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Government 'failing industry' on green and growth ambitions

30 July 2012

Britain ’s manufacturers have warned the government’s green and growth ambitions are failing to match the ambitions of Industry through a continued pursuit of complex, costly and incoherent climate and environment policies.

Terry Scuolar
Terry Scuolar

This is doing little but adding to costs and burdens, whilst failing to provide the right incentives to invest.

In response, publishing its 2012 Climate & Environment survey, ‘Managing Green and Growth’ the Engineering Employers' Federation (EEF) has called for an urgent full scale review of the government’s climate and environment policies ahead of the next Spending Review.

This should provide a more strategic approach to policy with a better of mix of measures to realise the benefits of a low carbon economy and to reduce the cost and simplify the current administrative burden.

EEF has also proposed a new green and growth ‘stress test’. This would require any new and reviewed climate and environment legislation to demonstrate a positive contribution to the government’s green and growth ambitions before it goes ahead.

Commenting, EEF Chief Executive, Terry Scuoler (pictured), said: “Britain faces major challenge to de-carbonise our economy and strengthen economic growth. Despite some progress, the simple truth is the government’s own policies are failing to match industry’s own ambitions with a confused and cluttered landscape adding to the cost burdens rather than driving investment.

“We need a simpler and more coherent approach to climate change with a full review of the current set of tax and regulation measures. This must be accompanied by a new green and growth ‘stress test’ that all new legislation must pass before it goes ahead.

“Government must now learn from manufacturers’ own efforts and develop policies which work with the grain of industry, rather than against it. Such an approach will help us meet our ambitious green targets, enable manufacturers to grow their businesses and help rebalance the economy.”

According to EEF’s survey manufacturers are taking the initiative with 70% of manufacturers having environmental targets which go beyond legislation. In addition, two thirds of manufacturers say cutting carbon and managing energy use is their number one priority and will remain so for the next five years.

The survey also showed the biggest barrier to making further improvements is now the burden of dealing with climate and environment legislation. This is especially acute for SMEs with 72% saying the cost of complying has increased and 74% saying they have to spend more time to comply. This issue is not limited to smaller companies with almost one third of larger companies reporting a significant increase in the time they spend managing green legislation.

EEF backed this by illustrating that many larger companies will now be required to report emissions under four different schemes (GHG reporting, EU ETS, CRC Energy Efficiency Scheme and Climate Change Agreements) on four different dates, using four different conversion factors and for four different types of emissions.

This is especially important when by the government’s own estimates climate change policies will add 20% to electricity prices for business by 2020, rising to nearly 50% by 2030. In response, EEF is urging government to place affordability at the heart of the current Energy Market Reforms.

The survey also backed the current perception that climate and environment policies do little but add to cost with 53% of companies believing the CRC Energy Efficiency Scheme (Carbon Reduction Commitment) does little to improve efficiency but simply adds to costs.

Other key recommendations include:
- Extend the number of Climate Change Agreements to more Industry sectors
- Consider how policy aims or compliance with existing regulation could be achieved through environmental management systems or voluntary approaches;
- Review reporting obligations for manufacturers and work with them to produce a manageable streamlined reporting schedule;
- Place affordability at the heart of Electricity Market Reforms;
- Ensure that the money set aside by the Green Investment Bank for industrial energy efficiency is easily accessible by manufacturing companies.

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