Chancellor Rachel Reeves announces a comprehensive £7.3 billion investment aimed at bolstering the UK’s green technology sector.
- Key projects include green steel, hydrogen production, and carbon capture and storage.
- The initiative seeks to attract significant private sector investment by leveraging public funds.
- Management of the fund will be conducted by the UK Infrastructure Bank, independent of government control.
- This move is part of Labour’s broader strategy to make the UK a leader in clean energy technologies.
Chancellor Rachel Reeves has unveiled an ambitious plan to inject £7.3 billion into the UK’s green technology sector, focusing on high-risk projects such as green steel, hydrogen production, and carbon capture and storage. This initiative is designed to stimulate innovation and economic growth by funding emerging technologies that typically struggle to secure financing.
A report highlighted the challenges faced by these projects, noting their unproven nature at a commercial scale and potential for cost overruns and delays. Key targets include industrial decarbonisation, commercial green hydrogen production, and the establishment of new gigafactories. The UK Infrastructure Bank will oversee investment decisions, ensuring independence from direct ministerial control.
The National Wealth Fund, central to Labour’s manifesto, aims to attract £3 of private investment for every £1 of taxpayer funding. Structured based on recommendations from a report led by former Bank of England Governor Mark Carney and Barclays CEO CS Venkatakrishnan, the fund is designed to assume a larger share of financial risk. This strategic design is expected to draw significant private sector interest.
Treasury sources have indicated that the UK Infrastructure Bank will swiftly begin identifying potential projects. The £7.3 billion funding will be available following Labour’s first budget, reflecting the government’s commitment to expedited action, unlike previous initiatives hampered by delays.
Labour’s strategy aims to position the UK as a global competitor in future technologies, especially against heavy investments from the US, EU, and China. Nevertheless, the fund will not target areas such as solar panels and EV batteries, where China already has a dominant position.
Ed Miliband, Secretary for Energy Security and Net Zero, has emphasised the critical role of this investment in Labour’s mission to establish Britain as a leader in clean energy. Despite the significant public investment, the Climate Change Committee estimates a need for £50 billion annually to meet the UK’s climate targets from 2030 to 2050. However, Reeves expressed confidence that this funding would significantly boost the UK Investment Bank’s efforts and attract immediate private sector investment.
Reeves highlighted the urgency of avoiding bureaucratic delays, which have previously hindered substantial investments. She believes the initiative will restore investor confidence in the UK and differentiate it from other countries. Alongside this fund, the government will also establish GB Energy, an £8.7 billion public investment vehicle to generate higher taxpayer returns through renewable electricity production. Reeves clarified that this is not a step towards state ownership of electricity generation.
This £7.3 billion initiative is a strategic move to position the UK at the forefront of green technology and economic growth.
