Low-carbon strategy lacks focus

Britain needs to increase its efforts to become a leading location for low-carbon industries if it is to take a share of a £4.5tn low-carbon business opportunity.

This is the conclusion of a report released by EEF, the manufacturers’ organisation, which looked at how the UK rates as a location for low-carbon industries.

The report, entitled ‘Under the Microscope – Is UK PLC Ready For Low Carbon?’, said that despite the government’s low-carbon industry strategy announced earlier in the year, the UK is at risk of falling behind countries such as South Korea, who have laid out more ambitious carbon-reduction plans.

EEF Energy Adviser Roger Salomone said that the government needs to improve strategic thinking in order to actively engage with industry.

‘The last two years has seen more progress towards a low-carbon economy than in the previous 10, but we cannot afford to rest on our laurels,’ he added. ‘Whilst the UK now has a low-carbon industrial strategy that has laid the foundations, we cannot ignore the fact the UK is behind the curve and playing catch up in this area.’

The EEF claims that market for climate-friendly ‘cleantech’ goods and services was worth £3tn in 2008 and is expected to reach £4.5tn by 2015 as a result of accelerating resource depletion, growing environmental awareness and increasingly aggressive climate change policies.

According to the report, the UK is attractive to investors as its has a good pool of skills clusters in areas such as offshore and automotive engineering, and increasing government support for low-carbon technology.

However, its major weaknesses include uncertainty over the long-term supply of core skills, a tax system that discourages capital investment and a low-carbon industrial strategy that lacks focus.

The report also noted that the UK has the lowest level of government-funded energy-related research and development in the Organisation for Economic Co-operation and Development (OECD).

In response, it suggests that the government should focus on a smaller number of industries, such as nuclear power, carbon capture and storage, offshore renewables and low-carbon vehicles and make a long-term commitment to support them.

It added that raising public support for clean energy research, development and demonstration and introducing a ‘green bond’ scheme that allows manufacturers to use future tax benefits to finance low-carbon technologies could improve incentives for businesses to locate in the UK, whilst continuing to invest in skills to drive forward the industry.