Shifting tectonic plates: what role for the UK in the global renewable race between the US and the EU?

Daniele Atzori and Matthew Chadwick

Cornwall Insight, UK

Background 

After the global financial crisis of 2008, capital has been relatively cheap and abundant for over a decade. However, the tectonic plates are shifting, with current high inflation and consequent restrictive monetary policies heralding greater competition among nations for a reduced pool of capital. With the Chinese infrastructure investment market dominated by local players and the state, the main competition will be between the US and Europe. The inflation reduction act (IRA), signed into law by President Joe Biden in August 2022, has provided $369bn in subsidies for clean technologies and has given the US a clear competitive advantage in the race to attract capital into renewables. Presented by the European Commission in January 2023, the Green Deal Industrial Plan is the EU’s answer to the IRA, aiming to remove obstacles and speed up the permitting and roll-out of renewable technology, as well as incentivizing investment in indigenous supply chains.

Methods 

Our paper will compare key factors such as geographical and geomorphological features of the US and Europe (including solar radiation, wind speed and bathymetry), macroeconomic conditions, renewable domestic supply chains, capacity to attract green capital, demographic factors, and renewable policy risks to assess the respective advantages and disadvantages in the global competition to attract the increasingly large pools of capital needed to achieve net zero. In-depth interviews with key market participants will allow us to add qualitative insights, focusing on the key opportunities and risks for the UK.

Conclusions 

Our paper aims to explore the respective competitive advantages of the EU and the US in the renewable race, identifying opportunities and risks for the future role of the UK in the global net zero transition. Against the background of the increasingly fierce contest among global jurisdictions to secure providers of green capital and attract renewable industry supply chains, this paper investigates how the UK could retain a competitive edge without risking being outcompeted by the EU and the US.