Carbon Budget Announcement: Government recognising the vital role of manufacturing in the UK for a green economy

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Today DECC has published the UK economy's progress on meeting its carbon budgets. The carbon budgets, set by DECC, put the UK on a trajectory to meet its legally binding commitment to reduce GHG emissions by 80% by 2050 from 1990 levels.

DECC has announced that emissions have already been cut by more than 25% from 1990 levels, that the current climate change policies put the UK on track to exceed its 34% reduction set for the first 15 years under the Climate Change Act – which we would apparently still achieve even without the recession, and that meeting the 50% reduction by the 2020's will not have any further additional cost during this Parliament (but will going into the 2020's).

Huhne then goes on to state that ‘…rebalancing of our economy away from carbon is achievable and, in the long run, highly desirable.' Yes this is certainly true and something EEF are calling for in our Green and Growth Campaign.

We welcome the recognition in the carbon plan today that manufacturing is at the heart of such rebalancing and the promise of assistance in maintaining the competitiveness of strategically important sectors. This is evidenced in the recent announcement of the package of measures for the electro-intensive industry.

We see this as a significant shift in thinking in government, one that now recognises role of such industries in the emerging green economy and as such a move to policies that will tackle the emissions intensity of production, rather than policy measures that place an absolute reduction in emissions from these critical industries – and therefore a reduction in production.

However, this is only a first step and government needs to go further a look at climate change policy in the round and provide policies that support investment in the UK. In addition, only a diverse range of technologies can deliver innovation and cost reduction in becoming more emissions-efficient. Therefore government must not favour one technology over another and let the market decide. However, a question mark remains about where the funding for this shift will come from in the next decade, when we feel that the current costs are already too high.

This month, we will be publishing a set of recommendations for government to deliver on both the green and the growth agendas and put manufacturing on the trajectory to fulfil its potential for delivering low carbon products and services. We encourage government to work with the manufacturing industry to achieve this.

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