The UK could fall behind the US and EU in the race to net zero unless the Government creates a new national investment fund to support green industries, a think tank has said.
The Institute for Public Policy Research (IPPR) called for ministers to provide equity finance funding – the approach to investing offered to entrepreneurs on the BBC show Dragon’s Den.
It said the National Investment Fund (NIF) would allow the Government to back new green technology companies and secure a share of any future profits for the public as well as future jobs.
It comes as the Biden administration in the US marked the first anniversary of its Inflation Reduction Act that offers government subsidies to support clean energy technologies, green jobs and infrastructure.
The move prompted the European Union to respond with its own Green Deal Industrial Plan.
The IPPR said the UK needed its own version in order to avoid losing out in the race to capture future green industries.
Simone Gasperin, IPPR associate fellow, said: “The National Investment Fund is a policy proposal for our time.
“The UK needs to finance and co-ordinate strategic industrial policy projects that will deliver a net zero transition through economic prosperity and inclusion.
“The cost of inaction on people’s livelihoods will be too high, while there are huge opportunities to be captured by the government co-investing with private companies.”
Under the think tank’s proposal, the NIF would invest in green manufacturing, encouraging private companies to make strategic investments that they would not otherwise make, help to level up the economy, reduce emissions and restore nature.
Initial funding to the NIF itself would be provided by the Treasury, the think tank said.
But it added that this would be supported by tax revenues from North Sea gas and oil, or by levies which the IPPR is urging be imposed on share dividends and “buybacks”.
The aim would be effectively to divert excess profits from fossil fuels into a future green economy.
In exchange, the state would become a part-owner of green businesses and share in their success and future profits – analogous to the type of investment on Dragons’ Den, the think tank said.
George Dibb, head of the IPPR Centre for Economic Justice said: “For the UK to hit net zero our households and businesses will need to buy new green products – from electric cars to heat pumps.
“We have a choice: do we want to make those products in the UK with all the jobs and prosperity that come with green manufacturing, or do we want to import them from abroad?
“The USA and EU are making major investments to secure the manufacturing and technologies of tomorrow, and its time the UK stepped up.
“Our proposal for a National Investment Fund is a practical way for the UK government to crowd in private sector investment by strategically supporting companies and taking a share in their future success.”
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