectoral level from international activity in low carbon sectors is the focus of work by Carvalho and Fankhauser (2017). That work does not however examine the consequences of achieving export growth at the sectoral level, or the quantitative scale of such impacts, or any trade-off's between successes in different low carbon sectors.

By looking these factors we can identify whether it may be possible to target export policies at specific sectors to stimulate greener growth, i.e. positive impacts on economic indicators with (desirable) reductions in energy use and/or emissions. While we might expect that such sectors could include those with lower energy and emissions per unit of output, or smaller links to energy-using sectors, the full (economic and environmental) system-wide consequences of increasing exports at the sectoral level can be examined using an appropriately detailed CGE model of the UK. Specifically, we are interested in the following question: are there differences in the consequences for economic, energy and emissions indicators when policies are successful in raising exports for individual sectors of the UK economy?