Britain 's manufacturers have called on the government to give them the clarity and predictability they need to invest in the low carbon economy by setting out its vision by the end of 2013 on how industry can deliver it.
The call was made on the back of a new report launched today by EEF, the manufacturers' organisation 'Tech for Growth' delivering green growth through technology. This looks at how government can realise the potential of key manufacturing sectors and, unlock investments in breakthrough technologies that will generate a step change in their carbon emissions.
According to EEF this would help UK manufacturers to take advantage of significant opportunities to export these solutions to the rest of the world. The report highlights new estimates that the potential prize could provide a boost to the UK economy worth up to £880 billion between now and 2050.
However, EEF also published analysis which shows that the UK's position as the sixth largest producer and provider of low carbon goods and services is faltering, with manufacturing output contracting.
The report also shows that the UK is placed towards the bottom of the OECD countries in government research spending on climate & energy related R&D, spending just over 1% of its R&D budget on energy against the OECD average of almost 4%.
Gareth Stace, EEF Head of Climate and Environment Policy said: 'The low carbon economy represents a massive opportunity for manufacturers and a major prize for our economy. If we can build an early lead in key areas we have the chance to export our solutions to the rest of the world.'
'But we are currently failing to take advantage of this opportunity to be a world leader in low carbon goods and services,' he added. 'We need government to set out its vision of manufacturing's place in the low carbon economy, focus more on innovation and provide greater regulatory stability and predictability to unlock investment in breakthrough technologies that will deliver it.'
According to EEF, manufacturers themselves are already investing in green growth with six in ten companies developing new processes to improve their own environmental performance. Over half of large companies are developing new products and internal processes to help them and their customers manage climate & environment issues.
However, despite these investments EEF warned the UK's performance is faltering with manufacturing output in low carbon goods falling in 2010/11 (3). In contrast, countries such as China, the United States, India and South Korea, that have a strategic policy framework of growing their low carbon industrial base, all recorded substantial double digit growth in this period.
EEF believes the current policy framework in the UK is too fragmented. Key areas to address include measures to fulfil our innovation potential, to ensure industry has access to the right skills, obtaining the finance to invest in decarbonising technology and competitively priced electricity.
To address this, EEF is calling on government to set out a clear vision by the end of this year for UK manufacturing in a low carbon economy to provide certainty for large scale, long-term market opportunities. This needs to be accompanied with measures to ensure the UK can develop a lead in early stage technologies and which address the obstacles holding back the development or commercialisation of new technology.
EEF's own recommendations include:
- Complementing the 2030 decarbonisation target with a goal to match the OECD average for government expenditure on energy and environment R&D over this period and make progress in each Spending Review.
- Outlining the portfolio of low carbon technologies on which the UK's innovation effort will be focused by summer 2013 and ensure intervention is additional, focuses on cost reduction and market failures.
- Developing the Low Carbon Funding Navigator which brings together private and public funding opportunities in low carbon energy projects to include R&D funding opportunities available to manufacturers
- Undertaking a review of Enhanced Capital Allowances to ensure they are targeting low carbon technology investment
- Ensuring the Green Investment Bank (GIB) becomes a one stop shop for all sources of low carbon project finance and that its fund managers allocate money to projects that otherwise wouldn't go through. Mandating the Growth Implementation Committee to monitor the progress of the GIB in providing finance for investment in low carbon technologies
- Government setting out its future procurement needs to create a clear market demand. This will stimulate low carbon technology innovation, help unlock investment and reduce technological development risk.
- Setting out a policy roadmap by 2015 for how sectors such as steel, glass, and cement which have unique issues in decarbonising will be helped to cut emissions.
This insightful report is available for download here.