The UK risks falling behind other countries in the race to achieve a net zero economy without strategic public investment in green manufacturing technologies, a new report by think tank IPPR has warned.
The report, titled Growing green: A proposal for a National Investment Fund, highlights how the US has marked the first anniversary of its Inflation Reduction Act, which is aimed at boosting domestic investment in clean energy technologies and infrastructure and creating green jobs, while the EU has implemented its own Green Deal Industrial Plan.
“The cost of inaction on people’s livelihoods will be too high, while there are huge opportunities to be captured by the government co-investing with private companies,” said Simone Gasperin, IPPR associate fellow.
IPPR is calling for a National Investment Fund (NIF) to provide finance for investment projects in green manufacturing in the UK.
The NIF would provide equity finance to firms, supplying funding in return for becoming a part-owner of the business and sharing in its success and future profits, according to IPPR.
The think tank suggests that initial funding would be provided by the Treasury, and further supported by tax revenues from North Sea gas and oil, or by levies which IPPR said should be imposed on share dividends and buybacks.
“The National Investment Fund is a policy proposal for our time. The UK needs to finance and coordinate strategic industrial policy projects that will deliver a net zero transition through economic prosperity and inclusion,” said Gasperin.
Global energy investment leaders
According to a 2022 report by the International Energy Agency (IEA), the highest clean energy investment levels in 2021 were seen in China ($380bn), followed by the European Union ($260bn), and the US ($215bn).
The annual average growth rate in clean energy investment in the five years after the signature of the Paris Agreement in 2015 was just over 2%.
“Since 2020 the rate has risen to 12%, well short of what is required to hit international climate goals, but nonetheless an important step in the right direction,” the IEA said.
More than 80% of EV sales were concentrated in China and Europe with more than 90% of global spending on public EV recharging infrastructure being in China, Europe and the US, the IEA noted.