Tackling climate change is a massive challenge for all countries and, within the UK, all sectors of the economy. The government has the difficult challenge of both bringing the manufacturing economy out of recession and also delivering on our climate change goals, in terms of meeting both the 2020 in 2050 targets that we have all signed up to. 

Today EEF is launching a report which aims to address this unique challenge. "Green and Growth Solutions for Growing a Green Economy", puts forward solutions that will deliver both green and growth ambitions. The manufacturing sector has, in terms of cutting emissions, done everything that the government has asked them to do. Manufacturers can do more, but this will not be achieved by artificially increasing our costs and putting us at a disadvantage against competitors both within Europe and beyond. What they need to deliver long-term and global action is certainty and cost effectiveness. 

When I talk about certainty, I’m not talking about the certainty of complex, costly and overlapping policy. I am, of course, talking about the need for certainty of investment in the UK. Investment both to rebalance the economy, and investment to deliver the solutions that manufacturers’ can deliver to tackle global climate change. 

If we can, more efficiently, make something here in the UK, then climate change policy should not discourage this. If the carrot and stick policy approach works best, then we should capitalise upon that, and if global companies are looking for a favourable place to invest in low carbon manufacturing, then that place should be the UK. 

We have a long way to go. One of the key challenges facing the UK, is the need to decarbonise of our electricity supply. We need longer-term certainty here of how to meet this goal in a cost-effective and achievable way. Policies to decarbonise the energy supply should focus the outcome, not the route. We must have a policy that enables the market, to invest in the most cost efficient and innovative solutions. 

This report is not about green, it is not about growth, it is about green growth. We need both to work together, otherwise we are doomed to fail.

for more infomation on EEF's Green and Growth campaign please visit http://www.eef.org.uk/manufacturingagenda/green-and-growth.aspx

Last night’s lively debate on the BBC’s flagship Newsnight programme saw Energy and Climate Minister Greg Baker, Green MP Caroline Lucas and EEF’s Policy Director Steve Radley tackle the difficult question of balancing a move to a green economy and promoting the growth of UK manufacturing.

Steve Radley and Greg Baker agreed that the government must work with industry to achieve the ambitious targets set out in the Government’s carbon budgets.  

The programme will be available on the BBC’s iPlayer for the next seven days.

http://www.bbc.co.uk/iplayer/episode/b015yr4p/Newsnight_11_10_2011/

The Environmental Audit Committee has today published a report saying that the Government’s “schizophrenic attitude” to climate policy was undermining confidence and long term certainty.

The report comes just a week after the Chancellor, George Osborne, speech at the Conservative party conference, in which he said that the UK should cut “carbon emissions no slower but also no faster than our fellow countries in Europe”.

Both statements revolve around the decision by the Government to review the fourth carbon budget in 2014. Although the report rightly acknowledges the very serious threat to economic growth that climate change policy could have on the UK manufacturing sector, the committee insists that the recommended carbon budgets, should be regarded as an absolute minimum.

But is there merit in a review the carbon budget targets in 2014? Any target adopted must reflect what is achievable at a cost which can be sustained. Surely damaging the UK economy without achieving significant global GHG reductions is not the way forward. Indeed in his speech at the party conference the Chancellor aid that “a decade of environmental laws and regulations are piling costs on the energy bills of households and companies” and that the UK is “not going to save the planet by putting our country out of business”.

What is needed from the UK is to provide a leadership role, one that shows that decarbonising and growing the economy go hand in hand. We need policy decisions that are based on a robust and agreed evidence base. It can be argued that policy making without the full evidence has led to the current policy landscape that is often confused, conflicting and costly.

The simple answer to question of Have we got the balance right on climate change? was re-evaluating the approach to climate change policy because the ‘one-size-fits-all’ approach of the previous Government did not work. This was the message from Climate Change Minister Greg Barker.

Speaking at  the EEF sponsored fringe event with the Enterprise Forum at the Conservative party conference, the minister said that in terms of rebalancing the economy, DECC did its part in ‘rediscovering the importance of making more things and making Britain a hub for manufacturing’ but felt the green economy was more than just clean, green technology innovation. He said these were ‘tough times’ financially and for the green agenda and that the green economy was not insulated from other market factors the economy was facing.

The event, titled “Carrot or stick? Have we got the balance right on climate change?” also included panellists Steve Radley, EEF Director of Policy; Tim Morris, Head of Climate Change at Tata Steel; and Dustin Benton, Senior Policy Adviser at the Green Alliance. The event was chaired by Andrew Cumpsty, Chairman of the Enterprise Forum, and was well attended with representatives from industry, trade bodies, the media as well as Conservative party members.

The Minister welcomed the broad cross party support for climate change policies, but argued that the previous government had too narrow a focus on short term carbon targets without considering wider impact on the economy.

Barker argued that ‘green politics 2.0’ was about taking the green agenda beyond a ‘silo’ of a small part of economy and embedding it across the wider economy. Importantly, he stated that he wanted to ensure that advanced manufacturing was not de-emphasised or sent abroad as result of UK climate change policies.

Following these remarks, EEF’s Steve Radley argued that green and growth policies should go hand in hand. He noted that half of EEF’s members saw big opportunities in being in being part of the supply chain for green industries, and that the key question was whether the conditions are right to invest. He pointed out that manufacturers were becoming increasingly mobile and that companies of all sizes were being encouraged to look at alternative locations partly due to energy costs in the UK.

Dustin Benton from the Green Alliance said there was a case to make for regulation. In the context of electricity market reform, he said that contract for difference feed-in tariffs were a potentially ‘big carrot’ but warned that emissions performance standards and the carbon floor price had the potential to be ‘big sticks’. He argued that raising the CFP was effective, but suggested the recycling of carbon floor price incomes would be a good idea.

Tim Morris from Tata Steel stated that energy intensive industries such as steel and ceramics would be the backbone of a low carbon economy. He said Tata was deeply committed to combating climate change, with lots of investment going into research and development, and pointed out that an important precursor to achieving a low carbon economy was the consideration of an international context for energy intensive industries.

He called on the Government should do more to support the UK’s supply chains, and in terms of ‘sticks’ he said that a level playing field was important and criticised the CFP for making the UK less competitive than it’s European neighbours.

After an interesting Q & A, the Minister stated that manufacturing must be at the centre of the UK economy and that it was important that Government is on the side of advanced manufacturing.

I must say, it should be an interesting first Cabinet meeting, when Osborne and Huhne face each other, following on from setting out their positions on climate change policy from very different angles.

The Chancellor’s intervention into reality is welcome relief to a manufacturing sector that can deliver on low carbon innovation, but, as he says, “a decade of environmental laws and regulations are piling costs on the energy bills of households and companies”. George Osborne has hit the nail on the head by stating clearly, “We’re not going to save the planet by putting our country out of business”.

Globally we have a major problem, we need to reduce the concentration of carbon in the atmosphere and we need to make this happen sooner than we all realise. To achieve this aim, we need to accept that manufacturers will provide much of the low carbon solution.

Even Chris Huhne knows this to be true, as he envies the Chinese, installing wind turbines across the South China Sea, building 28 nuclear power stations in the time it will take us to build one and building 10,000 miles of high speed rail. All three of these projects have Energy Intensive Industries (EII) at the very heart of them.

Raising costs to EII in the EU by increasing our 2020 target will not “represent a real incentive for innovation and action in the international context” as Huhne said in 2010. We believe that what makes good business sense is, providing the right incentives and business environment so that investment in low carbon technologies takes place here in the UK and not in regions of the world that are not subjected to the same levels of policy costs that our EII are experiencing today.

An example close to home is that climate change and environment taxes for EII in the UK are four times that of Germany. How does this encourage multinational companies to choose the UK as the place to invest.

The Chancellor’s view that we should not be going faster than the rest of the EU in setting targets, is the right one. We need to lead by example, yes, with that example showing that we lead on innovation, support and success, not on who can set the highest costs to meet our much needed targets.

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.

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.

Defra has today published its review of waste policies.  Announcing the publication at a CIWM event this afternoon, Secretary of State for Defra, Caroline Spelman, said:

“For too long, we’ve lagged behind the rest of Europe, although we are catching up fast. Communities and businesses can help us become a first-class zero-waste economy and unlock the real value in the goods that people no longer want.”

Although mainly focussed on domestic waste policy, there are particular aspects relating to business that EEF welcome – such as supporting energy from waste where appropriate, and for waste which cannot be recycled, and a greater focus on how business can benefit from improved resource efficiency. Of course, Defra could have been bolder in trying to address C&I waste. For too long it has been in the shadows.

I would say that on the whole this is a welcome step forward in the government’s approach to business waste. Many of the issues which have concerned business, especially smaller companies have been addressed and measures to aid collection of their waste and reduce regulation and costs are welcome. The proposals to support waste from energy that cannot be recycled is an especially bold move, although the issue of costs compared to landfill and access new capacity may remain an issue and therefore regional planning will be paramount.

We look forward to working with government to make these proposals happen.

I attended an excellent round table discussion this morning organised by Reform, where Greg Barker, the Climate Change Minister was the main speaker.

It was very encouraging to hear a DECC minister say things like “manufacturing is vital to rebalancing the economy” and “more must be done to support manufacturers”. For too long now EEF has been trying to get the message across that in order to have a UK low carbon economy, you need to have a vibrant economy, one which manufacturing, even energy intensive manufacturing, is supported and encouraged by government.

The short term test for government is what is said next week in terms of how it responds to the fourth Carbon Budget (2023-2027) recommendations from the Committee on Climate Change. Will it adopt the proposed budget of 1950 MtCO2e, that incorporates a tightening of the UK targets to 2020 which would replicate an EU move to -30% to 2020. If it does without any caveats, then we are in trouble and totally out of step with the rest of Europe, let alone the rest of the World. The unilateral cost increases to our economy would be significant and certainly not encourage investment in the UK. More so, it would provide a low carbon market that only overseas based companies (who aren’t subjected to costly climate change policy) could capitalise on.

We need long term policy certainty that aligns itself with investment cycles of industry. We need targets to be realistic and affordable, as deindustrialisation is not the answer and we need government to be working with manufacturing to ensure that the UK manufacturing base grows in a low carbon way and is seen as world class.

Government is saying the right things, but the coming months will be the test to find out if it will do the right things. Mr Barker, if you mean what you say, then we as manufacturers welcome that DECC is listening to our concerns.

I was pleased to see an article published in the Proceedings of the National Academy of Sciences that highlights the old story of consumption emissions. It is good to see formal scientific studies published on this issue for time to time, as I think this important debate often gets swept under the carpet.

Consumption emissions are the total GHG emissions consumed in a particular country, including embedded emissions in imported goods.

At EEF we know from experience that government isn’t too keen to discuss whether or not the UK should be calculating its emissions on this basis, or stick to the historical way of just counting emissions that take place directly in the UK. We published a report last summer which highlighted that whilst net emissions in the UK have fallen since 1990, by taking account of imported goods, this shows that UK emissions continue to rise. Hence why you can see why government isn’t too keen to consider changing the way it counts carbon emissions.

Although it doesn’t paint a wonderful picture, surely only by including these additional emissions can government really get a grip on how the UK can play its part in tackling global climate change. Without this we are just off shoring the problem, some might say, arranging the deckchairs on the Titanic. Worst still, a policy of just counting net emissions, can put UK manufacturing at a disadvantage against its global competitors, by imposing costly climate change policy here, whilst those overseas competitors increase their share of the market.

The UK looks good because net emissions have fallen, but globally all that has happened is the emissions have gone elsewhere and the problem of climate change has not been tackled at all. It doesn’t take a genius to work out that this is not the answer to solving this global issue.