Ahead of the House of Commons debate on industrial strategy tomorrow, the Aldersgate Group has prepared a briefing on why the industrial strategy should have a strong low carbon element.
Our briefing argues that the industrial strategy must build on the UK's existing areas of competitive strength, such as ultra-low emission vehicles, smart ICT solutions, energy efficiency, offshore wind and project financing of clean energy projects. It must also complement the government's forthcoming emissions reduction plan, include a skills strategy and reflect the shift to a more resource efficient or "circular economy".
The UK and world economy have embarked on a low carbon transition. The UK's competitiveness will be increasingly tied to the development of a strong low carbon goods and services sector to ensure we can take advantage of the opportunities in the international low carbon market, which is estimated to be worth $5.5tn. Taking a low carbon focus can help future-proof the economy and maximise potential for UK plc.
Reacting to the publication of three reports from the Committee on Climate Change (CCC) today, the Aldersgate Group stated that putting in place an ambitious low carbon policy framework is not only needed to meet the UK’s carbon reduction targets but also to strengthen the future competitiveness of its economy.
Nick Molho, Executive Director of the Aldersgate Group, said: “With the unprecedented speed by which the Paris Agreement will be coming into force on 4 November and a record $285bn invested in renewable energy globally in 2015, it is clear that tackling climate change and growing the low carbon economy has leapt up the international agenda. Much of the growth in low carbon investments is coming from countries outside the EU, with China, India, Brazil, South Africa and the US among the top ten global investors. At a time when Theresa May is focused on forging “a bold, new, confident role” for the UK on the world stage, government should take note of this global shift and prioritise the continued growth of its successful low carbon economy.”
Nick Molho added: “With the help of business and civil society, the government should now develop a detailed emissions reduction plan that will attract affordable private sector investment in energy efficiency and low carbon infrastructure to meet the UK’s carbon budgets at least cost and in line with the recommendations of the CCC in its latest reports. In doing so, government should put forward a clear plan to demonstrate the technical and commercial viability of new technologies in complex areas such as decarbonising heat. The upcoming industrial strategy is also an ideal opportunity to complement the emissions reduction plan and consider how targeted government initiatives can maximise growth and employment opportunities in the UK’s low carbon supply chain.”
 Bloomberg New Energy Finance, Global Trends in Renewable Energy Investments 2016: http://bit.ly/1RAJA8w
 Recent ONS figures have highlighted that 96,500 businesses in the UK operated in the low carbon and renewable energy economy in 2014, generating £46.2bn of turnover and employing 238,500 people directly. ONS’ statistics are available at: http://bit.ly/1XyY6ol
Today the number of countries that have ratified the Paris Agreement has passed the 55% threshold of total global greenhouse gas emissions prompting the Paris Agreement to come into force in 30 days.
Reacting to the news, Nick Molho, Executive Director of the Aldersgate Group said: “The unprecedented speed by which the Paris Agreement will have entered into force is a significant achievement for international climate diplomacy. It confirms global political support for the transition to a low carbon economy, something which the world economy has already embarked on with a record $285bn invested in renewable energy last year. As the international low carbon economy continues to grow, the most competitive countries will be those that lead the development and export of energy efficient and low carbon goods and services.
Nick Molho added: “Global leaders must now use the COP22 summit in Morocco to start thrashing out the details of some of the major commitments made in Paris last year. In the UK, the government should respond to the economic opportunity provided by the entry into force of the Paris Agreement by developing an emissions reduction plan that will increase affordable private investment in energy efficiency and low carbon infrastructure as well as use the industrial strategy to maximise growth and employment opportunities in the low carbon supply chain.
Reacting to Theresa May’s announcement at the United Nations General Assembly in New York that the UK would initiate domestic proceedings to ratify the Paris Agreement to tackle climate change, the Aldersgate Group welcomed the UK’s move to join the unprecedented momentum to formally ratify the agreement.
Nick Molho, executive director of the Aldersgate Group of businesses said: “Theresa May has shown welcome leadership on the world stage today by announcing the UK’s upcoming ratification of the Paris Agreement. Together with the government’s recent approval of the fifth carbon budget, this decision will help the UK maintain an influential role alongside other countries such as China and the United States in international efforts to tackle climate change and help the UK secure an important share of the growing global low carbon economy, which was recently valued at $5.5tn”.
He added: “To deliver on the Paris Agreement and the UK’s own climate targets, the government’s focus should now be to put together a national policy framework that will increase affordable private sector investment in low carbon technologies, accelerate their reduction in cost and grow the UK’s low carbon supply chain, which already employs over 238,000 people directly. A detailed emissions reduction plan and an industrial strategy that supports low carbon investment will be critical in delivering these objectives.”
 In 2014, 96,500 businesses in the UK operated in the low carbon and renewable energy (LCRE) economy, equivalent to 4.4% of all non-financial businesses. This activity generated £46.2bn turnover and employed 238,500 full-time equivalent (FTE) workers. These figures from the ONS are the final estimates of the direct low carbon and renewable energy economy in 2014. Estimates of indirect LCRE activity will be published later this year.
A new report from the Aldersgate Group out today, Setting the pace: Northern England’s low carbon economy, shows how low carbon projects in the North of England are contributing to increased economic activity in the region. Supporting the continued growth of the North’s low carbon economy should be a priority for national and regional government.
The report explores how low carbon investment is already creating jobs and developing supply chains, generating clean energy, protecting infrastructure and supporting skills development and innovation in the region. It also shows that the low carbon economy could deliver greater levels of growth to the region in the future. The report features a range of low carbon projects across the North, including a cluster of low carbon investment in Hull from Siemens, Associated British Ports and DONG Energy, shared emission reduction infrastructure creating a low emission industrial zone in the Tees Valley, and peatland restoration by Yorkshire Water in the Pennines.
Regeneration in the North has focused upon improved transport links through the Northern Powerhouse agenda, City and Growth deals and devolution deals. However, the Aldersgate Group argues that supporting the continued growth of the green economy also has a key role to play.
The report points to the 136,000 jobs in the North which have already been created by the low carbon sector. It argues that, while businesses are already investing in low carbon projects, the extent to which the low carbon economy bolsters growth in the North could become even more meaningful in the coming years with reinforced support at both the national and regional levels.
Joan Walley, Chair of the Aldersgate Group, said: “We’ve seen from the great case studies in this report that the low carbon economy is supporting economic growth in the North of England as well as helping deliver the UK’s climate change targets. Both national government and devolved local authorities should build on these successes and continue to champion investment into low carbon infrastructure in the North so that it can continue setting the pace.”
Brent Cheshire, UK Country Chairman at DONG Energy said: “We are beginning to see the benefits of sustained investment in renewable energy in the North of England. It is not only helping to regenerate communities which have lost their traditional industries, but building a robust supply chain and attracting international manufacturers to locate plants in the UK.”
Matthew Knight, Director of Strategy and Government Affairs at Siemens said: ““The world must decarbonise, the question is not ‘if’ but ‘when’. The most jobs will go to those countries who get their act together first. A clear low carbon industrial strategy now will help Britain grow its manufacturing base and become a major exporter of low carbon technologies such as offshore wind.”
In this report, the Aldersgate Group sets out some key recommendations for government to support the green engine of the Northern Powerhouse:
 The Department for Business, Innovation and Skills (2015) The size and performance of the UK low carbon economy
The Aldersgate Group welcomes the incoming Prime Minister, Rt Hon Theresa May MP and looks forward to working with her and her new ministers. Mrs May’s rapid appointment is welcome for businesses that have faced a high degree of uncertainty following the political turmoil in recent weeks.
The Aldersgate Group urges Mrs May to safeguard the UK’s growing low carbon economy, which generated a turnover in excess of £46bn in 2014 and which has become a key driver of jobs, skills and investment in parts of the country that need it the most. A key priority for Mrs May’s government should the development of a detailed Emissions Reduction Plan by the end of 2016. This will be key to drive business investment in the UK’s low carbon infrastructure to meet the UK’s climate targets and will put British-based businesses in a strong position to tap into the rapidly growing global market for low carbon goods and services that was valued at around $5.5tn.
As highlighted in yesterday’s report from the Committee on Climate Change, Mrs May’s government should also put forward in the near future a 25 Year Plan for the Environment. This will be essential to improve the state of the natural environment on which our economy and society depends and ensure the UK’s infrastructure, businesses and citizens are better prepared to cope with the effects of climate change, such as increased flooding and heat waves.
Nick Molho, Executive Director of the Aldersgate Group said: “Theresa May and her new government have a lot to do. Clearly, negotiations for the UK’s exit from the European Union will be a priority, but there are opportunities over the next few months to stabilise the UK’s policy landscape and ensure that businesses investing in our low carbon and environmental sectors can continue to do so. We urge Mrs May to provide continuity and leadership for the UK’s low carbon economy.”
Nick Molho added: “For forty years, European environmental legislation has provided a “backstop” for businesses considering investment in the UK, providing policy continuity beyond the domestic five-year parliamentary cycle. The new government’s priority must be to restore that confidence as swiftly as possible through ambitious and stable environmental policy.”
 Recent ONS figures have highlighted that 96,500 businesses in the UK operated in the low carbon and renewable energy economy in 2014, generating £46.2bn of turnover and employing 238,500 people directly. ONS’ statistics are available at: https://www.ons.gov.uk/economy/environmentalaccounts/bulletins/finalestimates/2014
 The Department for Business, Innovation and Skills (2015) The size and performance of the UK low carbon economy
 Committee on Climate Change (2016), UK Climate Change Risk Assessment Evidence Report: https://www.theccc.org.uk/2016/07/12/new-report-provides-authoritative-scientific-assessment-of-climate-change-risks-to-uk/
Reacting to the publication today of the Committee on Climate Change’s Risk Assessment Report, Nick Molho, Executive Director of the Aldersgate Group said: “Today’s report from the CCC shows that climate change will increasingly have disruptive impacts on the UK’s infrastructure, businesses and the state of its natural environment. In addition to developing a clear plan to cut its emissions of greenhouse gases to meet its climate targets, the government must strengthen its existing National Adaptation Programme to improve the state of its natural environment, ensure that its infrastructure is as resilient to extreme weather events as possible and build greater awareness in businesses and local authorities of the likely impacts of climate change in the years to come”.
Nick Molho added: “Improving the state of the UK’s natural environment can help the UK be better prepared to cope with the impacts of climate change, by for example protecting infrastructure and communities from risks such as flooding through the restoration of coastal wetlands , to supporting future food production in a changing climate by improving the fertility of agricultural soils . This should be a priority for the government’s upcoming 25 year Environment Plan”.
Coming a few days after the UK’s referendum on membership of the European Union increased investment uncertainty, the Aldersgate Group said that the government’s acceptance of the fifth carbon budget at the level recommended by the Committee on Climate Change is an important indication of the UK’s desire to continue growing its low carbon economy.
Nick Molho, Executive Director of the Aldersgate Group, said: “The adoption of the fifth carbon budget is an important step forward. It shows that the UK wants to stay on track in meeting its long-term climate change targets in a way that’s cost effective and also signals an intent to increase investment in low carbon technologies. At a time when global investments in clean technologies are rapidly growing in countries such as China, India, the United States and South Africa, it’s important that the UK keeps growing its low carbon economy to remain competitive on the global stage. As we are seeing with the offshore wind manufacturing investments being made in Hull, growing the UK’s low carbon economy can bring investment and skilled employment opportunities to those parts of the country that need it the most.”
Nick Molho added: “Business now looks towards the government’s Emissions Reduction Plan later this year to set out the specific policy drivers that will help stimulate investment in low carbon generation, energy efficiency projects, low carbon heat and low emission transport during this Parliament. This is an opportunity for the government to set out a strategy that businesses will respond to with affordable investment and innovation in low carbon technologies.”
Reacting to Secretary of State’s Amber Rudd speech this morning, the Aldersgate Group stressed that continuing to tackle climate change and build a strong low carbon economy is in the UK’s environmental and economic interest.
Nick Molho, Executive Director of the Aldersgate Group, said: “Coming a few days after the outcome of the EU referendum, it is positive to hear Amber Rudd highlight the importance of continuing to tackle climate change. As shown by the 195 countries that adopted the Paris Agreement in December, climate change is an issue that is of major concern to leaders around the world. The world economy is also seeing an important shift towards low carbon technologies, with a record $285bn invested in renewable energy in 2015  and countries such as China reducing their production of coal.
It is in the UK’s environmental and economic interest to stay in touch with these global trends, remain actively involved in international climate change diplomacy and support the growth of a strong national low carbon economy that already employs over 238,500 people directly. ”
Following the outcome of the UK’s referendum in favour of leaving the European Union (EU), the Aldersgate Group argues that it is in the UK’s interest to continue to lead on environmental issues and grow the UK’s thriving low carbon economy.
Noting that environmental issues featured very little on both sides of the EU referendum campaign, the Aldersgate Group said that the government should continue its work to improve the state of the natural environment at home and ensure the UK economy remained competitive at a time where the global market for low-carbon goods and services is rapidly growing.
Nick Molho, Executive Director of the Aldersgate Group said: “Environmental and low carbon economy issues were largely overlooked during the EU referendum campaign. Yet, both within and outside the EU, the UK has often taken a leading position on tackling environmental issues such as climate change. Today, its low carbon and renewable energy economy has a turnover in excess of £46bn, employs over 238,000 full time workers directly and British businesses are leading exporters of clean technologies such as ultra-low emission cars.
“With serious environmental issues facing the world economy and with low carbon investment rapidly growing globally, it is in the UK’s economic and environmental interest to engage positively in international negotiations on climate change and other environmental issues and support the growth of its low carbon economy through national policy. Showing its commitment to the Climate Change Act by adopting the fifth carbon budget and a robust carbon plan to deliver it and making rapid progress on a 25 year plan to improve the state of the UK’s natural environment must now be essential priorities for the government.”
Reacting to today’s Queen’s Speech, Nick Molho, executive director of the Aldersgate Group said: “As part of its legislative agenda for the coming year, we urge the government to build on its achievements at the Paris climate change summit and put forward a package of measures that will accelerate affordable investment in energy efficient and low carbon infrastructure in the UK. Rapidly adopting the fifth carbon budget recommended by the Committee on Climate Change and putting forward a comprehensive carbon plan by the end of 2016 must be a key part of this.”
Following the publication of a report today by the Energy and Climate Change Select Committee, Setting the fifth carbon budget, the Aldersgate Group stressed that an unequivocal adoption of the fifth carbon budget recommended by the Committee on Climate Change (CCC), backed up by a clear plan to deliver it, was essential to cut emissions cost-effectively and support the continued growth of the UK’s low carbon economy.
Nick Molho, Executive Director of the Aldersgate Group said: “Last December, the UK played a commendable role in the success of the Paris climate change agreement, which was signed by over 170 countries just a few days ago. Now is the time to translate international commitments into a new set of national policies to guide cost-effective investment in energy efficient, low carbon transport and clean energy technologies over the next 15 years.
Adopting the CCC’s fifth carbon budget recommendations, which are based on the minimum levels of emission cuts the UK needs to deliver out to 2032 if it is to meet its long-term targets affordably, is an important part of this.”
Nick Molho added: “With China having increased its investment in clean energy by 120% over the last five years and the international low carbon goods and services sector already worth $5.5tn in 2015, it is clear that the international low carbon economy is rapidly growing. It is key to the UK’s future economic competitiveness that it continues to support the growth of its low carbon economy whilst also taking care to provide the necessary support to its energy intensive sector during this transition.”
Ahead of the signing ceremony at the United Nations’ headquarters tomorrow (22 April) of the Paris Climate Change Agreement, the Aldersgate Group said that the signing of the Agreement was an important and positive step forward but that it had to be rapidly followed by regional and national policies to increase investment in low carbon technologies.
Nick Molho, Executive Director of the Aldersgate Group said: “Since the Paris Climate Change Summit concluded last December, we have seen a steady increase in business commitments and initiatives to reduce greenhouse gas emissions and grow low carbon investments. National governments need to build on this and the momentum provided by the signing ceremony to rapidly ratify the Paris Agreement and put in place the national policies that will help meet the goal of limiting global temperature increases to well below 2C.”
“In the UK, this will require a rapid implementation of the fifth carbon budget recommended by the Committee on Climate Change, together with a clear plan to support cost-effective business investment in the energy efficient and low carbon technologies that the UK needs to cut emissions and modernise its infrastructure. It will also require a clear strategy to support the UK’s energy intensive industries in the transition to a low carbon economy and ensure that they have a role to play in the supply chain.”
Nick Molho added: “We have to remember that delivering the Paris Agreement on the ground isn’t just important for the environment, it’s essential to prevent the significant negative impacts that climate change will have on the world economy if left unchecked. The move towards a low carbon economy can also open up significant economic opportunities, with the international low carbon goods and services sector already worth $5.5tn in 2015”.
With two weeks to go until the London mayoral election, the Aldersgate Group has today sent a letter to each of the mayoral candidates with four key business recommendations to help London tackle its environmental challenges such as air pollution and grow its low carbon economy.
Building on the recent event hosted by AG in March, we ask the next Mayor of London to prioritise the following areas:
The full letter is available to download.
Reacting to the publication today of the Environmental Audit Committee’s report, EU and UK Environmental Policy, the Aldersgate Group said that whilst improvements needed to be made, EU environmental policy was on the whole positive for UK businesses.
Nick Molho, Executive Director of the Aldersgate Group said: “EU environmental policy is important for UK businesses in that it has helped introduce similar environmental rules that apply to all businesses active in the Single Market. This has created more of a level playing field for UK businesses and reduced the cost and complexity associated with complying with different regulations in different Member States.
The EU’s common environmental and product standards have also sent clear market signals to businesses, which have helped both create market opportunities for businesses across the Single Market and improve environmental sustainability in certain markets such as the energy efficiency of consumer products and the sourcing of timber.”
Nick Molho added: “EU environmental policy could be improved in a number of areas such as by improving the common implementation of rules in different Member States, removing inconsistencies in the EU’s waste legislation and ensuring that new policies are developed in a way that better takes into account the EU’s overall environmental objectives. However, the UK and its businesses are likely to be better placed to make these improvements and influence the EU’s future environmental priorities if the UK remains part of the EU.”
Reacting to Secretary of State Amber Rudd’s speech later today on the importance of the EU internal energy market, Dame Fiona Woolf DBE, Energy Lawyer and Partner with CMS Cameron McKenna LLP and Honorary President of the Aldersgate Group said:
“Secretary of State Amber Rudd is right to highlight the contribution that the EU’s internal energy market makes towards the affordability and security of the UK’s electricity system. Co-operation within the EU isn’t just important for energy security; it is also important to tackle environmental issues such as climate change cost-effectively. EU energy and climate policy has an important role to play in helping the UK build a low carbon electricity system in a way that is secure and cost-effective, such as through building more links like the Britned interconnector between the EU’s national power grids.”
As part of the government’s focus on developing “long term solutions to long term problems”, it must build on the announcements made today to fully restore investment confidence in the low carbon sector by rapidly adopting the Committee on Climate Change recommendations on the fifth carbon budget and putting in place a clear strategy by the end of the year to meet these budgets in a way that is economically beneficial.
Nick Molho, Executive Director of the Aldersgate Group said: “The government’s commitment to auction Contracts for Difference of up to £730 million during this Parliament for up to 4GW of offshore wind or other less established renewables is a positive step forward. This gives the offshore wind industry some confidence to continue to invest in new projects and drive down costs, although a more ambitious level of deployment would accelerate cost reductions and deliver greater supply chain benefits.
But much more still needs to be done in order to address the concerns of investors recently highlighted by the Energy and Climate Change Committee. We now look towards the government’s decision on the fifth carbon budget, the Autumn Statement and its emissions reduction plan to provide confidence that the UK is on the right track to decarbonise cost effectively. We will need a clear strategy to increase investment in energy efficiency and low carbon heat, support the deployment of mature low carbon generation technologies such as onshore wind and solar and the demonstration of carbon capture and storage technology.”
Alongside the Budget, the government has published its response to the consultation on business energy efficiency. In response to this Nick Molho added: “It is great to see HM Treasury’s support for retaining mandatory greenhouse gas reporting. As the Aldersgate Group has repeatedly highlighted and the government has recognised, this requirement improves business productivity, provides more transparent information to investors and will help build London as a centre of global green finance. Businesses have been very clear about the importance of retaining the current standards.”
Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, the £290 million asset manager, also commented on today’s update about mandatory carbon reporting requirements: “We welcome HM Treasury’s acceptance of the importance of retaining mandatory carbon reporting standards for UK listed companies, as outlined in today’s consultation response. With the decision, the UK remains aligned with international sentiment, which is placing greater emphasis on sustainable business models following last year’s climate conference in Paris and the creation of the Financial Stability Board’s climate disclosure task force. Mandatory standards are based on hard business logic and enable us to make better informed investment decisions over the longer term because sustainable companies are better performers over longer horizons.”
In a context of more sluggish economic growth forecasts but growing international momentum to tackle environmental challenges such as climate change, this Budget must be one that supports the continued growth of the UK’s low carbon goods and services sector in a way that is cost effective and economically beneficial, recognising the £122bn contribution the low carbon sector already makes to the British economy.
Following the government’s consultation on business energy efficiency policies, we urge the government to confirm on Budget Day that it will keep the UK’s carbon reporting requirements for listed companies in place. As made clear in an open letter from several businesses last week, these requirements have been essential in driving greater business productivity and providing material information to institutional investors to guide their fund management decisions. Removing or weakening them would make no economic or environmental sense and would go against the growing international trend towards greater corporate disclosure of greenhouse gas emissions.
The Budget is also an important opportunity to provide much awaited clarity on the size of the levy control framework to allow the continued deployment, cost reductions and supply chain growth of low carbon technologies such as offshore wind. At a time when the government is reviewing the advice from the Committee on Climate Change on the fifth carbon budget and developing its emissions reduction plan, we hope to see greater clarity on the support that will be made available to improve the energy efficiency of the UK’s building stock and demonstrate the commercial viability of carbon capture and storage technology in the UK.
In today's edition of The Independent, the Aldersgate Group and 16 other signatories from leading businesses and NGOs call on government to ensure that the UK's market-leading mandatory carbon reporting requirements are retained.
Nick Molho, Executive Director of the Aldersgate Group said: “The UK’s mandatory carbon reporting rules require listed companies to report every year on their global greenhouse gas emissions in the directors’ report of the annual report. The broad scope of the reporting requirements is important as it provides a far more comprehensive picture of a company’s resource efficiency beyond just carbon emissions from the consumption of energy, which only account for a limited part of the emissions of some businesses. The fact that the reporting has to be signed off annually at a senior level also means that boards of directors become far more engaged behind initiatives aimed at driving greater energy and resource efficiency in their business, thereby improving their productivity whilst reducing environmental impact."
Nick Molho added: "Critically, the requirements provide institutional investors with material information about listed companies’ greenhouse gas emissions in a way that is reliable, standardised and comparable, where in the past information was provided through different voluntary initiatives using different metrics. This information is key to helping them better understand financial risks linked to climate change and guide their fund management decisions.”
The full letter is available online.
Reacting to today’s publication of the Energy and Climate Change Select Committee’s report on investor confidence in the energy sector, the Aldersgate Group urged the Government to rapidly adopt the fifth carbon budget as set out by the Committee on Climate Change and work with businesses from across the economy to deliver a compelling Carbon Plan to stimulate business investment in low carbon and energy efficient technologies. The Group highlighted that this would also help bring the UK’s domestic climate and energy policies in line with the positive work done by the UK government that helped deliver an international climate deal at the recent Paris COP 21 summit.
Nick Molho, executive director of the Aldersgate Group, said: “We have to recognise that the Government has faced some important cost pressures leading to some of its recent policy decisions in the low carbon and energy efficiency sector. But the Energy and Climate Change Select Committee is right to highlight the recent dip in investor confidence in the sector. What has been particularly damaging is the lack of an alternative plan accompanying recent policy changes, rather than the changes themselves.
Confidence is essential to attracting investment at sufficient scale and at the lowest possible cost in the energy efficiency and low carbon sector and needs to be a priority for the government in 2016. A rapid adoption of the fifth carbon budget, together with a clear plan to increase investment in energy efficiency, low carbon generation and low carbon heat as well as to support the demonstration of carbon capture and storage technology would be an important step forward in re-establishing that confidence.”