Blog

EEF blog

Insights into uk manufacturing - the real economy

About Roger Salomone

I am EEF's Energy Adviser

RSS feed for Roger Salomonesubscribe to my RSS feed to keep up-to-date with my posts

Low Carbon Industrial Strategy: a failure of ambition

Roger Salomone July 15, 2009 16:37

The government finally published its long awaited "Low Carbon Industrial Strategy" today. This was the document which was supposed to light the green touch paper and set the UK economy on a course for long-term prosperity built on clean new industries. So did it deliver on this promise? The short answer is no., at least not entirely. 

Buried within the 90-page document there are a few new policies of real merit, concrete measures to boost UK industrial capability in areas of major economic opportunity. For example, there is £120m to support a British-based offshore wind industry, a package of measures to improve testing and demonstration facilities for marine renewables, and the establishment of a public-private research centre to strengthen the nuclear industry supply chain. All very promising developments in their own right.

However, what was conspicuous by its abscence, was a long-term vision or sense of priority. The document gives no indication of what the government's priorities are for green development over the next 5-10 years. Instead, if one were to be extremely critical, it reads like a few short-term funding annoucements accompanied by a mass of restatements of existing policy and previous announcements. The strategy should have been bolder and sent a much clearer message to would-be investors about long-term funding priorities.

First, the focus should have been tighter. Rather than setting out nearly a dozen general areas of opportunity, four or five key areas should have been identified. The recession and the state of public finances will mean that resources are scarce in both the public and private sectors for several years to come. So to maximise its impact and attract private investment, government funding will need to tightly focused. The UK is competiting with the rest of the industrialised world to develop low carbon industries and we can't be world beaters in every single one of them.

Second, the strategy should have set out a longer-term vision. Of course, government is not in a position to commit specific sums of money to specifc projects years in advance. But it could, and should, have made clear its intention to sustain support over time for key indsutries. In this regards, the industrial strategy is conspicuously lacking compared to the goverment's plans for reducing carbon emissions and increasing renewable energy. Whether or not one agrees with them, in these policy areas long-term plans (to 2020 and beyond) have been clearly set out and long-term policies put in place to achieve them.

In short, the Low Carbon Industrial exhibits a lack ambition. And the risk is that companies looking to invest in emerging green industries will gravitate towards countries with clearer long-term commitments.          

  

Tags:

Green vision needs substance

Roger Salomone March 09, 2009 12:15

I attended Government’s “Low Carbon Industrial Strategy Summit” on 6th March, and couldn’t help but feeling a little underwhelmed. 

A heavy-weight team, fronted by Messers Brown, Mandelson and Miliband, set out a vision that was full of fine words about how the British economy can benefit from the transition to a low carbon economy. For example:

 “Our vision is of a UK economy that is at the heart of the huge, multi-trillion pound global market this will create, where businesses in this country are designing, producing, marketing and deploying the goods and services that will shape a low carbon world.”   

But there was nothing new in terms of policy thinking. No indication of how this compelling vision will be turned into reality. Nevertheless, the plan is still to have a fully-fledged low carbon industrial strategy in place by the end of the summer. So between now and then, someone will need to come up with some ideas. 

One of the biggest questions that will need answering is whether the “new industrial activism for a new green industrial revolution” promised by Lord Mandelson will be a continuation of the current policy approach or something more radical. 

Up to now, policy has focused on setting targets and providing financial incentives to reduce emissions, raise energy efficiency and increase use of renewable energy. Think targets for reducing carbon dioxide emissions, subsidies for renewable energy, and emissions trading. The idea is that if policymakers can craft the right “signals”, then the market will respond and low carbon industries will take off in the UK.     

Will this approach actually deliver on its promise? It is certainly part of the solution. But remember countries around the world have equally ambitious plans for their economies and, in many cases, are devoting considerable resources to achieving them. The goods and services of the much vaunted low carbon economy could quite easily be supplied from overseas. The UK wind energy market is testament to this.  

So government needs to be bolder. Having an industrial strategy should mean having a clear idea of what type of industries you want to encourage, creating an environment in which they can flourish, and using the policy levers available to speed their development.  

One place to start is thinking about what factors need to come together to make the UK the best place to do low carbon business. Things like taxation, skills, infrastructure and access to finance are likely to be major considerations for potential investors.  

Government also needs to look at how its £170bn annual procurement budget can be used more effectively to support the development of low carbon technologies and businesses in the UK. 

EEF looks forward to working with government to help answer these questions.

Disclaimer
This is an informal blog about manufacturing and the economy written by EEF's policy and representation staff. While it is written from an EEF perspective, contributions should not be taken as formal statements of EEF policy, unless stated otherwise. Nor does it cover all the issues on which we campaign - you can check these out in more detail at our main site.

We welcome and encourage comments, but we reserve the right to remove any that are offensive or irrelevant. We are not responsible for the content of external internet sites.

About EEF

EEF helps manufacturing businesses evolve and compete.  We provide business services that make them more efficient and management intelligence that helps them plan.  Our work with government encourages policies that make it easy for them to operate, innovate and grow.

Find out more at www.eef.org.uk