The European Waste Framework Directive requirement to consider the ‘waste hierarchy’ comes into force today. Many companies are already doing this voluntarily as part of best practice and lean manufacturing. Today we have published a report looking at the opportunities and barriers for manufacturers ascending the waste hierarchy.

Waste prevention and recycling is commonly done by manufacturers and has now reached a mature stage and is embedded within company operations. Data show that between 2002 and 2009 the amount of waste produced by manufacturing fell by 23% whilst the amount sent to landfill fell by 43%. In fact we think that much more waste prevention and re-use happens than is recorded in government waste statistics.

It makes good economic sense for businesses to use their resources wisely and efficiently so that less waste is produced. However other research indicates £23billion of resource efficiencies that could be achieved.  We have researched the opportunities to reduce waste and believe that manufacturers still face significant structural and regulatory barriers.  And whilst we welcomed the government’s Waste Review and Action Plan in June 2011, many of the actions have yet to be developed into tangible commitments of support or finance.

We need to see changes to regulation particularly to help define when waste ceases to be a waste to enable it to be re-used and guidance on achieving the best options under the waste hierarchy.  The guidance on the waste hierarchy for hazardous waste is not even published yet. Awareness of the requirements and options is low, yet government has done little to promote this.  

We also need improved access to affordable and convenient waste management infrastructure. Government promised to help businesses gain access to local authority run recycling facilities. This is important particularly where collection of recoverable wastes is uneconomic for private waste companies

If government fail to address these issues, the new requirement might be only more red tape heaped upon industry.  

We urge government to shake-up this stagnant area of policy.

Also read The Environmentalist's take on the Waste Hierarchy http://www.environmentalistonline.com/article/2011-09-29/what-rubbish.

Following today’s Labour party conference speech by Meg Hillier, Shadow Energy & Climate Change Secretary, it is good to see that both sides of the political spectrum now understand that there will be no green without growth. The way forward is about growing in a green way, done together not separately in different government departments, wanting different things that contradict each other. There is nothing to divide the messages from the government and opposition on this issue, what is important is how these messages are delivered.

Here in the UK we have some of the toughest carbon reduction targets in the world. Yet, even though there is a long term goal, there is no long term solution for achieving the goal. All parties have made clear what is needed, but no one has come forward with any tangible actions to get us to this 2050 vision where we will have decarbonised our energy sources, be leading in low carbon and green technologies, and we will all have green jobs.

During Ms Hillier’s speech we heard about significant action at Durban, we heard that a Labour government would aim for leadership on the world stage in creating an international agreement to cut GHGs.  This new found interest is encouraging, as many will recall a previous Labour minister who left one of the rounds of international negotiations a day early and missed the conclusion and final agreed actions.

There was no talk about whether the UK and EU targets were the right ones or whether the policy mix aimed at meeting those targets is fit for the job, or even whether the Renewables Target achieves our aims in the most cost effective way. A target that the Labour government signed up to.

Many of the problems may well have come to the fore in recent months, but let’s not forget that these are not new problems, fuel poverty has been rising steadily from 6 per cent to 18 per cent between 2003 and 2009, energy prices too have been rising parallel with this trajectory. 

What the UK needs most is certainty, not more ‘hot air’ from either side. Certainty that we will be given the conditions to make the most of the opportunities to move to a low carbon economy and the benefits that come with this. We need leadership and tangible actions. We know what is needed, what we need now is practical actions to get us there.

As part of EEF’s Green and Growth campaign, we held a joint fringe event in conjunction with the Fabian Society at this week’s Lib Dem party conference in Birmingham. The event’s title was ‘Have we got the balance right on climate change policy?’ and attracted an interesting panel including Duncan Hames MP, Parliamentary Private Secretary (PPS) to Energy and Climate Change Secretary Chris Huhne; Mark Littlewood, Director General of the Institute of Economic Affairs; Maria McCaffrey, Chief Executive of RenewableUK and EEF’s Director of Policy & External Affairs, Steve Radley – all ably chaired by Ed Gill, Head of Public Affairs at Good Energy.

Mark Littlewood was critical of new policies aimed at tackling emissions being overlaid on top of existing policies that were already in place. He was also highly critical of the EU ETS, describing it as a ‘big failure’. He suggested the UK should introduce a single ‘carbon tax’ approach to replace the litany of carrots and sticks that are currently in place.

Maria McCaffrey emphasised that renewables benefit industry, and that it’s not an either/or question of using them. She highlighted that the UK is already a leader in onshore wind, but that we missed out on leading the way on offshore wind, where we have big potential for growth. She also said there was the potential to see 90,000 new jobs being created in the renewables sector over the next few years.

Steve Radley made some comments about EEF’s Green and Growth interim report, as well as figures from EEF’s recent survey demonstrating that manufacturers already have significant green ambitions, but that around two thirds of those surveyed are very concerned about the current approach to energy and climate change policy. He also pointed out that the UK has fierce international competition for its green industries, as lots of other countries have green ambitions, and that he found it hard to see where as many as 90,000 extra jobs would come from. Other issues he raised included industry’s need for certainty in electricity market reforms. However, he agreed with Maria McCaffrey’s point that the UK has missed the boat on some greener technologies.

Duncan Hames  answered  that the UK has ‘not yet’ achieved the right balance on climate change policy. He raised the issue of carbon flight as a significant international problem in meeting the aims of the UK’s carbon budget. He argued the electricity market reforms were aimed at providing more stability in the market, but that policies need to look at lowering the costs of the low carbon transition.

After these initial statements the chair opened up the discussion to the rest of the room for a Q&A session, and a number of interesting points were made on industry issues.

In response to some of the issues raised, Mark Littlewood and Steve Radley both stated their scepticism about the government trying to ‘pick winners’ in terms of sectors. Duncan Hames picked up on a point about the need for industry to develop more efficiency, arguing that the fuel combustion engine is very inefficient and that there was room for improvement in moving on from such decades-old technology. Later Maria McCaffrey added that Renewable UK had been heartened by a number of energy intensive companies had been making efforts to be more energy efficient, and also highlighted the fact that some of these companies are crucial to supplying the parts that make renewable technology possible.

Mark Littlewood suggested that there was ‘no prospect whatsoever’ of the UK meeting its carbon reduction targets, but added that if the government is serious about this then it has to be brutal in tackling international problems such as carbon flight. Duncan Hames stated that the UK needed to be prepared to lead the international debate on this, but that the UK couldn’t delay its own green ambitions just because there’s an assumption that the international community will not follow suit.

Maria McCaffrey also argued that just because the UK’s targets appear daunting that doesn’t mean that we shouldn’t try to achieve them. However, Steve Radley later pointed out that the UK has the toughest emissions targets in the world, but that just having these won’t necessarily lead to a green economy. Maria McCaffrey and Steve Radley later added that upskilling of the workforce in this sector was crucial.

The event proved to be a useful and engaging debate covering some of the energy and climate change policy issues faced by industry. EEF and the Fabian Society will also be hosting a similar event at the Labour party conference next week with Shadow Energy Minister Luciana Berger. This will be followed up the week after by a joint EEF/Enterprise Forum fringe debate at the Conservative conference, featuring Energy Minister Greg Barker MP on the panel. If you would like any more information about these events or are interested in attending please get in touch with Rocky Lorusso on rlorusso@eef.org.uk

I attended a lunchtime seminar at the Royal Commonwealth Society yesterday.  Here Henry Bellingham, the Parliamentary Under-Secretary of State for the Foreign and Commonwealth Office, spoke to us about the unique position of the Commonwealth in tackling in climate change.  The Commonwealth has such a broad range of countries within its 54 country membership, from ‘every global interest’ but with a common mindset and a sense of unity.  This Bellingham says is what puts the Commonwealth in such a strong and unique position in international climate change negotiations.

32 of the countries most vulnerable to climate change are part of the Commonwealth and are already starting to feel the effects of climate change.

Bellingham went to argue this makes it even more important to ratify a global deal, but realistically acknowledging this is still a long way away.  He spoke of the need to lead through example, to say ‘follow me, instead of after you’.  However – EEF has long argued – is anyone actually following, or are we in Europe, with the EU ETS, just ploughing ahead blindly?

I believe that Bellingham actually gave a realistic alternative that still show leadership, but through a different approach:  the low carbon economy.

If we, in the in the developed economies can prove that decarbonising can still mean growth, this will act as an incentive for others to follow; the current system of cap and trade that adds unilateral costs to Europe production and simply outsources our carbon emissions is not attracting any takers and a different approach is needed.

The challenge then is to foster this new kind of environment, and for the Commonwealth to challenge us to show leadership here to prove that green can mean growth.

The Coalition’s Programme for Government committed to “promoting the green industries that are so essential for our future.” The latest figures show an 80,000 increase in unemployment on the quarter and youth unemployment (18-24 year olds) at its highest level since Spring 1993. A combination of factors highlighted in EEF’s discussion paper, Green and Growth have stalled progress on green growth, indeed, growth of any hue.

Strategic misdirection, an over-focus on process emissions, political uncertainty and a sometimes muddled policy mix are the four issues the EEF highlights for debate. There is an increasing space for the cynics who say we can either be green, or we can grow, but we can’t do both. Those who accept the fundamentals of climate change and the vital necessity of developing a low carbon economy have to move quickly to develop a coherent green growth strategy.

But regaining the trust and confidence of businesses, consumers, employees and trade unions won’t be easy. Take the EEF’s “certainty challenge”, perhaps better called the “uncertainty challenge”, and exemplified by the government’s decision to cut support for large scale solar energy earlier this year, after barely a year’s activity. Jobs and investment were lost as a result. Now, lobbyists, including the TUC, are hoping to persuade the committee of MPs meeting on 15 September to reconsider this move. Investors in high capital items like offshore wind or CCS fundamentally need very long term certainty to invest, with risks underpinned for the same periods. Uncertainties over the ports scheme to support offshore wind, or the lack of a timetable for CCS projects two to four, go to the heart of a stuttering green growth.

The report opens an important debate on whether climate strategy is over-focussed on controlling process emissions, rather than, say, life-cycle emissions, implying consumers should contribute more to carbon reductions costs. EEF also goes close to calling for a review of the renewables target itself, because “targets that specify the means rather than the ends” can bias policy and lead to less cost-effective solutions.

On this vexed point of the renewables target, we might well be able to save more carbon for the same price through other technologies. But a major factor inhibiting renewables has been the lack of a high ambition growth model, involving both a rounded domestic supply chain and a skills strategy. Plants are being set up along the North east coast and elsewhere, but we will see foreign steel standing in the North Sea where UK steel should be. Of the 6,000 jobs in large scale onshore wind schemes, just 300 are in manufacturing.

Yet, such a challenge to the renewables target heightens uncertainty, which EEF has identified as a barrier to growth. The renewable target is a fundamental of UK and EU climate change policy. Better, perhaps, to focus on how to grow a major domestic renewables industry, which would then tend to drive green jobs and bring down renewable energy costs.

It’s nevertheless true that our climate strategy has squeezed production through carbon pricing and emissions trading. In terms of the energy intensive sector, employing 125,000 people in some 2,800 enterprises, evidence from the TUC’s joint studies with the Energy Intensive Users’ Group points to the need for new incentives to stimulate investment in low carbon technology. Smart policy would couple relief from carbon cost burdens both with conditions on investment. We welcome the government’s decision to set up a task group of the Green Economy Council to bring forward a package of measures this autumn.

Nor will green growth happen without a coherent skills strategy. It’s a gap in the EEF report, hopefully addressed elsewhere. This is also a coherence issue for government and stakeholders. At the centre is a clear need for Ministerial leadership, supported by a stakeholder body focusing on skills needs. This isn’t a new problem characteristic of a change of government, but an inheritance that needs addressing at the highest level. Issues include the cross-sector relevance of STEM skills and the inadequacy of the present demand-led approach. Employers will need graduate level skills to deliver on the green economy. But whilst many of the critical skills, e.g. engineering, are in demand across other sectors of the economy, DEFRA-sponsored research showed that others were not well understood by employers with the UK’s demand-led approach likely to lead to under-investment.

EEF has launched a timely public debate on Green and Growth. Hopefully it will contribute to the fresh thinking on a strategy for green manufacturing security that’s required – and generate some much-needed new, high quality green jobs.  

For more information on the TUC’s climate and environment work please contact Philip Pearson on ppearson@tuc.org.uk or visit http://touchstoneblog.org.uk/category/environment/

“The EEF interim report ‘Green and Growth’ clearly illustrates the difficulty UK-based energy intensive manufacturers face with a multi-layered and largely unilateral policy approach within the EU and the UK. Tata Steel welcomes this contribution to the debate and supports the broad conclusions of its analysis and its call for policies that work with the grain of business, are more stable and coherent and consider how the demand side of the UK's carbon footprint can be shaped. The launch event for the interim event brought together a wide range of well informed observers and participants who were keen to discuss and challenge each other in a very constructive way. We look forward to working with the EEF to shape really meaningful conclusions in the next phase of this crucial research.”

- Ian Goldsmith, Head of Public Affairs, UK & EU, Tata Steel

It might seem like having your cake and eating it too, but why can’t we rebalance and decarbonise our economy at the same time? Why does it seem like we can either be green, or we can go for growth, but we can’t do both?

These questions were at the heart of an EEF breakfast briefing this morning where we launched Green and Growth – An interim report. Tackling this ‘Green and Growth’ question is also the lynchpin for our new Climate and Environment campaign.

At EEF, we believe in an approach to environmental policy that helps companies meet their environmental responsibilities in an effective way, allows manufacturers to remain competitive and encourages the UK to become a world leader in environmental technologies.

The first in a two-part series, this report helps kick-off the campaign by taking aim at the four key challenges standing in the way of reconciling the Government’s two seemingly incompatible priorities of rebalancing the economy and being the greenest government ever.

Rather than trying set out all the answers, the focus of the interim report is to make sure we’re asking the right questions by highlighting some of the initial challenges of the competing aims of green and growth faced by the manufacturers. For example:

• Can the UK lead the world on decarbonisation without imposing unilateral costs on UK businesses?
• Can we spur innovation by shifting our focus from squeezing production to life-cycle emissions?
• Can the UK minimise the political risk manufacturers big and small face when deciding whether to make long-term investments in low-carbon markets?
• Can the UK move from our current set of patchy and inefficient policies towards a more holistic and coherent policy mix?

The failure to resolve these issues has left the UK with a green-growth divide. EEF therefore believes that reconciling these two priorities will require government to significantly shift its strategy on climate change towards a sustainable alternative.

The launch event provided a stimulating debate on this issue. EEF’s Energy Adviser Roger Salomone, one of the authors of the interim report, was joined on an impressive panel: Magued Eldaief (Executive Director for Infrastructure and UK Managing Director, GE Energy), Matthew Spencer (Director, Green Alliance) and Ian Goldsmith (Head of Public Affairs, UK & EU, Tata Steel). Our Director of Policy & External Affairs, Steve Radley, chaired the event.

We live tweeted the event on #greengrowth, and here are the key themes that came up through the panel discussion and subsequent debate:

·         Manufacturers are playing their part…:

o        80% of firms have invested in improving their energy, waste and resource efficiency;

o        50% of firms are/plan to be part of low-carbon technology supply chains; and

o        40% of firms are/plan to produce or develop low-carbon technologies.

·         …yet manufacturers are facing the cost:

o        75% have seen a rise in the cost of complying with environmental regulations over the past 2 years.

o        Only 13% think that UK climate environmental policies will encourage investment in the UK.

·         From an international perspective, what drives investment is:

o        Stability (i.e. minimal political risk) – Firms making £000m investments like to minimise political risk, yet too many policies in the UK, like the Carbon Reduction Commitment RC, Feed-in-Tariffs and Carbon Capture and Storage demonstrators have suffered from uncertainty and rapid reversals in policies.

o        R&D investment – There’s very little support for large, capital-intensive, innovative manufacturers to invest in R&D in low-carbon technologies in the UK.

o        Market size – this goes hand in hand with stability and certainty: The market size needs to justify the risk and scale of investment. Where the UK has been too prescriptive (CCS demonstrators), too uncertain (nuclear) or too small (Green Investment Bank) to stimulate private sector investment. We also do too little stimulate the demand for green products while raising the cost of production too high.

o        Strength in the supply chain – The depth, breadth and quality of supply chains are a big issue for big investments in nascent technologies. Yet supply chains in the UK are eroding, despite manufacturers investments in innovation and technology.  Part of the problem is rising carbon prices and energy costs squeezing otherwise competitive firms.

We will be publishing the conclusions of our final report in November, and welcome any contributions over the coming weeks. For more information please get in touch with Roger Salomone on rsalomone@eef.org.uk. For up to date information about our campaign and policy work you can also follow us on twitter here.

Today, we the launch of our Climate and Environment Campaign.  This campaign is about getting policy makers to reconcile the diverging growth and environmental agendas so that the UK can place itself at the centre of a low carbon economy.

As part of the kick start, we have published some very interesting findings from a recent survey.

This executive survey of 76 senior manufacturing executives provides a focused look at current attitudes and concerns regarding climate change and environmental policy in the UK.

At a time when we are challenging government on their ambition to have both a sustainable and growing economy, we show that currently, government policies to meet these objectives are conflicting and causing unintended consequences.

While seeking to increase investment in the UK and make the leader in producing low carbon technologies, 75 per cent of our respondents feel climate and environment policies at the moment will damage UK competitiveness.

UK manufacturing is at the heart of the shift to a ‘green’ economy.  We need support from government to ensure this happens. 

Manufacturers are already taking steps to reducing the environmental impacts of their production; 80 per cent of companies have invested in energy, resource or waste efficiency.  And they want to go further than just complying with regulation; they want to be part of this emerging ‘green’ economy, with 22 per cent using the green credentials of their products as their unique selling point on the market.

However, the policies in place at the moment are having the opposite effect by raising the cost of being green – 75 per cent have experience an increase in environmental policy costs in the past two years.  However, this is increased cost has had little effect on emissions reductions.  In fact, there is no tangible link between high energy prices and a subsequent reduction in energy use.

This makes the UK an unattractive place to invest, 50 per cent of our respondents believe there are better investment opportunities for efficiency and low-carbon technologies abroad.  Surprisingly, considering another goal of government is to support medium-sized firms, it is these companies that are feeling the effects of poorly-designed policies that pull them in different directions, but ultimately raise their costs to unreasonable level; 95 per cent has seen a cost increase compared to only 82 per cent of large firms and 52 per cent small firms.

Making the UK an unattractive place to do business and to invest will drive innovation and skills to other countries.  You can download the full survey report here.

Connie Hedegaard is quoted as saying

"What is the point of extending our commitments if none of the other big economies say that they are willing to follow, if not today, then at least at some time tomorrow?"

It was very heartening to hear her talking common sense when asked about the future of the Kyoto Protocol after it comes to an end in December 2012.  There had been rumours that Connie and Chris Huhne would push for Europe to go it alone, which to me would be econmically damaging for Europe and won't achieve a global solution to climate change.

A global legally binding accord would in theory be the best approach, however, we have been trying to achieve this since 1992 and how far have we come?  Kyoto set in motion the framework for a global deal, but the most significant outcome has been the increasingly isolated EU ETS cap and trade scheme. 

It has become evident that for only Europe to have a cap and trade scheme is detrimental; it pushes up energy prices when many other countries’ energy remains low, thus pushing production to the emerging economies who are booming because of the increased demand to produce the goods demanded by European consumers.  This leads to a crucial point, are emissions actually going down, or are they just being moved to these less regulated, and cheaper to produce in countries?

As Connie stated, “Europe represents only 11% of global emissions.  What will the other 89% do?”  We need to stop thinking that other countries will follow our lead, they aren’t and they won’t, while the EU has such a complex and costly climate change policy landscape.

There is a need to re-evaluate the approach we take in tackling GHG emissions at the global level rather than keep hoping everyone will suddenly have a change of heart.  If the talks at Durban can recognise this, then I think the talks will start to move us out of the stalemate we are currently in.

EEF will be closely following the talks at Durban and calling for a move away from a Europe-only view.

With the best of the summer behind us, DECC has now published its eagerly awaited consultation on the future of the Climate Change Agreements. CCA consultations appear to developing an interesting definition of the seasons with this consultation announced in the Budget for the summer, following an autumn consultation in December last year. That aside the substance of the consultation is nothing new to the CCA community having been briefed a number of times by the succession of DECC officials. However some of the additions have surprised me.

Chief amongst these is the proposal that the Environment Agency should act as the administrator of the CCAs in England. Although the proposal to appoint an administrator came as no surprise, I feel it flies in the face of the coalition government’s stated goal of reducing the administration and cost burden on industry.

I had expected something on reducing the burden on government, but we had been assured that no decision had been made as to who would administer the scheme. I understand the government’s desire to reduce costs, but I’m concerned that a move to a new administrator risks the loss of expertise both within government and industry.

I also can’t see how the additional administrative burden required to transfer all the data, history, and knowledge of the agreements of 10,000 sites to a new administrator won’t add costs and complexity.

I feel strongly, and have argued that the sector associations, who have over 10 years of experience in managing the scheme and working with their respective industries, would be best placed to take on the role of administrating the scheme. This would of course require a robust audit process, but I think it represents the best opportunity to reduce cost and administrative burden for both industry and government.

Another gripe is the decision to not allow trading in the CCA, although again not surprised by government’s proposal, I am disappointed that the CCA started as a trading system and should continue as a traded system. However, we have lobbied tirelessly on this and government knows our position well.  

Those concerns aside there are many positives and I broadly support many of the recommendations set out in the consultation, for example the proposal of two year (24 month) target periods will not only ensure government’s desire for participants to be continually measured, but reduces the burden of annual reporting.

All in all it looks like this will be an interesting consultation.