The cluster effect | Why the UK needs a place-based green industrial strategy

 

This paper The cluster effect | Why the UK needs a place-based green industrial strategy prompted a delve into the chinwag vaults for  podcasts broadcast in April 2021 and before See foot of this page.

 

 

Clusters: why the rising interest? New Energy Chinwag

• • Business

 

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Across the various clean energy topics we track and talk about, a common theme has been emerging recently - a focus on the importance of particular geographic clusters.

 

So we spend forty minutes chatting about why this might be: why clusters matter, what the advantages of clustering might be and how they might emerge within the clean energy landscape.

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The cluster effect | Why the UK needs a place-based green industrial strategy

Place-based strategy to grow green industries The net zero transition will require an industrial strategy with emissions reduction and improving productivity as clear national missions at its heart. As we have demonstrated, a place-based strategy is a more efficient way to address the three Ps we outlined at the start of this report: purpose, people and productivity, which are the main issues behind UK economic stagnation. We have shown that targeting specific clusters or places can be a successful strategy. Defining it in this way helps to refine the policy tools to achieve it.

Complementary policies in a carefully designed package of measures should reap the best results. Policy tools for place-based strategies Industrial policies are traditionally distinguished by whether they are horizontal (cross economy) or vertical and targeted (sector specific). Horizontal policies are available to all businesses, regardless of their location or sector, for example R&D tax incentives. Targeted policies may only be available to businesses in certain locations, or those that make specific technologies, for example the public procurement of green steel.

Effective targeting drives resource reallocation between sectors to encourage growth; for instance, the expansion of renewables at the expense of fossil fuels. In short, industrial policy means choosing and giving clear direction. Place-based strategies draw more heavily on targeted policies; for instance, they identify pockets for high productivity and high growth industries in areas of low growth and investment, and support their development with long term public investment to crowd in private investment.

sectoral training

Place-based strategy to grow green industries The net zero transition will require an industrial strategy with emissions reduction and improving productivity as clear national missions at its heart. As we have demonstrated, a place-based strategy is a more efficient way to address the three Ps we outlined at the start of this report: purpose, people and productivity, which are the main issues behind UK economic stagnation. We have shown that targeting specific clusters or places can be a successful strategy. Defining it in this way helps to refine the policy tools to achieve it. Complementary policies in a carefully designed package of measures should reap the best results. Policy tools for place-based strategies Industrial policies are traditionally distinguished by whether they are horizontal (cross economy) or vertical and targeted (sector specific).

Horizontal policies are available to all businesses, regardless of their location or sector, for example R&D tax incentives. Targeted policies may only be available to businesses in certain locations, or those that make specific technologies, for example the public procurement of green steel. Effective targeting drives resource reallocation between sectors to encourage growth; for instance, the expansion of renewables at the expense of fossil fuels. In short, industrial policy means choosing and giving clear direction. Place-based strategies draw more heavily on targeted policies; for instance, they identify pockets for high productivity and high growth industries in areas of low growth and investment, and support their development with long term public investment to crowd in private investment.