Tata Picks UK for Gigafactory as Report Criticises Aviation Industry’s Impact on UK Economy: GMPB

Covered in this week’s Green Mobility Policy Brief: Tata Sons Announces £4 Billion Investment to Build 40GW Battery Cell Gigafactory in the UK; Boom in Air Travel Fails to Increase UK Productivity or GDP Growth: New Economics Foundation Report; ICAO Stocktaking: Paving the Way for Cleaner Energies in Global Aviation.

Tata Sons Announces £4 Billion Investment to Build 40GW Battery Cell Gigafactory in the UK. Tata Sons has recently unveiled its ambitious plan to construct a state-of-the-art battery cell gigafactory in the United Kingdom. This investment, valued at over £4 billion, will pave the way for the production of an impressive 40 GW of cells annually. The gigafactory will play a vital role in delivering electric mobility and renewable energy storage solutions to customers in the UK and across Europe. The project is set to commence supplies in 2026, with Jaguar Land Rover (JLR) and Tata Motors serving as anchor customers. Commenting about the announcement of the UK gigafactory, UK Prime Minister, Rishi Sunak, said: “Tata group’s decision to build their new gigafactory here in the UK – their first outside of India – is a huge vote of confidence in Britain. This will be one of the largest ever investments in the UK automotive sector. It will not only create thousands of skilled jobs for Britons around the country, but it will also strengthen our lead in the global transition to electric vehicles, helping to grow our economy in clean industries of the future.” Under the Trade and Cooperation Agreement (TCA), up to 70% of an electric battery’s components can come from outside the EU or UK before tariffs are attached to the product. This threshold will, however, be reduced to 40% on January 1st 2024, leading some to question whether restrictive post-Brexit regulations will hinder the UK and the EU’s transition to more sustainable modes of mobility. 

Boom in Air Travel Fails to Increase UK Productivity or GDP Growth: New Economics Foundation Report. In recent years, the aviation industry has experienced significant growth, with more people taking to the skies for both business and leisure travel. This boom in air travel has been hailed as a driver of economic growth and prosperity by both the industry and the government. However, a peer-reviewed report from the New Economics Foundation (NEF) challenges these claims, revealing that the surge in air travel has failed to boost UK productivity or GDP growth. One of the most striking revelations from the report is the existence of a significant travel spending deficit, with £32 billion more leaving the UK through outbound tourism than flowing in through foreign visitors. Despite the surge in passengers between 2015 and 2019, the report shows that the number of jobs in the air transport sector has declined since 2007. Furthermore, the industry appears to be one of the poorest job creators per pound of revenue, and real wages for air transport workers have experienced the most significant decline of any sector following the 2008 financial crisis. Dr Alex Chapman, senior researcher at the New Economics Foundation (NEF), said: “For years, this government has let the air travel industry balloon in size, based on dangerously outdated claims that it is boosting the UK’s economy. The reality is declining business air travel, declining wages for air travel workers, declining job numbers, and declining domestic tourism spending in the UK. And that’s before you consider the rise in noise, air pollution and dangerous emissions driven by UK airports. So who exactly is benefitting from ever more air travel? You needn’t look much further than the highly paid executives, the private shareholders, and the wealthy minority of ultra-frequent flyers.”

ICAO Stocktaking: Paving the Way for Cleaner Energies in Global Aviation. As the world faces the urgent need to combat climate change, the aviation industry has been under increased scrutiny due to its significant contribution to carbon emissions. In response to this challenge, crucial consultations were recently held at the International Civil Aviation Organization (ICAO) headquarters in Montréal. The “2023 ICAO Stocktaking on Aviation in-Sector CO2 Emissions Reductions and Pre-CAAF/3 Policy and Finance Consultation” event marked a significant milestone in tracking progress towards achieving the industry’s long-term global aspirational goal (LTAG) of achieving net-zero carbon emissions by 2050. The three-day event brought together over 1000 participants, including representatives from governments, aviation and energy stakeholders, research institutions, start-up companies, and civil society. One of the primary focuses of the event was the exploration of cleaner energy options for aviation. Various advanced and novel aircraft technologies were discussed, along with operational improvements both in the air and on the ground. Sustainable Aviation Fuels (SAF) and Lower Carbon Aviation Fuels (LCAF) emerged as key players in reducing the industry’s carbon footprint. Undoubtedly, financing plays a critical role in facilitating the transition to cleaner energies in aviation. Blended finance, which involves collaboration between public and private institutions, was a key topic of discussion during the event. Financial institutions presented their perspectives, needs, and challenges in supporting green funding for aviation projects. The importance of capacity development and implementation support was also stressed to ensure smoother access to funding, necessitating the development of multi-stakeholder partnerships, feasibility studies, and policy implementation roadmaps.

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Picture by Simon Dawson / No 10 Downing Street (CC BY-NC-ND 2.0)

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