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Rich opportunities for EU investors to support UK green ambitions

Author: ICAEW Insights

Published: 07 Dec 2021

The UK has a compelling array of actual and potential investment projects and an active programme to encourage foreign investors to benefit from this, says Chris Barton, HM Trade Commissioner to Europe.

Chris Barton, HM Trade Commissioner to Europe, leads a team from the UK’s Department for International Trade based in 34 countries to encourage trade and investment between the UK and Europe.

In the second of two interviews with ICAEW Insights, he outlines what his team is doing to encourage investment in the UK, drive ‘green trade’ and ensure the government’s levelling-up agenda is met. You can read the first interview in this mini-series here: How international trade can help tackle climate change.

What are you doing in terms of value proposition, talent, access to finance and any other investment driver to ensure the UK becomes a magnet for foreign direct investment to drive clean growth?

We already attract very significant foreign direct investment (FDI) flows and are working to do so even more. We have a compelling array of actual and potential investment projects, a highly supportive investment environment and a very active programme to encourage foreign investors to benefit from this.

Following the UK Government’s Ten Point Plan and the National Infrastructure Strategy, the policy paper "Build Back Better: Our plan for growth" sets out the government’s plans to support growth through significant investment in infrastructure, skills and innovation, and to pursue growth that levels up every part of the UK and enables the transition to net zero. Furthermore, our National Infrastructure and Construction Pipeline sets out the details of nearly £650bn of investment opportunities over the next 10 years spread across 528 projects and programmes and supported by £31bn of public procurement over the next year alone.

For example, the UK is the world’s largest market for offshore wind and is ranked as Europe’s leading market for investment in the sector. The UK owns a quarter of the total global portfolio and generates more electricity from offshore wind than any other country.

The upgrading of UK energy networks fit for a Net Zero future also provides a £45bn investment opportunity, as do our ambitions to transition towards low-carbon heating options. This involves a target of 600,000 heat pumps being installed annually in the UK by 2028, which opens large investment opportunities in the manufacturing capacity that will be needed for this. 

A key part of my and my team’s role is to advocate these rich opportunities to actual and potential European investors and thereby support the UK’s green ambitions. We also advocate the UK as an attractive investment environment. Not only do we have clarity on these major opportunities but we have an open market, stable and predictable regulation, a competitive tax system, a skilled labour force; strong commitment and institutions in science, innovation and R&D, and supportive infrastructure. This is a great story to tell.

We then work to assist European companies who want to exploit these opportunities. We connect them with local partners and across government to help them select specific projects, to advise on how best to deliver them and to assist in overcoming barriers. We also deliver strategic relationship management of major European investors in-country. 

Here is an example: we have recently launched an HPO targeting investment opportunities into heat networks in the North East and Tees Valley, which showcases an ecosystem in energy, engineering, and manufacturing. Needless to emphasise that this is where clean growth and levelling-up objectives meet. 

We also now have dedicated Clean Growth focused Northern Powerhouse Overseas Trade and Investment officers, based in Germany, who combine and drive forward clean growth and levelling-up opportunities to specifically support growth in the North of England. We are committed to driving investment into the whole of the UK to support the levelling-up agenda and in many markets work extremely closely with our colleagues from the UK’s devolved administrations, Scotland, Northern Ireland and Wales.

What does “green trade” mean from your point of view?

‘Green trade’ can encompass both trade in environmental goods and services, and environmental financial trading (eg, in carbon credits). Both have an important role to play in encouraging cost-efficient and effective sustainability. The UK Global Tariff is a very practical example of how green trade can look in practice. By removing tariffs on over 100 green goods, we support the transmission of green solutions – benefitting UK companies and our partners across the globe.

“Trade” is also frequently used as a shorthand for “trade and investment”. International investment also has a very positive role to play in supporting sustainability, eg, to finance the green transformations we need in our energy, transport, housing and wider infrastructure.

Whether or not climate-friendly outcomes are an actual tenet of the trade agreements concluded since Brexit, to what extent is the green agenda present in your thinking generally? How?

Climate-friendly outcomes are an important element of trade agreements we have concluded since Brexit and integral to our thinking on trade more generally. As I hope is clear from earlier answers, we believe that international trade and investment has a crucial role to play in tackling climate change, and similarly tackling climate change brings enormous opportunities for international trade and investment. The two go very much hand-in-hand. Free trade represents a major opportunity for the UK, creating high-value jobs in the low-carbon economy, driving sustainable growth in all corners of the country, and fuelling technological innovations that can be exported to the world. 

The recently published ‘Green Trade’ report impressively highlights these opportunities, indicating that the UK’s low carbon economy could grow by 11% per year and the global export market for low-carbon products could be worth up to £1.8tn by 2030. By 2050, there could be more than 1.2 million full-time workers directly employed in the UK’s low carbon industries in England alone.

How are you working with other non-UK government organisations and supranational organisations to tackle the trade consequences of climate change, both negative and positive (where they exist)?

Collaboration is key to ensuring that our work can be as impactful as possible. Indeed by its very nature international trade and investment involves us engaging with non-UK counterparts. DIT Europe, therefore, engages closely with many thousand businesses across Europe on the trade consequences of climate change, in particular to encourage trade and investment in sustainable products and infrastructure.

For example, only a few weeks back we organised the European Green Investment Summit, bringing together leading businesses from across Europe to join a discussion with Alok Sharma, COP26 President-Designate and Lord Grimstone, Minister for Investment on the implementation of Net Zero and green innovation. At the time of writing, we are also about to have the Global Investment Summit in London to encourage investment in UK low carbon infrastructure.

Part of our remit is to influence other European governments in support of our wider international trade goals too, for example in G7, G20 and WTO to encourage sustainable trade. We also frequently partner with non-governmental organisations, research institutes and others to progress thinking and generate awareness. By way of example, DIT Germany recently hosted a discussion on decarbonising heavy industries together with the well-respected Carbon Trust.

Trade: clean growth and tech

Clean growth and the application of major emerging technologies to existing sectors are two key characteristics of trade in 2022. Add to these levelling up supported by foreign direct investment, and there are exciting future prospects for business and the prosperity of communities globally.

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