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UK government under fire from IPPR for lack of a green strategy

The IPPR says if the UK government had enacted a long-term investment strategy “it could have employed 98,000 more people to deliver the 27.1GW of wind power it reached in 2021” (Photo: Paul Ellis/AFP via Getty Images)
The IPPR says if the UK government had enacted a long-term investment strategy “it could have employed 98,000 more people to deliver the 27.1GW of wind power it reached in 2021” (Photo: Paul Ellis/AFP via Getty Images)

The Institute for Public Policy Research has accused the government of missing out on ‘the economic opportunity of the 21st century’ by failing to harness the financial benefits of the energy transition

A report published today by UK think-tank the Institute for Public Policy Research has found that while the UK is making progress on emissions reduction, it is failing to harness the economic benefits of the energy transition due to a lack of a green industrial strategy. 

According to the report, the global race to net zero is worth $4.7tn in investment every year up to 2050, and as many as 1.6mn UK jobs could be created by the green transition. 

Promoting growth technologies, such as electric vehicles, heating and insulation, could deliver between £37bn and £57bn of annual UK GDP by 2030. This represents 1.6–2.4 per cent in UK GDP and 14–20 per cent of total GDP growth between now and 2030, say the authors.

The IPPR has published the paper in response to the UK government’s late September decision to delay the ban on the sale of petrol and diesel cars, push back a ban on the sale of gas boilers, and scrap energy efficiency standards. The IPPR accused prime minister Rishi Sunak of “running in the opposite direction” to green investment.

Sunak said the decision was a “proportionate response” to costs faced by households adopting green technologies. However, the report says: “It was actually an abdication of government responsibility to offer more support with upfront costs, thereby delaying households’ access to technologies like electric vehicles, heat pumps and insulation that can substantially lower people’s living costs.”

The prime minister told a press briefing following the announcement that his government will retain the net zero by 2050 target, but he failed to detail specific alternative policies that would enable decarbonisation.

Corporate support for net zero

Edward Matthews, campaigns director at climate change thinktank E3G, told Sustainable Views that Sunak is “at risk of destroying the greatest economic opportunity for this country in over a hundred years”.

He added: “The industries on which clean technologies are based will not develop in the UK and investment will go to the US, the EU and other countries because there’s greater political support and greater incentives [there].”

According to Matthews, the government decision was made despite consistent corporate support for net zero. “The Conservative government has been warned repeatedly by business associations and business leaders that they need to get their act together and create stable policy foundations, increase incentives and put in place regulation to mobilise investment as rapidly as they can. They have utterly failed to do that,” he said.

Failure to exploit opportunities

The report also found that the UK has lower levels of economic activity in green industries compared with other advanced European economies and the US. The researchers use offshore wind as the “most evident” example of how the UK is failing to harness the economic benefits of the green transition. 

According to the paper, the UK is the second largest installer of offshore wind in the world after China, yet it has failed to establish domestic supply chains that, in turn, provide employment. The IPPR predicts that if the UK government had enacted a long-term investment strategy – as Denmark’s wind industry has done – “it could have employed 98,000 more people to deliver the 27.1 gigawatts of wind power it reached in 2021”.

The UK government’s most recent contracts for difference round, in early September, failed to secure any bids for offshore wind, after the government ignored industry calls for greater financial support in the face of rising costs and inflation.

Attracting future investment 

The UK has, nonetheless, made strong progress on emissions reduction. Territorial CO₂ emissions have dropped 46 per cent since 1990, and the UK is on track to decarbonise much of its power sector by 2035, according to the IPPR report. 

One of its authors, Josh Emden, told Sustainable Views that “there is an important distinction to be made between emissions and economics” and just because the UK has lowered its emissions, it has not secured sufficient green investment. He is, however, optimistic that there is still a chance for the government to “course correct”.

Emden suggests it creates policies that focus on the “huge demand and scale up” of renewable technologies that emerge in line with growing energy demands. “There’s still an awful lot of wind that needs to be deployed in the UK and therefore, there’s still an opportunity to make sure that there’s domestic manufacturing in the UK,” he added.

A service from the Financial Times