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8 March 2021updated 04 Sep 2021 8:27am

Will Brexit make the UK economy greener?

Manufacturers are waiting to see if the government will make the investments needed to kick-start a green industrial revolution.

By Philippa Nuttall

Since Brexit hit and customs barriers went up, headlines have poured forth about the closure of businesses and slowdown in trade between Britain and the EU. At the same time, the UK is supposedly driving forward plans for a green industrial revolution. Some in the clean energy space believe the time is ripe to reinvigorate UK industry and bring down greenhouse gas emissions.

In November 2020, the UK government published its “Ten Point Plan for a Green Industrial Revolution”. “Just as science will enable humanity to rout coronavirus, so we will use the UK’s extraordinary powers of invention to repair the economic damage and build back better,” enthused the Prime Minister, Boris Johnson, in his foreword to the plan.

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He eulogised over a vision where, “you cook your breakfast using hydrogen power before getting in your electric car, having charged it overnight from batteries made in the Midlands”. A future where British towns and regions have become “synonymous with green technology and the jobs they bring”. And a world in which “Britain’s ability to make hydrogen and capture carbon pioneered the decarbonisation of transport, industry and power”.

Brexit chaos, not Covid-19, has had the biggest impact on imports for British manufacturers
Main cause of import challenges for manufacturing businesses

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However, the current state of British manufacturing is fairly dire and Brexit has only made the situation worse. Is the idea of a green industrial revolution pie in the sky or can the UK, post-Covid and post-Brexit, kick-start its economy around green manufacturing?

Johnson blustered his way through the Brexit negotiations with the EU, broadly suggesting everything would come out in the wash. But this has not been the case. Companies in many sectors have been left struggling with extra customs paperwork and charges, and significant disruptions to supply chains, while the City has been largely excluded from the deal. It now remains to be seen whether the government will decide a green industrial revolution is the horse to back and fully throw its weight and the necessary investment behind it.

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The Ten Point Plan offers “potential for reindustrialisation”, says Eliot Whittington, director of the Prince of Wales’s Corporate Leaders Group, part of the Cambridge Institute for Sustainability Leadership. But the “government needs to take a whole system view” of the economy for it to be realised, he adds. This includes embedding the country’s net-zero emissions goal in all policies and “ensuring it trickles through all investment and tax decisions,” says Caterina Brandmayr, head of climate policy at Green Alliance, a UK think tank.

More than 20% of British manufacturers are using more UK suppliers since Brexit
Percentage of manufacturing businesses that made changes to supply chains since the end of the EU transition period

Rather than waiting for the government, entrepreneur Adam Barmby, founder and chief executive of Electric Assisted Vehicles (EAV), a company offering last-mile transport solutions, believes that the private sector should just get on with it. Companies should innovate and create new business models, he says. “At EAV, we don’t want to sell a product, but a vision. We don’t want people to buy our products, but to subscribe to our service, to lease a fleet of our vehicles and its maintenance, as a package.”

Brandmayr endorses this call for new business models. “This can mean a whole range of solutions, including services-based business models instead of ones based on selling products,” she says. A green industrial revolution should offer “long-term business opportunities” and “employment opportunities across the country,” she believes.

Set up two years ago, Barmby says his company has been “almost crippled” by Brexit. “We are 15 people and should have been 30 by the end of last year, but we can’t have a growing production line without a constant supply of parts,” he says. EAV is struggling, for example, to get bike parts it has traditionally shipped in from the Netherlands.

Barmby’s solution is to look as close to home as possible for most, if not all, of his needs. One project is to buy hemp from a farmer in Cornwall and, within a 200-metre radius of the farm, transform it into bodywork for his vehicles.

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His is a “common sense approach” to manufacturing and moving goods and people based on “sustainability values” not cost. Barmby would like to see the government create a system of metrics to measure sustainability and the quality of a product. “We need to throw the rule book away and work out what is the most sustainable way to get from A to B,” he says.

Lars Carlstrom, the founder and chief executive of Italvolt, a battery company, and a shareholder of BritishVolt, is bullish that after Brexit green industrialisation can be a big opportunity for the UK, although he acknowledges that in the short term the situation may not be easy for everyone.

“It could change society and create prosperity,” he says. “The change will be painful for many, but in the next five to ten years, we will come out better and bring back jobs.”

A planned battery gigafactory for Northumberland in the UK’s north-east “will have big social impact”, employing 3,000-4,000 people directly and supporting a larger ecosystem of 15,000-20,000 people, he says.

For Carlstrom, it makes little sense to talk, as it does in the Ten Point Plan, about phasing out petrol and diesel cars by 2030 if batteries for electric vehicles, or even the cars themselves, are imported from China.

“We need to bring supply chains back to the UK,” says Carlstrom. “We have no control over supply chains in Asia; we don’t know how the batteries are manufactured. Also, batteries are very heavy — we cannot transport them over the sea and say they are a green product.” He wants the government to show it is “serious” about a green industrial revolution by ensuring batteries made in Asia are more expensive than those made in the UK. “It costs money to be green,” he says, but insists the rewards will be plentiful. “Brexit could be an advantage if it means we can ultimately supply British batteries to the UK car market.”

Instead of hand-wringing about Brexit, business should see it as “an opportunity to get back to producing British everything”, says Barmby. For him, Brexit has “hyper-accelerated” the energy transition and made a UK green industrial revolution “a necessity”.

It will take time to know the full extent of the challenges related to Brexit, says Brandmayr, but she is also quietly optimistic. If the government sets ambitious decarbonisation policies it could trigger opportunities to “attract inward investment” in the green economy and strengthen “UK business competitiveness in a global low-carbon market,” she says.