The Sunak government’s inadequate commitments to strip heavy carbon pollution out of UK industry along the lines of President Joe Biden’s Inflation Reduction Act could wipe a staggering £224 billion off this nation’s wealth by 2050, new research released today indicates.
Environmental business practitioners the Aldersgate Group today publish reports urging stronger, more sustained measures by UK ministers to secure job creation and better inward investment in tomorrow’s industries.
Commissioned by Aldersgate from economists WPI, the two reports are the latest in a line of complaints from Britain’s boardrooms that recent governments have adopted too piecemeal an approach to greening Britain’s economy.
WPI Economics finds that without further policy support for heavy industrial decarbonisation, over £224 billion or 5.9% total gross value added (GVA) could be lost in 2050.
Heavy industries such as glass and cement making, plus their supporting supply chains, are critical to the UK economy, contributing £152 billion in GVA now, and supporting over 1.4 million jobs. across the country, the studies calculate.
Clearer policy signals than Rishi Sunak’s administration currently provides could, say WPI, deliver economic growth across the UK’s regions, increase supply chain security, and protect more than 450,000 jobs and £72bn GVA, all while providing a major economic boost to other sectors across the economy.
A swifter, stronger Whitehall response is vital, say Aldersgate’s industrialists, to international competition such as the USA’s Inflation Reduction Act and the EU’s green industrial strategy. Both policies debuted in 2021, but have met with inadequate UK response, says the ginger group.
Aldersgate’s second paper outlines what the UK must do to retain investment in the Net Zero transition and maximise economic benefits despite a challenging new economic landscape.
Adding to the urgency are recent reports that despite being a global leader in clean energy investment, the UK has already started to fall behind international rivals.
Last year investment in Britain’s energy transition fell 10%, Aldersgate’s economists note. That’s in stark contrast to the US and Germany, which scored rises of 24% and 17% respectively.
WBI’s research also finds several among the UK’s top ten sectors of national significance to exports are most exposed to trade risks from Biden’s IR Act.
Key asks on the Aldersgate’s wish list of government include
- enacting a UK emissions trading scheme to harmonise with the EU’s equivalent
- lowering high electricity prices for heavy industrial users,
- mandating more green buying by public bodies
- setting out a voluntary Contracts for Difference scheme.
- delivering a robust, comprehensive industrial strategy, favouring sectors offering strategic, climate-accommodating growth
Aldersgate executive director Rachel Solomon Williams said: “Our members are keen to harness the economic opportunity which the Net Zero transition offers in the UK.
“The Government has made positive statements about the need for investment into UK clean industries, but is increasingly falling behind the US and other countries in backing statements up with firm policies and long-term strategies”.
The group’s new research highlights, according to Solomon Williams, both the risks of inaction and the huge benefits that would follow tangible action.
Nick Molho, head of climate policy at institutional investors Aviva, said: “A rapid and comprehensive response is essential if the UK is to remain competitive in the growing global competition for low carbon investment and supply chains and if it is to maximise the energy security, job creation and cost of living benefits of the net zero transition.
“This should include a targeted public funding intervention to crowd in private investment in areas where market barriers persist, and a UK Climate Transition Plan tackling outstanding policy gaps in areas such as buildings, surface transport and heavy industry.”
Read the Aldersgate Group’s new research here and here.
