Industrial Strategy green paper: A step in the right direction or too little, too late?

The Government has unveiled its much-anticipated Industrial Strategy, outlining plans to transition to a low-carbon, resource-efficient economy. But does the green paper offer enough tangible evidence that we are on the best pathway to a low-carbon economy?

The broad consensus of green groups and sustainability professionals in the immediate aftermath of today’s Industrial Strategy paper suggests that the country does, at the very least, have a clear opportunity to drive forward with low-carbon commitments.

Underlining the vision of the 132-page Strategy lies a plan to “deliver affordable energy and clean growth”. The Goverment aims to achieve this ambition by upgrading infrastructure, improving supply chains and increasing investment in research and innovation.

The release of this document is well-timed: Theresa May has sent a strong signal that the UK remains open for business, as Britain remains engulfed in Brexit negotiations. The Prime Minister’s message that the country will “more outward looking” than ever before as a global trading nation could well provide a much-needed confidence-boost for investors; effectively underlining that that the UK can lead the global race to dominate clean technology markets.

Energy and Climate Intelligence Unit (ECIU) director Richard Black was among the first to react to that statement. “At first glance, the Industrial Strategy announcement seems to herald evolution not revolution regarding energy and the transition to a low-carbon economy,” Black said. “A commitment to energy security and tackling climate change are taken as givens, but it’s the third leg of the ‘trilemma’ that reveals the opportunities that the Government hopes to grasp, by exploiting innovative new technologies in the most cost-effective way possible.”

What is promised?

A world-leading sustainable economy must be driven by a technically-skilled UK workforce to steer these emerging industries. Indeed, today’s Industrial Strategy recognises the potential for job creation in low-carbon sectors to help deliver economic growth in line with the UK’s carbon reduction commitments. The paper gives specific mention to the “major opportunity” for high-skilled domestic workforces at developments such as the Siemens offshore wind project in Hull to “sustain a supply chain of smaller business” and “build a competitive industrial base”.

This need for additional skills is closely aligned with investment in smart technologies such as demand response, energy storage and electric vehicles (EVs) – all given particular mention within today’s green paper. Drawing together these technologies is noted as a prudent move because, as the Government itself states, “step-changes in innovation will likely involve all of them”. The paper notes the potential for EVs to provide electricity storage and demand flexibility options that could “provide benefits to consumers and our electricity system”. The “continuing commercial success” of Nissan’s solar-powered Sunderland plant is cited – the Japanese carmaker recently provided the exact type of boost required in a post-Brexit Britain with its turn to EV battery storage systems as a new key area for sales.

Nissan’s Sunderland plant underpins the new Strategy’s regional approach to low-carbon investment, which promises to “back local innovation strengths”. An extra £556m investment into the Northern Powerhouse should provide a positive step to create jobs and lift confidence for companies, as Julie Hirigoyen, the chief executive of the UK-Green Building Council (UK-GBC), points out. “Attracting investment from businesses into key regions will depend on the availability of healthy and productive places for people to live, work and learn,” Hirogoyen said shortly after the paper’s release.

A nod to localisation within the Strategy paper includes a potential boost for flood resilience measures in vulnerable northern towns and cities. This investment is particularly welcome in light of recent evidence that 2016 was the hottest year on record; coming off the back of the Government’s own five-year climate action plan which highlighted the need for urgent action to prevent the costs and disruption caused by extreme weather. The paper goes on to provide a brief mention of the wider pressures on natural resources globally and within the UK, with a focus on how “we improve our stock of natural capital”.

WWF-UK head of climate and energy policy Gareth Redmond-King is among those that have reacted to today’s paper by calling for an economy and industrial base that recognises the “risks for business from the pressure on water, timber, mineral and other natural resources and which reduces, re-uses and recycles these valuable resources.” Resource efficiency, in particular, will play a crucial role – evidence within a report released by the Aldersgate Group earlier on shows that the UK economy could swell by nearly £80bn if the country adopts resource-efficient business models.

The Industrial Strategy paper considers how energy costs can be contained or reduced by increasing resource productivity, highlighting specifically how “increased material efficiency across the whole supply chain deliver huge cost savings and improve the productivity of UK businesses”. The resulting consultation will be a crucial tool for ministers to work with stakeholders to explore opportunities to reduce raw material demand. As Redmond-King suggests: “Only through sustainable and equitable use of resources will we be able to meet the Government’s objective of leaving the environment in better shape than we inherited and to meet the UK’s international commitments to the Paris Agreement and the Sustainable Development Goals.”

What wasn’t mentioned?

Today’s paper is not without its shortcomings, however. For instance, the blueprint fails to address the renewable energy policy gaps created in recent years through subsidy cuts for onshore wind and solar panels. In fact, the paper refers to the launch of a new review aimed at lowering the cost of cutting carbon in the power and industrial sectors – which is likely to include reductions in subsidies for offshore wind energy. The text goes on to underlines a “settled policy position” which reflects Government’s commitment to meeting its legally-binding targets under the Climate Change Act, so it appears that little hope exists for renewed financial support for renewables through this plan.

Moreover, while low-carbon heat has been often regarded as the failing element of the Government’s green policy, this paper provides no indication of reversing the controversial cut to the Renewable Heat Incentive (RHI). This will come as a matter of concern to this sector, considering that the UK is not even halfway towards reaching a 12% target for heat generated from renewables. Additionally, there was no specific reference for the now-stagnant carbon capture and storage (CCS) industry, although Climate Minister Nick Hurd has previously insisted that the Government is refusing to close the door on the technology.

What next?

It is important to note that today’s document is not the official launch of Britain’s Industrial Strategy, it is simply the first step in a consultation process to deliver the Strategy later this year. The Government is now inviting people from across the public and private sectors to respond to the Industrial Strategy consultation via an online survey by mid-April. That survey can be found here.

ECIU’s Black says ministers’ next act should be to respond to the consultation with a “firm, unequivocal statement that they are committed to the smart energy revolution, and so restore to investors some of the confidence lost under the previous Government”.

In the interim, updates can be expected on both the Emissions Reduction Plan and Defra’s 25-year Environmental Plan, which are likely to set the long-term objectives for the UK’s natural capital and climate change targets. The delays of the respective publications’ release has coincided with the UK’s decision to leave the EU – the next few months will provide a strong indicator as to how the UK’s continuing environmental ambitions will be altered in a post-Brexit Britain.

In the immediate future, the Prime Minister has a golden opportunity to challenge Donald Trump’s climate-scepticism when she becomes the first world leader to meet with the new US President this Friday. The UK is uniquely placed to become a strategic partner of the world’s largest economy, but it remains to be seen if May will explore the possibility of convincing Trump to enter a large-scale collaboration on climate change.

George Ogleby

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