The UK tax system currently fails to provide manufacturing companies with the incentives they need to develop low carbon technologies, a new report has concluded.
The report, released on November 16 by the manufacturers organization EEF, suggests that the UK "needs a major step up" in efforts to become a premier location for low carbon industries if it is not to risk losing out on a slice of a GBP4.5 trillion (USD7.5 trillion) business opportunity.
As well as pointing to the uncertainty over the long-term supply of core skills, the report identified the tax system as a "major weakness" because it "continues to discourage the capital investment on which manufacturing depends."
The EEF proposes that the UK government should introduce a "green bond" scheme that allows manufacturers to use future tax benefits to finance low-carbon technologies at the critical stage of their development.
While the report notes that the low carbon industrial strategy announced earlier this year has laid the groundwork, it goes on to warn that the UK risks falling behind other countries around the world who are setting out ambitious plans to develop their own low carbon industries, such as South Korea, which has committed to investing 2% of its gross domestic product per year on developing low carbon industries.
“Locating in the UK offers cleantech companies some real advantages, but major weaknesses remain," stated EEF Energy Adviser Roger Salomone. "To position the country as a premier location for the low carbon industrial revolution we urgently need more strategic and joined-up thinking from government together with active engagement from industry.”
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