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.