Think tank IPPR has called for a new public fund to ensure the UK doesn’t fall behind international markets in the race to net zero.
The warning comes in light of the US Inflation Reduction Act (IRA) which celebrates its one-year anniversary this month and has been significant in accelerating green investments. For example, according to Mark Williams, senior fellow at the Centre for American Progress, since the launch of the IRA, US domestic manufacturing is currently at its highest level in 60 years. Over 270 new clean energy projects have also been announced in the past year over 44 states, totalling over US$270 billion (£212 billion) in new investments for local economies.
The EU responded to IRA with its own Green Deal Industrial Plan, a €250 billion (£214 billion) package to increase investment in green technologies.
However, the UK is yet to respond with similar legislation for which, the IPPR has warned that the UK could “remain on the starting blocks of the race to capture the green industries of tomorrow”.
In its Growing green: A proposal for a National Investment Fund report, the IPPR proposed a National Investment Fund (NIF) that could help finance projects in green manufacturing.
In doing so, IPPR continued, the NIF would encourage private companies to make strategic investments within the green industry.
Comparing it to a ‘Dragon’s Den’ set-up, IPPR said that funding for the NIF would initially be required from the Treasury, but could be further supported through tax revenue from North Sea gas and oil.
Levies on excess profits and “economic rents” from fossil fuel companies could also be used to provide investment in the UK’s green economy, continued IPPR.
“The National Investment Fund is a policy proposal for our time. The UK needs to finance and coordinate strategic industrial policy projects that will deliver a net zero transition through economic prosperity and inclusion,” said Simone Gasperin, IPPR associate fellow.
“The cost of inaction on people’s livelihoods will be too high, while there are huge opportunities to be captured by the government co-investing with private companies.”
George Dibb, Head of the IPPR Centre for Economic Justice, added: “For the UK to hit net-zero our households and businesses will need to buy new green products – from electric cars to heat pumps. We have a choice: do we want to make those products in the UK with all the jobs and prosperity that come with green manufacturing, or do we want to import them from abroad?
“The USA and EU are making major investments to secure the manufacturing and technologies of tomorrow, and it is time the UK stepped up. Our proposal for a National Investment Fund is a practical way for the UK government to crowd-in private sector investment by strategically supporting companies and taking a share in their future success.”
