MPs are piling pressure on the government to compete with rival markets for green investment, amid growing concerns the UK could lose out to the US and EU unless it offered a more attractive climate for renewable energy projects.
Shropshire Conservative MP Philip Dunne urged ministers to “act now” to ensure the UK’s global net zero standing was not “eroded” by companies heading overseas.
This follows the passing of the US Inflation Act last summer, including Biden’s $391bn clean energy package – the largest raft of federal climate laws in history – while the EU has vowed to soften state subsidy limits.
The environment audit committee chairman told City A.M.: “Other countries are offering impressive incentives for investment. The UK risks losing immense talent if it fails to make the UK an attractive place for innovators to invest and spur green growth.
“The UK cannot allow its net zero standing in the world to be eroded, with UK innovators attracted by overseas incentives. These vital demand signals are needed urgently.”
Meanwhile, Alexander Stafford, Rother Valley Tory MP and BEIS Select Committee member, said the UK could not become complacent about its leading role in renewable projects.
He said: “The UK, which is unquestionably a world leader in green energy projects, must work hard to ensure we stay the torchbearers of global green projects.
“There are elements of these funding regimes that the UK should also look to emulate.”
Peter Aldous, Conservative MP for Waveney, said the UK risked missing its net zero goals unless it matched EU and US plans for subsidies and tax breaks.
He said: “The UK needs to stay competitive to keep growing net zero investment, which is the best route to a more productive, resilient economy with better-paid jobs.”
Aldous argued Biden’s legislation had “accelerated the global race to net zero” and posed a “challenge” to UK competitiveness.
The MP urged the government to deliver a set of fresh incentives to invest, from planning reforms and investment relief for renewable energy projects in line with the oil and gas allowance and “backing emerging sectors like sustainable aviation fuel earlier than other nations”.
“We can still lead by ensuring the UK is the best place to invest in clean industries and technologies,” he stressed.
Green energy frustrations shared across parties
Concerns over green investment were shared across the aisle, with Labour frontbencher Jonathan Reynolds also raising his fears about the lack of support.
The shadow business and industrial strategy secretary said: “It beggars belief that Britain has the lowest business investment in the G7. At a time when we should be attracting investment, sadly too many firms are choosing to go elsewhere because the government is failing to offer the stability business needs to thrive.
Labour’s industrial strategy includes pledges to provide zero carbon power to the grid by the end of the decade.
Industry bodies warned last week that the UK was in jeopardy of missing its climate pledges without a strategy to compete with the US and EU.
Nascent green energy firms such as Sunfire and Zenobe told City A.M. last month they are considering pivoting projects to the US, attracted by its subsidy regime.
At a green energy conference in London yesterday, Hunt described the new US subsidies as a “very real competitive threat” and announced the the government would respond in the “next few months”.
He said: “We are not hanging around on this. We need to give all those guys you saw at the conference a clear sense of how we are going to respond to the Inflation Reduction Act.”
However, he warned it wasn’t going to be easy for the UK to access the “GDP equivalent of $391bn,” in line with the US spending commitments.
The Chancellor also confirmed The Treasury would also take on board Tory MP Chris Skidmore’s “excellent” Net Zero Review – which makes the business case for green investing – and come back with a “fulsome response” in late spring or early summer.
Joe Tetlow, senior political advisor at environmental think tank Green Alliance expected there would be announcements in the coming weeks ahead of the budget.
He said: “They have all the information they need to act, so expect movement next month at the very latest with the spring budget, return of the Energy Bill to the Commons, and government response to the Net Zero Review.
“There is a real danger we lose our position as world-leaders in offshore wind and in green finance, as well as investment in the next wave of green technologies. MPs understandably want answers”.
The government has been approached for comment.
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