Jeremy Hunt has criticised President Joe Biden‘s plan for green growth – the $400bn Inflation Reduction Act (IRA) – and he has accused the US of leading a “distortive” global subsidy race.
The Chancellor said the UK’s own climate change strategy will be “different and better”, but the UK will not go “toe-to-toe” with the US in regards to mass subsidies and tax breaks. Britain’s response to the US‘s green subsidy plans will not be announced until the autumn, which has left the government open to criticism that it will lose out on creating employment opportunities in new green industries.
Grant Shapps, the energy security secretary, has announced a multi-billion pound energy security plan, which signals the government’s shift towards clean power. The plan includes investment in offshore wind, new nuclear modular reactors, carbon capture and a scheme designed to incentivise investment into renewable electricity.
The government’s energy security plan, which comes eight months after Biden announced the IRA was passed, falls far short of what was expected by UK business leaders. Particularly as the US and EU press forward with major responses to climate change. Research by the Confederation of British Industry estimates that the UK is investing five times less in green industries than Germany and roughly half the amount that France and the US are investing. The Institute of Directors has warned that “the UK will find itself left behind in the accelerating race to lead the green economy”.
[See also: Why Labour is going green at its conference]
Much of what is contained in the government’s energy security plan has also been already announced. George Osborne first promised new nuclear technologies in 2015. The carbon capture programme was first announced last year, and won’t come into effect until the next parliament. The £160m for offshore wind was also announced last year. The ban on onshore wind is yet to be lifted.
As the US and EU compete for jobs in green technology, the government seems wary of expanding green industries and becoming entangled in a potential trade war. But many business and industry leaders think that the UK will be left out of potential growth if the government does not invest in new green technologies.
The Conservatives political philosophy has held back the UK before. In 2010, David Cameron urged people to “vote blue, go green”, before telling aides in 2013 to find ways to cut “green crap” policies. Experts believe that removing these policies has added £150 annually on to household energy bills.
The Labour Party, meanwhile, says that the £28bn-a-year climate investment pledge, announced by the shadow chancellor Rachel Reeves – which is designed to match-fund private investment – is a comprehensive response and will create green jobs in Britain.
Ed Miliband, Labour’s shadow climate change and net zero secretary, believes the plans unveiled today will amount to “higher energy bills, energy insecurity, lost jobs and climate delay”. Without a clearer sense of direction on climate amid the cost-of-living crisis, the Tories may leave the opposition with a powerful message to take to the electorate.
[See also: The dangerous conceits of the green revolution]
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