It might seem like having your cake and eating it too, but why can't we rebalance and decarbonise our economy at the same time? Why does it seem like we can either be green, or we can go for growth, but we can't do both?
These questions were at the heart of an EEF breakfast briefing this morning where we launched Green and Growth – An interim report. Tackling this ‘Green and Growth' question is also the lynchpin for our new Climate and Environment campaign.
At EEF, we believe in an approach to environmental policy that helps companies meet their environmental responsibilities in an effective way, allows manufacturers to remain competitive and encourages the UK to become a world leader in environmental technologies.
The first in a two-part series, this report helps kick-off the campaign by taking aim at the four key challenges standing in the way of reconciling the Government's two seemingly incompatible priorities of rebalancing the economy and being the greenest government ever.
Rather than trying set out all the answers, the focus of the interim report is to make sure we're asking the right questions by highlighting some of the initial challenges of the competing aims of green and growth faced by the manufacturers. For example:
- Can the UK lead the world on decarbonisation without imposing unilateral costs on UK businesses?
- Can we spur innovation by shifting our focus from squeezing production to life-cycle emissions?
- Can the UK minimise the political risk manufacturers big and small face when deciding whether to make long-term investments in low-carbon markets?
- Can the UK move from our current set of patchy and inefficient policies towards a more holistic and coherent policy mix?
The failure to resolve these issues has left the UK with a green-growth divide. EEF therefore believes that reconciling these two priorities will require government to significantly shift its strategy on climate change towards a sustainable alternative.
The launch event provided a stimulating debate on this issue. EEF's Energy Adviser Roger Salomone, one of the authors of the interim report, was joined on an impressive panel: Magued Eldaief (Executive Director for Infrastructure and UK Managing Director, GE Energy), Matthew Spencer (Director, Green Alliance) and Ian Goldsmith (Head of Public Affairs, UK & EU, Tata Steel). Our Director of Policy & External Affairs, Steve Radley, chaired the event.
We live tweeted the event on #greengrowth, and here are the key themes that came up through the panel discussion and subsequent debate:
· Manufacturers are playing their part…:
o 80% of firms have invested in improving their energy, waste and resource efficiency;
o 50% of firms are/plan to be part of low-carbon technology supply chains; and
o 40% of firms are/plan to produce or develop low-carbon technologies.
· …yet manufacturers are facing the cost:
o 75% have seen a rise in the cost of complying with environmental regulations over the past 2 years.
o Only 13% think that UK climate environmental policies will encourage investment in the UK.
· From an international perspective, what drives investment is:
o Stability (i.e. minimal political risk) – Firms making £000m investments like to minimise political risk, yet too many policies in the UK, like the Carbon Reduction Commitment RC, Feed-in-Tariffs and Carbon Capture and Storage demonstrators have suffered from uncertainty and rapid reversals in policies.
o R&D investment – There's very little support for large, capital-intensive, innovative manufacturers to invest in R&D in low-carbon technologies in the UK.
o Market size – this goes hand in hand with stability and certainty: The market size needs to justify the risk and scale of investment. Where the UK has been too prescriptive (CCS demonstrators), too uncertain (nuclear) or too small (Green Investment Bank) to stimulate private sector investment. We also do too little stimulate the demand for green products while raising the cost of production too high.
o Strength in the supply chain – The depth, breadth and quality of supply chains are a big issue for big investments in nascent technologies. Yet supply chains in the UK are eroding, despite manufacturers investments in innovation and technology. Part of the problem is rising carbon prices and energy costs squeezing otherwise competitive firms.
We will be publishing the conclusions of our final report in November, and welcome any contributions over the coming weeks. For more information please get in touch with Roger Salomone on firstname.lastname@example.org. For up to date information about our campaign and policy work you can also follow us on twitter here.