TRANSCRIPT

The Green Alliance Podcast | Why the UK needs an industrial strategy, and why it must be green, with Matthew Lockwood and Silvia Weko

SPEAKERS

Matthew Lockwood, Silvia Weko, Steve Coulter

 

Steve Coulter:

Hello, and welcome to the Green Alliance podcast. We are the charity and think tank that’s all about achieving the ambitious leadership for the environment. I’m Steve Coulter, Head of Economy at the Green Alliance, and a visiting senior fellow at the European Institute of the London School of Economics. In this episode, I chat with Silvia Weko, who is the postdoctoral researcher with the Friedrich Alexander University at Nuremberg, Erlangen, and Matthew Lockwood from Sussex University, where he is with the Sussex Energy Group and also works with the Industrial Decarbonisation Research and Innovation Centre, and we’ll be talking about industrial strategy, green industrial strategy in particular. First, Matthew.

Matthew Lockwood:

Yeah, thanks very much Steve, my name is Matthew Lockwood. I’m a senior lecturer in energy and climate policy That’s Sussex University I’ve done lots of research on especially UK energy and climate policies over the years and in an earlier phase in my career I’ve also worked in a variety of different roles for the think tank the Institute for Public Policy Research for the London government on energy and climate policies and also for the UK government.

Steve Coulter:

Before I go over to Silvia I I’ll just ask you a cheeky question, Matthew. What is your favourite green policy? Or do you have a green hero you want to share with us?

Matthew Lockwood:

I suppose my favourite or one of the most successful ones for the UK is actually being offshore wind, being a great success story for the UK. And a lot of that has been down to the way that people in the industry and the government have all worked together in a very constructive, collaborative way to really maximise the potential that we’ve got to use our fantastic wind resources here.

Steve Coulter:

Silvia, introduce yourself and then perhaps your favourite green policy.

Silvia Weko:

My name is Silvia Weko. I’m a postdoctoral researcher at the FAU Nuremberg and Langen in Germany. And I have worked in the past on energy politics and policy in Europe and Europe’s relationships with its neighbours and just recently I was working on green hydrogen and also the UK’s green hydrogen strategy. So, I’m very pleased to discuss policies and politics with you guys today. And speaking of policies, my favourite is the EU eco design directive because we’re now going to have interoperability requirements. So, I won’t have to have eight million chargers for three million chargers. phone and my computer and whatever else, but just the one, which I’m very much looking forward to.

Steve Coulter:

So, the topic of discussion today is industrial strategy. It’s very much a buzzword. For a long time, under the years of the Washington Consensus, industrial strategy was a bit of a swear word. It wasn’t something that sensible governments did because the market knew best. Over the last 10 years, or so years as global and domestic economic and social problems have mounted to do with deindustrialization, changing technologies and of course now net zero. That attitude has changed, and industrial strategy is very much in vogue all over the world and most strikingly in many of the advanced economies that had previously eschewed it. There were some major programs of industrial strategy now undergoing the Inflation Reduction Act in the US which despite its name is mostly about protectionism and subsidies for industries including green industries. There’s also the CHIPS Act which is about reshoring semiconductor production. The EU has stepped in with its Green New Deal which is in sort of relatively similar program but with less money, a bit more regulation. And then of course there’s China’s Made in 2025 strategy, which despite its name goes all the way up to 2040 and is a major program to drag China’s industry into the 21st century and steal a lead in green technologies and other technologies. In the UK, now after Britain, we’re somewhat caught between these various trading blocks, and we don’t have very much money. But there has been a healthy tradition of regulation and strategic direction of the market over the last 10 or 15 years. Theresa May 2017 had her industrial strategy, which was junked a few years later by Boris Johnson. Nevertheless, the Conservatives have not been shy of doing industrial strategy. Boris Johnson had his 10 -point plan for a green industrial revolution and sunk a lot of money into developing renewables and supporting the electric vehicle industry, not to be outdone. The Opposition and Labour Party, they have ambitious plans for an industrial strategy. They have a green prosperity plan. All these schemes have a very large green component.

All these governments see green as very much the industry of the future. But greening industrial strategy is a lot more than switching a few factories over to making electric vehicles and developing renewables. There are some major organizational, economic and political challenges involved in the green transition. A lot of coordination problems have to get the regulation right. If you have any questions, please post them in the comments section. If you’re helping industry to adapt, how do you ensure that it has sufficient power supplies? Is there sufficient skilled labour? Is the capital available? All of these coordination problems demand an industrial strategy, which is why even the industrial strategy sceptical conservatives have not abandoned it entirely. They have an advanced manufacturing plan, which is an industrial strategy in Norbert name. which has a lot of green elements. So, despite the sort of rhetoric cooling from the conservative government on industrial strategy, they’re still very much doing it. However, it’s also becoming a bit more political. There was an on -store against Labour’s 28 billion green prosperity plan. So, it’s now cooling on that, which is even though many people agree that we need more investment, not less, and actually even more. 28 billion a year is actually chicken feed in comparison with what we need. There’s also question marks over how you do industrial strategy. Conservatives have generally cleaved to a sort of market failure approach, correcting markets with regulation and subsidies and expecting the private sector to jump in. Labour has much more interventionist strategy, government setting the pace. pace, but they generally agree that all this stuff is needed. In Europe, there’s more consensus, but increasingly we’re seeing signs of the political coalitions around all this fraying. We’re seeing political problems in Germany overheat pumps and the costs of the transition, the threats to the Germany’s manufacturing model from the end of cheap energy, the end of abundant exports. to China. I’m sure Silvia will talk more about this in a second. And over in the US, the prospect of President Trump cooling on a lot of aspects of the IRA and particularly green technologies is looming. So, the new consensus around industrial strategy may not last, particularly as competition over things like critical war materials, amounts of up, as supply chains get near shored or reshored, and as global competition for leadership in green technologies heats up. So, I’m going to now turn it to my guests, Matthew and Silvia, to ask them for their view on what the main challenges are for the UK, Germany, and globally. Silvia, I was touching on some of the sort of things going on in Germany. Would you like to expand on Germany, the EU and elsewhere?

Silvia Weko:

Yeah, absolutely. Thank you. I think you picked up on a very important point also in your introduction, which is that this is a massive change for the EU as well as the UK in terms of this focus on industrial policy, which was for a long time a very dirty word. And to some extent still is. This is not something that the Commission is, let’s say, going to be broadcasting that they’re doing industrial policy, but they do have some policies that will lead to or are aimed at maintaining industry within Europe as does Germany. Germany, I think is a bit more overt about its industrial strategy ambitions. I think also though one thing that’s important to recognize for Europe and especially European countries like Germany that have been highly dependent on energy imports is the fact that that supply chain vulnerability is going to continue when it comes to energy and energy technologies. And so even if there is a backlash against industrial policy or the cost of industrial policy, we’re kind of between a rock and a hard place, right? There’s not a lot of other options apart from French shoring, which is then also still not as cheap per se as this very global division of labour. what we’ve had for the past 20, 30 years. So, I think in general, for us, the main challenge of green industrial policy is really how are you going to support these industries because you need to in a way that’s not so expensive that you completely destroy the momentum for green politics. And I think at the EU level, there’s two big policies that are really supposed to retain industry in Europe and tackle decarbonization at the same time because this is what the EU has ultimately pledged to do with the Green Deal. So, the first is the extension of the EU ETS, the emissions trading system. And this is being extended because previously there were a lot of industries that were exempt from these allowances under the EU ETS. So, like steel and chemicals and there’s a concern that now that the EU ETS applies to them, these industries are going to shift abroad rather than decarbonizing within Europe. You’ll just see steel being imported from China rather than being made in the EU. And so, the European response to this has been the carbon border adjustment mechanism or CBAM, which basically is supposed to ensure a level playing field in that an imported good will have eventually the same cost of carbon as a good made in the EU. But there has also been some political backlash within Europe, but as well as from trade partners who see this as kind of green protectionism. So, there are international political difficulties with the EU’s kind of green protectionism, if you want to call it that, also from the US. But I think more importantly now there’s the EU Net Zero Industry Act. And this is kind of a response to the US. IRA, IRA, I guess, as we’re calling it, which is really driven by the concern that a lot of manufacturing for these really important technologies like solar PV has moved to China. And the rest of it that still remains in Europe is now saying we’re going to pick up and move to the US because they have much better support for that industry. And so, the Commission proposed this last March, and they just reached a sort of… of provisional deal, but it’s still not gone through. The goal is to increase EU manufacturing of these key technologies and support them. So that means PV, but also wind batteries, heat pumps. And so, auctions for renewable energy within Europe now are allowed to be based not only on price, but also on different criteria like sustainability, basically meaning that you can. choose to use European products in new energy installations because they are more sustainable, more compliant with data security and cybersecurity. So, kind of giving an indirect boost to the European industry.

There are also some possibly direct ways of boosting European industry with funding from the ETS, from the Strategic Technologies for Europe program. program. The problem with this as so many other things with the EU is just coordination. So which technologies should be subject to EU support is a whole political mess. Should nuclear be, should it not be? We know where Germany and France will fall in this respectively. But then also coordinating these things at the EU level is always tricky because at the end it’s often up to the member states what they’re going to actually implement. So, I think while the EU has this coordination problem within Germany, there’s a really big political and budgetary problem. So, Germany has a bunch of programs already to try to keep its green industries and establish new ones. So, there’s programs for semiconductor production, for hydrogen industry, it’s very important. And we had in the last years, power price compensation. for heavier industries, a lot of different things. But the problem we’re facing now is that we have this budgetary constraint. I guess a bit of background. So, Germany has a constitutionally determined limit on the debt that it’s allowed to raise. And this can be lifted in certain emergency situations. So, this was lifted during COVID, for example, the Germany was allowed to have a bit more debt to be able to address the crisis. And so, the government had proposed to sort of continue to support industrial policy with some debt -based funding with the Climate Transformation Fund, but this has been rejected by the Constitutional Court. So, there’s been a huge setback in terms of the money that’s available to actually carry out this kind of support for these industries. And now they’re off. austerity plans, which have led to the farmer protests in Germany about the sort of cutting for the subsidies for vehicle taxes support and diesel. But there’s also other stuff like the support for electric vehicles will probably have to be cut a lot because there’s just not the funding there. So, we’ll see how that develops. But I think for the EU, really main challenge is coordination and being able to move quickly enough to address industrial challenges. And for Germany, for now, it’s about money.

Steve Coulter:

Over to Matthew then. So, I think, I mean, what Silvia been saying is that, you know, money’s very important, but it’s not just a subsidy race. There are lots of things about setting expectations and having sort of clear policies, which I guess is a sort of chink of light for the UK, given that we don’t have the spending power of the US war, the regulation. regulatory heft of the EU or those sort of cheap labour costs, massive scale that the Chinese have. So, what do you see as the sort of best strategy for the UK and try to sort of find a chink of light between these very powerful blocks?

Matthew Lockwood:

It’s a really good question. I think that the UK also, as you say, it’s surrounded by these big blocks which have bigger fiscal firepower and so on, a bigger market. But the UK also has this problem that historically it’s really wrestled with the idea of industrial strategy. We have a long history of a kind of dominant ideas in policymaking that the market decides. I mean, there’s a lot of scepticism, especially in the treasury about industrial strategy. And although we’ve had a bit of a return to that, as you were saying in recent years, it’s still really a big problem, I think, or it’s still a very strong set of ideas there. The other thing that arises from that experience is that the government in the UK hasn’t had the history of building up capacity in government amongst policymakers for thinking intelligently about industrial strategy. We don’t have the institutions and so on. And we also, to some extent, have a lot of instability in policy. Fashions come and go. We get enthusiasm about industrial strategy and about funding and then it’s dropped, or it’s reversed. So, I think that’s an additional problem that we have. I think the other thing is that as you say it’s not just about money. So, we do have to have some kind of incentives there, subsidies, tax credits and so on. But we also have to think about other aspects of policy to make this work. We have to get better vocational training and retraining institutions. I think we need more patient capital. We have to think also about how to make support available not just to the big players who find it easier to actually to access subsidy programs and so on, but also to the small and medium -sized enterprises in the UK, the sort of UK equivalent to Germany’s Mittelstand, which often gets overlooked in these kinds of programs. So, there’s lots of different parts to a successful strategy, I think, and so that really means you do have to have a strategic approach overall. And then I think the other thing to say about the UK is about to comparative advantage. As you say, we can’t match China on cheap mass manufacturing. Where I think some of the UK comparative advantage does lie is in areas like high -value manufacturing. Even though we lost lots of support from the 1970s to manufacturing, we have kind of kept that high -value manufacturing going in areas like the automotive sector in the UK and aerospace in other related areas. areas. And so, I think that and the strong science base in the UK really point to the importance of building on innovation and high value manufacturing is where we can kind of fit in. So, I think those need to be core parts of our strategy really.

Steve Coulter:

I suppose what a country is good at is always where’s the question of, well, there’s sort of past legacies. But when you have a sort of serious transition of a sort of profound transition like the green transition when suddenly all these other new sectors are up. up for grabs, then it becomes much more of a sort of creative problem. Well, what do we back and what do we not back? And for that, you do need a good sort of stock take. Do we have the right institutions for it? Do we have the right training? Do we have a genuine comparative advantage here? Is there a global market for here? And if so, is anybody else coming to eat our lunch? So those are all things you have to bear in mind. mind. Let’s turn now to another area, the sort of second big area of screen industrial strategy, which is the decarbonisation of industry, which is sort of often overlooked when politicians, they prefer to talk about sort of shiny, sexy new sectors like aerospace and CCS and hydrogen and stuff. But actually, an equally profound transition is decarbonising heavy industries and manufacturing. in fact, medium and some light industries which have been built since the Industrial Revolution around consumption of greenhouse gases. So, this is a major undertaking as well. So industrial decarbonisation has stuck with Matthew. What are the main challenges here and you think our government’s doing enough?

Matthew Lockwood:

Yeah, I mean I think this is a really important area and it’s one that I’ve been working on within this consortium which you mentioned before, the industrial decarbonisation research. Innovations Centre, which is focusing on industries like steel, cement, chemicals, ceramics and so on. I mean the first thing to say is that this is still part of the industrial strategy agenda very much so and the reason for that is that you need industry if you want to decarbonise. So, if you don’t have any industry who will lose it all then you can’t decarbonise it. So, keeping industry going in the UK is a really important part of this agenda. And this is a real issue because in recent months we’ve seen how that can, in a country like the UK, which is always under cost and competition pressures, it can easily slip away from you. So, it was announced just before Christmas that a refinery, one of Britain’s few remaining refineries actually in Grangemouth looks like it’s going to close.

There’s going to be the loss of primary steel making in one of Britain’s two remaining. steel plants being shifted over to using scrap that’s at Tata in South Wales in Port Talbot. So that part of the agenda is very important, the industrial bit. So that’s the first thing to say. The second thing to say is that the decarbonisation bit is a big challenge, and this is true for the UK and elsewhere because we’re at this stage, early stage, with we have multiple industries that involve multiple processes and processes. you know there’s over a hundred thousand different chemicals registered in the EU and lots and lots of processes for making them. Each of one of it produces emissions and so on. So how we tackle this from a technological point of view is still a big challenge and there are lots of cost uncertainties and actually the challenge for policymakers I think under those circumstances are there’s the danger of kind of hype and capture by different technology lobby groups. They’re all pushing their particular product saying this is the solution you want to invest in this subsidize this and will provide the solution. For the UK I think one of the most powerful lobbies is not true actually in a lot of other European countries is from the carbon capture and storage kind of people and related to that also blue hydrogen. I mean my view is that I’m not against those technologies I think we need to investigate them, but I think the danger is the that maybe they could crowd out support for other options like electrification or investigating more efficient use of final products and so on. So, I think that there’s a need for policymakers to try to keep a balance and be very aware of these technology lobbies. Putting these two agendas together, I guess, the industrial strategy bit and the decarbonisation bit, there’s always a battle between specific interests which is industries here, and workers in those industries, and taxpayers and consumers on the other. It’s a little bit like what Silvia was talking about in Germany with the Constitutional Court. You’ve got a battle over money. How much money are we going to put into this? How much support are we going to put into it? And also interrelated changes in other areas like training, which we talked about earlier. And you see that in the UK fought out partly as the battle between the Treasury and the Department of Trade and the Energy Ministry. and so, I think in the UK we’ve got a lot of political competition over this both foreign against spending for decarbonisation.

I think governments are increasingly as you pointed out they’re increasingly wary of adding cost on to consumers and maybe taxpayers and you can see this being played out for example in the politics around Labour’s 28 billion commitment for sort of green industrial development which includes industrial decarbonisation. decarbonisation and it’s really mixed messages. So, it’s an unstable situation and I also think it’s a reactive one. So, one of the really striking things about decarbonising heavy industry in the UK is that heavy industry is very energy -intensive, it uses a lot of energy, a lot of electricity and so its costs are really affected by the costs of electricity. Our competitors in Europe, including Germany, actually protect heavy industry quite a lot. And so, what you see over the last 10 years is the UK government moving where they see countries on the continent giving discounts, protection from network charges and so on in the electricity sector, then they tend to kind of follow that to some extent, but usually in a kind of weaker form and pretty slowly. So, it’s a very reactive kind of approach. And I think that one of the things that we really need to keep in mind is that we need, And I think that one of the things that we really need to keep in touch with the UK government in the UK to do this successfully is to think longer term and to think more strategically and not be so reactive all the time. Final thing that I’ll say about this agenda, which I think is also pretty important, is about the politics of it. So, there are some now the UK government is putting money behind this. It’s saying let’s try to decarbonise some of this heavy industry through the UK government. like hydrogen, like carbon capture and storage. But that money is not going everywhere equally. It’s going to, at the moment, the initial money is going to two places in the UK, two regions, and other regions such as in South Wales, in Scotland, and so on at the moment are not getting any support. So, the support is being focused on the northeast of England, around Teeside, Humberside, and in the northwest on the and the trouble is that this then raises concerns, it means that people in these other industrial clusters have to keep things going, try to keep companies interested and so on until more resources are available. And so, I think there’s a regional politics of this which is important and tricky to manage, I think. I also think there’s an issue about jobs. One thing that’s often said about this sort of green industrial agenda and it’s a selling point, usually, is that there’ll be lots of jobs coming out of it. And the headline figures look good. So, one quite authoritative estimate, I think, from the University of Chester is that we’ll have 350 ,000 jobs between now and 2040 in meeting the industrial decarbonisation agenda. But a lot of those jobs are going to be in construction. So, they’re not going to be permanent jobs. They’re going to be for a while we’re building new. new plant in different areas. And the other thing is that some green technologies can actually mean job losses. So, one very obvious example at the moment is as I mentioned before Tata in South Wales is moving away from traditional glass furnace operation, getting rid of coal, switching to electric arc furnaces, which is a much cleaner technology, but it looks like there will be something like 3000 job losses. in Port Talbot, the big impact, those are high paying jobs, and the same could be true for British steel and scumthorpe. And you also see this issue of greener technologies sometimes being less labour intensive in electric vehicle production, for example. This is a big issue in the US, increasingly, and unions are not entirely happy about it. So, I think that the politics of jobs in the green industrial transition is also, it has to be handled carefully. carefully, because otherwise people can get very understandably, can feel very let down and get very angry about it.

Steve Coulter:

So, Silvia, Matthew has mentioned some of the political side of this, it’s not just a technical side, it’s very much a political side, these are people’s jobs. I’m assuming it’s a sort of similar issue in Germany and many other countries. What for you were the big challenges of the decarbonisation of industry?

Silvia Weko:

I was nodding along quite a lot with them. Matthew when he was describing this because I’ve done quite a lot of work on hydrogen in the past couple of years and hydrogen for a green industry. And I can only add to that that it’s very hard to cut through the hype cycle and that it’s also very true that all of these are highly, highly political decisions. I mean the decision to go for hydrogen within Europe and green hydrogen, I think, has already been made. But yeah, this may also come with challenges for the industries that are so politically important, like steel, like chemicals. And these are also highly important in Germany. And they’ve often been based on access to cheap gas. And so the idea that access to hydrogen will be able to continue these industries kind of as they are today I think is a hope that’s also encouraged by many working in green hydrogen that it will be so cheap and it will be so plentiful and that we can just easily switch it out with gas and then there will be no consequences for jobs and for industry and I think unfortunately that’s just not the case neither in Europe nor in the UK. And in fact, in many cases because of the nature of these technologies which are still developing, it might not make sense to use hydrogen, it might make sense to use electricity. So, there’s a couple real risks when it comes to industrial decarbonization. I think one thing that I am still wondering about, and I’ve not found a great answer to in my research is how high the actual risk of relocation of a large scale for these industries is that’s related directly to energy. And that’s not just because of some other costs like labour costs, for example. I mean, we’ve seen already enormous amounts of industry relocating to China, but that’s not necessarily because of climate or environmental policies as highly linked to labour costs. So, I think this is a risk. risk, but it’s also may be overstated by certain industries that have an interest in ensuring that they also continue to receive support and subsidies within Europe. So, this big challenge about cutting through the hype and then also for Europe, I mean, the fact remains that Europe and especially Germany are huge energy importers. And so, no matter what happens, their industries will have to somehow decarbonize with energy that will probably some of it come from outside of Europe. And with this, then comes a whole host of other issues. So obviously it can’t be gas from Russia, but it has to be clean energy. So now Europe and especially Germany are really pushing for green hydrogen. And this then comes with new political risks more now in the international arena, so not just related to local jobs, but also if, for example, Germany aims to import a lot of hydrogen to power its industries and decarbonize them, this will come from probably Northern Africa. But then there’s the question, are the other EU member states on board with this? France is maybe not interested in having these new dependencies develop. Spain probably wants to sell its green hydrogen to Germany and not have to compete with Northern Africa. So, there’s a lot of politics around the infrastructure and the cooperation between European member states that would be needed for countries like Germany to actually go green in these key industries by using hydrogen. And then, of course, there’s all the other complications of relationships with those companies. and countries outside of Europe. So, if Germany is going to, for example, import green hydrogen, it’s likely going to be working very closely with state -owned companies like Sonatrack or like OCP in Morocco, which are tied to, let’s say, illiberal governments and are not transparent. So, in the end, we may end up kind of recreating these same patterns, even if we’ve decarbonized the industry and hopefully, we have. We may. may still have the same sort of geopolitical issues that come with energy dependence.

Steve Coulter:

So, my final question is, we sort of veered towards the politics, quote or not, and the sort of political sustainability of industrial strategy. I mean, if you look at the sort of history of this and why industrial strategy went out of fashion after the 1970s and in the 1980s, it’s a sort of cyclical approach to industrial strategy. Sometimes it’s in favour, sometimes it’s not. I wonder if this time, and maybe we’re seeing the sort of seeds of this now, it might actually be a victim of its own success. How can we think about framing industrial strategy in a way that people see why it’s needed and see that there are benefits for them, rather than just sort of abstract statements that it’s good for the balance. of payments or it’s going to happen anyway, it’s inevitable technological change. Is there any way we can reframe or frame better industrial strategy, so it continues to have political support?

Matthew Lockwood:

Yeah. I mean, it’s a really good question. I think that there can be arguments made on jobs, but as I said, I think you have to be quite careful because it can easily go wrong. There’s an awful, awful emphasis put on opportunity at the moment, which is of course is very positive and that’s great but maybe we can also start emphasizing more the sort of if we don’t do this then we’re going to lose everything kind of we’re going to lose all the jobs and all the investment and the technological kind of opportunities that are there in this industrial transition if we don’t help support this process. It’s a process that just can’t rely it can’t rely just on markets. You can do certain things in markets like a carbon border adjustment mechanism or something like that. but you’ve really got to manage this transition. And if you don’t, then as I say, you know, the jobs that are there, the jobs that will be there in future in green industries, there will be some jobs, then you’ll lose those. So, I think it’s keeping the, for say for the UK, especially now we’re not part of a big block like the EU, small, we’re getting a smaller player in the world for the big sharks as it were, then it’s sort of keeping up and being part of that. rather than just saying, throwing our hands up and saying, “This is all too complicated.” I think that’s one message which I think we really need almost. And I think that the other kind of way of framing it, maybe especially for the UK, is as I mentioned earlier, we’ve got some comparative advantages and in these areas like high value manufacturing like science, technology, innovation, I emphasised some technological and cost uncertainty, and I think there is still a lot of potential for innovation, especially in industrial decarbonisation, decarbonising these existing industries. And we’re constantly seeing new ideas coming through. And so, I think there’s a big opportunity there for the UK to be part of that. But what that means, I think, is that it also means we have to think very hard about our institutions around all of this. So, if there are not going to be lots and lots of jobs in manufacturing. manufacturing, even if we make these industries greener, then we’re going to have to get more people trained in STEM subjects and being able to take advantage, more advantage of these technological opportunities in the UK. So, I think we really have to, we have to have a, I think the advantage of having an industrial strategy mindset is you can think, well, it’s going to be challenging, but we can, and we have to find it, steer our way through it. We can’t just sort of leave things because we’re probably going to leave out if we do. I mean, actually, some people take the view that we need institutionally or organisationally. We also need some innovation here as well in the form of some kind of maybe some green industrial transition advisory board or a group. I think parts of industry have called for a royal commission sort of industrial transition. And maybe we do need that kind of something like the climate change committee, but more focused specifically on industrial transformation.

Silvia Weko:

This is a really interesting question and I think one that we can speculate on, but ultimately, we’re going to have to muddle through and see what happens in terms of which framings are actually effective because they’re always super context dependent. I liked Matthew’s idea of sort of look, it’s coming, we can think, or we can swim, so let’s try to swim. And as you said earlier, where can we compete, it’s not going to be on labour. And it’s not going to be maybe on energy prices, but it can be on innovation. I will add to that, I think something that’s been historically important in Germany, but also in China is the link between manufacturing and innovation. So that, of course, there’s sort of innovation in the lab, but there’s also this kind of innovation in engineering, making something work. work a lot better.

Matthew Lockwood:

Yeah, I think that’s very important. And I think there’s also an intermediate stage. So, there’s also, you know, there’s quite a lot of activity firms’ jobs in making the move from the lab to manufacturing. There’s lots of intermediate stages. And I think that’s where actually economies like Germany are and also the UK’s and other European economies actually do quite well. So, there’s a tendency, I think, for much the public to think it’s either all science in the lab or all big factories, but actually there’s a big range in between. And that’s where a lot of us, the comparative strengths of European economies lie.

Silvia Weko:

Yeah, yeah, absolutely. So, I think this complementarity where we need to keep at least some manufacturing even if it’s on a small scale and that needs to be encouraged, but also those links maybe between industry and science could be strengthened. For Europe, I have to say, I think going forward, energy security and energy dependence are going to continue to be a really big issue. And so, highlighting the importance of as much as possible, these industrial policies can help us address these major challenges of energy security, kind of this same sink or swim mentality, right? That there are things that we can do to make our… our energy system more robust and that includes addressing risks down the supply chain when it comes to everything from where solar panels are manufactured to what kinds of materials are used for that. So, I think framing this as something that’s inevitable and we’re figuring out a strategy to try to address it as best we can be maybe the way to go. So, I guess that doesn’t sound quite so positive as jobs, but I agree with the point that it’s maybe quite high risk to promise jobs which are then not delivered. And actually, we’ve seen this happen in other countries where there’s been a lot of jobs at the stage of construction of plants and then very few jobs in the stage of maintaining renewable energy power plants and systems. And of course, this then can lead to a local backlash if it’s not the kind of benefits that we’re looking for. So, I think having a strategy to be able to address supply chain vulnerabilities could be one way to sell this and not necessarily leaning so heavily on jobs.

Steve Coulter:

Well, thank you both very much. That’s been a very fascinating discussion. I think if there’s one message, it’s don’t overpromise with industrial strategy. It’s vital. We can’t do without it. it. If we try and do without it, our competitors will carry on anyway and leave us in the dust. But don’t promise it’s going to produce millions of jobs and make Christmas happen every day because that’s the way to lose the goodwill and support.

This has been a Green Alliance podcast. We’ll hope you can join us for a future podcast. (upbeat music) Thanks for listening to this Green Alliance podcast. Keep checking in as we continue to bring you specialist interviews and highlights from our events here on your podcast feed. You can subscribe to the Green Lights podcast on your favourite podcast app and can follow us at Green Alliance UK on Twitter and Instagram and the Green Alliance on LinkedIn.

See you next time. ん