Smarter taxation can help us reclaim our lost ambition for green growth: Beckie Hart

This drive for green is driven by more than good will and the need to leave behind a liveable planet for future generations. It is about commercial opportunity, and the numbers speak for themselves.

In 2024, a year when the UK economy fell into a technical recession, our net zero sector grew 9 per cent.

The CBI’s own research shows green growth could deliver as much as £57bn to the UK economy.

So why does it feel like we’re sliding backwards?

Last year broke every climate indicator we have. It was by far the warmest year on record, observed sea levels reached record highs, and greenhouse gas concentrations continued to rise.

The politicisation of net zero certainly hasn’t helped. Green scepticism has been getting a lot of airtime recently, with some asking whether it’s worth investing in green, whether it can really drive growth.

With all of that in mind, it’s no wonder Chris Stark, the outgoing chair of the Committee on Climate Change, recently asked if the UK had lost its ambition for green.

What gives me confidence that we are heading in the right direction is the conversations I have with businesses. Once regarded as climate laggards, businesses have overwhelmingly become champions of net zero.

They want to capitalise on the country’s status as an early leader in green investment, they want to leverage our energy expertise, and they want to invent and build climate friendly technologies that will shape the future.

But to do that, and to challenge the sceptics, we need bold action. The US and EU have used their deep pockets to lure green investment with hefty incentives. It’s an approach we just can’t match pound for pound. But it is one we can outsmart.

One of the clearest and most underused ways to unleash private investment is greening the tax system: and the CBI’s latest research sets out three headline proposals for how we can do that.

First, enhanced green R&D tax credits, with a headline rate of 40 per cent. That can help us supercharge UK tech like electric vehicles and batteries, heat pumps, biofuels, hydrogen production and carbon capture, utilisation and storage (CCUS).

Second, lowering corporation tax for green tech profits to 10 per cent would also be a powerful incentive. Third, an enhanced green super-deduction rate of 120 per cent could get green investment flowing to where we need it most.

Greening the tax system would not only build confidence, but really help us to crowd in the investment we need. It would also send a powerful message about our status as the best place in the world to invest in green.

Companies in our region know that the cost of missing out on this golden opportunity could be devastating.

Beckie Hart is Yorkshire and Humber regional director for the CBI