Beyond Carbon: an industrial strategy for a resource efficient economy

Peter Ainsworth MP, the host of the event, welcomed all attendees.

He described his pleasure at hosting the event for the Aldersgate Group and welcomed the publication of the report, “Beyond Carbon”, noting that his audience “probably haven’t had a chance to read this yet, but I have and I can honestly say that it is a hugely commendable piece of work.”

Mr Ainsworth explained that the report set out the challenges ahead if we are to transition to a resource efficient economy and also recognised that the challenges are not purely to be faced by government and regulators: industry and consumers’ engagement with the transition will also be vital.

To watch Mr Ainsworth’s speech, click here.

Sir John Harman, Chair of the Beyond Carbon report provided an introduction to the report.

It argues that resource efficiency, which is “the systematic reduction in the quantity of resource employed to produce goods and services in the economy”, will be one of the key determinants of economic success and human wellbeing in the 21st century. Regardless of the ethical concerns which exist around resource use, a prudent economic policy would promote low resource consumption as a vital part of securing future competitive advantage.

The report suggests that resources must be priced accurately to reflect their true worth, although resource management cannot rely purely on monetary measurement. Moreover, management of one resource cannot be done in isolation, because altering the usage will inevitably impact on another resource.

Although the report is largely theoretical, it suggests practical implications for future economic policy. “We hope what this will do is provoke wide debate and we hope also challenge the parties to think about how they will approach industrial and economic policy, not necessarily environmental policy.”

To watch Sir John’s speech, click here.

Dr Gev Eduljee, Director at SITA, quoted figures from Defra, suggesting that better resource efficiency would save British business approximately £6.4 billion pa.

Dr Eduljee explained that in order to produce a plan for resource efficiency we need to understand how materials flow through our economy through accurate data on imports and exports. Japan provides a good example of how this can be achieved, as they have mapped their flows of materials nationally and regionally, down to the flows of specific materials such as iron scrap. Japan’s data allows them “to actively manage the way in which they are using their resources.”

Dr Eduljee called for the Government “to build a supporting policy framework”, to answer the issues discussed in the report: the need for price signals to reflect the true cost of our national resources, consumer protection and responsibility. Dr Eduljee believes that “we have an ideal opportunity now to convert our existing waste strategy into a resource management strategy and to integrate that into the low carbon transition plan.”

To read Dr Eduljee's presentation, click here.

Dr Jack Frost, Director at Johnson Matthey congratulated the Aldersgate Group “for being just plain brave, really, because this is a very unfashionable, unpopular area.”

He argued that policymakers have historically avoided the issue of resource efficiency, believing that market forces would resolve the problem because scarce resources would become prohibitively expensive. This has been proven wrong and some now call for resources to be priced according to their true cost. Dr Frost challenged this suggestion, for two reasons:

1) the best pricing mechanism we have is the market and that has failed; manually ascribing a price to resources is unlikely to be successful
2) damage is being done to things which are priceless and ascribing monetary value to them will be an inadequate way to tackle the issue.

Pricing the externalities of a resource is also frequently not the priority of the consumer, who is motivated by price and reliability of the product or service on offer. It therefore seems counterintuitive to price a product higher because this makes doing ‘the right thing’, in terms of altering buying patterns, less attractive.

Dr Frost proposed that climate change is the product of a market failure because “In my experience, markets are usually very good at delivering exactly what you asked for; and there’s the problem.” Historically, consumers generally demanded cheap energy regardless of the associated carbon emissions.

To watch Dr Frost’s speech, click here.

Professor Paul Ekins, UCL, proposed that in addition to monetary savings, resource efficiency can stimulate innovation, new technology, economic activity and exports.

Professor Ekins is Chair of the National Industrial Symbiosis Programme (NISP) which pursues the resource efficiency agenda. NISP has given real empirical validity to the estimated savings made possible through its publicly funded resource efficiency programme and has produced figures which show how little the savings have cost the taxpayer: 31p per tonne of diverted landfill; 36p to save a tonne of CO2, and the savings in resources have actually saved businesses money.

Professor Ekins disagreed with Dr Frost’s views on pricing and cited the landfill tax which will reach £72 per tonne by 2013, meaning that by 2018 “landfill will be a problem of the past … it simply won’t make sense to put stuff in holes in the ground when there are alternatives.” However he recognised that “prices are not the whole answer” and need to be supported by regulation,information and procurement policies. Ultimately, “we’ve got to take the physical basis of the economy as seriously as we take its monetary basis.” This will mean utilising every tool: setting prices at effective levels, providing a framework within which markets and prices can operate; utilising public procurement to stimulate a resource efficient market.

To watch Professor Ekins’ speech, click here.
To read Professor Ekins' presentation, click here.

Rt Hon Hilary Benn MP applauded the Aldersgate Group’s report, “because you’ve led throughout on this and what you’re telling us today will help us to move forward and to make progress.”

Mr Benn suggested that “we’ve reached a point in human development where the thing that we call waste needs to be seen for what it really is: a resource.” Mr Benn said that since resources have real value, “we need to create a loop in which things like timber, aluminium, iron and gypsum are treated as assets with lifecycles as near infinite as technology and practicality can make them.”

He suggested, however, that there is cause for optimism. The proportion of household waste that is now recycled has risen from 8% to 37% in the space of 12 years. Businesses are making changes. For example, United Utilities is generating energy from the methane from their sewage works, which powers the sewage works and saves £7 million in the process.

Mr Benn recognised the need for better data and described Defra’s efforts supporting the European Commission, which is setting standards by which resources can be tracked into and out of Europe. Domestic policy also has a role and referring to a forthcoming consultation, Mr Benn suggested: “we [will] say there are certain products we just won’t stick in landfill. Why would you put aluminium in landfill? Why would you put wood in landfill? Plastic, tin, food, paper, glass?” He proposed a date to be set for each material, beyond which it could not be sent to landfill.

Mr Benn concluded that “It is time finally, to close that loop and … confine the word ‘waste’ to the bin of history where it belongs.”

To watch Mr Hilary Benn MP’s speech, click here.