UK warned to get serious on green growth or face a future of economic pain

The UK government has been told it is being out spent and outsmarted by a string of nations in its drive towards growing the green economy.

Speaking yesterday at the University College London CBI director general Tony Danker (pic) said the UK must up its ambitions and open the purse strings or it risks falling further behind its economic rivals.

Danker said: “Our international competitors in Europe, Asia and the US are going hell for leather on green growth and getting firms investing. We are behind them now and seem to be hoping for the best.”

Early data shows that the UK could stay stuck in a low growth trap as the major drivers of productivity grind to a halt, he warned. This makes the chancellor’s Spring Budget a key point in the Government’s turnaround strategy. But there is grave concern that the Government could “shy away from the hard decisions that can reverse the UK’s trajectory’ with a General Election on the horizon.”

“The Skidmore Review is devastating,” he said. “And echoes CBI analysis of the UK’s performance against our competitors in future green industries. The UK is falling behind rapidly, to the Americans and the Europeans, who are outspending and outsmarting us.

“We’re behind the Germans on heat-pumps, insulation and building retrofits, the French on EV charging infrastructure, and the US on operational carbon capture and storage projects – despite the UK’s North Sea advantage. We’re lagging all three on hydrogen funding.

“We are leaving huge amounts of money on the table here. In the last two years alone, the UK has lost market share in green tech, equivalent to the potential value of £4.3 billion by 2030.

“That’s approximately £3 billion in EV assembly and battery production, and £1.3 billion on hydrogen electrolysers. Even before we get into the growth possibilities of emerging tech, like Carbon Capture and Storage.”

Danker continued: “While our competitors across Europe, Asia and the US are making their move, and going hell for leather, we seem to be second guessing ourselves, and hoping for the best. It’s time for us to take those hard decisions, generating the forward momentum not only to limit recession this year but also get us really growing next. And in turn, deliver wages that really are higher; skills that really do matter; and public services restored at last.

“Let’s get back to winning not losing in green by making smart regulatory changes and using public money specifically to unblock private sector investment.  We did this on offshore wind – we can repeat that successful formula.

“The UK Government protests that it’s increased its green investment. But we are not racing against ourselves. We’re in a race with our competitors, and this is where the lion’s share of growth for Britain will come, or not, in the years ahead.”

Danker used the speech to set out four key steps the CBI wanted the government to take to secure the UK’s role in the global economy.

On the country’s green transitions the CBI  said it wanted to see the UK up its game on green growth in response to fierce global competition for market share. “The UK cannot compete with US and EU subsidies so it must be smart and strategic,” it added.

The CBI estimates that £4.3 billion in European green growth market value will be lost by 2030.

“Green growth is one of the big opportunities in the coming years for the UK economy, so the Government must improve its record of delivery, in particular by reforming consent process for green infrastructure,” it said. “It needs to bring forward market-making mechanisms like the Contract for Difference that have proven success in renewables and could be applied to other promising technologies like hydrogen, carbon capture and sustainable aviation fuels.

“The Government needs to use regulation to stimulate domestic demand for green technologies as is being done for electric vehicles.”

In a wide ranging speech, Danker said in order to get growth going in 2023, the Government cannot take small decisions: they need to take big ones to ensure the UK is not going backwards but forwards.

“The Government is likely to comfortably meet its economic targets this year, but sustaining growth thereafter depends on taking some very big decisions right now, not waiting until 2024,” he said.

“Growth still matters,” added Danker. “This is people’s livelihoods and life opportunities. The PM set out less than a year ago what is needed to transform our economy. The ideas are there. Let’s stop second guessing ourselves and get on because there is money on the table to capture right now.”