Why the UK government must do more to boost green revolution 

Innovation, specifically green innovation, will be essential in respect of every one of the points in the Prime Minister’s recent 10-Point Plan for greenhouse gas (GHG) emission reduction, and to get anywhere near the pathway to net zero released last month by the Climate Change Committee. Green innovation is something the UK could be doing much better and its encouragement and stimulation provides one of the brightest opportunities for recovery from the COVID-19 pandemic.

Green innovation means finding ways to create value for society and the economy while giving better environmental outcomes, through the creation and adoption of new ideas, inventions, practices, processes, products and organizational forms. Traditionally, most governments have been inclined to concentrate their innovation efforts on research and development funding, and leave the rest to business. For the kind of systemic innovation required to meet today’s environmental challenges in an economy-enhancing way, government and business will have to forge new partnerships for technology deployment at scale, and work closely together at strategic, sectoral and local levels.

This is just one of the main conclusions to emerge from a new business-led Green Innovation Policy Commission, chaired by former CBI Director-General John Cridland. Its report was launched at a seminar on 12 January.

The businesses on the commission were clear that businesses can and should do more to address both GHG and other environmental challenges. They need to adopt their own net-zero commitments consistent with the Paris Agreement and put in place reporting procedures to track their progress. Through their sectoral organizations they need to work with other businesses to generate route maps to net-zero for their sector as a whole. They need to lobby and work with government to ensure that the policy landscape is conducive to green innovation and helps new solutions to be created, adopted and widely diffused in ways that support the generation of new businesses, jobs and industries. The financial sector, in particular, has a crucially important enabling role to play.

In all the sectors represented on the commission, businesses were prepared to boost uptake of clean vehicles, develop innovative low carbon building materials, promote new designs and processes for resource-efficient manufacturing, and enable sustainable land use practices. However, the commissioners were categoric that businesses could not do it all by themselves. They need government buy-in and support, in terms of clear and consistent policy commitments that can underpin innovative approaches and accelerate promising innovations through the difficult links of the innovation chain. This may need price signals buttressed, if necessary, by green taxes needed to ensure that green innovations are not undercut by businesses that externalise their environmental costs.

A new national green investment fund is needed to foster and accelerate green transformation across the UK. Performance standards that promote green innovation should replace regulations specifying particular technologies. Local and regional innovation support networks, working with and through local economic partnerships, should contribute to the UK’s ‘levelling up’ agenda, which aims to address regional inequalities across the country. The businesses on the commission were clear that too often government policy and innovation efforts do not work in this way.

In addition, the government has some specific and important roles to play. It is the primary provider of infrastructure, or enabler of its provision by others. In many sectors represented on the commission – water, food, waste management – as well as many more that were not (particularly energy and ICT) the government needs to do more to ensure that infrastructure supportive of green innovation is delivered in a timely and inclusive way.

Another core role is the leveraging of government purchasing power to give early markets to green innovation by specifying in tenders the need for levels of environmental performance that are only achievable by the cutting edge technologies of today so that businesses know that top-notch environmental performance will be both recognised and rewarded in fair competition.

There is so much in current government policy that is already pointing in the right direction: clear, long-term targets and a commitment to increased innovation spending to name the two most important elements. But the policy framework to achieve the former is still largely undefined, and the mechanisms to make the most of the latter still need to be fully fleshed out.

Businesses committed to the green agenda, such as those on the commission, feel that they have an important part to play in helping the government put in place policies that will allow them to realize their current aspirations for green innovation, and persuade their boards to go beyond them. Moreover, their expertise in how markets work and in the technologies that are ready, or nearly ready, to be pulled through into large-scale deployment means that they are often best placed to advise – perhaps through a new ‘Green Innovation and Sustainability Transformation Council’ – how government spending on innovation could be maximally productive. If such a Council were to be chaired by the Prime Minister, business would know that there would be government action on the green revolution that has been promised through the net-zero target and the 25 Year Environment Plan.

More and more businesses are up for the green innovation challenge, if government can put in place the processes of collaboration, then they are all too willing to help achieve the ambitious targets that have been adopted.