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.

Climate Change Minister Greg Barker last night called for a long term industrial strategy fit for the 21st century. Speaking at the All Party Parliamentary Group for Energy Intensive Industries, the Minister, provided a tantalising glimpse of the governments proposed energy intensive package, expected to be announced in late November. Barker began by stating that the government cannot have a monofocus on carbon targets and that the government recognises the importance of a strong manufacturing sector and the need for an effective transition to a low carbon economy. The government recognise that its not hard to meet UK carbon targets by offshoring our industries, the real challenge is to meet the targets while supporting growth in the sector.

It is clear that Greg Barker and his department have a good understanding of the impact of the UK’s unilateral climate policies on the competitiveness of UK manufactures. They are also committed to working with industry to overcome these barriers. However the minister gave the caveat that the approach will be cumulative, phased and delivered as and when the government can afford it.

The key concern is whether cabinet ministers agree with Greg Barker, the proof will be in the Chancellors announcement on 29th November.

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 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.

We had a meeting this week with Gregory Barker, the Minister of State for Climate Change within DECC. It was a refreshing meeting and a welcome change from the last administration. I am coming round to believing my earlier view that this government seems to accept that the climate change policy landscape is crowded, confused and overlapping. This is something that we highlighted in our recent report on UK climate change policy. The report called on the coalition government to reduce the burden of climate change policy by simplifying the mismatch landscape that has grown over the last ten years.

Simplification was high on the Minister’s agenda and in line with the recommendations set out in our report. Again in line with the EEF position, the Minister was receptive to the concerns of manufacturers on competitiveness and carbon leakage. There was a real acceptance that industry, even carbon intensive industry, is vital to the UK economy and particularly to the emerging low carbon manufacturing sector.

However, all my positive views might change come 20 October, when government publishes its Comprehensive Spending Review and with it, detailed climate change policy intension. Of importance will be how it intends to reform the Climate Change Levy into a potential carbon tax. During our meeting with Gregory Barker, we were at pains to point out that although we support moves for a carbon tax, we do not wish to see an increase in the overall climate change policy cost burden to manufacturers resulting from such a move.

Finally, the Minister stated he wanted his department to work closely with industry rather than at length, via consultations. The test here will be whether government consults with us ahead of any formal announcement in October. I know that we would be keen to work with his department on how to change the CRC Energy Efficiency Scheme into something more workable and business friendly. This will be high on the agenda when we meet with DECC later today.