Greening our energy supply can and should be compatible with growth, if it is done correctly and affordably. Energy Intensive Industries (EII) have a vested interest that we achieve realistic goals at least cost and most benefit to the UK and EU economy. What would upset EII would be an assessment that the objectives of greening our economy, whilst promoting economic growth, are not compatible and that government just pushed ahead with its green agenda at their expense.
To understand the contribution and importance of EII’s we need to clear up two misconceptions. Firstly, the term ‘Low Carbon Economy’ is often misunderstood and implies new sectors whereas, in contrast, these sectors are our established sectors, not new. For example, a low carbon supply chain looks very similar to a traditional supply chain with high carbon components in low carbon products (high speed rail, nuclear and wind). Therefore EII are vital to the growth of a ‘low carbon sector’ here in the UK.
Secondly, EIIs are committed to the green agenda and are taking action. For example, over the last 20 years Industry has reduced emissions by almost 40% whilst producing the same output whereas, in contrast, the residential sector has increased emissions.
The current policy landscape aims to increase costs through a carbon price aimed at de-risking investment in renewable technologies whilst making emitting carbon more expensive. What does this do to globally competitive sectors, such as steel, aluminium and cement where the price of their product is set globally and where the abatement opportunity using current technology is extremely limited? The effect is to make those sectors become uncompetitive in that global market and, if they are uncompetitive then production moves to less regulated regions. The result of this is higher global emissions and a disrupted low carbon supply chain here UK.
However, we should not forget our Climate Change Act targets or excuse globally exposed sectors from making their contribution to further reducing emissions and improving energy efficiency. But, we need to accept that different sectors require different solutions to achieve our common goal of reducing emissions globally.
In terms of the energy supply and the economy as a whole, the UK must change policy and set itself on a road to ‘affordable decarbonisation’. No successful business has a long term plan that isn’t affordable and sustainable, so government policy should be no different. But, in contrast, currently we have a crowded, confusing and costly policy landscape, one that can’t decide if its purpose is to decarbonise or just increase government income.
Creating a market for low carbon investment is easy by increasing the carbon price, regulating and setting standards. The difficult part is ensuring that the home market, be it UK or EU, can feed into and benefit from that market.
The answer for most globally exposed sectors is sector agreements that put all players on a level playing field and, create an environment where unlocking barriers to major technology changes are addressed. This process has started but it needs government support to become a reality. We are obsessed with top down targets, without a credible, strategic and cost effective route to achieving them.

Caroline Flint today set out Labour’s five point plan to target green growth. Speaking at an Aldersgate Group event this morning, the Shadow Secretary of State for Energy and Climate Change called for a new industrial strategy that supports the delivery of genuine leadership by demonstrating that the UK can achieve success on both the green and growth fronts at the same time. Flint called for a change, highlighting the need for certainty and simple policies.

The five point strategy echoes much of what EEF’s have been calling for and draws on the 10 recommendations set out by in EEF’s report on Green and Growth published in December. Labour is calling on government, industry and the public to deliver investment in the low carbon economy; however the plan was light on the details in terms of specific policy recommendations.

The five points were:

1.       Unlocking private investment, by delivering on Electricity Market Reform and Government acting decisively and consistently

2.       Better public procurement

3.       A strategy for skills for a low-carbon economy

4.       A rebalanced economy, supporting growth in our regions and encouraging manufacturing

5.       Engaging the public and communities

Each of these points finds parallels with EEF’s recommendations and it is encouraging that Labour recognises the challenges manufacturers face and the opportunities; however we need a shift in policy to help us unlock that potential.

The first call was to unlock private investment in the electricity market reforms and deliver low carbon energy for the UK, recognises the need to decarbonise our energy supply and the need for government to deliver on carbon capture and storage without delay.

Flint’s second call, for better public procurement, needs to focus on setting policy based on achieving the right outcome. The example highlighted by the Shadow Secretary of State of a proposed policy requiring landlords to achieve a minimum level of energy efficiency for their homes, shows that driving the outcome will lead to the greatest innovation.

EEF has lobbied tirelessly on skills and saying that the skills required to grow the economy and green the economy are the same. Government must ensure that STEM careers advice is part of Continuing Professional Development for science teachers and subject curricula and must clarify the legal status of apprenticeships.

The fact that Labour recognises the need to rebalance the economy and is recommending support for growth in manufacturing and in the regions is also encouraging. EEF has long believed that rebalancing our economy goes hand-in-hand with decarbonising it. The Shadow Secretary of State highlighted the importance of ensuring that manufacturers in the UK take advantage of the opportunities presented by the green economy, citing the example of the wind power sector where 80% of the equipment and services come from overseas. Labour is also calling for green investment hubs in the regions, such as Yorkshire and Humberside and the South West and Wales.

The final point was a called to the public to be active participants in the green economy. With public support faltering it is essential that the government provide the right incentives to help the public and small businesses unlock the potential savings, such as micro generation.

Sitting listening to this plan I was encouraged that Labour recognises the challenges and opportunities, however as I have said before we need see a shift in policy from the government to help us unlock that potential.

We believe the government must now look to the next spending review and deliver a holistic review of green and growth policies that will help manufactures to deliver the green economy.

Following the publication of our Green and Growth report yesterday, I was encouraged to hear Greg Barkers, Minister of State for DECC, echo our key messages that carbon reduction and rebalancing the economy are integrally linked and that manufacturers will need to be at the heart of the green economy. Speaking at the Associated Parliamentary Manufacturers Group this morning, the Minister said that the government and industry must work together to provide a strong industrial base to build up the green economy.

These messages mirrored Terry Scuoler’s speech at the launch of Solutions for Growing and Green Economy at a well-attended parliamentary reception last night.

Mr Scuoler highlighted that the manufacturing sector is already making big progress towards cutting its emissions, and will be at the forefront of providing the technological solutions to climate change, but that we risked undermining growth and missing out on green business opportunities if our policy focuses solely on relentlessly loading costs on industry.

Mr Scuoler said “we believe there is a better way. So, in this report we argue for a change in our approach that we believe will help us grow our economy and better meet our environmental goals.”

EEF’s report was been well received and has built on the strong relationships we have developed with NGOs, sector organisations, and member companies. I am now looking forward to working in partnership with government to deliver on both growth and green.

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/