The Prime Minister’s net zero announcement this week made a big splash in an already agitated green policy pond. While it might have been more nuanced than some of the initial media speculation it was deeply concerning that in a mere matter of minutes, the direction of travel on net zero could be quite fundamentally changed. Industry was waiting in anticipation to understand exactly what might be changing.
Reassuringly there was no faltering on the intention of the country’s international or domestic net zero commitments. But what industry needs right now is certainty, stability, and the confidence to invest, and this is not quite what they got.
Manufacturing businesses, particularly the automotive value-chain and in the next generation of domestic and commercial heating subsector, will be acutely aware of how the sands have shifted under their feet, once again. In the case of automotive, the UK has since 2020 been committed to the 2030 deadline for the cessation of sale of ICE, which has been a more ambitious target than our closest neighbours and trading partners in Europe.
The new proposals are too diluted, and will cause the gap between the government’s emission reduction plans and real action to widen and to run an even greater risk of the UK missing the net zero target
As a result, over the past years manufacturers in the automotive value-chain have ramped up investments in the future of electronic and alternatively powered vehicle technology in order to take advantage of the anticipated seismic shift in the vehicle market come 2030.
With this announced change, many within the automotive sector will feel like they’ve been left holding the baby, and that their accelerated commitment over recent years to investing in the next generation of vehicle technology will now go without the commensurate return.
And it’s not just the automotive sector that has taken great strides to transition to net zero. Manufacturers of all shapes and sizes have put net zero on the top of their agendas and business priorities. The vast majority either already have a net zero strategy in place or are in the process of implementing one.
Manufacturers have sought to decarbonise their processes and production lines, reducing their carbon emissions, and increasing their energy efficiency.
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Yes, we have seen some piecemeal incentives drop in here and there. The business rates relief for building improvements and relief for green technologies for onsite generation are welcomed. But these incentives (or removal of disincentives), often lack one thing in common – certainty. Short time frames that don’t relate to the average business investment cycle. The same can even be said for the Government’s flagship full expensing announcement which will only be in place for three years.
Credit where credit is due, there are some positive takeaways in the detail of the announcement. For example, the acceleration of the national grid upgrade to allow business to get a connection as well as more targeted R&D with the new Green Future Fellowship to allow the development of real breakthrough technologies for decarbonisation. But the question remains, will this be enough?
For us, the new proposals are too diluted, and will cause the gap between the government’s emission reduction plans and real action to widen and to run an even greater risk of the UK missing the net zero target. Instead, we should stay firmly on track, double down on net zero, and not shy away from its challenges.
We only have to look overseas to see the big bold and ambitious plans other nations have put in place. We now run the risk of falling behind our international counterparts as a home for green technologies if we persist in frequently altering policies that impact businesses directly.
This is a timely reminder that the UK also needs a long-term industrial strategy which encourages innovation in advanced, high value technologies such as net zero and AI to stimulate growth and skilled employment. This announcement sends entirely the wrong signal for businesses and suggests if we aren’t looking forward, we are simply going backwards.
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