UK missing 'economic opportunities of net-zero transition'

UK public investment in the net-zero economy is 'inadequate', the Institute for Public Policy Research says

Panels and electricity pylons at the Owls Hatch solar farm near Herne Bay, England. Bloomberg

The UK is lagging behind international competitors in the global race for green growth and is “in reverse gear”, a think tank has warned.

The country is not in a position to exploit the economic opportunities of the net-zero transition because of a lack of a green industrial strategy, the Institute for Public Policy Research (IPPR) said.

Prime Minister Rishi Sunak’s recent withdrawal of some net-zero policies makes the UK an outlier at a time when other major powers are supporting the shift, such as through the Inflation Reduction Act in the US and the EU’s Green Deal Industrial Plan, the report suggested.

UK public investment in the net-zero economy is also “inadequate”, according to an IPPR analysis, which found that commitments to invest in clean-energy technology are among the lowest in the G7 group of leading western economies.

A collaboration between public research, strategic investment and industry co-ordination seen in other nations is “glaringly absent” in Britain, the left-leaning think tank said.

Its analysis revealed a clear gap between the contribution of green goods and services to gross domestic product (GDP) in the UK and European countries.

The sector contributes only 3.9 per cent to UK GDP compared with 5.8 per cent in the EU, with the figure soaring to around 11 per cent in Denmark and Sweden.

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The shift to net zero offers the potential for up to 2.4 per cent to be added to the UK GDP and 1.6 million jobs to be created by 2030, the report said.

But there is no industrial strategy and not enough public investment to seize the opportunity, it said.

“The UK is at a pivotal juncture. While other nations are forging ahead in the global green race, the UK is moving into reverse gear," IPPR associate director Luke Murphy said.

“The absence of a robust green industrial strategy is not only a missed economic opportunity but a dereliction of our global responsibility in combating climate change.

"We must set a new course, capitalising on the green growth potential to spur job creation, innovation and sustainable prosperity.

“Every further day of inaction is costing us valuable jobs, technological advancements and a sustainable future.”

IPPR senior research fellow Josh Emden said: “Our analysis highlights the glaring disparity between the UK and its international competitors in harnessing the economic boons of the green sector.

“The road map to net zero is not just a climate necessity but an economic opportunity waiting to be tapped.”

Mr Sunak last month weakened pledges designed to help the UK achieve a net zero economy by 2050, including pushing back the ban on new petrol and diesel cars by five years; weakening plans to strip out polluting gas and oil boilers; and scrapping the requirement for energy-efficiency upgrades for homes.

“This report ignores the fact we are already overdelivering on our targets and cutting emissions faster than any other G7 country," a government representative said.

“We have attracted £200 billion ($243 billion) in low-carbon investment since 2010 – and our global leadership in clean technologies is expected to attract a further £100 billion in private investment by 2030, helping to support up to 480,000 skilled jobs across the country.

“We have shown a clear strategy for UK manufacturing with a variety of schemes that ensure sectors from auto, to aerospace, to low-carbon technologies have the access to the funding, talent and infrastructure they need.”