- Date submitted: 1 Nov 2011
- Stakeholder type: Member State
- Submission Document: Download
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United Kingdom Contribution to the UN Conference on Sustainable Development (Rio+20) UK contribution complementary to and fully supportive of the contribution by the EU and its Member States SUBMISSION TO THE UNITED NATIONS DEPARTMENT OF ECONOMIC AND SOCIAL AFFAIRS, 2 November 2011 UK Actions on the Green Economy Based on Government evidence to a recent (September 2011) UK Parliamentary Select Committee enquiry into the Green Economy. Submitted by the Department for Environment, Food and Rural Affairs 17 Smith Square, London SW1P 3JR. United Kingdom 2 November 2011 Introduction/Summary 1. The UK Government has taken strong action to facilitate the transition to a green economy. Initiatives delivered and in the pipeline, such as the Green Investment Bank, Electricity Market Reform, Renewable Heat Incentive, the Green Deal and provisions in the Natural Environment White Paper, are part of a broad programme of work which will drive the transition and ensure the UK is well placed to take advantage of the opportunities created and is prepared for the challenges. This is all part of wider work Government is doing to put the UK on a path to sustainable, long-term economic growth. 2. This document highlights the Government's actions and draws on 'Enabling the Transition to a Green Economy: Government and business working together' (ETGE), a recent publication which aims to help set out the government's approach to building the green economy and serves as a tool to inform continuing dialogue between government, business and communities. A full list of publications can be found at Annex A. 3. This submission is based on written evidence from UK Government officials for an ongoing Parliamentary Select Committee enquiry on Green Economy convened in July 2011 to examine the concept of a green economy and its role in delivering sustainable development. The original written evidence can be found here: http://www.publications.parliament.uk/pa/cm201012/cmselect/cmenvaud/writev/g reen/m40.htm; and the background to the enquiry can be found here: http://www.parliament.uk/business/committees/committees-a-z/commonsselect/ environmental-audit-committee/inquiries/green-economy/. 4. This submission is intended to be complementary to the contribution by the EU and its Member States, which the UK fully supports. a) The economic, social and environmental outcomes that a green economy should aim to deliver, and the appropriate tools and indicators to monitor progress towards such outcomes 5. A green economy is not a sub-set of the economy at large - our whole economy needs to be green. A green economy will maximise value and growth across the whole economy, while managing natural assets sustainably. 6. Our vision is that our green economy of the future will: ? Grow sustainably and for the long term. Growth in the economy will be achieved and wealth generated while emissions and other negative environmental impacts are reduced. Opportunities for green growth will be facilitated - including in a growing low-carbon and environmental goods and services sector - and the global competitiveness of UK industry maintained. ? Use natural resources efficiently. Effective demand management and efficiency measures for energy am:! other resources will be used in our homes, offices and businesses across the economy. Inputs of materials to production processes should be optimised and the level of waste to landfill should decrease through greater resource efficiency in production and a move towards closed loop production through increased recycling, re-use and remanufacture. New process and products will be required, creating new market and job opportunities. ? Be more resilient. The UK will have a reduced reliance on fossil fuels whilst maintaining secure supplies of energy, food and other natural resources. The economy will be more resilient and prepared for the implications of a greater scarcity of resources, climate change and environmental risks such as floods and heat waves. ? Exploit comparative advantages - UK businesses will be well placed to take advantage of the expanding markets for greener goods and services. 7. The Government currently publish Sustainable Development indicators which cover sustainable consumption and production, climate change and energy, protection of natural resources and, creation of sustainable communities. 8. We are currently reviewing Sustainable Development Indicators and intend to publish these for public consultation at the end of 2011. In developing these indicators we will consider which measures can provide the best picture of the impact of our production and consumption of goods and services - looking at consumption patterns and resource efficiency of business and individuals as well as the UK as a whole. 9. The OECD have conducted some useful work in developing Green Economy Indicators published earlier in the year", this will be a useful resource to draw on for future thinking in this area. 10.We are making significant steps towards developing a green economy, by placing the value of natural capital at the heart of decision-making. The Natural Environment White paper (NEWP) sets out actions Government will take to achieve this, by accounting for natural capital. A significant new commitment is to establish an independent Natural Capital Committee reporting to the Economic Affairs Cabinet Committee, to provide independent expert advice on the state of English natural capital. Other commitments include working with the Office of National Statistics to fully include natural capital within the UK Environmental Accounts with a roadmap published in 2012 to set out required improvements up to 2020, with early changes to be made by 2013. These accounts will provide a useful tool for understanding the interaction between the economy and the environment, both in terms of the impact that economic activities have on the environment and the use that the economy makes of the environment. 11.The Measuring National Well-being Programme was launched on 25 November 2010 with the long-term vision of an accepted and trusted set of National Statistics, which people turn to first to understand and monitor national well-being. The phrase 'national well-being' recognises a need to provide wider measures of progress and quality of life than are derived just from the national economic accounts. This work is sometimes characterised as 'GOP and beyond'. I OECD: Towards Green Growth: Monitoring Progress - OECD Indicators Ib) The nature of any barriers preventing the transition to a green economy 12.Government has worked with business to understand the barriers to a green economy transition. More detail on these barriers can be found in ETGE's 'unlocking green growth' annex, but in summary: ? Appropriateness of infrastructure - this is largely geared towards incumbent technologies, which are predominantly based on the use of fossil fuels. ? Ability to access finance - there are significant challenges in accessing finance for green investments, such as capital investment in new large infrastructure projects and taking technologies from demonstration to commercialisation. ? Availability of necessary skills - the transition to a green economy requires a workforce with the right skills. This includes ensuring that the skills are in place to help support the growth of new and emerging low carbon and environmental goods and services sectors as well as those needed to help all businesses use natural resources efficiently and sustainably and to be resilient to climate change. ? Investment in innovation - risks related to likelihood of success or the potential market size and difficulties in capturing the full value of innovation, particularly given that final markets may be initially stimulated by government policy, affect the incentives to innovate, and hence may lead to underinvestment in innovation for a green economic transition. ? Information provision - Businesses need information to inform decision making on risk, market opportunities and the impact of their activities. Employees need information on the skills needs, and job opportunities available, in the green economy. And consumers need information on how to change their behaviours and to inform choices. Government needs to both receive and supply information on environmental impacts and performance measures. 13. There are a broad range of policies in place or under development to address these barriers. For example: ? Large scale reforms of the electricity market will bring forward the investment needed to decarbonise electricity generation. ? The Green Investment Bank will leverage investment in infrastructure projects that support growth and environmental objectives. ? Radical changes to the planning system, including a fast-track planning process for major infrastructure applications, will remove several of the barriers holding back growth and the green transition. ? Increased bank lending to businesses, the Business Growth Fund and increasing Enterprise Capital Funds will improve access to finance, particularly for small and medium sized enterprises. ? The new National Careers Service, to be launched in April 2012, will improve the quality of information, advice and guidance available on careers in a green economy. ? The Low Carbon Innovation Delivery Review (LCIDR) will enhance the delivery of public funding support for innovative low carbon technologies and a new Offshore Renewable Energy Technology Innovation Centre has been announced. ? A package of measures will be announced before the end of the year for those energy intensive industries whose international competitiveness will be most affected by our energy and climate policies. This package will help these industries adjust to the transition to a green economy. c) The approach required to deliver a green economy, and the aspects of the current economic model that require development, eliminating and/or new approaches found. What tensions might there be between economic growth and the green economy? Would 'greening the economy deliver the outcomes needed? 14. The Government's Plan for Growth 2 makes clear that decarbonising the economy provides major opportunities for UK businesses. At the last Budget, the Government set out its ambition for increased investment in low-carbon technologies and a commitment to benchmark the UK against the top countries in the world. In 2009/10 the global market for low-carbon and environmental goods and services was estimated to be worth more than £3.2 trillion. The UK share of that market was estimated to be worth around £116 billion. With average annual growth forecast to be 5% to 2016/17, if we act now to build on our situation, UK business can be at the forefront of the transition. 15. Building on the reforms set out in the Plan for Growth there will be a second phase of the Growth Review, as we continue to focus on restoring the economy's health. The growth reviews will work to capture, where appropriate, actions that will both enhance growth and help to deliver our environmental objectives. 16. The UK is becoming increasingly dependent on imported fossil fuels - by 2020 we could be importing 45-60% of our oil and 70% or more of our gas. Demand is likely to increase, potentially leading to supply constraints and volatile prices without timely and massive investment in new production. Access to other critical natural resources such as water and minerals could also be constrained in the future. The UK needs to become more resilient to price variations, develop alternative sources of supply, and make more efficient use of natural resources. 17. The Government recognises that there will be increased costs of some resources, and rebalancing of investment and innovation towards green activity. As we make the transition, we will need to take into account the distributional impacts on certain households and sectors, including for example energy intensive industries. 2 The Plan for Growth, March 20 II 18. A potential significant challenge for energy intensive businesses will be the increased costs as a result of climate change and other environmental policies, and from the increased cost of energy. The government recognises the issues facing these industries, including the difficulties some face in remaining internationally competitive, while driving down domestic greenhouse gas emissions. We are taking active steps to help these industries over the transition (see below) because the green economy will continue to have and need these sectors. 19. There are actions that can deliver both economic and environmental gains in the short-term, such as low cost/no cost energy and resource efficiency measures. Evidence from the Carbon Trust includes a finding that a 35% improvement is possible in the energy efficiency of UK bUildings by 2020, and that this would realise over £4bn worth of benefits. Maximising the opportunities and managing the costs of transition to a green economy will require choosing the most efficient mix of interventions where the benefits justify the costs, as well as providing a robust, credible and long-term policy framework to increase business certainty of payback from investment. 20. There are a number of different policy tools and approaches that Government can use to affect this change and it is important to develop an integrated package of interventions if we are to deliver a meaningful effect (see Figure 1 below). As a starting point, getting the policy framework right is essential to facilitate this transition while minimising costs and other negative impacts to businesses. This means outlining, clear long-term objectives, choosing the right policy mechanisms, designing policy to work as efficiently as possible and highlighting where benefits justify costs. Figure 1 : '4 Es' model of behaviour change. Making it easier for businesses and consumers to act (e.g. Ensuring availability and building understanding of green choices) Providing incentives and disincentives (e.g. through regulation and fiscal measures) Encourage Enable Exemplify Engage Getting businesses, trade associations, civil society and consumers involved (e.g. simplifying regulations, exploring ways to make it easier to make sustainable choices) Demonstrating greener behaviours (e.g. procuring greener products and moving to more sustainable operations) 21. It will also be important to integrate a deep understanding of the motivators and barriers to adopting pro-environmental behaviours into our policy framework. We have already made some significant steps in this direction with documents such as the Framework for Sustainable Lifestyles and the substantial evidence base which underpins it, and the efforts to value natural capital found in the NEWP. This work will continue and develop our approach over time. 22. The response to part 'e' below gives further detail on the policies which the government is developing across specific policy areas. d) The policy and institutional 'framework' required to create the right conditions for the green economy to thrive. 23.To invest in new systems, processes and tools, businesses require certainty on Government action. ETGE aims to help set out the Government's approach to building the green economy and serves as a tool to inform continuing dialogue between government, business and communities. Alongside, we have produced a visual timeline for the key policies to drive the transition to a green economy and an indication of their direction of travel. The timeline will be updated periodically and our progress on many of these actions can be tracked through our Carbon Plan which brings together the actions across government on climate change. 24. Government is using a range of policy tools to support the transition. Using these tools in the right way that balances encouraging good behaviour and discouraging poor environmental outcomes is important for ensuring that change happens, that benefits from that change are maximised and costs are minimised. These tools are briefly mentioned here and are discussed in more detail in Enabling the Transition to a Green Economy; the overarching framework: ? Fiscal Measures - Fiscal measures, such as environmental taxes, can be effective in driving change. They can, for example, work to discourage damaging environmental behaviours (e.g. Climate Change Levy, Landfill tax, carbon price floor); incentivise environmentally-friendly products (e.g. Vehicle Excise Duty) and energy efficiency (e.g. the Green Deal, Climate Change Agreements; Enhanced Capital Allowances). To support decarbonisation of electricity supplies and provide certainty for investors on the carbon price, a carbon price floor was announced in Budget 2011. The Government will increase the proportion of tax revenue accounted for by environmental taxes. Where appropriate, measures will be targeted to maximise opportunities for green growth in the UK. ? RegUlation - Regulation has been, and will remain, an important tool in managing environmental risks and impacts. It can offer advantages such as setting a clear direction of travel and ensuring a level playing field. It is important that regulation is only used when there are no better alternatives. The principles underpinning the Coalition Government's approach to regulation can be found at: www.bis.gov.uklassets/biscore/betterregulation/ docs/r/1 0-1155-reducing-regulation-made-simple.pdf. ? Finance - The Green Investment Bank aims to accelerate private sector investment in the UK's transition to a green economy. Its initial remit will be to focus on green infrastructure assets and late stage innovation. It is intended to achieve significant green impacts and make a financial return. Government support and funding for innovation in low carbon technologies is provided by a number of sources, including the Technology Strategy Board, the Carbon Trust and the Energy Technologies Institute. ? Market Reform - In some cases, Government has to fundamentally reform the market in order to signal the need for change and give the right incentives. For instance, the government White Paper on Electricity Market Reform sets out the commitment to transform the UK's electricity system to ensure that our future electricity supply is secure, low-carbon and affordable. ? Voluntary Agreements - A wide range of voluntary agreements have been used for different green economy issues, from single, tangible issues (e.g. the use of recycled paper content in newspapers) to more complex supply chain issues (e.g. the sustainable clothing roadmap). This voluntary approach is less burdensome than regulation, and, developed intelligently, can achieve positive outcomes freeing businesses and society from unnecessary obligations, improving competitiveness and allowing people to take greater responsibility for their own lives. ? Market based instruments can help to establish the right incentives for participants. The EU Emissions Trading System places an explicit cap on the volume of emissions from ETS sectors and allows trading between participants. This incentivises decarbonisation of production, but ensures that this occurs where the cost is lowest. The creation of a price for carbon through this system is an important part of incentivising wider investment in both abatement technology and low carbon generation. ? Public Procurement and leading by example - The public sector has major economic and environmental impacts. In 2009/10, the public sector spent £236bn on goods and services, Government operations used 36 million m3 of water and resulted in over 296,000 tonnes of waste. Shifting public procurement and operations towards greener models can increase the market for greener products and services, and provide opportunities for businesses. Government is also leading by example via the Greening Government Commitments (GGC - announced 28 February 2011), which set ambitious goals to drive efficiency and reform in the way we manage our estate and reduce our environmental impact. In May 2010 the Government set a target to reduce its carbon emissions from its office estate by 10% over the next 12 months. A reduction of over 104,000 tonnes of carbon was achieved - a saving of nearly 14%. ? Advice - Access to tailored advice and information about environmental impact can make it easier for businesses to green their operations, to produce greener products and services, and for consumers to choose them. Government has a role in helping to provide some of this information to businesses - particularly, for example, on the expected impacts of climate change3 , resource efficiency", and resource nsks". Government will continue to make simple-to-use information available to business in these areas via its expert delivery bodies such as the Waste and Resources Action Programme (WRAP) or via its online portal BusinessLink.gov. In addition, from late 2012, the Green Deal financing mechanism will also include up front advice on measures and behaviours that can help businesses and consumers improve their energy efficiency. 25.We will continue work towards to reform our regulatory frameworks moving towards more efficient mixes of instruments to achieve environmental outcomes, for example using market-based instruments where possible rather than prescriptive regulations. For example a programme of work is underway in Defra", including much better evidence about the stock of regulation and about the effectiveness and efficiency of available policy approaches. e) Priorities for action, including those sectors of the economy crucial for creating the conditions for a green economy 26. The ETGE highlights current government action across a range of policy areas. This emphasises the fact that a green economy is not a sub-set of the economy at large - our whole economy needs to be green. 27. Some actions are grouped into high level areas in the ETGE. For example, the UK climate change and emissions framework looks at the risks and opportunities presented by climate change and covers areas such as low carbon and renewable energy, greener transport and emissions reduction. Policies in this area include removal of energy efficiency barriers under the Green Deal, the setting of Carbon BUdgets to 2027 and developing a Climate Change Risk Assessment, and a wide range of sectors are affected by this work. A resource-smart economy covers resource and energy efficiency in a green economy, sustainable products and service, water efficiency, waste, marine management, agricultural efficiency and biodiversity improvement. Policies include movement towards a 'zero waste' economy and various initiatives to provide advice and encourage voluntary agreements across the economy. 28.We will continue to focus on ensuring businesses realise the benefits of being more resource efficient and through that more competitive. Better management of natural resources is a financial and environmental opportunity. Research for Defra estimated UK businesses could save around £23bn and 29MtC02e (about 4% of total emissions) annually by using resources more efficiently. 29. The Renewable Energy Roadmap, meanwhile, which was published on 12 July (see link in annex), focuses on 8 key technologies which have either the greatest potential to help meet the 2020 target in a cost effective and sustainable way, or offer the greatest potential for the UKin the decades that follow. The roadmap sets out a comprehensive suite of targeted, practical actions to remove barriers and includes an action plan for each of the 8 technologies which shows estimated changes in capacity and growth rate, identified challenges to their deployment and a bespoke package of actions to address those challenges. 30.Work continues to explore the opportunities presented by the transition to a green economy and help UK businesses capitalise on these. For example, the UK has a strong comparative advantage in traditional environmental goods and services, such as recycling and water treatment. Emerging sectors -like wind, photovoltaics and carbon finance - are the strongest growth areas, both in terms of sales and employment. 31. In addition to the measures set out in Budget 2011, we will take steps to reduce the impact of government policy on the cost of electricity for energy intensive manufacturers whose international competitiveness is most affected by our energy and climate change policies and to support Ells in becoming more energy and carbon efficient, where it would be cost effective for them to do so. We're currently working with industry on this and will announce a package of measures by the end of the year. 32.The National Ecosystem Assessment published in June, shows the enormous value to the economy of properly managing the natural environment and resources beyond the traditional market prices on which they are valued. The Natural Environment White Paper published in June set out measures to better connect people and nature. Getting there will require better data on the value of nature, to which end a business led Ecosystems Taskforce is being set up to expand business opportunities for new products and services that benefit the economy and environment alike. In addition, a Natural Capital Committee will put natural value at the heart of Government's economic thinking. Finally the Government's Waste Review is driving innovation in the waste and recycling sector. f) The role of consumers, businesses, non-government organisations and international bodies in delivering, and stimulating demand for, a green economy 33.A green economy will only be achieved through working together - as noted already, that means Government working with businesses, consumers and with civil society. The commitments in ETGE demonstrate a shared responsibility to take action. Consumers 34.The transition to a green economy will depend on the development of and demand for greener goods and services across the whole economy. Consumer demand will therefore need to adapt and shift towards products and services that are greener, more efficient and competitively priced. Where this happens responsive businesses will need to take account of the environmental impact of their products, services and sustainable business practices at home and abroad. This will apply equally to the whole supply chain, and the work Government is doing to facilitate open-source access to supply chain impact data (carbon, energy and water initially) will help enable this transformation. Therefore, a company will have to consider the practices of those with whom it does business (manufacturers, distributors, retailers etc.). Increasingly businesses might be held to account by their customers for the impact they have on the environment, which has reputational issues for businesses. 35. Our research demonstrates the important role of trusted retailers in influencing consumer behaviour and shifting peoples' willingness to buy and use more sustainable products. Government has published its research, synthesised into the Framework for Sustainable Living for advice on best practice approaches, and continues to work on a range of partnership projects with businesses (including retailers) to stimulate improvements on a range of issues. 36. Measures such as the mass rollout of smart meters will ensure consumers are better informed. Consumers will be provided with near real-time information on energy consumption, enabling them to monitor and manage their energy consumption, save money and reduce carbon emissions. Bills will be accurate and switching between suppliers will be smoother and faster. New products and services will be supported in a vibrant, competitive, more efficient market in energy and energy management services. Meanwhile the Green Deal and Energy Company Obligation (see annex for more details) will create the financing mechanisms and support needed to drive investment in energy saving measures in our homes and businesses. And the feed in tariffs (FITs) scheme has been a success since its launch in April 2010 with over 69,300 FITs installations registered to date. Businesses 37.There will be both opportunities and challenges from the transition to a green economy and businesses will need to adapt to take advantage of benefits and manage costs and risks. Impacts will be felt by sectors of the economy in different ways and to varying degrees. And the context of the transition will continue to be strong pressures from our international competitors in the global economy - competition for investment, market share, new and more efficient goods and services, and the natural resources to produce them at a price that businesses, consumers and governments are prepared to pay. 38.Some sectors will see increased demand for goods and services. Some sectors will need to transform aspects of their business models to reduce their environmental impact, while others will need to manage potential increased input costs or lower or volatile demand. Some businesses are already making significant changes within their supply chains, demonstrating a willingness to lead the transformation to a more resource efficient economy. Government is working with business to enable change through greater access to data on product supply chain impacts, guidance on reporting, and facilitating voluntary initiatives (such as the Courtauld Commitment, Federation House Commitment and the pilot product roadmaps) to improve collaboration and on-the-ground improvements. Government is also working with business on new approaches to business models, and developing pilot projects to trial these. 39.The new Green Investment Bank will facilitate increased and accelerated private sector investment in infrastructure projects that support economic growth and our environmental objectives, such as offshore wind, industrial energy efficiency and commercial and industrial waste as well as growth capital for innovative green technologies. And in November 2010, BIS, DECC and Defra set up a Green Economy Council providing advice to Government on its approach to a green economy. The Council draws on high level representation from business and industry. To date the Council has looked at the ETGE document and the relationship between energy intensive industries and a transition to a green economy. The Government looks forward to continuing dialogue with Council members. 40. The Renewable Heat Incentive (RHI), meanwhile, is designed to increase significantly the level of renewable heat in Great Britain by helping to remove the financial barrier currently holding back uptake. The RHI will be launched in Phases with Phase 1 aimed at the industrial and commercial sector being open for business on 30 September, subject to State Aids. See Annex for link to further information on the RHI. Civil Society 41. Social enterprises have a potentially significant role to play in influencing consumer demand towards greener goods and services. They have the ability to exert influence from within communities, where they are trusted and can play an inspirational role. They have the potential to provide the link between the wider green economy and the delivery of the Big Society, by acting as exemplars for environmentally responsible behaviours at the local level. International bodies 42. The Green Growth reports from the DECO and UNEP have provided solid economic analysis around the transition to a green economy. Sharing research and best practise policy initiatives will help expedite progress in countries at all levels of development. This work needs to be further developed, however, with a particular focus on emerging and developing markets for which evidence is currently weak. The establishment of a knowledge sharing platform with the OECO, UNEP, World Bank and Green Growth Institute will contribute to this agenda. g) How the UK's policies to deliver a green economy relate to actions needed to deliver the global green economy. 43. There is a strong case for moving the global economy onto a greener footing: According to the Stern Review the global costs of climate change could be between 5% and 20% of GOP per annum if we fail to act, dwarfing the costs of effective international action, estimated at around 1% of GOP in 2050. In addition the net costs of mitigation in the short to medium term will be higher if global action is delayed or if there is uncertainty about the investment and changes in behaviour needed to make the transition. Action by the UK alone (which only accounts for around 2% of global emissions) will not be sufficientclimate change is a global issue and needs a global response. 44. UKTI is leading a green export campaign which consists of a programme of activities that is helping UK companies with green solutions access international buyers and investors and boosting the reputation of the UK's low carbon capabilities in international markets. New activities include: ? Low Carbon exhibitions in British Embassies overseas to which we bring UK companies to showcase products and services; ? A green technology roadshow for 109 innovative SMEs to meet overseas buyers and commercial officers from 10 international markets at three locations across the UK.