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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.

Achieving the targets for reducing greenhouse gas emissions set out in the UK Climate Change Act will require a significant transformation in the UK's energy system. At the same time, the government is pursuing a new UK Industrial Strategy, which aims to improve labour productivity, create high-quality jobs and boost exports across the UK. The economic and the energy systems in the UK are tightly linked and so policies adopted in one area will produce spillover effects to the other. To achieve the objectives set out in the two strategies it is therefore vital to understand how the policies in the energy system will affect economic development and vice versa. This study seeks to contribute to this by investigating how an increase in exports (a key pillar in the UK Industrial Strategy) could impact energy- and industrial policy. We address this question by systematically comparing the results of two types of energy-economy models of the UK, a computable general equilibrium model and a macroeconometric model. In terms of the implications of a successful export promotion strategy, the models agree that there is likely to be a beneficial impact on the economy, but an adverse impact on CO2 emissions and energy intensity. This reveals the extent of any policy adjustment that would be required to maintain a given level of emissions and serves to emphasise the need to complement UK industrial policies with appropriate action on energy use and carbon emissions to meet statutory carbon targets set by the Climate Change Act (2008). Our second main conclusion is that there are advantages to having a diverse mix, or portfolio, of energy-economy models with each having comparative advantages depending on: prevailing circumstances (including the state of the economy); the time-period of interest and the nature of the policy question being addressed.

The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literature. But this interdependence similarly implies that policy interventions in the non-energy system also affect the energy system, though such spill-overs have not been extensively researched. Increasing labour productivity is a key component of the UK’s Industrial Strategy. The present paper analyses the impacts of success in this policy on key elements of the economic and energy systems through simulation. It uses a UK computable general equilibrium (CGE) model - UK-ENVI – to fully capture economy/energy interdependence. The simulation results suggest that there are trade-offs, particularly between achieving energy and economic policy goals. For example, increased labour productivity stimulates GDP but also energy use and territorial industrial CO2 emissions, whilst reducing short-run employment. Policy makers should therefore be aware that successfully implementing the Industrial Strategy might impact on the UK’s Clean Growth Strategy and on the goals of energy policy more generally. Knowledge of the nature and scale of economy/energy spill-overs potentially improves policy co-ordination and over-all effectiveness. For example, this analysis reveals the extent of energy policy adjustment that would be required to accompany a successful industrial policy in order to maintain a given level of emissions.

The energy system and the economy are inextricably intertwined. While this interdependence is, of course, widely recognised, it has not featured prominently in assessing the likely impact of economic policies. In principle, broad fiscal policies are likely to have a significant influence on key elements of the energy system, the neglect of which may lead to inefficiencies in the design of appropriate energy and economic policies. The importance of this in practice depends on the strength of the spillover effects from fiscal policy instruments to energy policy goals. This is the focus of this paper. We employ a multi-sectoral computable general equilibrium (CGE) approach for the UK which allows us to track the impact of key fiscal policy interventions on key goals of economic and energy policies. Overall, our results suggest that a double dividend - a simultaneous stimulus to the economy and a reduction in emissions – induced by an increase in current public spending or a hike in the income tax rate seem unlikely in the UK context. Nonetheless, there are undoubted differential spillover effects on key components of the energy system from tax and public spending interventions that may prove capable of being exploited through the coordination of fiscal and energy policies. Even if it seems doubtful that fiscal policies would be formulated with a view to improved coordination with energy policies, policymakers should at least be aware of likely direction and scale of fiscal spillover effects to the energy system.

Two key pillars of the energy quadrilemma (which measure the sustainability of energy policy) are a reduction in greenhouse gas emissions and economic development. Recent worldwide energy policy has focused on the reduction of greenhouse gas emissions to combat climate change, which will influence, and in turn be influenced by, economic activity and energy use. As such, it is of critically important to identify and incorporate emissions into macroeconomic models. Typically, emissions are linked to economic activity via the level of output, both calculated at a sectoral level. However, this approach – while consistent with linear models such as Input-Output - assumes that emissions per unit of output remains constant, which can be problematic with more complex economic systems. In this paper we detail a method for incorporating sectoral and aggregate CO2 emissions into a macroeconomic model (CGE) of the UK through the use of sectoral primary energy use.

The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literature. Given the interdependence of energy and the wider economy, any economic policy change will impact on the energy system. However, such ‘spillovers’ on the energy system have not been extensively researched. This article analyses the impact of export promotion policies - a key element of the UK’s Industrial Strategy - on the energy system and energy policy goals. As the impacts of such policies are, in large part, transmitted via their effects on the economy, we use a computable general equilibrium model - UK-ENVI – to Economic Commentary, September 2018 fully capture impact. Our results suggest that an across-the-board stimulus to exports significantly increases total energy use, not directly via energy exports but indirectly via linkages between the energy sector and other sectors. We show that export-led growth has significant impacts on energy use and, in turn, on emission targets. Policy makers need to be aware that the successful implementation of the UK Industrial Strategy may create significant tensions with the UK’s Clean Growth Strategy and wider energy policy goals. The scale of such impacts depend upon both the mix of UK goods and services exports and the success of low-carbon policies. A knowledge of the nature and scale of the spillover effects of economic policies on the energy system provides a platform for more effective and efficient policy making.

Anticipated changes in energy provision over the next decades will likely have major implications on employment within energy activities. To understand the possible consequences, many studies have considered the level and types of employment in existing energy technologies. Using the hypothetical extraction approach for the UK, we explore the employment in and supported by energy activities - including across occupations and skills categories. We show that the impact on occupation and skills across the whole economy is more evenly spread than the employment in individual sectors. From the empirical results presented here, it is evident that the system-wide demands for skills - including not only the direct, but also knock-on effects across the economy - can change the pattern of labour market needs, which have implications for labour market planning in the low carbon transition.

The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literatures. Additionally, the interdependence of energy and economy implies that a (policy) change in the non-energy system impacts on the energy system. However, such spillovers on the energy system have not been extensively researched. We begin by analysing the impacts of export promotion policies - a key element of the UK’s Industrial Strategy - on the energy system and energy policy goals. As the impacts of such policies are, in large part, transmitted via their effects on the economy, we adopt a computable general equilibrium model - UK-ENVI - that fully captures such interdependence. Our results suggest that an across-the-board stimulus to exports increases total energy use significantly. This does not come directly through energy exports, but indirectly through the energy sectors’ linkages to other sectors. Export led growth therefore impacts on energy use - and significantly so. This in turn is likely to have an adverse impact on emission targets. Policy makers should be aware of the fact that a successful implementation of the Industrial Strategy may create significant tensions with the UK’s Clean Growth Strategy, for example, and with the goals of energy policy more generally. The importance of this effect will in practice depend upon: the mix of goods and services that are exported (an issue that we shall address once the export strategy is published); the success of low-carbon policies. Ultimately, a knowledge of the nature and scale of these spillover effects of economic policies on the energy system creates the potential for more effective and efficient policy making.

Small growing firms are widely recognised to be a key determinant of economic growth, regional prosperity and sustainable development. This thesis investigates the role of continuing entrepreneurial activity, defined by the annual rate of new VAT registered businesses within Scotland in an attempt to identify the key determinants that underpin its development and hence the contribution of small growing firms to the Scottish economy.A review of the theoretical and empirical literature reveals that the role of continuing entrepreneurship within Scotland is imperfectly understood, particularly at sub-regional level, and the empirical analysis undertaken in this thesis represents a step towards greater understanding in this area.The role of the regional environment is investigated by testing a number of hypotheses reflecting the local socio-economic characteristics of a region and the extent to which these factors are able to explain variation in rates of continuing entrepreneurial activity. Panel data models are constructed for 32 regions over a 10 year period from which a variety of hypotheses are tested and conclusions drawn.On the basis of the quantitative results and supporting qualitative interviews the research findings show that differences in rates of continuing entrepreneurial activity can most significantly be explained by population growth an indicator of local demand conditions and by the number of existing small businesses an indicator of attitudes and culture towards entrepreneurship. Human capital, access to finance and the presence of urbanisation economies were also found to significantly explain rates of continuing entrepreneurship across Scottish regions.On the basis of the results reported in this study, enterprise policy should attempt to address the entrepreneurial deficit that exists between regions and be focussed on the creation of a positive culture towards entrepreneurship in Scotland. This should involve the continued development of institutions and levers that are capable of providing an environment which encourages and actively supports an entrepreneurial culture in order to promote economic growth, job creation and higher levels of investment.

The energy and economic systems are inextricably intertwined. This means that fiscal interventions are likely to have a significant influence on the energy system, the neglect of which could lead to inefficiencies in the design of energy and economic policies. The importance of this in practice depends on the strength of the spill-over effects from fiscal instruments to energy policy goals. This is the focus of the present paper which employs a multi-sectoral computable general equilibrium (CGE) model to track the impacts of fiscal adjustments on key economic and energy policy goals. In particular the effect of tax and public expenditure changes are quantified and compared both with and without the imposition of a balanced budget. We are interested in identifying conditions under which a fiscal policy “double dividend” might occur. This is a stimulus to the economy accompanied by a simultaneous reduction in emissions or increase in energy productivity. Our results suggest that such an outcome is possible but these impacts depend on the public’s valuation of the amenity associated with the greater public expenditure and the extent to which this is reflected in workers’ wage bargaining behaviour. There are undoubtedly differential spillover effects on key elements of the energy system from tax and expenditure policies that may prove capable of exploitation through the coordination of fiscal and energy policies. Whilst it seems doubtful that fiscal policies would be formulated with a view to improved coordination with energy policies, policymakers can benefit from knowledge concerning the likely direction and scale of fiscal spillover effects to key elements of the energy system. For example, this analysis reveals the extent of any energy policy adjustment that would be required to maintain a given level of emissions.