Dr Roger Barker said, “The Inflation Reduction Act in the US is a game changer which cannot be ignored by UK policy makers. It provides substantial incentives for companies to pursue green innovations and green technologies in the United States rather than in the United Kingdom. The EU is also raising the stakes through its ‘Green Deal Industrial Plan’ which, amongst other things, is proposing a significant relaxation of the EU’s state aid rules when it comes to investment in green technology.

“In 2021, Prime Minister Boris Johnson announced that the UK’s strategy was to ‘lead the world in ending our contribution to climate change’. However, we have now reached a situation in which that rhetoric needs to be converted into substance.”

He added that a particular concern is that short-term budgetary concerns will override the strategic imperative of establishing market leadership positions in green business.

“It’s imperative that government and the private sector work together, otherwise the UK will find itself left behind in the accelerating race to lead the green economy,” he said.

The IoD is calling on the UK government to be significantly more active in incentivising green industries and technologies. In a recent 859-person survey of IoD members in February, nearly eight out of 10 businesses supported subsidies, either to achieve a step-change in how we tackle climate change or to level the playing field with the EU and the US.