The UK Government’s 10-point plan for a ‘green industrial revolution’ has major implications for investors as it creates a tailwind (and headwind) for a lot of sectors.

It is designed to accelerate the UK’s path to net zero carbon emissions, repair the damage to the economy from coronavirus, and support green jobs.

The plan covers the transition to new forms of energy, a shift to zero emission transport, both private and public, carbon capture, green building and green finance.

It promises to ‘mobilise’ £12 billion of Government investment, and potentially more than three times that amount from the private sector, to create and support up to 250,000 green jobs like engineers, fitters, construction workers ‘and grid system installers everywhere’.

The end goal is to reduce UK emissions by 180 million tonnes of CO2 equivalent between 2023 and 2032, and ultimately to create a net zero carbon economy by 2050.

Two of the most striking initiatives are the proposal to quadruple existing offshore wind capacity and the banning of new internal combustion engine cars a decade earlier than initially planned.

Thanks to public subsidies and the proliferation of new sites, the cost of offshore wind has fallen by two thirds in the last five years. However, to increase output to 40GW considerable investment will be needed not just in turbines and wind farms but also in network infrastructure and smart energy systems.

The move to ban the sale of new petrol and diesel cars by 2030 will also have significant ramifications for fossil fuel firms, infrastructure providers, housebuilders and ultimately consumers. For example, creating a nationwide charging network is imperative, with vehicles capable of being charged at home, at work and on the road.

It will put pressure on car retailers to invest sooner rather than later in servicing capability for electric vehicles, a route that accessories provider Halfords (HFD) is already taking via the recruitment of more specialist staff. By April 2021, it says each of Halfords’ garages will have at least one electric car technician, with electric bike and scooter servicers in every store.

Specialist lenders should benefit from the opportunity to extend credit to businesses involved this ‘green revolution’, while alternative fund managers can expect a bright future as asset allocators funnel ever greater amounts of money into green infrastructure and ESG funds.

While the plan sounds impressive, more cynical observers believe the Government’s sudden interest in a green agenda is political expediency and an attempt to cosy up to a greener US administration. As UBS Global Wealth chief economist Paul Donovan put it, ‘this is the “hug a tree to hug Biden” strategy which other leaders will surely follow.’

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