Margot James: With the right industrial strategy, the UK can become a world leader in battery manufacturing

Margot James is a former BEIS and DCMS minister and was the MP for Stourbridge from 2010-2019.

Not much good news around. That is why I am particularly pleased that the chancellor is willing to revisit the idea of ​​an industrial strategy with the business secretary. The chancellor has identified five growth industries to be supported by such a strategy: digital technologies, green technologies, advanced manufacturing, life sciences and financial services. Plans for investment zones around universities have also been announced.

The Department for Business, Energy and Industrial Strategy (BEIS) is now the fifth Secretary of State since Greg Clarke developed and delivered the industrial strategy in 2017. This strategy has been replaced by various interventions (the Treasury’s growth plan, the Innovation Strategy, the Ten Point Plan for a Green Industrial Revolution and the Industrial Decarbonisation Strategy – to name a few during 2020/21.

The pick and mix approach included some important goals and good ideas. But what was missing was a strategic and coherent analysis of the opportunities and challenges across the economy and the many different places that make up our industrial and service-based landscape.

I was a junior minister at BEIS during the last industrial strategy. I now chair the Warwick Manufacturing Group (WMG) at the University of Warwick. WMG is one of a select few industrial research and education centers in the UK, a true partnership between industry and the best academic minds in engineering, technology and manufacturing. WMG is also home to one of the High Value Manufacturing Catapults, as are the Advanced Manufacturing Research Center (AMRC) at the University of Sheffield and the University of Strathclyde.

At WMG, we particularly welcome the chancellor’s inclusion of investment zones around green technologies, advanced manufacturing, digital technologies and universities. It is positive that these growth areas are sector agnostic. Strategic support for these industries will benefit many sectors and locations within the economy and across the country.

Take the transport sector. Transport accounts for around 24 per cent of the UK’s total greenhouse gas emissions. So it’s impossible to get to net zero without changing our journey. When the challenges facing advanced manufacturing are combined with the need to reach net zero and the opportunities presented by digitization and automation of processes; the growth opportunities are huge.

An industrial strategy that combines tax incentives, investment incentives, a lighter-touch regulatory environment and investment in the skills required by tomorrow’s workforce will accelerate this growth in ways that have a wider impact on economic sectors and communities. more laissez-faire approach.

Returning to transportation, WMG has extensive experience and has conducted advanced research in the automotive sector. The sector is currently at a crossroads, combining both economic strength and weakness. Before the pandemic, the UK produced 1.4 million cars a year, 80 percent of which were exported. The sector currently directly employs one hundred and eighty thousand people in the UK in manufacturing alone.

The industry is in a decarbonisation race as the sale of new internal combustion engines will be illegal from 2030. As a direct result of the industry strategy set five years ago, much research is ongoing into the development of new electric vehicles and battery technologies. This strategy identified challenges for the future of clean growth and mobility, and then introduced policies and institutions designed to help transition to an electric, low-carbon future.

In particular this resulted in the establishment of the Faraday Institute within the wider Faraday Battery Competition to advance battery science and technology in the UK. The UK Battery Industrialization Center (UKBIC) was established as part of the Faraday Challenge with over £100m of public funding to bridge the gap between promising laboratory-level concepts and successful mass production.

Thanks to that industrial strategy, Britain is now a leader in battery science. UKBIC is helping around two dozen automotive companies graduate from scientific discovery to mass production. But there is a huge gap between both UK battery production capacity and what is needed in the future, as well as what is already being built in other European countries.

The UK currently has 2 GWh of battery manufacturing capacity, with plans to expand across the UK. However, Faraday estimates that UK domestic electricity demand will reach 100 GWh per year by 2030, with total UK battery demand reaching 200 GWh by 2040.

The Center for Advanced Speed, which manages the Automotive Transformation Fund (ATF), is investing up to £1bn of public funding to support the industrialization of the electrified supply chain and investment in battery manufacturing.

Other Governments are subsidizing the huge costs of building gigafactories on a larger scale than the UK. The German and French governments have invested €1.3 billion in Automotive Cells to build two gigafactories, one in each country. And the EU has announced €39 billion under the European Structural and Investment Fund to support the move towards low-emission mobility.

In the US, it’s a similar story with the Biden administration’s recent Tax Relief Act, which offered $800 million in support for battery manufacturers per company to build gigafactories in the US.

If the new industrial strategy takes a long-term perspective, it will seek to take advantage of the new high-skilled jobs that local battery production capacity will bring, while also securing the future of the existing automotive sector (which will eventually move to where the batteries are made). Success will mean competing with other Western economies to attract investment to the UK. This will include competitive support packages that make it cost-effective to build and run gigafactories in the UK.

The UK’s leadership in battery science is down to its latest industrial strategy. A new industry strategy can pay off even bigger. One that sees this country turning its competitive advantage in battery science into a new manufacturing industry that will create and maintain hundreds of thousands of high-skilled jobs in the future.