UK: The Confederation of British Industry (CBI) has called for UK tax incentives to encourage green technologies like heat pumps to tackle climate change and boost the economy.
The CBI recognises that the green economy offers unrivalled opportunities to meet the UK’s commitment to decarbonise by 2050 and to capture green growth that could deliver a GDP boost of up to £57bn a year by 2030.
Yet, the CBI insists that the UK risks falling behind global competition. It argues that both the US and Europe have introduced impressive reform packages (US Inflation Reduction Act and the EU Net Zero Industry Act) to incentivise green investment, using tax credits, subsidies, grants and loans.
The CBI is proposing a number of recommendations to strategically target important green technologies, sending a strong signal to business that the UK has a green plan and is ready to invest.
These include a new Green Innovation Credit with a headline rate of 40% for green technologies and processes; lower corporation tax rate of 10% for profits derived from green technologies; a new capital allowance rate of at least 120% to support capital investment.
“The UK is lagging behind in the global green growth race. Our US and European rivals have bolted out the gate with incentivising reform packages, securing major market share and creating skilled jobs,” said CBI chief executive Rain Newton-Smith.
“The UK initially led the pack, setting international standards and as the first major economy to sign net zero into law. We must now move at pace to reclaim our lead in this field, to achieve our net zero goals and build in long-term, sustainable economic growth. Public funding alone will not be sufficient.”
“Making better use of the tax system in the form of capital allowances, investment tax credits and reductions to the corporation tax rate, to incentivise green investment is an effective way to drive the supply of new green products and services and encourage the adoption of green technology.”