The Green Industrial Revolution

Open any newspaper, pull up any news site, and you’ll find the evidence of climate change. Catastrophic natural events, which were once a thing of the future, a problem we didn’t yet have to worry about, are becoming increasingly common. Droughts, hurricanes, floods and heatwaves are hitting our shores and people are clamouring for change.

Globally, governments are waking up to the pressure for change. With COP26 looming, half-hearted pledges will no longer cut it. Following the IPCC’s Climate Change 2021 report, the need for concrete action is stark and investment in green infrastructure will provide jobs, stimulate the economy and future-proof our society.

Covid-19 has laid bare our system’s unpreparedness for the climate crisis, leaving millions at risk. It has shown how fragile we are and how we are not ready for the change which is coming. The current system needs to be progressed and stabilised where it can provide services through our uncertain future, during our adaptation to Brexit, Covid-19 and the climate crisis. Research and Development (R&D) are crucial to the UK’s recovery from these events and are the foundation of the road to net-zero.

The Ten Point Plan for a Green Industrial Revolution

In November 2020, the Department for Business, Energy & Industrial Strategy published its ten point plan for a green industrial revolution. In short, the plan looks at ten areas where the government will invest, hopefully attracting further private investment and creating up to 250,000 green jobs in the UK.

The importance of a just transition as we divest from pollutants cannot be understated. Recovering from the coronavirus pandemic gives us the opportunity to build back better and make the UK a leader in green technologies.

However, this plan has not gone without criticism; many question whether the plan is robust enough, goes far enough, whether it can deliver what is promised. Original pledges to halt government funding for fossil fuels were dropped and other links to the Green New Deal have been omitted.

Still, this plan does encourage innovation in green technology, surely prompting the UK to emerge at the forefront of the fight for the climate. With further government investment on top of the available reliefs for innovative projects, like R&D tax credits, companies looking to advance science and technology towards a brighter, cleaner future are likely to find some benefit in this plan.

Let’s look closer that the ten points and what they mean for innovators:

Powered by wind

For once, the UK’s cold and windy weather can do more than send us back inside searching for scarves. We are already a world leader in this form of renewable energy, however the UK government aims to produce 40GW of offshore wind by 2030, bringing new jobs and growth to ports and coastal regions. Wind turbines can power a house for a day with a single turn of their blades and are already transforming the energy system now.

The government has introduced competition in onshore networks alongside their £160 million support for modern ports and manufacturing. Innovations in wind farming, energy storage or the network infrastructure are welcomed to further the rewards reaped from wind power.

Low carbon hydrogen

Long touted as the fuel of the future, hydrogen is the lightest, simplest and most abundant element available. Solutions for fuel, heating, logistics and industry all have hydrogen at their heart. We are already ahead of the game with world-leading electrolyser companies and carbon capture and storage sites. The goal of developing 5GW of low carbon hydrogen production capacity by 2030 is supported by a £240 million Net Zero Hydrogen Fund.

Investigations into the use of hydrogen are already underway in the UK, starting with a 300 home trial in Levenmouth, Fife. Research and development in this area will find strong support from both public and private sources.

Nuclear power

A controversial source of power, nuclear power plants continue to supply energy for the growing demand of the UK. Though large-scale new projects are still being considered, subject to their value-for-money, the next generation of nuclear technology is attracting far more attention. Small and Advanced Modular Reactors offer more flexibility and can unlock further technological advances in hydrogen and synthetic fuels.

Decarbonising industry, heat and transport with Small Modular Reactors may be controversial, however the public investment in these investigations is expected to unlock £300 million of private investment.

Electric vehicles

Possibly the most visible advance in green technology, zero-emission vehicles are already increasingly on the streets. With benefits for the UK economy and for the very air we breathe, electric and hybrid vehicles are an important step for the reduction of emissions. The Nissan Leaf was the third highest-selling EV in Europe in 2019 and was produced in the UK; the manufacturing industry in the UK is already leading the field in decarbonising transport.

The UK has committed to ending the sale of new petrol and diesel cars and vans from 2030 and has pledged £2.8 billion in support of electrifying our transport networks. The tax system is equally changing to encourage uptake of EVs, with credits towards cars and chargers available. 

Public transport

On the point of travel, the best option for the environment has always been using our very own natural engines – walking and biking are to be supported through investment in pedestrian and cycle paths, warranting comparison to Holland. Reducing emissions, improving physical and mental health and creating safer environments for our public, low-traffic neighbourhoods will decrease pollution with £2 billion pledged to them.

Public transport, including rail and buses, are also getting a green makeover, with research into low-emission versions of the vehicles and a more robust infrastructure surrounding them. Innovation in anything from electric railway lines to ticket machines will encourage a better, cleaner way of life and up to 3,000 jobs created by 2025.

Aviation and maritime

Aviation and logistics are one of the trickier problems to solve when it comes to reducing emissions. On the one hand, they’re one of the biggest polluters, but on the other, they are entirely necessary for our globalised import/export system. Investment in R&D for green ships and planes, as well as for the airports and seaports which support them, are essential for the reduction of a huge portion of our greenhouse gas emissions. The UK has established the Jet Zero Council as a way to accelerate this development, along with a 12-month study into zero-emission aircrafts. Regarding ships, hydrogen ferries are already being trialled in Orkney, and £20 million has been invested into the Clean Maritime Demonstration Programme.

For innovators working in this space, an extension of the Future, Fuels for Freight and Flight Competition has been developed, the Sustainable Aviation Fuels competition. R&D is also required for the infrastructure upgrades in airports to facilitate these technological advances. Future-proofing the aerospace industry is worth £12 billion to the economy and will surely attract private investment.

Building greener

Homes, schools, hospitals, and workplaces are all at the very heart of the green industrial revolution. Energy efficiency is important, as is a warm home and a bill that doesn’t make your eyes water. Fossil fuel boilers are to be phased out with new, lower carbon options. Up to 50,000 jobs are supported in this sector, keeping our houses going while preparing for the changes that we are to experience in the coming decades. The Green Homes Grant and the Public Sector Decarbonisation Scheme are both being extended, along with many other schemes designed to encourage energy efficiency.

The Future Home Standard is being implemented as quickly as possible to reduce its direct emissions by 50% compared to the 2017 baseline by 2032. Buildings are one of the largest areas where emissions can be reduced by swapping to energy efficient options in every space possible.

Carbon capture

This exciting new industry has goals of capturing 10Mt of carbon dioxide a year by 2030, the equivalent of 4 million cars’ worth of annual emissions. Carbon capture, usage and storage (CCUS) is especially well supported in industrial clusters, named ‘SuperPlaces’ (like the North East, the Humber, the North West, Scotland and Wales).

This new sector will require significant investment and will support up to 50,000 jobs. Public investment to the tune of £1 billion is expected by 2025, looking to create four CCUS clusters by 2030.

Natural environment

The UK’s pride and joy is its rich and diverse landscapes which have inspired poets and painters for centuries. This landscape also offers one of the most effective solutions for sequestering carbon long-term. By restoring habitats, improving biodiversity and stability in the face of climate change, the UK government hopes to create green jobs and actively reduce the amount of carbon in the air.

New national parks (covering up to 30% of the UK by 2030), nature conservation and restoration projects (supported by a £40 million Green Recovery Challenge Fund) and investment in preventative measures like flood defences are all part of the plan. Increased biodiversity and restorative action against climate change are expected to result from the public investment in our natural environment.

Green finance and innovation

The future is now and developing greener ways to progress is at the top of the priority list for the UK. The UK Research and Development Roadmap, published in July 2020, spells out the different ways that R&D will be supported, amounting to 2.4% of GDP by 2027. High risk, high reward projects which contribute towards the goal of net-zero will find that their endeavours are greatly supported, especially following the launch of the £1 billion Net Zero Innovation Portfolio, which corresponds largely to the ten point plan but has sections for other innovations not covered in the above. The UK government also recently released its first Sovereign Green Bond, to keep up with market demand for green investment and green finance, and will introduce mandatory reporting of climate-related financial information, offering investors further clarity.

The Green Finance Institute is a champion of green finance in the UK and brings together global experts to co-design sector-specific solutions and providing the case for the sovereign green bond with more than $10 trillion assets.

R&D Tax Credits

Investment in a greener future is very much on the agenda for the UK government, as this ten point plan demonstrates clearly. But what if your innovation is too small to be supported by any of the above? Or if your company is developing green technology which is outside of the scope of these schemes? There are still options to inject some cash flow into your project.

The R&D tax relief scheme is nearly two decades old and thriving, providing a tax credit of up to 33% of eligible expenditure. To qualify, your project must be advancing the field of science or technology by resolving technical uncertainties. The requirements are far less complex than formulating a fuel from hydrogen, and the process is relatively simple, especially when compared to capturing carbon.

To find out if your project is eligible for this generous government-backed scheme, call us on 020 7360 4437, or use our contact page for friendly, professional advice from our expert staff.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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