Political concerns grow over Britain’s lost ‘green economy’ advantage – OpEd – Eurasia Review

By Andrew Hammond*

Following the COP26 climate summit in Glasgow in 2021, Boris Johnson’s UK government claimed that the nation was at the forefront of the global race for green technology and investment.

Fast forward to 2023, however, and that proclamation looks hollower by the day as the government fails to take advantage of the global green economy it may once have had. This is not only a tragedy for the planet but also for the UK economy as the Chancellor prepares his annual budget statement ahead of Wednesday.

At the time of writing, there is tremendous new impetus for the UK to up its game and push this agenda forward. This is because following the US Inflation Reduction Act and expected new counter-subsidies from the EU’s Green Deal Industrial Plan for the net-zero era, there are growing concerns from the UK economy that the nation could miss out on a rising tide of green investment Global economy growing from around US$90 trillion today to a projected US$190 trillion by mid-21st century, when the world could achieve net-zero emissions.

It’s not just political opponents of the government who are voicing concerns. Take the example of the Confederation of British Industry, the self-proclaimed voice of British big business, which issued a stark warning in January that “the UK is fast falling behind – to the Americans and the Europeans who are trumping and tricking us . We stand behind the Germans on heat pumps, insulation and building retrofits, the French on electric vehicle charging infrastructure and the United States on operational carbon capture and storage projects – despite the UK’s advantage in the North Sea. We are lagging behind all three in hydrogen financing. This is surprising to many who rightly believed that clean energy was our property. But it has changed in the last two years as the UK market share has been lost in green tech, potentially worth £4.3bn by 2030.”

Other UK industry bodies such as EnergyUK and RenewablesUK have also sounded the alarm. Perhaps the clearest warning, however, came from the government’s own Skidmore Net-Zero Review, published in January, which highlights that the UK is at risk of losing further green investment due to factors such as inconsistent decision-making at the top of government and crucial delays in planning decisions at local level Level.

These warnings are a far cry from the bold pledges made at COP26, when the government announced its intention to be the world leader in reducing carbon emissions. Just before the big summit, a new net-zero strategy was released, aiming for a decarbonized economy by 2050.

In doing so, the government aims to create high-skilled jobs, make the transition from fossil fuels, secure the UK’s energy supply and use green technologies to spur economic growth. For example, the strategy hopes to create up to 190,000 jobs by 2025 and up to 440,000 jobs by 2030, and to mobilize up to £90 billion in private investment by 2030.

It is that promised vision that is now under threat unless the UK government can take the lead. If not, the tragedy is that the full potential of existing investments may not be realized in recent years.

Take the example of wind energy where the UK could be a great testing ground for innovation in power distribution infrastructure, large scale storage etc due to the large wind power generation capacity already installed to balance and manage the intermittent nature of wind power. This may lead to the emergence of a differentiated UK based technology.

Significant challenges remain, however, and the National Audit Office this week issued an important new report warning that the UK’s newly formed Department for Energy Security and Net-Zero are planning how to rapidly expand offshore wind energy can be achieved is behind schedule. The government aims to more than triple offshore wind capacity to 50 GW by 2030 as part of its energy security strategy. The challenge often cited is that the cost of developing wind farms has risen as prices of commodities such as steel and copper have skyrocketed, so the next few license auctions are likely to see higher prices.

The economy has many concerns, but with the right ambitions and strategies, the situation could still be turned around. One of the UK’s key strengths on the green economy agenda is the flexibility and depth of its financial industry across the City of London. The energy transition requires a lot of capital and many countries could learn from UK best practices. The UK, for example, also has a good track record of using fintech to support the development of innovative green technologies.

In what may be a “last saloon” for international climate action, the UK government must now step up and deliver. If it doesn’t, it will not only fail the British public, but the whole world as well.

• Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.