UK has its ‘fingers in its ears’ on green investment, think thank says

The UK must learn "urgent lessons" to avoid losing the global green race, according to the Institute for Public Policy Research (IPPR). The think tank has noted what it perceives as the government's "unwillingness to invest" in its industrial strategy. 

The IPPR has called on the UK to put in place policies similar to those of the US and the EU in order to remain competitive in the renewables industry. 

“The UK is in urgent need of renewal," IPPR said. “The country faces a series of challenges from stagnation and inequality, risks to national and energy security, to the climate and nature crises. Together they threaten to undermine the UK’s path to a sustainable economic future.

“While our international competitors are deploying public investment and using industrial strategy to take advantage of the opportunities of the net-zero economy, the UK government appears to have its fingers in its ears.”

The IPPR praised US president Joe Biden’s Inflation Reduction Act (IRA), which aims to raise billions of dollars of investment in energy production and electric car manufacturing and reduce US carbon emissions by 40 per cent by 2030.

The think tank said that in the seven months since the Act was passed, clean energy companies in the US have announced over 100,000 new jobs across 31 states, compared with 11,500 new jobs created in the UK over seven years.

Meanwhile, the EU is debating the passing of a Green Deal Industrial Plan with which it wants to grow clean energy production, revitalise manufacturing and support well-paid jobs.

The IPPR highlighted six lessons that chancellor Jeremy Hunt must learn “urgently” to prevent the UK from falling behind in the global race to net zero.

The think tank said the government must close a £30bn investment gap between now and 2030; utilise regions such as the north of England to deliver climate, prosperity and levelling up targets, and "decide which aspects of the green industry it wants to be good at".

It must also learn that climate action can be a “jobs engine”, apply corporate safeguards to socialise rewards as well as risks and learn from the stability provided by the US Act and not discourage private investment through a lack of long-term thinking.

“If the government is serious about reaping the benefits of the transition and levelling up it should learn from Joe Biden, scale up public investment and bring forward a serious strategy to build an economy that is prosperous, fair, and green,” said Luke Murphy, associate director for the energy, climate, housing and infrastructure team at IPPR. 

In order to avoid a future in which the UK is reliant on imports of electric vehicles, steel, hydrogen and even electricity, Labour is calling for an investment of £28bn a year in the low-carbon economy.  

However, energy security and net-zero secretary Grant Shapps has described Biden’s Act as a “dangerous” slide into protectionism, while Conservative Party chairman Greg Hands said Labour’s policies would only saddle future generations with more debt.

The International Energy Agency estimates the global market for mass-produced clean energy will triple to around $650bn (£527bn) a year by 2030, with related manufacturing jobs more than doubling.

In January this year, the CBI’s ‘Mapping The Net Zero Economy’ report found that the drive to achieve net-zero emissions in the UK is worth £71bn, and would involve more than 20,000 businesses and 840,000 jobs in sectors such as renewable energy and waste management.