The UK Sustainable Investment and Finance Association (UKSIF) has called on UK government to provide greater transparency on its approach to automotive industry transition.
UKSIF, which brings together over 300 members managing more than £19trn (€22trn) in global assets under management, said the clarity on the long-term strategy to decarbonise the UK transport industry would improve investor confidence and unlock growth opportunities for the transport sector.
It believes that the UK government risks creating an investment hiatus and a flood of private capital being driven to other international markets through, among other areas, its “inconsistent” and “opaque” approach to public-private engagements in regard to gigafactory investment.
UKSIF highlighted that when placed in stark comparison with other international policies, such as the US Inflation Reduction Act (IRA) which provides potential investors with easily identifiable rules of engagement, unless the UK can provide a clear process for investors it will continue to fall behind and be unable to compete on the global stage for battery production.
It added that since being signed into law, the IRA has attracted more than $110bn of private capital investment into new clean energy manufacturing, including more thant $70bn into electric vehicle supply chains.
This, the association said, is clear evidence of what a transparent and clear approach can do to unlock higher domestic private sector investment.
UKSIF research showed that 87% of the UK transport sector, representing approximately £150bn in UK investment, agree that providing a consistent approach to UK government partnerships with investors, including producing investment prospectus for gigafactory sites would have a positive effect on investment into the UK.
The research, which surveyed 100 businesses across the transport sector, also highlighted the opportunity cost of not pursuing a more transparent and consistent policy approach. It showed that 57% of major transport companies have said they have or plan on moving investments out of the UK to a market that is more supportive of their sustainability goals.
Alongside greater transparency on general rules of engagement around private partnerships, UKSIF is also calling on the government to produce an investment prospectus for identified sites, which sets out the key opportunities, and the level of support investors can expect the government to provide.
This support could come in the shape of subsidies, and providing longer-term certainty for investors that they can access energy at a comparable cost to other international markets, UKSIF said.
James Alexander, chief executive officer at UKSIF, said that a lack of clarity and certainty on the long-term strategy for the automative sector, is “destroying” investor confidence, driving much needed private capital overseas and limiting necessary progress on the decarbonisation of the transport sector.
He added that without certainty from policymakers on targets or transparency on the approach to private partnerships, manufacturers and investors find themselves in “limbo – questioning how or why to invest in this sector, and the long-term strategy for UK transport”.
“This is confirmed by our own research into large transport businesses in the UK, where more than half (57%) have said they have moved or plan on moving investments out of the UK to a market that is more supportive of their sustainability goals,” he noted.
Alexander added that the UK is in “desperate need” of consistent policy, backed by ambitious targets to retain its powerful position as a “world leader in sustainable finance and innovation”.
“UKSIF has worked closely with organisations and businesses across the transport sector to understand what policies will be needed to unlock greater investment in the drive to net zero and decarbonisation,” he stated.
Ashton Cull, public affairs manager at Road Haulage Association (RHA), added that the road haulage industry supports net zero and is determined to make the transition work for all businesses, including our vital small businesses.
However, he said that there is simply not enough certainty on what the fuel of the future will be.
“Firms need that clarity to inform their investment decisions for the next buying cycle (around 15 years) – both the current cost and the stranded asset risk are too high.”
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