This post is by Baroness Brown of Cambridge DBE FREng, chair of the Committee on Climate Change’s Adaptation Sub-Committee. It is written in a personal capacity.
We are approaching a climate change tipping point, one that I am eagerly awaiting. With all of the political changes going on in the UK and around the world, I just hope this one doesn’t get delayed.
In my role as Low Carbon Business Ambassador for the UK I have been able to tell a wide range of global audiences that the fastest growing sector of the UK economy through the recession has been low carbon goods and services, which has been growing at between four and six per cent per year. As a non-executive director of the Green Investment Bank (GIB), I have seen, over a period of just four years, investment in UK offshore wind move from being something that needed a government partner to ‘crowd’ other investors in, to a sector where the competition to invest in operating assets is so strong that GIB has been able to launch a £1 billion wind fund. All of this activity is driving up confidence and delivering dramatic reductions in cost.
Major investors such as pension funds are looking at the long term return and value of their investments. They are realising that low carbon assets offer returns in the short and the long term, whereas carbon intense businesses look increasingly uncertain. The green bond market is developing, alongside a new services market for green assessments of potential investments.
These shifts are reflected in the growing role of low carbon businesses in our economy. The recent Energy prices and bills report, published by the Committee on Climate Change, concludes that the low carbon economy is already comparable in size to energy intensive manufacturing, at two to three per cent of GDP, and is growing much faster than the rest of the economy. The UK is well placed to take advantage of the growing global market in low emissions vehicles; low carbon services such as finance, insurance and consulting; low carbon electricity, including offshore wind and smart grids; and energy efficient products. Some of these are already reflected in the government’s new industrial strategy and research investments, including the recent announcements of funding for advanced battery developments.
So we are approaching a critical tipping point – the one where business and investors drive the low carbon future – whatever individual governments do. But we aren’t quite there yet. In the UK we need to ensure that the government continues to send strong signals in its forthcoming clean growth plan and retains, or improves on, EU efficiency and environmental standards as we enact the ‘great repeal bill’ and leave the European Union.
The UK’s leadership in passing the Climate Change Act in 2008 has put us in a strong position to benefit from the fast growing global low carbon economy. The evidence is accumulating that this is supporting UK growth. The industrial strategy is the place to capitalise on this opportunity. We mustn’t stop now.
‘Industrial strategy fit for the future: perspectives on building a competitive UK economy’ brings together the views of seven respected thinkers from politics, business, trade unions and academia on the kind of economy the industrial strategy should be building and the role low carbon and resource efficiency can play.