The UK risks falling behind within the ‘global green-race’ due to the government’s unwillingness to invest and use industrial strategy, according to the Institute for Public Policy Research (IPPR).
Around the world, governments are working to capitalise on the economic benefits from the race to net-zero, rolling out policies to drive investment.
In the US for example, Biden’s Inflation Reduction Act (IRA) has spurred a significant amount of investment. In the seven months since it was passed, clean energy companies across 31 states in America have announced over 100,000 jobs.
This dwarfs the 11,500 jobs that have been created in the low carbon space in the UK in the past seven years, IPPR highlighted.
Elsewhere, the EU is looking to spur a similar expansion through its own Green Deal Industrial Plan (GDIP), designed to grow the clean energy sector, revitalise manufacturing and support well paid jobs.
These stand in stark contrast the UK, where there has been a huge public investment gap with regards net zero, and government ministers have veered between dismissing the IRA and describing it as “dangerous”.
Ahead of tomorrow’s Spring Budget, the think-tank has highlighted a number of key lessons Chancellor Jeremy Hunt should bear in mind to cross this gap.
This includes the need for at least £30 billion a year of investment between now and 2030, as previously estimated by the IPPR, but which the government remains far short of.
Additionally there should be place-based industrial policy, with the north of England for example, uniquely placed to lead the net-zero economy if supported.
Policy should address the current lack of long-term think, which discourages private investment, and should be focused in its use, as “Britain needs to decide what it wants to be good at” the IPPR has stated.
The country should learn from the unprecedented certainty and policy stability that the IRA has provided in the US. Climate action can be used as a “jobs engine”, with the thinktank’s figures suggesting that the green transition could create up to 1.6 million jobs over the next year, but there must be a “clean job guarantee”.
Finally, there is a need for corporate safeguards to socialise rewards as well as risks. The gains from public investment must not just end up in the pockets of shareholders, notes the IPPR.
“The UK is in urgent need of renewal. 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,” said Luke Murphy, associate director for the energy, climate, housing and infrastructure team at IPPR.
“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.
“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.”
The warning follows the Climate Change Committee’s report last week, which highlighted the need for policy support to improve the attractiveness of the UK’s clean energy market attracting international investment to spur action.