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Rapid adoption of fifth carbon budget essential for business

26th November 2015

Further to the publication today of the Committee on Climate Change’s advice to government on the fifth carbon budget, the Aldersgate Group called on government to rapidly adopt the fifth carbon budget in 2016 and avoid the delays and investment uncertainty that came with the slow adoption of the fourth carbon budget. The Group stressed that the medium-term clarity provided by the carbon budgets was essential for encouraging international businesses to invest in the UK’s low carbon infrastructure and for remaining on track to meeting the UK’s long-term climate goals at least cost and in a way that could deliver growth.

Nick Molho, Executive Director of the Aldersgate Group said: “With the UK Met Office recently confirming that global temperatures are set to rise by more than one degree above pre-industrial levels for the first time, the UK needs to build on the emission reductions achieved to date and put itself in a situation where it can tackle the challenge of dangerous climate change in a way that is timely, cost-effective and delivers economic benefits in terms of growth and jobs to the UK. The timely adoption of the fifth carbon budget is key to this.

Companies investing in low carbon infrastructure, many of which are international and have a choice as to which countries they want to invest in, are already looking at projects that will be developed in the next decade. Continued confidence in the UK’s low carbon ambitions is essential to attracting this investment. It will allow businesses to keep on investing in innovation, new projects and supply chain factories, all of which will help develop much needed infrastructure, reduce the cost of new technologies and create new jobs in the UK’s low-carbon economy, which already employs 460,000 people.”

A day after the Autumn Statement, the Aldersgate Group also stressed that the Treasury had an important role to play in ensuring the UK would have the means to meet its fourth carbon budget (covering the years 2023 to 2027), as the majority of low carbon and energy efficiency policies and supportive funding were due to end over the course of this Parliament. The Group added that this was also key for the government to meet its existing renewables target for 2020, as the Department of Energy and Climate Change recently acknowledged.

Nick Molho added: “To remain on track for meeting our long-term climate goals cost-effectively, the Treasury must urgently support the government in rapidly introducing policies that will ensure the UK meets its fourth carbon budget. This requires in particular a clear set of new policies in the energy efficiency, low carbon heat and low carbon transport sectors where all support policies are expiring in the near future. Clarifying the government’s plans on renewable electricity beyond the offshore wind auctions announced last week is also an urgent necessity if the UK is to meet its climate goals at the lowest cost and its renewable energy targets for 2020.”

Committee on Climate Change

Government must do more to deliver on its environmental objectives

25th November 2015

Further to the Chancellor’s Autumn Statement today and ahead of the publication of the Committee on Climate Change’s advice on the Fifth Carbon Budget tomorrow, the Aldersgate Group said that it was unlikely the Autumn Statement had done enough to allow the government to meet its environmental objectives effectively.

Recognising the difficult challenge faced by government in addressing the deficit, the Aldersgate Group welcomed the government’s decision to increase climate finance, maintain support for the purchase of low emission vehicles, commit to an increase in funding on low carbon heat and protect the budget of the FCO, a department which performs important functions in climate change diplomacy and in setting up trade opportunities for UK businesses.

However, it was unclear how the government’s proposal to increase funding for low carbon heat whilst saving £700m would help deliver the increase in low carbon heat required by the UK’s carbon budgets. The proposal to insulate one million homes during the course of this Parliament also amounts to a significant drop compared to the number of homes which took on energy efficiency measures during the course of the last Parliament.

Nick Molho, Executive Director of the Aldersgate Group said: “Without rapid investment in energy efficiency and low carbon heat at scale, it is difficult to see how the UK will meet its Fourth Carbon Budget at least cost and on time. The government needs to do much more to improve the energy efficiency of our building stock and explain how its new proposals will deliver the increase in low carbon heat that the Committee on Climate Change has been calling for. It is also unclear how the government intends to allow further investment in cost-effective renewable electricity projects outside of the offshore wind auctions announced last week.”

The Aldersgate Group however welcomed the Government’s increased focus on apprenticeships and highlighted that a comprehensive strategy was needed to ensure the UK’s workforce was equipped to benefit from the employment opportunities that the transition to a low carbon economy had to offer. This will be the subject of a major Aldersgate Group event in Parliament next week.

Referring to the spending cuts of 15% at DEFRA at 22% at DECC in particular, Nick Molho said:

“Government departments such as DEFRA and its regulatory agencies provide important – and often overlooked – services that are key to the effective functioning of our economy. These include providing access to high quality natural resources such as water and interpreting UK and EU environmental legislation in a way that is pragmatic and can support business innovation. The implementation of the different settlement plans must ensure that these government departments and their regulatory agencies have sufficient resources to continue providing these services effectively.” 

Pointing to the fact that businesses were awaiting clear policy signals to increase investments in the UK’s natural capital, Nick Molho added:

“As the Aldersgate Group highlighted in its report last week, the government has the opportunity to drive greater levels of private investment in improving the state of the UK’s natural assets in a way that would support the competitiveness of the UK economy and wouldn’t jeopardise its objective of tackling the deficit. Doing this requires greater policy co-ordination between government departments to support projects that are mutually beneficial and helping support the financing of natural capital projects by making existing subsidy schemes more efficient and developing markets for ecosystem services.”

Osborne

UK energy policy is right on coal but more clarity rapidly needed on renewables and energy efficiency

18th November 2015

Reacting to today’s speech by the Secretary of State for Climate and Energy the Rt Hon Amber Rudd MP, the Aldersgate Group welcomed the government’s commitment to phase out the UK’s old coal-fired power stations but stressed that more clarity was rapidly needed on the government’s plan to support future investment in renewables and energy efficiency if the UK was to meet its objectives on carbon emissions, affordability and security of supply.

The Aldersgate Group welcomed the government’s decision to set a clear date for the closure of the UK’s old coal-fired power stations, as this will help modernise the UK’s energy infrastructure and reduce carbon emissions.

Nick Molho, Executive Director of the Aldersgate Group said: “The closure of the UK’s old coal power stations is a pre-requisite to modernising the UK’s energy system. It will help reduce carbon emissions and make clear that modern gas-fired power stations, not coal, are the best complement to increasing amounts of low carbon generation.”

The announcement that three CfD auction rounds for offshore wind will take place during this Parliament was also a positive step forward. However, the Group stressed that more clarity on the funding available to support these auctions and policies to facilitate investment in other forms of low carbon generation such as mature renewable energy technologies was rapidly needed. This was essential to support continued investment in these technologies and secure further cost reductions for consumers and supply chain benefits for the UK economy.

Nick Molho added: “Having provided over 25% of the UK’s electricity in the second quarter of 2015 and demonstrated significant cost reductions in recent years, renewables have an important and growing role to play as part of a secure, low carbon and affordable energy system but the current lack of specific policy has been undermining further investment. Building on today’s positive announcement on offshore wind, the government must rapidly set out its proposals in more detail as to how it will support continued investment and cost reductions in the renewables sector.”

The Aldersgate Group called on the government to clarify as soon as possible the funds that would be available for investment in low carbon power stations under the levy control framework and under what mechanism investors could still develop mature and cost competitive renewable energy technologies such as onshore wind and solar projects.

The Aldersgate Group also highlighted that clarity was needed as to how the government would support investment in a range of other infrastructure areas that were key to meeting the UK’s carbon targets on time and on budget. This included in particular future policies to guide investments in energy efficiency, carbon capture and storage, low carbon heat and low emission vehicles.

offshore-wind

UK must invest more in its natural assets to support long-term economic growth

17th November 2015

A new report from the Aldersgate Group out today, Investing in our natural assets: how government can support business action, argues that it is in the UK’s economic and social interest to increase investment in its ‘natural capital’ and calls on government policy to do more to support businesses investing to improve the state of the UK’s natural assets. 

Featuring case studies from major projects such as Crossrail and the work of Aldersgate Group members including National Grid, the RSPB, Kingfisher, Willmott Dixon and the Woodland Trust, the report explores how businesses are already assessing their reliance on natural capital and investing to protect it.

The UK’s ‘natural capital’ includes the natural resources that provide goods and services essential to the functioning of our society and economy, such as the availability of clean water, food, timber, recreational green spaces and the regulation of flood risk and other climate change impacts.

The report argues that with the state of the UK’s natural environment rapidly declining, the UK urgently needs to prioritise the state of its natural assets in order to support the future resilience and productivity of its economy. The report refers for example to the current degradation of soil, estimated to cost £1.2bn a year in England and Wales alone, which is undermining the vital economic and social functions that soil plays in supporting food production and storing water and carbon. Environmental damage feeds directly into costs for government, business, supply chains and households.

Nick Molho, Executive Director of the Aldersgate Group, said: “Not properly valuing natural capital poses economic risks for the UK but natural capital projects can also provide excellent investment opportunities, by ensuring that the key natural resources our economy and society depend on will remain available in the long term. By putting more focus on improving the state of our natural capital in policy making and investment decisions, government and businesses can manage risks more effectively and will reap the benefits in terms of long-term growth and competitiveness.”

In this report, the Aldersgate Group sets out how action by government can help deliver natural capital improvements through:

Better measurement –improving understanding of our reliance on natural resources will help its value be better reflected in policy and corporate decision making and support economic growth over the long term. The Office of National Statistics should in particular continue its work to incorporate tools to measure the state of the UK’s natural capital into the national accounts.

Improved integration of different policy areas – improving the state of the UK’s natural capital could deliver benefits and cost savings for a range of policy areas beyond just the environment and requires much greater levels of co-operation across several government departments including the Department of Health, the Department for Communities and Local Government and the Department for Environment, Food and Rural Affairs.

Evidence such as the NHS Forest Initiative suggests for example that the availability of green spaces for recreational purposes can improve health, accelerate patient recovery and cut costs for the NHS. The government has also previously estimated that coastal wetlands provide valuable services in the region of £1.5bn a year in terms of helping managing the impacts of storms and floods.

The recent co-operation between the RSPB and Crossrail have provided a valuable example in this area: more than three million tonnes of earth tunnelled from beneath London’s streets has been used to help transform Wallasea Island into a huge wetland, which will provide economic benefits in terms of reduced flood risk and flood defence expenditure, increased tourism and significant carbon storage.

Helping build a supportive structure for investment in natural capital projects – long-term investments in natural capital improvements and new market opportunities can be supported by targeted government action.For instance,the reform of existing subsidy schemes in areas such as agriculture could help channel greater funds towards projects aimed at improving the state of the UK’s natural assets. Helping set up markets for ecosystem services, of which some examples already exist in the water and farming sectors, could also result in greater private sector investment in natural capital improvement projects. 

Ensuring robust institutions can help deliver natural capital improvements over the long term – the work of institutions such as the Natural Capital Committee has been fundamental in driving forward understanding in this area. Confirmation of its future remit and an ambitious 25-year plan for biodiversity will help safeguard the UK’s natural capital strategy and steer policies towards delivering better environmental outcomes in the long term.

The report will be launched at an event in Parliament today, hosted by Peter Aldous MP, member of the Environmental Audit Select Committee.