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Posted on 7 Mar 2013 by The Manufacturer

EEF’s chief executive Terry Scuoler sets alarm bells ringing over UK competitiveness in low-carbon technologies.

Terry Scuoler, EEF Chief Executive

Much has been made of the UK’s position as the sixth largest producer and provider of low-carbon goods and services in the world. But there are signs that its position is faltering. Manufacturing, which accounts for the largest slice of activity in this sector, contracted in 2010/11 – by one percentage point on the previous year. Meanwhile, China, the States and others are experiencing rapid growth in their low-carbon industries.

Let’s not be negative. There remains a real opportunity for UK plc and UK manufacturers. We are well positioned to prosper in sectors relating to energy technology which could be worth £189.5-£877.5bn by 2050. In EEF’s report, Tech for Growth: delivering green growth through technology we outline the steps we think government must take to realise such potential and unlock investments in breakthrough technologies, helping manufacturers decarbonise.

Firstly, we argue that government should set out its economic vision for manufacturing and use this to drive a coherent set of policies.

The need for this vision is evident in the vacuum in the government’s Carbon Plan where a strategy for the transition of key industrial sectors ought to be. These “hard-to-treat” sectors are often heavy green house gas emitters – as a result of their processes, rather than their energy consumption and, so far, the question of how to decarbonise them has been ignored.

This is untenable. These sectors need to understand what is expected of them to form a clear plan of action: 2050 is just one or two investment cycles away for some.

A strong culture in innovation is central to minimising the cost of meeting climate change targets, reducing energy costs, capitalising on the opportunities available through green growth. It is critical in overcoming technical challenges to decarbonisation.

But innovation is being undermined by eroded investment in R&D. We need to ensure we are spending enough and that the money is targeted at the right place in the innovation cycle. This must be underpinned by a clear push on skills. Manufacturing is on the brink of a skills crisis. Many are experiencing real difficulties in recruiting skilled workers – without whom we won’t be able to innovate.

To encourage investment and attract skills we need to ensure that finance for green technology and R&D works. Manufacturers have implemented technologies that deliver paybacks within the normal investment horizon – now we must unlock the next tranche of technologies with payback periods beyond this. Our report sets out some initial solutions: a better Capital Allowance system and a more responsive Green Investment Bank.

Get this right and we anchor green industry, with a strong export market, in the UK. Failure to respond could see us lose some manufacturing sectors entirely and miss out on a tremendous opportunity for green growth.