Success in Sectoral Export Promotion and Economic and Environmental Indicators: A Multisectoral Modelling Analysis

UK policymakers are seeking to use the levers of a more active industrial policy to develop economic opportunities, including through new and expanded trading opportunities. At the same time, the UK Government has committed to a net zero greenhouse gas emissions target by 2050. While increases in exports are expected to raise economic activity, it is unclear what impact this will have on UK energy use and emissions. With a main plank of the UK strategy the development of "Sector Deals", it is unknown whether this is also true for specific industrial sectors. We examine this empirically in a multisectoral Computable General Equilibrium model of the UK that captures the interdependence between economic activity, energy use and emissions. Our results suggest that while economic outcomes move in the desired direction there are mixed impacts on energy use, UK territorial industrial emissions, and the energy- and emissions-intensity of the UK economy. Notably, we identify instances where growing exports in specific sectors helps to meet the objectives of both the Clean Growth Strategy and Industrial Strategy.