Government flags potentially massive savings through resource efficiency

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British business can expect to save a staggering £23 billion a year through low-cost/no-cost methods simply by improving the way they use energy and water and by reducing waste, according to a new report which emerged from the environment department on Friday.

It's a huge number. And it's significantly higher than the £6.4 billion estimated by consultants Oakdene Hollins and Grant Thornton when they initially conducted the study in 2006. Yet the numbers keep on growing. On top of the £23bn low-cost savings, those opportunities with a payback greater than one year have been estimated at an additional £33 billion.

We must be careful about interpreting the report literally. It was not based on any site-audit data. Nor did it use any case studies. The figures were developed by using existing data from a variety of sources. But they do serve a useful reminder that lean manufacturing and resource efficiency can potentially have a profound impact on competitiveness.

But over £55 billion worth of savings? You would have thought manufacturing, of all sectors, would be alert to those kinds of savings. But of course there are a range of factors that prevent businesses from realising the fruits of resource efficiency. The researchers in fact have created four lists of reasons. These range from access to finance to difficulties implementing changes because of the need of specialist advice to the prevalence of behavioural barriers, or because businesses simply are not aware of (or have access to) information about the costs and benefits of particular measures.

Either way, it smarts to be told all this at the same time as the government is stripping away many of the business support schemes it had developed in an attempt to overcome these entrenched barriers. While our training on resource efficiency effectively deals with the information gaps the researchers referred to, last week, the Carbon Trust, in an address to EEF's Climate and Environment Policy Committee, confirmed it would no longer be offering its free on-site energy audits, would be discontinuing the well-received Industrial Energy Efficiency Accelerator and scrapping its 0% interest-free loans*. In short, the Carbon Trust is now offering very little (bar its frequently excellent publications) to business.

While it is true the Trust has its funding cut by £50m, it is also true that this brings its funding in line with what it received three years ago. Yes, some of the Carbon Trust's offerings to business needed reform – but to scrap (what seems like) everything? I can't help feel that if the Carbon Trust vacated its plush offices in central London it could a better start to address the funding “shortage” without cutting services to business. Sure this would prove to deliver greater levels of resource efficiency?

* A new “green finance deal” worth £550m has been announced over the next three years, to businesses of all sizes, from 4 April 2011 following a deal between the Carbon Trust and Siemens Financial Services Ltd. Interest rate levels have not been confirmed. See here for more information.

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