Aldersgate Group calls for robust industrial strategy to achieve net zero
Heavy industry's role in the UK's economy is at risk of a £224 billion loss without support, but targeted policies can unlock growth, create jobs, and maintain competitiveness in the face of global competition like the Inflation Reduction Act, finds new research.
Heavy industry's role in the UK's economy is at risk, but targeted policies can unlock growth, create jobs, and maintain competitiveness in the face of global competition like the Inflation Reduction Act, finds new research.
New research from WPI Economics on behalf of the Aldersgate Group, finds that without further policy support for heavy industrial decarbonisation, the sector’s contribution to the UK’s economy is at risk. Studies show this could wipe out over £224 billion or 5.9% total gross value added (GVA) in 2050.
The UK’s heavy industries and their wider supply chains are a critical foundation of the economy, Aldersgate reveal the industry contributes £152bn in GVA to the UK economy and supporting over 1.4 million jobs across the country.
The report outlines, if a thriving green industrial sector is created through investment and policy support the economic rewards would be significant. Aldersgate show the right approach could deliver economic growth across the UK’s regions, increase supply chain security, and protect more than 450,000 jobs and £72bn GVA, all while providing a major economic boost in other sectors across the economy.
Immediate action is vital in the face of international competition from the Inflation Reduction Act. The second Aldersgate Group paper launched outlines what the UK must do to retain investment in the net zero transition and maximise economic benefits despite a challenging new economic landscape.
The urgency is made clear by Aldersgate recent reports that despite being a global leader in clean energy investment, the UK has already started to fall behind international rivals. In 2022 investment in the energy transition in the UK fell by 10%, which stands in stark contrast to the US and Germany, where it rose by 24% and 17% respectively. Furthermore, Aldersgate research finds that several of the UK’s top ten sectors of national significance to exports are most exposed to trade risks from the Act.
Aldersgate reveal key recommendations from the reports state that the UK Government must address this by delivering a robust industrial strategy, addressing high electricity prices for heavy industrial businesses, introducing measures to promote green public procurement, enacting an Emissions Trading Scheme in line with the European Union, and setting out a voluntary Contracts for Difference scheme.
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