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Poor investment climate stymies UK energy transition — industry report

A successful UK clean energy transition is dependent on government, business and civil society working together effectively, according to a report by Energy UK and Oxford Economics (Photo: INA FASSBENDER/AFP via Getty Images)
A successful UK clean energy transition is dependent on government, business and civil society working together effectively, according to a report by Energy UK and Oxford Economics (Photo: INA FASSBENDER/AFP via Getty Images)

A new report warns that without additional investment in clean energy the UK risks falling behind not just the US but also China and various EU countries in the race to decarbonise.

A “weakened investment climate” is making it harder for the UK to reach a decarbonised future, a report by industry organisation Energy UK and advisory company Oxford Economics has concluded.

The report cites the “changing face of global competition” as a key challenge, namely the US Inflation Reduction Act — “expected to be the largest redeployment of international capital since the 2008 financial crisis; capital that is pointed in the direction of the US” — but also the various measures being agreed by the EU to stimulate green growth.

“The UK can’t go head-to-head with the US on subsidies,” said Energy UK chief executive Emma Pinchbeck in a foreword to the report. “But nor can we afford to sit back and do nothing. Instead, the UK must chart an ambitious course that embraces our regulatory strengths and strategically directs support to where it can be best leveraged by businesses and communities.”

Pinchbeck’s message echoed the letter sent this week by more than 100 companies, including Tesco, BT, M&S, Unilever and Amazon, to the UK’s prime minister Rishi Sunak, underlining the importance of net zero for business and the environment, and the need for government “leadership and commitment to the green economy”.

The report warns that without additional investment in clean energy the UK risks falling behind not just the US but also China and various EU countries in the race to decarbonise. “Of the world’s largest eight economies, the UK is forecast to have the slowest growth in low-carbon electricity generation between now and 2030,” the research concludes.

“Low levels of expected investment in the UK are a significant factor behind the downbeat UK forecast,” it adds, calling for the government to do more to encourage private sector investment in the infrastructure needed to reach net zero by 2050.

“Given the current incentive schemes around the world, which are often much more generous than the UK, there is a risk that investment in green energy infrastructure will be pulled from the UK to countries with more attractive regimes,” warns the paper.

The report insists a successful UK clean energy transition is “dependent on government, business and civil society working together effectively”, but suggests that without “ambition and decisive action” from government, the UK will struggle to compete and to attract the investment needed to decarbonise its economy.

You can read the full report here.

A service from the Financial Times