This post is by Bryn Kewley & Peter Clutton-Brock of E3G.
From an unassuming factory in Sunderland, the UK is leading the EU market in electric vehicles. It’s a market which is expected to grow quickly, with Norway already consulting on an outright ban on the sale of fossil fuel cars.
Nissan invested £420 million in their factory in the north of England which recently reached the milestone of producing their 50,000th Leaf. Not only is this the best selling electric vehicle, but this is the only plant in Europe where they’re built.
Another international company, Toyota, also chose the UK for the first mass produced hybrid vehicle, the Auris Hybrid, helping to bring the total value of the UK’s low carbon vehicle exports to £3 billion. The UK was chosen by these companies in part because Europe gives the UK an international competitive advantage.
This advantage is present across the 96,500 businesses in the growing low carbon and renewable energy economy of the UK which employs 238,500 people full time and generates a £46.2 billion turnover. This sector has grown rapidly, despite the economic recession.
The UK is a gateway to EU consumers
The UK is currently seen, by the Commonwealth and other countries, as a gateway to the 500 million EU citizens which represent the single market. Two thirds of Leafs produced in the UK are exported to Europe, but both these exports and the complex supply chains underpinning them would be threatened by Brexit.
To be cut off from the world’s largest trading bloc, even whilst renegotiations occurred, would leave the new industry in hiatus. Uncertainty, during years of negotiations, may cause the industry to move offshore.
In the event of a Brexit the rising political forces in Britain would ostensibly not tolerate the free flow of labour which the single market is predicated upon. Considering only eight per cent of EU exports are to the UK (versus 44 per cent of UK exports heading to the EU), the rise of far right political forces in Europe and the desire to make leaving the EU unattractive to other member states, EU countries would have little incentive to give Britain a special deal. The likely outcome is that there will be trade tariffs with Europe. Deals with alternative markets in the US and Asia would take years to negotiate, squander our geographical advantage and may threaten further investment from international vehicle manufacturing companies.
Given that electric car manufacturers are looking to develop production facilities that serve the whole of the EU market, in this situation inward investment to the UK plc – for instance the £26.5 million specialist battery production facility Nissan has yet to build – would be unlikely to materialise.
Standards and long term goals are good for the market
Other advantages of EU membership include mandatory vehicle emission standards which have been legislated by the EU to reduce the cost of travel and improve air quality in Europe. This has produced the world’s largest market for low emission vehicles.
The investment decisions of large international companies with complicated supply chains are made years in advance. Europe provides a stable policy environment which, having been negotiated by ministers from all member states, remain unaltered for long periods. For instance, the recently agreed EU 2030 goal of reducing CO2 emissions by at least 40 per cent is long term and includes renewable generation and efficiency targets. This not only creates a Europe-wide internal market for these products and services but establishes a steady policy environment, reducing the cost of capital and giving companies the confidence to spend on R&D and deployment to bring down their costs.
EU investment supports growth in the UK
Finally, UK companies in the low carbon sector receive inward investment from the EU and its institutions. The European Investment Bank (EIB) and the European Fund for Strategic Investment support growth in Europe and have provided cheap capital for low carbon projects. Over the past decade the EIB has provided £10 billion for UK energy infrastructure. In May this year the Beatrice offshore wind farm off the Scottish coast received over £500 million in backing for the £2.7 billion project.
The EU is also helping to fund the UK Rapid Charging Network through the EU’s Trans European Network for Transport. This network is being designed as a transnational network of EV rapid charging points allowing all vehicles to be charged on long distance trips across the EU. Another example of how harmonising standards across the EU can provide substantial benefits to UK customers.
Opportunity for the UK within the EU
Keeping our EU membership will help to supercharge the UK’s low carbon economy as we evolve into a zero emission world. As with any technological advancement, new industries form in hubs, and evolve complex networks, the effects of which often serve to reinforce the importance of the location they initially developed. The electric car industry is developing quickly, and the UK has the opportunity to be in the driving seat of European electric car manufacturing.
This is an opportunity to shake off sluggish growth, to rebuild our manufacturing sector with an advanced twist and to rebalance the economy towards the north away from London. It’s also a moment to redefine ourselves within a reformed EU, to democratise our energy system and the way we travel, and to extend our sovereignty beyond the shores of our small island, to lead in the low carbon industrial revolution.
The debate ‘Will the UK economy succeed in a low carbon world?’ was held on 9 June 2016, with a keynote speech by Lord Mandelson, organised by Green Alliance with CAFOD, Christian Aid, Greenpeace, RSPB and WWF. Read the Storify record of the discussion.