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Time for UK clean growth plans to turn into concrete policies

28th June 2018

Reacting to the publication today of the Committee on Climate Change’s 2018 Progress Report, Nick Molho, Executive Director of the Aldersgate Group said: “Despite the positive progress delivered in the power sector and ambition coming out of government, the UK is not on course to deliver its carbon budgets on time or cost effectively. Private sector investment and supply chain growth in areas such as onshore wind and energy efficiency is being hampered by a lack of clear regulations (such as binding EPC targets), fiscal incentives (such as stamp duty rebates) and market mechanisms (such as subsidy free CfDs for onshore wind). 

The vision set out in the government’s Clean Growth Strategy was a positive one but it must urgently be complemented by clear regulations and incentives that will support decarbonisation in sectors that have shown negligible progress by creating project pipelines to drive energy efficiency improvements and low carbon heat provision in buildings, and the growth of an ultra low emissions vehicles market. Without project pipelines that attract long-term business investment in innovation, supply chains and skills, the UK will miss out on its climate targets and its industrial clean growth ambitions.”   

Nick Molho added: “In the power sector, providing a route to market for onshore wind through a new competitive auction round and providing more clarity on the timing and size of future offshore wind auction rounds would do much to cut power prices for UK heavy industry and support continued cost reductions in renewable technologies.” [1]

[1] See Professor Michael Grubb and Paul Drummond (February 2018) UK industrial electricity prices: competitiveness in a low carbon world. This report set out six policy recommendations to support competitive industrial electricity pricesas the UK continues its transition to a low carbon power system including for the government to improve investment conditions for low-cost renewable energy technologies such as onshore wind.

Committee on Climate Change

No Time to Waste: the government must use Brexit to make the UK a world leader in resource efficiency

19th June 2018

Today, the Aldersgate Group launches a briefing [1] setting out recommendations for the government’s forthcoming Resources and Waste Strategy (RWS), which is expected in the autumn. No Time to Waste: An Effective Resources and Waste Strategy sets out key policy priorities to radically improve the UK’s resource efficiency and maximise the economic, societal and environmental gains that this transition will offer.

Significantly improving the efficiency with which the UK economy uses resources could deliver major benefits, in environment gains and competitiveness. Recent business trials that the Aldersgate Group has been involved in showed that greater resource efficiency could deliver a total net gain in Gross Value Added (GVA) of £76bn by 2030, whilst also improving resource security [2].

To turn this economic and environmental potential into reality, the Aldersgate Group’s briefing urges the government to:

  1. Provide clear policy direction by explicitly linking resource efficiency commitments to existing targets and updating the RWS every five years; supporting the provision of skills and access to information about resource flows for businesses
  2. Set standards to mandate greater resource efficiency in the manufacturing of products, ensuring that these are at least as stringent as those developed in the EU
  3. Establish tax incentives (such as VAT rebates) to encourage businesses to develop resource efficient goods and services and to drive consumer demand
  4. Support an effective regulatory regime for resources and waste through adequate funding for regulators and local authorities who can apply pragmatic regulations and tackle waste crime
  5. Ensure the effective implementation of the Waste Hierarchy through development of metrics that better reflect the best environmental outcome for resources
  6. Optimise producer responsibility to capture more businesses and more products, incentivise businesses to take greater responsibility for the environmental impact of their products and penalise those who fail to engage.

The government has committed to establishing the UK as a world leader in resource efficiency and to doubling resource productivity by 2050. The economy-wide benefits of resource efficiency are well documented [2] and can save businesses money, reduce reliance upon finite materials, provide insulation from materials’ price volatility, protect the natural environment from harm by the processes of material extraction and waste disposal and reduce the UK’s carbon emissions.

To secure these benefits the government’s Resources and Waste Strategy must provide a coherent policy framework that moves beyond the take-make-dispose model of waste management and recognises the need for integrated regulations, product standards and technical and financial support to drive business innovation in developing new relationships, products and processes.

Victoria Fleming-Williams, lead policy paper author and Policy Manager, Aldersgate Group, said: “Resource efficient business models are proven to generate significant financial, material, natural resource and greenhouse gas savings, all of which are essential to deliver the government’s goals in the Industrial Strategy, 25 Year Environment Plan and Clean Growth Strategy. It’s high time for resource efficiency to cease to be an overlooked area of policy and for government to use the public procurement, regulatory and fiscal levers at its disposal to make the UK economy a world-leading resource efficient economy.”

Walter Scheel, Inbound Support Manager, Cement Operations, CEMEX, said: “Adopting resource efficiency practices in the manufacturing industries is a must to stay competitive in a world of finite resources and challenging economic conditions. CEMEX is a strong supporter of the Circular Economy, with its principles embedded in its day-to-day operations and sustainability targets, by co-processing un-recyclable waste streams as alternative fuels in the cement kiln and re-using waste streams as alternative raw materials for cement production. But, the path to travel in this CE journey is still long. Support from the government, through effective regulation and promotion of cross-sectoral collaboration between industries, is required to continue with the shift in mindset to see and treat waste as commodities.”

Caroline Laurie, Head of Sustainability, Kingfisher plc, said: “We warmly welcome the Aldersgate Group’s policy paper, because resource efficiency makes good economic sense for Kingfisher and resonates strongly with what our customers want: smarter use of their cash. But we could go further and faster if we had better policy direction from government; we recommend the Aldersgate Group’s priorities are given maximum consideration.”

John Kenny, Chief Officer for Circular Economy, Scottish Environmental Protection Agency (SEPA), said: “The most successful countries in the 21st century will be resource efficient, circular economies, which function within our planet’s means to support us. Recognising the value of our waste materials and natural resources is the first crucial step in creating a truly circular economy, which keeps materials in use for as long as possible and extracts maximum value from our waste.

Environmental regulators are central to this process, which is why SEPA is actively engaging with businesses who seek innovative solutions to reuse valuable resources, in ways that ensure the environment is protected and waste criminality is prevented.”

Dr Adam Read, External Affairs Director, SUEZ Recycling & Recovery UK, said: "There is so much work to be done to overhaul the UK’s approach to resource management, but the prize will be to spur new levels of productivity and economic competitiveness. SUEZ warmly welcomes the Aldersgate Group policy paper which sets out many of the priority areas that must be tackled. Our own recent report similarly emphasises the need to consider resource management at product design stage, whilst a number of policy interventions and measures are needed to more effectively tackle the complexity of our waste streams.

We firmly believe that a combination of Extended Producer Responsibility, better data, new non-weight metrics and better labelling will allow consumers and the value chain to identify, extract, harvest and reuse materials more easily. We look forward to working closely with the government and the Aldersgate Group on this vital agenda in the coming months.”

Julia Barrett, Director, Willmott Dixon Re-Thinking Limited, said: “The RWS provides an opportunity to move on from our historic preoccupation with municipal waste to target all waste streams prioritised based on economic and environmental benefit.

By using fiscal mechanisms to change behaviour, and government procurement to demonstrate leadership, underpinned by stronger penalties for those who breach the rules, we have a real opportunity to make the UK a world leader in resource efficiency."

[1] More details can be found here.

[2] See Aldersgate Group (January 2017) Amplifying Action on resource efficiency: UK edition. Aldersgate Group was a partner on the REBus project, an EU LIFE+ funded project that demonstrated how businesses can implement resource efficient business models and thus generate, financial, material and greenhouse gas savings. The REBus project ran 30 pilot schemes across a range of market sectors in the UK and the Netherlands, including electrical and electronic products, textiles, construction and ICT. If the savings secured by these pilots were applied across the EU, resource efficient business models could secure an increase of up to £280bn GVA for the EU economy by 2030, a reduction in material demand of 184 million tonnes and a reduction in greenhouse gas emissions of 154 million tonnes CO2eq.

Realign investment decisions to avoid long-term risks

4th June 2018

Responding to the House of Commons Environmental Audit Committee (EAC)’s report today on embedding sustainability in financial decision making, Alex White, Senior Policy Officer at the Aldersgate Group said: “Financial markets are overwhelmingly geared towards maximising short-term returns, to the potential detriment of long-term value creation. [1] However, climate-related risks and pensions are both long term in nature. It is not sound financial management if up to £2tn of UK pension savers’ money [2] is being invested without a strategy to avoid the longer-term risks that could reduce the value of their savings. We therefore endorse the EAC’s recommendation to clarify that pension fund trustees must consider Environmental, Social and Governance risks as part of their fiduciary duty.”

Alex White added: “Better information on long-term risks and risk management strategies is needed to underpin a more forward-looking financial system. The current lack of sufficient, quality data about the financial impacts of climate-related risks and opportunities makes it difficult to accurately calculate investment risk and allocate capital efficiently, even with clearer guidance on fiduciary duties. 

Widespread implementation of the TCFD framework will help businesses, investors and investment intermediaries to develop long-term climate risk management strategies. To ensure comparability between sectors this should be mandatory in the medium term, with a transitional arrangement from current mandatory carbon reporting to minimise burden for reporting entities. Businesses will require greater guidance and technical assistance from government, similar to the European Commission’s proposed Corporate Reporting Lab [3], to help identify best practice and allow for initial trial and error.” 

[1] The Aldersgate Group published a report on green infrastructure investment in March 2018, Towards the new normal: increasing investment in the UK’s green infrastructure which considers changes to financial regulations to encourage long-term investment in green infrastructure and greater mandatory business disclosure of climate and environmental risks to better inform investment decisions, alongside recommendations on targeted public spending to crowd in private sector investment in complex projects and greater policy detail to deliver a cost-effective pipelines of green infrastructure projects.

[2] Converted from USD$2,868bn in 2016. Source: Willis Towers Watson (January 2017) Global Pension Assets Study 2017

[3] European Commission (8 March 2018) Action Plan: Financing Sustainable Growth COM/2018/097