Competition, Human, Long Read

The UK’s Green Industrial Revolution

This essay by Carl Scandelius won an internal Year 11 competition

Post-Brexit, the UK government has stated a commitment to a ‘green industrial revolution’. Evaluate the strategy and explain which aspects of The Government’s stated aims you would prioritise.

The UK economy has faced a severe setback under COVID-19, with unemployment predicted to reach 2.6 million, 7.5%[1] of the working population, by mid 2021 (See Fig. 1[2]) and a GDP decline of over 100 million GBP from 2019 Q4 to 2020 Q2[3]. As such, the key focus of any new policy should be first and foremost to ‘bounce back’ from this time of economic decline, most importantly, decreasing unemployment and economic inactivity rates to pre-pandemic levels, for without economic growth from our current situation, any major efforts towards this ‘green industrial revolution’ will be met with extreme popular resistance and reluctance and thus be non-sustainable in its ability to continue into the future if there is no private investment (and this requires prospective of profit) nor any popular support, many of the stated initiatives also require a population with a stable income sufficient beyond mere subsistence (how else will they be willing to buy a new electric car or a more efficient heat pump). There simply is no market for this if there is no multiplier effect, and this requires employment and investment (see Fig. 2[4]). The Kuznets Curve (Fig. 3[5]) illustrates this – environmental progress occurs after economic security has been established. Thus, the initiatives that should be prioritised are those that support the revitalisation and recovery of the most impacted industries (typically tourism-related and construction) whilst simultaneously establishing infrastructure that will fuel the basis for progress towards a ‘green industrial revolution’.

Figures 1-3

In the ‘Ten Point Plan’ there is a clear focus on moving away from high-emission vehicles, and encouraging walking and cycling. The transport industry accounts for 30% of the UK’s greenhouse gas emissions 85% from road transport[6], and thus decarbonising the transport industry and reducing internal combustion vehicles is a crucial stride towards carbon neutrality. The Plan pledges a 50 million GBP investment into development of more sustainable aviation and maritime transport. Making these ‘difficult-to-decarbonise’ industries more sustainable, and ‘future-proofing’ them, protects the current 185,000 employees in the maritime sector and the 12 billion GBP worth of the aerospace industry from inability to react to future regulation changes, also encouraging FDI as the UK becomes a leading nation in developing more sustainable bulk-transport.

The plan intends to end all sale of new internal combustion vehicles by 2030, with 1 billion GBP invested for the production of ‘Gigafactories’ which manufacture the batteries, each supplying 2,000 high skilled jobs. The plan predicts a total of 50,000 new jobs created across these three Points, many in the construction industry for the building of the required infrastructure to support the ‘electrification’ of the UK vehicles. The automotive industry has been highly impacted during the pandemic due to decreased production rates by 43%[7] on account of lower demand and the COVID-19 regulations. As such, these created job opportunities promise economic recovery through the multiplier effect – the Plan pledges 1.3 billion GBP into the implementation of charging infrastructure using smaller-scale construction companies – the most impacted by the pandemic. This also establishes a potential for significant emission decrease, with 300 MtCO2e saved by 2050.

The UK’s influence in the automotive industry in Europe is already established, with 80% of produced cars being exported. Moreover, automotive trade has been protected from post-Brexit tariffs, avoiding a 55 billion GBP loss in manufacturing value[8]. The UK has a trade deficit in the automotive industry of over 6 billion GBP (Fig. 4[9]) and thus this push towards its ‘electrification’ could be the necessary action to revitalise the industry’s trade and gain a surplus whilst providing a boost to established facilities such as the Sunderland plant, employing 35,000, bringing job opportunities and the multiplier effect to the north (reducing North-South divide) since these areas are typically more suited to large-scale production plants due to the cheaper land.

Figure 4 – Historic import and export of UK automotive industry

The reason for the trade deficit is the lead of other countries such as Germany in conventional vehicles, but this is not so for EVs (in 2016, a fifth of all EVs sold in Europe were produces at the Nissan plant, Sunderland[10]) and so this may be the UK’s opportunity to gain a trade surplus to further invest into infrastructure to catalyse development and protect the environment. Indeed, the domestic demand is certainly there and is set to rise rapidly, with an 184%[11] rise in pure-electric car registrations in September 2020[12] and petrol and diesel cars were down by 50.6% and 62.1%[13] respectively, this is also reflected internationally (see Fig. 5[14]). Predictions suggest as much as 95 billion GBP in contribution to the UK economy by 2030 from the EV industry (see Fig. 6[15]) if the UK capitalises on the increased global demand – especially significant as countries such as India continue down the second half of the Kuznets curve and also due to the many resolutions to ban the sale of new petrol and diesel cars (see Fig. 7[16]).

Figure 5 – EV registrations in the EU-27

Despite this, electric cars are not necessarily an entirely ‘green’ solution to traditional vehicles. The production of lithium batteries and the generation of the electricity used in the cars still produces a significant amount of greenhouse gases (see Fig. 8[17]) and thus this needs to be met with similar change. The extraction and transportation of copper and nickel often include toxic chemicals and large-scale mining which is harmful to the environment (see Fig. 9[18])

Figures 6-9

Figure 10 shows the potential economic benefit of a ZEV policy: The UK could greatly increase its domestic production to meet this worldwide demand by adopting a ZEV credit system similar to the one in certain North American states, where manufacturers are encouraged to increase ZEV production through a credit return for each sale (the benefits of this can be seen with the example of China, who now produces half of all the EVs globally). This would also increase competition between OEMs, potentially reducing the price of EVs, further encouraging greater demand. The combination of these innovations will also greatly reduce UK oil import, estimated to decrease to as low as 50% by 2035, saving around 6.5 billion GBP annually.

As mentioned, there remains the problem that the electricity powering these cars is generated unsustainably – in UK 2019, 43% of electricity was generated by oil and natural gas. Therefore, the Ten Point Plan also addressed an increase in sustainable energy sources, aiming to quadruple the amount of energy from offshore wind to 40GW by 2030 encouraging up to 20 billion GBP of private investment and doubling the number of jobs in the industry in the next decade (another 60,000) ranging from construction to high-skilled engineers. The emissions saved by this increase in wind energy along with nuclear power will amount to 21 MtCO2e between 2023 and 2032. This complements the initiative of the electrification of UK cars since the increased demand for electricity will be met with increased renewable electricity. Wind energy has already proven to be attractive to investors – the existing infrastructure attracted 11.5 billion GBP of investment between 2017 and 2021. Hinkley Point C (construction started 2016) shows the benefits of nuclear power. It will create around 25,000 jobs during construction and 900 throughout 60 years of operation. The South West economy has benefited significantly from this, with 1.67 billion GBP already spent with companies in that region. This will be crucial for the recovery of the economy post-pandemic, since the flow of money is necessary to encourage the multiplier effect, with local companies profiting from these initiatives, thus attracting FDI and also migration to those areas for job opportunities, creating demand for products in those areas.

The Ten Point Plan also aims to tackle inefficient and outdated heating technology in homes, with a target of 600,000 new heat pumps installed by 2028. The focus is on a ‘market led initiative framework’ encouraging private investment (predicted at around 11 billion GBP in 2020s), inciting the multiplier effect through the flow of money. This will save around 71 MtCO2e between 2023 and 2032, 16% of 2018 UK emissions.

However, after a global pandemic with a near 100 million GBP fall in GDP and mass economic inactivity, people will likely not be receptive to spending a significant amount of money (buying and installing a new heat pump costs around 20,000 GBP) for such a long-term environmental benefit and very gradual economic return. Thus, this initiative should be postponed until a more suitable time when the economy has had time to recover.

The Plan also holds initiatives for the implementation of carbon capture technology, utilising the key asset of the North Sea for storing carbon underneath the seabed. The plan includes a 1 billion GBP CCUS Infrastructure Fund, encouraging jobs and investment into the North, helping to decrease the North-South divide through these ‘SuperPlaces’ in the North-East, the Humber, North West, Scotland, and Wales. This will save 40 MtCO2e between 2023 and 2032. Plans to increase private sector investment in industrial carbon capture and hydrogen projects will also be beneficial to the multiplier effect and the development of the Northern areas in the UK. With the purpose of protecting biodiversity and existing habitats, the Plan pledges 5.2 billion GBP to flood and coastal defence, providing 20,000 jobs directly by 2027. This will also have profound benefits for coastal communities, whose economy is reliant almost entirely on coastal-related industries such as tourism (which has seen severe declines during COVID-19, with 78% decrease in tourist spending[19]). Floods disperse debris and sewage, resulting in eutrophication. This destruction of the landscape has devastating consequences for biodiversity, but similarly impacts nature tourism. The plan intends to protect 30% of UK land by 2030 through National Parks and AONBs, also creating new wildlife attractions in the UK.

However, this is perhaps a more long-term plan that must be kept as a complementary initiative to the more short-term economically beneficial plans especially during this period of post-pandemic economic recovery where the people will be far more receptive to the prospect of economic return intermingled with environmental progress.

In conclusion, the government ought to prioritise the aims centralising the reformation of the transport industry and internal combustion vehicles, and the aims complementing this initiative such as encouraging walking and cycling, developing more sustainable fuels, and generating a greater proportion of our electricity in a sustainable and renewable manner. These are the strides that will stimulate a multiplier effect, catalyse development from this time of economic recovery, and lay the foundations of infrastructure and policy that will lead us into the ‘green industrial revolution’.

References

  1. BBC. (2020, November 25). Spending Review: Unemployed predicted to rise to 2.6 million. BBC News. https://www.bbc.co.uk/news/uk-politics-55072987
  2. Ibid
  3. McAuley, N. (2020, December 22). GDP quarterly national ACCOUNTS, UK: July to September 2020. https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/quarterlynationalaccounts/julytoseptember2020#expenditure
  4. Ibid
  5. Kuznets curve. (2021, February 11). https://en.wikipedia.org/wiki/Kuznets_curve. 
  6. HM Government – The Ten Point Plan for a Green Industrial Revolution. (November 2020). https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/936567/10_POINT_PLAN_BOOKLET.pdf#page21
  7. [in the first half of 2020 compared to the previous year] Leaker, D. (2021, January 26). Labour market overview, UK: January 2021. Labour market overview, UK – Office for National Statistics. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2021. 
  8. [within the five years after a no-deal Brexit] Guardian News and Media. (2020, November 24). No-deal Brexit would cost UK car industry £55bn, says analysis. The Guardian. https://www.theguardian.com/business/2020/nov/24/no-deal-brexit-uk-car-industry-tariffs-smmt.
  9. Department, P. by S. R., & 31, J. (2020, January 31). UK: Trade in motor vehicles 2017-2017 STATISTIC. https://www.statista.com/statistics/299359/motor-vehicle-imports-and-exports-in-the-united-kingdom/. 
  10. Green-alliance, How the UK can lead the electric vehicle revolution.https://www.greenalliance.org.uk/resources/How_the_UK_can_lead_the_electric_vehicle_revolution.pdf#page21
  11. Lane, B. Electric car market statistics. Next Green Car – Green car guide. https://www.nextgreencar.com/electric-cars/statistics/. 
  12. [compared to the previous year]
  13. Howe, J. (2021, February 4). Electric car Sales Uk: 6.6% market share in 2020. https://www.drivingelectric.com/news/678/electric-car-sales-uk-electric-cars-outsell-plug-in-hybrids-in-january-2021. 
  14. Electric cars registered in the EU-27, Iceland, Norway and the United Kingdom. (2020, December 3). https://www.eea.europa.eu/data-and-maps/daviz/new-electric-vehicles-in-eu#tab-chart_1. 
  15. Green-alliance, UK trade in a decarbonising world. https://www.greenalliance.org.uk/resources/UK_trade_in_a_decarbonising_world.pdf
  16.  Green-alliance, How the UK can lead the electric vehicle revolution. https://www.greenalliance.org.uk/resources/How_the_UK_can_lead_the_electric_vehicle_revolution.pdf#page21
  17. Union of Concerned Scientists, Cleaner Cars from Cradle to Grave, How Electric Cars Beat Gasoline Cars on Lifetime Global Warming Emissions. (November 2015}. https://www.ucsusa.org/sites/default/files/attach/2015/11/Cleaner-Cars-from-Cradle-to-Grave-full-report.pdf
  18. Ibid
  19. Guardian News and Media. (2020, August 26). Drop in tourism could wipe £22bn from UK economy, says WTTC. The Guardian. https://www.theguardian.com/business/2020/aug/26/drop-in-tourism-could-wipe-22bn-from-uk-economy-says-wttc-covid-19

Bibliography

All statistics not otherwise cited are taken from:

HM Government – The Ten Point Plan for a Green Industrial Revolution. (November 2020).

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/936567/10_POINT_PLAN_BOOKLET.pdf#page21

Further Sources:

André Gonçalves – Editor & Head Of English Market After studying and working in HR, & all, S. (2020, March 9). Are electric cars really eco-friendly? Maybe not as such much as you think. https://youmatter.world/en/are-electric-cars-eco-friendly-and-zero-emission-vehicles-26440/.

Boris Johnson announces 10-point GREEN plan with 250,000 jobs. (2020, November 17). https://www.theguardian.com/environment/2020/nov/17/boris-johnson-announces-10-point-green-plan-with-250000-jobs.

Brunsden, J., Foster, P., & Campbell, P. (2020, September 17). EU poised to Rebuff UK’s market ACCESS push for electric cars. https://www.ft.com/content/1dddbb06-565e-401e-bc65-696d9de8860f.

Carrington, D. (2017, August 4). Electric cars are not the answer to air pollution, says top UK adviser. https://www.theguardian.com/environment/2017/aug/04/fewer-cars-not-electric-cars-beat-air-pollution-says-top-uk-adviser-prof-frank-kelly. 

Department, P. by S. R., & 31, J. (2020, January 31). UK: Trade in motor vehicles 2017-2017 STATISTIC. https://www.statista.com/statistics/299359/motor-vehicle-imports-and-exports-in-the-united-kingdom/.

Electric cars registered in the EU-27, Iceland, Norway and the United Kingdom. (2020, December 3). https://www.eea.europa.eu/data-and-maps/daviz/new-electric-vehicles-in-eu#tab-chart_1.

Environmental Impacts of Flooding. Alberta WaterPortal. (2014, April 8). https://albertawater.com/what-are-the-consequences-of-flooding/environmental. 

EU-UK trade deal: EU automobile manufacturers react. (2020). https://www.acea.be/press-releases/article/eu-uk-trade-deal-eu-automobile-manufacturers-react. 

Green-alliance, How the UK can lead the electric vehicle revolution.

https://www.greenalliance.org.uk/resources/How_the_UK_can_lead_the_electric_vehicle_revolution.pdf#page21

Guardian News and Media. (2020, August 26). Drop in tourism could wipe £22bn from UK economy, says WTTC. The Guardian. https://www.theguardian.com/business/2020/aug/26/drop-in-tourism-could-wipe-22bn-from-uk-economy-says-wttc-covid-19. 

Guardian News and Media. (2020, November 24). No-deal Brexit would cost UK car industry £55bn, says analysis. The Guardian. https://www.theguardian.com/business/2020/nov/24/no-deal-brexit-uk-car-industry-tariffs-smmt.

Howe, J. (2021, February 4). Electric car Sales Uk: 6.6% market share in 2020. https://www.drivingelectric.com/news/678/electric-car-sales-uk-electric-cars-outsell-plug-in-hybrids-in-january-2021. 

Huitema, E.-M. (2021, January). Message from ACEA’s Director General – January 2021. RSS. https://www.acea.be/industry-topics/tag/category/coronavirus-covid-19. 

Huitema, E.-M. (2021, January). Truck makers gear up to go fossil-free by 2040, but EU and member states need to step up their game. RSS. https://www.acea.be/news/article/even-if-we-manage-to-overcome-covid-19-a-no-deal-brexit-might-be-the-next-t. 

Hull, R. (2020, October 15). New regulation will guarantee supply of EVs to the UK post-Brexit. https://www.thisismoney.co.uk/money/cars/article-8831683/New-regulation-guarantee-supply-EVs-UK-post-Brexit.html. 

Impact of Covid-19 and Brexit for the UK economy. https://www.tuc.org.uk/research-analysis/reports/impact-covid-19-and-brexit-uk-economy. 

Inagaki, K. (2021, February 4). UK carmakers AFTER Brexit: A race to attract battery production. https://www.ft.com/content/0e097085-5b80-4bc1-8c34-ec5df5be0acc. 

Keating, D. (2020, December 27). Brexit deal Protects U.K. electric Car trade – for now. https://www.forbes.com/sites/davekeating/2021/12/27/brexit-deal-protects-uk-electric-car-tradefor-now/.

Lane, B. Electric car market statistics. Next Green Car – Green car guide. https://www.nextgreencar.com/electric-cars/statistics/.

The key areas of Boris Johnson’s ‘GREEN industrial revolution’. (2020, November 17). https://www.theguardian.com/environment/2020/nov/17/the-key-areas-of-boris-johnsons-green-industrial-revolution. 

Kuznets curve. (2021, February 11). https://en.wikipedia.org/wiki/Kuznets_curve.

LDN_gov. (2020, August 7). 5 times greater reduction IN no2 in London than rest of the country. https://www.london.gov.uk/press-releases/mayoral/5x-greater-reduction-in-toxic-no2-in-london.

Leaker, D. (2021, January 26). Employment rate (aged 16 to 64, seasonally adjusted). https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/timeseries/lf24/lms.

Leaker, D. (2021, January 26). Labour market overview, UK: January 2021. Labour market overview, UK – Office for National Statistics. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2021.

McAuley, N. (2020, December 22). GDP quarterly national ACCOUNTS, UK: July to September 2020. https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/quarterlynationalaccounts/julytoseptember2020#expenditure.

McAuley, N. (2020, December 22). Gross domestic PRODUCT: Chained Volume MEASURES: Seasonally Adjusted £m. https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmi/qna.

Nissan motor MANUFACTURING UK. (2021, January 6). https://en.wikipedia.org/wiki/Nissan_Motor_Manufacturing_UK. 

UK carmakers have three years to source local electric car batteries. (2021, January 3). https://www.theguardian.com/politics/2021/jan/03/uk-carmakers-have-three-years-to-source-local-electric-car-batteries. 

BBC. (2020, November 25). Spending Review: Unemployed predicted to rise to 2.6 million. BBC News. https://www.bbc.co.uk/news/uk-politics-55072987.

Union of Concerned Scientists, Cleaner Cars from Cradle to Grave, How Electric Cars Beat Gasoline Cars on Lifetime Global Warming Emissions. (November 2015}.

Click to access Cleaner-Cars-from-Cradle-to-Grave-full-report.pdf

Ruan: Transportation Industry Outlook. (August 2020).

Click to access Ruan_Ind_Update_0820.pdf

European Environmental Agency, EEA report confirms: electric cars are better for climate and air quality. (22. November 2018).

https://www.eea.europa.eu/highlights/eea-report-confirms-electric-cars

OECD, Dr. Mike Holland EMRC: Reducing the health risks of the copper, rare earth and cobalt industries. (26, 27 November 2019).

https://www.oecd.org/greengrowth/Reducing%20the%20health%20risks%20of%20the%20copper,%20rare%20earth%20and%20cobalt%20industries.pdf#page21