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UK needs ambitious policy on resource efficiency as it prepares to leave EU

23rd January 2017

A new report from the Aldersgate Group out today, Amplifying action on resource efficiency, brings forward new business trials showing that greater resource efficiency could deliver significant economic benefits to the UK. To reap these rewards, the UK must outline the future of its resource efficiency policy, much of which currently comes from EU legislation. 

The new research published by the Aldersgate Group on behalf of the REBus project is based on the successful delivery of 26 business pilots that have delivered £4.89m in financial savings and reduced materials consumption and greenhouse gas emissions by 62,619 tonnes and 1,953 tonnes, respectively. The work has been conducted across the UK and the Netherlands in a range of key market sectors (including electrical and electronic products, textiles, construction and ICT) that are worth an estimated €350bn to the EU economy. 

Based on the results from the pilot projects, the research also finds that adopting resource efficient business models across these key sectors of the EU economy could deliver an increase of up to €324bn of gross value added (GVA) by 2030 to the EU economy. Of this, the UK alone could see up to €88.4bn (approx. £76.9bn) in GVA gains.

The report features learnings from these business pilots as well as several case studies from Aldersgate Group members, including IKEA UK, Sky and Thames Water. The pilots taking part range from small SMEs such as iPower (whose installation of small scale fuel cells in social housing is estimated to save consumers up to 36% on their energy bills, whilst mitigating 3-4 tonnes of CO2 annually) to the Dutch Ministry of Defence (whose textile recovery programme for its military personnel has delivered additional revenue of approximately €750,000 and a savings of over 14,500 tonnes of CO2 annually).

As the UK prepares to leave the EU, the report sets out a range of key policy recommendations for the UK government based on the learnings from these business pilots:

1.    Improving the resource efficiency of the UK economy requires the development of government policy that is backed by all key departments across Whitehall and should feature in the upcoming industrial strategy.

2.    The government should develop standards that require products sold in the UK to be designed in a way that is resource efficient in order to minimise waste and ensure consumers benefit from better quality products that last as long they expect them to. These standards should be as good as or better than what will be put in place under the EU Circular Economy Package to avoid putting British businesses and consumers at a disadvantage.

3.    Government policy should help drive innovation on resource efficiency by helping businesses, especially SMEs, have better access to finance and technical advice.

4.    The UK should build on the success of its landfill tax and promote other fiscal incentives to encourage the re-use of materials, such as through variable VAT rates that favour resource efficient goods and services over their counterparts.

5.    Waste regulations need to be improved to ensure that secondary materials are not classified as ‘waste’, as long as a safe, alternative use can be found for them.

Other recommendations in the report include leading by example through public procurement practices that favour resource saving goods and services and improving the availability of data on how businesses are becoming more resource efficient. 

Steve Wallace, Director of the Aldersgate Group said: “The businesses involved in Rebus have demonstrated that resource efficiency can lead to commercial success. Theirs is an example  that others can follow. The pilots demonstrate that resource efficiency makes business sense and that there’s a double-win given the environmental benefits that coincide with the financial gains. The report that we are launching today sets out the critical actions required to encourage and support more businesses to follow this path, leading to a more resource efficient and therefore more prosperous UK economy.”

Nick Molho, Executive Director of the Aldersgate Group said: “As it prepares to leave the EU, the government should urgently develop a resource efficiency policy that will help replicate the benefits of these pilot projects across the UK economy. This policy should be supported by all key government departments and should include fiscal incentives, product standards on resource efficiency that are as good as or better than what is in place in the EU and working with businesses to remove the financial and technical barriers that stand in the way of innovation."