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UK Manufacturers Need Incentives to Meet Low-Carbon Goals, Study Says

Manufacturers need more incentives to invest in low-carbon and energy efficient technologies if the UK is going to meet its low-carbon economy goals, according to recent study from the Institute for Public Policy Research.

IPPR argues that three traditionally carbon-intensive sectors — energy, transport and manufacturing — are critical to the UK’s transition to a low-carbon economy. In 2009, these sectors accounted for nearly three-quarters of UK emissions. In turn, these industries will have to shoulder a significant proportion of the require carbon cuts if the government is to meet its long-term goals, the IPPR said.

Growing Pains: British Industry and the Low-Carbon Transition recommends the UK government make six policy changes, including introducing a so-called green deal that would provide incentives to manufacturing businesses with high energy costs (relative to total costs). IPPR recommends starting with a pilot project for small and medium-sized manufacturers and then expanding, if it’s successful.

IPPR also recommends the UK government craft a consistent, long-term policy to reduce uncertainty and encourage investment. Ideally, the government should introduce a 2030 target to reduce emissions in the energy sector to speed up carbon reductions.

Other key policy changes included:

  • Work with industry through public-private partnerships to identify opportunities for low-carbon growth and innovation and to address supply-side challenges, such as infrastructure, skills and financing.
  • Ensure more nuanced policy for energy-intensive firms that targets cost-effective paths for emissions reductions and positive incentives, such as support for R&D.
  • Collaborate with European partners on low-carbon innovation to target potential technological breakthroughs.
  • Work with industry to promote international sectoral agreements.

In other manufacturing news, the natural gas drilling boom that is spreading across the US could fuel a revival in manufacturing, according to a group of economists. By 2025, the manufacturing sector could save $11.5 billion in energy costs, Robert McCutcheon, an economist with consulting group PriceWaterhouseCoopers told the Cleveland Plain Dealer reported.

PwC’s 2011 study, Shale Gas: A renaissance in US manufacturing?, found that low-cost energy could create as many as 1 million new manufacturing jobs in the US. The report found that inadequate infrastructure, concern over the environmental impacts of the shale drilling technique hydraulic fracturing and tax policies could hamper growth in the manufacturing sector.

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