CBI urges new government to make green growth a priority: Olga Watterich

We also cannot afford not to invest and offset the cost of the seismic damage from climate change. 2023 broke every climate indicator: it was by far the warmest year on record; observed sea levels reached record highs, and greenhouse gas concentrations continued to rise.

At the same time, the UN has found that national climate action plans are still insufficient to limit global temperature rise to 1.5 degrees Celsius. The threat from climate change remains devastatingly real.

The need to address these challenges creates substantial economic opportunities for the UK in emerging markets.

The CBI estimates that by 2030, green growth ‘prizes’ could increase in value to contribute £37-57 billion of annual UK GDP alone. These prizes include net zero technology and infrastructure in which the UK has competitive strengths to attract inward investment and export, with domestic markets projected to be worth more than £1bn by 2030.

The startling pace of growth compared to other sectors means it is key to building a long-term, sustainable economy. Last year the green economy grew by 9 per cent compared to 1 per cent in the rest of the economy.

The UK was an early leader in seizing these opportunities. In 2020, we were investing the biggest share of GDP of any country in energy transition. Since then, however, we have dropped down the league table behind both France and Germany in overall investment.

And we are now up against huge stimulus packages: the EU’s Net Zero Industry Act and the USA’s Inflation Reduction Act, which is estimated to be worth over $1 trillion.

While we can’t outspend these huge incentivizing packages, we can outsmart our competitors by pulling the policy levers at our disposal. The CBI’s ‘Tax and Green Investment’ report, for example, shows how the tax system can better drive the supply of new green products and services and encourage the adoption of green technology through targeted capital allowances, investment tax credits and reductions to the corporation tax rate.

New and ambitious actions are also required to send a strong signal to business that the UK has a green plan and is ready to invest. The next government has to make green growth part of a revitalised investor pitch for brand Britain.

No more rowed back commitments, but a message from whoever forms the next government that the UK is serious about reaching its decarbonisation goals and is in it for the long haul.

To achieve this, business would like to see a new Office for Net Zero Delivery, based in the Cabinet Office, that embeds net zero objectives into economic strategy and leads a strategic approach across departments and devolved governments. A Net Zero Investment Plan would help to outmanoeuvre the huge public spending packages of our competitors by demonstrating to investors what market-making policies are in place to crowd in the private investment needed to scale technologies and build infrastructure like carbon capture storage, EV charge points and wind turbines.

In Yorkshire and the Humber and all regions of the UK, the power of partnership between businesses and government can accelerate green growth from the race to net zero. The investment needed to deliver the UK’s energy transition will ultimately come from the private sector.

Cultivating a shared understanding between government and industry about which net zero technologies and infrastructure will get us there and which cross-economy policies will crowd in the private capital to deliver, will edge the UK ahead of our rivals and help drive the prosperity that’s so needed up and down this nation.

Olga Watterich is CBI deputy regional director for Yorkshire and Humber