There are real risks that the City remains wedded to fossil fuels rather than setting the global gold standard for green finance. That would not be good for Britain or the climate.
The biggest businesses in Britain must decarbonise as the UK prepares for trade talks with the EU in order to stay competitive and exploit growth in the low carbon market post-Brexit, a new report warns.
The chemicals, automotive and financial services industries are among the major UK export sectors that are currently risking losing out to foreign competition unless they adapt quickly to fast rising gobal demand for low carbon goods and services.
The chemicals sector is a strong UK exporter but highly energy intensive. It contributes 13 per cent of all the direct greenhouse gas emissions from manufacturing. As global economies favour new production techniques with lower carbon emissions, the UK's trading position will be at risk unless the sector upgrades.
The electric vehicle (EV) market is predicted to grow almost five fold from £41 billion in 2015 to £1,960 billion globally in 2030. While the UK has the potential to grab £95 billion of this market, it is currently lagging behind and importing more than it exports.
The UK is also not spending enough on battery development, despite some positive announcements on EV charging infrastructure in the budget. The government has said it will buy around 1,200 EVs per year for its fleet. By comparison, the Indian government is buying 10,000 electric vehicles this year, and a further 10,000 after March.
Financial and professional services are by far the UK's most significant export sectors, together contributing £78 billion gross value added (GVA) to the UK.
Until recently, the UK was the global hub for low carbon financial services. But other countries now threaten the UK market, just as demand is set to grow significantly. France is home to the top three banks for sustainability, rated by investors.
Christine Allen, director of policy at Christian Aid, said: "In future all trade has to be low carbon. The Paris climate agreement has shifted countries all over the world onto a trajectory of cleaner development, and blown the starting whistle on a race for new the technologies and markets needed to tackle climate change.
"British aid and climate finance are assisting the poorest countries hit hardest by climate impacts. Britain is also in pole position to be a leader in low carbon trade.
"There are real risks that the City remains wedded to fossil fuels rather than setting the global gold standard for green finance. That would not be good for Britain or the climate."
She added: "The government's recent Clean Growth Strategy and Industrial Strategy, announced this week, have together set the UK on the right course. Cross government alignment is now needed on domestic and international policy, to support UK businesses in building the expertise the world is now demanding."
Jürgen Maier, the CEO of Siemens UK, is speaking at the launch of the report on Wednesday 29 November. He said: "As we respond to the challenges and opportunities of decarbonisation, the bar has been raised even higher. The UK has a major challenge to increase productivity as well as reduce carbon emissions. These twin challenges are interlinked.
"The UK 'Made Smarter' review highlighted that, by investing in the latest digital technologies, we can boost industrial productivity by 25 per cent and reduce carbon emissions by 4.5 percent by 2025. UK policy in these critical areas is now needed to drive international competitiveness."
Brendan Montague is editor of The Ecologist. He tweets at @EcoMontague.