The Clean Growth Commission
The Clean Growth Commission report “Making the Industrial Strategy work” is a response to government setting out its initial thinking on this all-important part of its growth mission. This Public First research was co-sponsored by the British Private Equity & Venture Capital Association, the Carbon Capture and Storage Association, Cleantech for UK, the Mineral Products Association, and Renewable UK. In it, we outline the challenges and decisions facing the government as it moves from the Green Paper to its fully formed Industrial Strategy, setting out priority areas of focus, including key subsectors, technologies, and geographies.
The government has been clear that it sees the Industrial Strategy as the cornerstone of its growth agenda, setting out the goals of the strategy, and the sectors which will achieve them. We argue that for the Strategy to succeed by its own metrics – net zero, regional growth, and economic security – then its initial priority should be on encouraging investment in clean energy and the parts of the advanced manufacturing that support its supply chain. Our analysis suggests that there are specific technologies under the three subsectors of offshore wind, CCUS, and hydrogen that present the UK a genuine growth opportunity, but that these stand out as areas where that growth and investment is likely to be focused outside of London and the South East.
For the Strategy to succeed and enable to policy stability the government desires, it must succeed politically. This means ensuring that people feel the impacts of policy decisions made in Whitehall. Our new Towns and Cities Index identifies the North West as a region of particular advantage given a range of conditions from existing skills to industrial rent levels, but identifies specific areas across the UK where parts of the clean energy supply chain might secure investment.
But in order to capitalise on the investment opportunity, policy is also needed. We offer policy recommendations built around three core problems:
- Land. Expanding sites in the UK is expensive. Reducing the cost of industrial rent is fundamental to manufacturing strength, but at present too many areas are priced out of building new sites, or growing their existing ones. This is due to the complex and arbitrary nature of the UK’s planning system, preventing building and impeding investment. New facilities need access to low-carbon power infrastructure, be it hydrogen, CCS, or electricity.
- Skills. Making technologically complex products requires a highly skilled workforce. Yet provision of in-work training and the uptake of apprenticeships is insufficient to equip workers for the future. The state needs to bring more coherence between its skills policy and the objectives of its industrial strategy, starting with a clear focus on understanding the labour market and its needs.
- Capital. New technologies are risky for investors. This is especially the case in clean energy where even mature technologies are often large, physical and expensive, but require access to capital. The state needs to use its new institutions to support financing of first-of-a-kind clean energy projects through grants, guarantees, and equity, as well as the bridge funding required for UK start-ups to scale and grow here, not abroad. It must accompany this with a policy environment which enables low-cost financing without loading unnecessary risk onto developers.
Finally, we look at technology specific policy covering Industrial Decarbonisation, Electrification, CCUS, and Hydrogen to ensure that those sectors are able to invest confidently and underpin the growth of the economy as a whole.
You can read the full report here, and find the Towns and Cities index here