The Coalition's Programme for Government committed to “promoting the green industries that are so essential for our future.” The latest figures show an 80,000 increase in unemployment on the quarter and youth unemployment (18-24 year olds) at its highest level since Spring 1993. A combination of factors highlighted in EEF's discussion paper, Green and Growth have stalled progress on green growth, indeed, growth of any hue.
Strategic misdirection, an over-focus on process emissions, political uncertainty and a sometimes muddled policy mix are the four issues the EEF highlights for debate. There is an increasing space for the cynics who say we can either be green, or we can grow, but we can't do both. Those who accept the fundamentals of climate change and the vital necessity of developing a low carbon economy have to move quickly to develop a coherent green growth strategy.
But regaining the trust and confidence of businesses, consumers, employees and trade unions won't be easy. Take the EEF's “certainty challenge”, perhaps better called the “uncertainty challenge”, and exemplified by the government's decision to cut support for large scale solar energy earlier this year, after barely a year's activity. Jobs and investment were lost as a result. Now, lobbyists, including the TUC, are hoping to persuade the committee of MPs meeting on 15 September to reconsider this move. Investors in high capital items like offshore wind or CCS fundamentally need very long term certainty to invest, with risks underpinned for the same periods. Uncertainties over the ports scheme to support offshore wind, or the lack of a timetable for CCS projects two to four, go to the heart of a stuttering green growth.
The report opens an important debate on whether climate strategy is over-focussed on controlling process emissions, rather than, say, life-cycle emissions, implying consumers should contribute more to carbon reductions costs. EEF also goes close to calling for a review of the renewables target itself, because “targets that specify the means rather than the ends” can bias policy and lead to less cost-effective solutions.
On this vexed point of the renewables target, we might well be able to save more carbon for the same price through other technologies. But a major factor inhibiting renewables has been the lack of a high ambition growth model, involving both a rounded domestic supply chain and a skills strategy. Plants are being set up along the North east coast and elsewhere, but we will see foreign steel standing in the North Sea where UK steel should be. Of the 6,000 jobs in large scale onshore wind schemes, just 300 are in manufacturing.
Yet, such a challenge to the renewables target heightens uncertainty, which EEF has identified as a barrier to growth. The renewable target is a fundamental of UK and EU climate change policy. Better, perhaps, to focus on how to grow a major domestic renewables industry, which would then tend to drive green jobs and bring down renewable energy costs.
It's nevertheless true that our climate strategy has squeezed production through carbon pricing and emissions trading. In terms of the energy intensive sector, employing 125,000 people in some 2,800 enterprises, evidence from the TUC's joint studies with the Energy Intensive Users' Group points to the need for new incentives to stimulate investment in low carbon technology. Smart policy would couple relief from carbon cost burdens both with conditions on investment. We welcome the government's decision to set up a task group of the Green Economy Council to bring forward a package of measures this autumn.
Nor will green growth happen without a coherent skills strategy. It's a gap in the EEF report, hopefully addressed elsewhere. This is also a coherence issue for government and stakeholders. At the centre is a clear need for Ministerial leadership, supported by a stakeholder body focusing on skills needs. This isn't a new problem characteristic of a change of government, but an inheritance that needs addressing at the highest level. Issues include the cross-sector relevance of STEM skills and the inadequacy of the present demand-led approach. Employers will need graduate level skills to deliver on the green economy. But whilst many of the critical skills, e.g. engineering, are in demand across other sectors of the economy, DEFRA-sponsored research showed that others were not well understood by employers with the UK's demand-led approach likely to lead to under-investment.
EEF has launched a timely public debate on Green and Growth. Hopefully it will contribute to the fresh thinking on a strategy for green manufacturing security that's required – and generate some much-needed new, high quality green jobs.
For more information on the TUC's climate and environment work please contact Philip Pearson on firstname.lastname@example.org or visit http://touchstoneblog.org.uk/category/environment/