The UK Government is failing to provide consistent commitment and support to companies trying to make the switch to a low-carbon future, according to an influential think-tank report published today.
The Institute for Public Policy Research (IPPR) said Ministers must now deliver a clear message in support of the green technology revolution to provide industry with the confidence to invest in it.
And more damagingly, the IPPR report accuses the Government of blowing “hot and cold” on its commitment to be the greenest ever and reduce carbon emissions.
The findings of today's report, “Growing Pains: British industry and the low-carbon transition”, were drawn from a series of private roundtable discussions and interviews with senior executives from different sectors which shed light on the barriers to, and the opportunities presented by, the transition to a low-carbon economy.
The findings suggest that there are opportunities for UK plc to take advantage of and adapt to the challenges presented by the UK’s low-carbon transition, particularly in the Transport and Energy sectors.
However, the findings also highlight the need for policymakers to have a more active role in addressing the barriers to low-carbon growth, which face many manufacturing and energy-intensive industries in particular.
And it slates the Government's approach on recent fiascoes such as the unlawful cuts to the Feed-in Tariff for solar PV.
“Government policy has at times displayed a lack of stability, certainty and consistency, particularly towards low-carbon energy generation,” it described. “Many participants described policymakers as continuously ‘moving the goal posts’, making investment decisions difficult and creating uncertainty.
“Although many felt the FIT reduction was necessary, participants were critical of the way the Government handled the decision. They suggested, as others have done, that the short notice given to companies damaged industry, public and investor confidence.
“The protracted legal dispute that followed, in which the Government was defeated in three successive court rulings, has also not helped. Some clean-tech investors consulted for this report said they were increasingly cautious of investing in technologies that are dependent on subsidies, given their susceptibility to rapid and seemingly arbitrary policy changes; they preferred regulatory-based incentives to stimulate technology deployment."
The paper presents a six-point plan of policy interventions which would reinforce the UK’s low-carbon ambitions and provide vital support to UK industries:
* Provide stable, consistent and long-term policy: industry representatives were united in their views that the policy framework should be stable; many complained about the government ‘moving its goalposts’.
* Develop sectoral industrial strategies to spur low-carbon energy, transport and manufacturing.
* Ensure more nuanced policy for energy-intensive firms: in some cases energy-intensive firms face barriers and challenges that are specific to their individual sectors.
* Introduce a targeted ‘green deal’ for manufacturers: manufacturers need more incentives to invest in low-carbon and energy-efficient technologies.
* Collaborate with European partners on low-carbon innovation to target possible technological breakthroughs.
* Work proactively with industry to promote international sectoral agreements: although not a replacement for binding country-level emissions reduction commitments, sectoral cooperation can be a precursor to greater regulatory action at the national and global levels.
IPPR research fellow Reg Plant said: "An ambitious decarbonisation policy offers a route to long-term sustainable economic growth, and productive British businesses.
"But businesses need to know the government will provide consistent support for their investments.
"And at the moment ministers blow hot and cold on their commitment to a green future."
The IPPR said there were "mixed signals" because the government initially promised ambitious targets before seeming to appear doubtful about their effect on the economy.
It also said the Treasury should abandon plans to introduce a "carbon floor price" - a green energy tax setting a minimum price for greenhouse gases.