Low carbon vision, the £880 billion proze
Much has been made of our position as the world's sixth largest producer and provider of low-carbon goods and services. But there are signs we are faltering. Manufacturing, the largest slice of activity in the sector, contracted in 2010/11 while China, the US and others are experiencing rapid growth in this sector.
Yet there remains a real opportunity for UK plc and, for manufacturers, especially in sectors relating to energy technologies. In our latest report published this week Tech for Growth: delivering green growth through technology we outline the steps government must take to grow low-carbon manufacturing and unlock investments in technologies to help manufacturers decarbonise.
Firstly, government must set out its economic vision for manufacturing. The need for this vision is well illustrated by the vacuum in the government's Carbon Plan relating to the transition of key industrial sectors that emit greenhouse gases as a result of their processes, rather than their energy consumption. So far we have ignored how to decarbonise these "hard-to-treat" sectors which is untenable. We must understand what is expected of them and have a clear plan on how to tackle them: 2050 is just one or two investment cycles away for some.
A strong culture in innovation holds the key to minimising the cost of meeting climate change targets, reducing the cost of energy, capitalising on the economic opportunity presented by green growth and for overcoming technical challenges to decarbonise industry. But this is being undermined by erosion in spending on research and development. We must invest more, especially at the right place in the innovation cycle.
This must be underpinned by a clear push on skills given real difficulties in recruiting skilled workers. Without skilled people, we just won't be able to innovate.
Finally we need to ensure that finance works. Manufacturers have implemented technologies that deliver paybacks within the normal investment horizon but we now to unlock the next tranche of technologies with payback periods beyond this during the current economic uncertainty. Our report sets out some initial solutions: a better Capital Allowance system and, more responsive Green Investment Bank.
Get this right and we allow UK businesses to export low-carbon solutions to the rest of the world, anchoring these businesses' economic future in the UK. Failure to respond could see us lose some manufacturing sectors entirely and miss out on opportunities for green growth.