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.”
Civil society and business groups have set 5 tests against which any prospective buyers of the Green Investment Bank will be assessed, calling on them to commit to measures that will ensure it continues to act and invest in the public interest.
The Green Investment Bank ‘Public Interest Prospectus’, launched today, sets out the 5 tests which any prospective owners must pass.
Prospective buyers of the GIB should commit to:
Nick Molho, Executive Director of Aldersgate Group said: “What has made the Green Investment Bank unique to date hasn’t just been its focus on green infrastructure but the fact that it has been a step ahead of the market, by supporting projects that weren’t attracting sufficient levels of private sector investment. This focus on supporting novel projects, such as complex NHS energy efficiency schemes and offshore wind projects using cutting-edge technology, has allowed the bank to make a real difference by supporting innovation, accelerating cost reductions and delivering supply chain benefits to the UK.
It is in the interest of both the future owners of the GIB and the UK public that funded its creation for the bank to retain its market strength in these areas and to continue to provide genuine added value to the UK’s green finance sector.”
Karla Hill of ClientEarth said: “The GIB is a unique institution, integral to supporting the UK’s cost-effective transition to a low-carbon economy. In the coming years we will need investment in our most important green projects – which is why we have to protect the GIB and its special character now.”
Sepi Golzari-Munro, Head of the UK Programme at E3G said: “To stand any chance of winning civil society and business support, any new investors must commit to maintaining the GIB’s integrity as a single, functioning institution and to deploying at least £4bn of new GIB capital in the UK’s low carbon economy over the next three years. Nothing less will do. “
Angela Francis, Economist at Green Alliance said: “If the GIB can continue to provide first of a kind finance to green projects it will remain a powerful institution, but if this sale leads to the bank losing its distinctive leadership role in market, it will be written up as an experiment that failed”
Doug Parr, Policy Director at Greenpeace UK said: “If Government abandons giving the Green Investment Bank the clarity of purpose that made it such a special institution, then the investors who take it over will need to step up to the plate.”
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.”
Reacting to the announcement on the start of the sale process for the Green Investment Bank (GIB), the Aldersgate Group welcomed the government’s rethink to create a special share in the GIB but reiterated that maintaining the GIB’s focus on novel projects under its future ownership was key to its long-term value added and success.
Nick Molho, Executive Director of the Aldersgate Group said: “What has made the GIB unique to date has been its ability to be a step ahead of the market by supporting projects that weren’t getting sufficient support from mainstream private investors such as complex energy efficiency projects and offshore wind farms using new technologies. This focus on projects that are both green and novel has allowed the GIB to help tackle important market failures in the area of green infrastructure. Identifying investors with a clear plan and commitment to maintain this current focus must be an important part of the GIB sale process.”
Reacting to the Prime Minister’s announcement today on an EU referendum to take place on 23 June, the Aldersgate Group issued the following statement on the importance of EU environmental legislation for UK businesses.
High quality environmental legislation is good for the economy, for business and for citizens. EU environmental legislation has provided to date important benefits for UK businesses and the environment. Many environmental issues such as climate change and air quality are transnational in nature and other environmental issues, whilst not always or necessarily transboundary (e.g. water pollution), are common to many member states.
Whilst some improvements must be made, EU legislation has helped tackle some of these challenges in a more environmentally and economically effective manner by pooling the resources of different member states to address a particular environmental concern and driving environmental and business innovation across the EU. Membership of the EU has also strengthened UK diplomatic efforts in international negotiations such as recently at the climate change summit in Paris.
The UK has at times been a major player in the improvement of EU environmental legislation such as on emissions trading and industrial pollution; however, EU legislation has often resulted in standards that have resulted in a higher degree of environmental protection than would have otherwise applied in the UK. For instance, EU legislation has been the principal driver of rising UK standards on air and water pollution with major health benefits - the Bathing Water Directive has driven real improvements in beach water quality and benefitted tourism. The Environment Agency has stated that the Landfill Directive has changed for the better the way that waste is managed in the UK. The Birds and Habitats Directives have led to substantial improvements in the standards of protection for habitats and species in the UK.
In addition to addressing environmental issues cost-effectively, EU legislation has resulted in the introduction of common environmental and product standards which have been beneficial to UK businesses by providing more of a level playing field across different member states and providing clear market signals on the standards that products and services being developed on the Single Market need to meet. These standards have also often resulted in cost reductions for consumers, for instance DECC predicts that tighter efficiency standards for household energy appliances are expected to deliver an average annual saving of around £158 per household in 2020 (including around £25 per household through more efficient TVs and set-top boxes, £25 through more efficient consumer electronics and around £20 through more efficient lighting).
There are undoubtedly areas of European environmental legislation that could be improved and made more effective, in particular through more consistent implementation across member states and a greater focus on looking at environmental issues as a whole when developing policy to avoid unintended impacts. This could help avoid instances where some areas of EU legislation undermine its environmental objectives such as the European Court of Justice ruling last June that the UK’s reduced 5% VAT rate on energy-saving products was in breach of EU laws. However, the UK is most likely to have some influence in supporting these improvements and ensuring that the interests of its businesses are recognised and promoted if it continues to be part of the EU.
Should the UK leave the EU, the government must ensure that the UK continues to abide by environmental standards of at least a similar threshold to those contained in existing European legislation and applied across the Single Market. This is particularly the case in key areas such as product efficiency, fuel efficiency, industrial pollution and climate change. However, no clarity has been provided to date as to how this would be done and how the future development of these standards and legislation could still be influenced by the UK in the event that it was no longer part of the EU.
The positive conclusion of the climate change negotiations in Paris is a fitting reflection of the unprecedented political and business momentum witnessed at the summit, which marks the start of increased global efforts to tackle climate change. The UK government, which should be given credit for its impactful climate diplomacy in recent years, must now rapidly address the incoherence of its domestic energy policy and follow the positive outcome in Paris with a clear plan to meet the UK’s own carbon budgets.
The Aldersgate Group welcomed today the progress achieved at the climate change summit in Paris. As was to be expected, the Paris summit has not delivered a deal that will immediately prevent warming of more than 2°C and there are still some important issues that will need to be worked on in months to come. But it provides a very important step forward in international climate policy, by delivering an international political agreement to tackle climate change, which can be made more ambitious over time.
Nick Molho, Executive Director of the Aldersgate Group said: “Businesses have been very vocal throughout the summit about the need for a strong climate deal. They are fully aware of both the high costs of inaction on their bottom lines but also the huge opportunities on offer in the transition to a low carbon economy. Businesses want to be at the forefront of tackling climate change, develop much needed low carbon infrastructure, continue to reduce the cost of new technologies and create new jobs.
“The Paris summit provides a comprehensive framework that can now be built on and represents a genuine step forward for international climate diplomacy. The inclusion of a review mechanism that will allow countries to increase their emission cut pledges in the near future, the provision of more finance to support developing countries’ efforts to adapt to climate change and cut their own emissions and the reference to a long term goal for slashing carbon emissions in the world economy are key to supporting long lasting action on climate change. Business will now expect national governments to put in place credible plans to deliver on their pledges and continue diplomatic efforts to ensure ambition is ramped up in the future.”
Nick Molho added: “The UK’s efforts on climate diplomacy over several years have helped influence other large emitting countries to take action on climate change. If the UK wants its weight to continue to be felt on the international stage, it needs to ensure that policies are put in place to deliver on its own domestic climate targets. The government should now act swiftly to deliver a plan for meeting the fourth and fifth carbon budgets.”
A range of Aldersgate Group business members welcomed the final deal and progress on climate change action reached in Paris.
Mike Barry, Director of Sustainable Business at Marks and Spencer said: “COP21 has crystallised the enormous potential of business to help create a low carbon future. Its ability to innovate, scale solutions and engage people can complement the hard work of policy makers and other stakeholders globally. The UK must seize the opportunity to be at the centre of this global low carbon business revolution which is creating markets, growth and jobs.”
Dax Lovegrove, Director of Sustainability and Innovation at Kingfisher plc said: “The COP 21 deal is a pivotal step forward. We look forward to future UK policies flowing out of this international agreement to decarbonise the UK economy at the required pace, to drive greater consumer demand for low carbon goods and services, and to improve the energy use across the country's housing stock.”
Steve Waygood, Chief Responsible Investment Officer at Aviva Investors said: "The outcome of the Paris climate summit is a genuine step forward. The quantity, quality, and ambition of the debate on sustainable finance was hugely improved on previous COPs. There was much greater recognition of the trillion dollar scale of impact of the market failure; a grown up discussion on legal or fiduciary duties of investors, and genuine recognition that we need a material carbon price. COP21 will not solve all these issues, but it would have been unreasonable to expect it to do so. Perhaps the most exciting concrete development is that internationally comparable, consistent and complete carbon data took a huge step forward with the unveiling of the FSB industry led task force on carbon disclosure.
“We believe that the political conditions are now there to change the policy environment and redouble global efforts to tackle climate change. For this summit to be a lasting success, it will need to be followed however by continued efforts to increase international ambition and real action on the ground to cut emissions domestically. In the UK in particular, the government will have to rapidly provide a credible plan for meeting its carbon budgets and ensure that it continues to encourage major companies to disclose their greenhouse gas emissions and then encourage investors to report transparently on the greenhouse gas emissions of the companies in their portfolios.”
Matthew Knight, Director of Strategy and Government Affairs at Siemens Plc said: “The Paris agreement is unprecedented; never before have so many countries agreed to take such a level of action on a common issue.
Siemens has long recognised the seriousness of climate change and is committed to working with other businesses and countries, to minimise and manage effects on the climate. That’s why Siemens engaged in the Paris conference and recently announced our own commitment to decarbonise fully by 2030.
Lessons from the previous conference in Copenhagen have been learnt; government and businesses worked in advance of the summit to clarify our positions, to maximise the chance for agreement. There is still a long way to go. The governments need to deliver on their promises and will need to go further to meet the 1.5 degree target.
But, national governments have been joined by cities and businesses, each making their own commitments. And each will be held to account by future generations. Therefore, the progress made at COP 21 Paris has been a great step forward.”
Niall Dunne, Chief Sustainability Officer at BT Group said: “At BT, we’re delighted that the negotiations at COP21 have achieved this agreement and significant step towards a sustainable future. We hope that the spirit of collaboration that has been centre stage these last few weeks is continued as governments, business and civil society identify actionable ways to implement the details of the agreement.
As a net positive company, BT along with our suppliers and customers around the world, knows that the business case for a low carbon economy is clear and we’ll continue to innovate, collaborate and scale up to use the power of communications to make a better world.”
David Symons, Environmental Director at WSP | Parsons Brinckerhoff said: “It’s strong testimony to the global process that 187 countries from the UK to the USA, from Canada to China have committed to manage their greenhouse gas emissions as part of the Paris process. Business, cities and governments now need to play their part to both implement these plans, and also to get ready for the weather extremes that will still happen.
"A hot day in London will be up to 10°C hotter than today by the end of the century, sea levels 1m higher and rainfall much heavier. Getting our buildings, transport networks and business supply chains ready for the future is a huge challenge – and is one which needs action and investment now.”
Sue Riddlestone OBE, CEO & co-founder of Bioregional said: “An outstanding outcome of COP21 is that more than 180 countries have committed to plans (INDCs) to reduce their carbon emissions. This will feed through into national strategic plans and policies which will give business the framework we need to work with Governments to deliver on what the whole world wants, a stable climate.”
The Aldersgate Group welcomed the EU Commission’s intent to drive much greater resource efficiency across European economies with the publication of its Circular Economy Package today. However, whilst the package touches on most of the right issues, it now needs to be much clearer in terms of how it will promote a significant increase in the reuse of secondary materials that is needed to deliver an EU economy that is competitive and fit for the 21st century.
Nick Molho, Executive Director of the Aldersgate Group said: “The Commission should be given credit for having reintroduced a new circular economy package today, having made it a priority across departments and showing a desire to drive much greater investment in the EU’s circular economy. All the businesses we work with are already innovating to find new ways to be more resource efficient and competitive but a strong circular economy package could help them go much further by removing barriers and introducing smart incentives.
The EU Commission’s own research found that greater resource efficiency could save EU businesses around €630bn a year by 2030 and just yesterday, Green Alliance found that the move to a circular economy could also help deliver net employment benefits across the EU. The business case for a strong circular economy package is compelling and goes far beyond the important environmental benefits.”
The Aldersgate Group, which is working closely with other UK and EU organisations as part of the Alliance for Circular Economy Solutions, stressed however that much more needed to be done to make the package a success. Whilst today’s package touches on the right issues and rightly focuses on increasing resource efficiency across the whole product lifecycle, a lot more detail was needed in order to boost the use of secondary materials across the economy. In particular, using the Commission Ecodesign working plan to develop standards that would facilitate the disassembly and repairability of products beyond just electronics will be important as well as a clear timetable for introducing quality standards to address consumer confidence in secondary goods.
Nick Molho added: “The package today provides a decent starting point but it is not yet detailed enough to give the resource efficiency makeover the EU economy needs. The package needs a clear overall resource efficiency goal, clear standards to facilitate material reuse across all key products, quality standards to boost consumer confidence in secondary materials and a clear strategy to favour those businesses that are more resource efficient through public procurement policy.
The Aldersgate Group and its business members stand ready to work with the EU Commission and Parliament to build on today’s positive announcements and thrash out the important detail that will determine whether or not the package will be a success.”
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.”
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.”
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.
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.
Following the publication of the Committee on Climate Change’s report, Power Sector Scenarios for the fifth carbon budget, the Aldersgate Group urges the Government to rapidly extend or replace existing low carbon support policies, the vast majority of which are expiring during the course of this Parliament.
The Aldersgate Group, whose corporate members span a wide range of economic sectors and have a global collective turnover in excess of £300bn, urged the Government today to provide greater policy clarity to support continued investment in the UK’s future low carbon power and energy efficient infrastructure, accelerate cost reductions and deliver supply chain benefits.
Nick Molho, Executive Director of the Aldersgate Group said: “UK low carbon policy has helped deliver many successes in recent years from the falling cost of onshore wind, solar PV and offshore wind to supporting the rapid growth of the UK’s low carbon economy which delivered a turnover of £122bn in 2013 and employs 460,000 people. But the low carbon sector is now at a crossroads, with urgent clarity needed in particular on the funds available to support investment in low carbon power stations in the 2020s and on the support mechanisms that will help improve the efficiency of the UK’s building stock.”
The Aldersgate Group added that the need for long-term policy signals extended beyond the power sector and affected other key infrastructure areas such as low carbon heat and low emission vehicles, where support policies are all due to expire within the term of this Parliament.
Nick Molho added: “In setting out future policies to support investment in low carbon infrastructure, cut its cost and deliver supply chain benefits, the government should also provide continued support to those energy intensive industries at risk of competitiveness impacts to ensure they can play a role in the UK’s future low carbon supply chain.”
Following the publication of the Committee on Climate Change’s report today on the scientific and international context for the fifth carbon budget, the Aldersgate Group urged the UK government to continue its effort to cut carbon emissions and grow its low carbon economy amidst increasing international action on climate change.
Following an increase in ambition in the climate change policies of key emitting countries such as the US and China, the Aldersgate Group highlighted that international action to tackle climate change was strengthening despite the fact that current pledges to cut emissions were still insufficient to prevent dangerous levels of climate change.
Nick Molho, Executive Director of the Aldersgate Group said: “The upcoming Paris climate change summit won’t result in an agreement that can immediately lock-in commitments that will prevent dangerous levels of climate change. But the summit will be a success if it commits countries to initial emission cut pledges and provides for a mechanism to increase these pledges in the coming years.”
Nick Molho added: “To support this strengthening international action on climate change, the UK must continue its own efforts to cut carbon emissions at home. Concretely, this requires rapidly replacing a range of policies such as the levy control framework that will expire during the term of this Parliament and which are critical to increasing innovation and attracting investments in energy efficiency and low carbon power, heat and transport infrastructure.”
The Aldersgate Group also pointed out that in designing the UK’s future climate change and energy policies, the government should not lose sight of the economic opportunities presented by a transition to a low carbon economy.
Nick Molho said: “The international market for low carbon goods and services is already worth $5.5tn. We must look at climate change and energy policies not only as a tool to tackle climate change but also as a way of supporting UK businesses playing an increasing role in this growing international market.”
Following the Emergency Budget presented by the Chancellor of the Exchequer George Osborne today, the Aldersgate Group stated that the continued growth of the low carbon economy was vital to the UK’s long-term economic prospects and that the government should do more to back it.
Today’s Emergency Budget, which contained very few proposals to support the growth of the UK’s low carbon sector, came a day after the Aldersgate Group published its latest report A Brighter, More Secure Future. In this report, businesses from a wide range of economic sectors called on the government to provide enough policy clarity to support continued investment in the UK’s low carbon infrastructure and help investors to continue cutting the cost of new technologies.
Nick Molho, Executive Director of the Aldersgate Group said: “The government’s understandable focus on tackling the annual budget deficit and the national debt shouldn’t come at the expense of failing to support those sectors of the economy that are key to the UK’s long-term growth and competitiveness prospects. With the global low carbon goods and services sector already worth US$5.5 trillion and international momentum building to accelerate cuts in carbon emissions, the UK economy can’t afford to drop out of the low carbon race."
With the UK’s low carbon economy already reaching a turnover of £122bn in 2013, the Aldersgate Group added that rapidly providing sufficient funding under the levy control framework to invest in low carbon infrastructure after 2020 and extending energy efficiency policies would help accelerate the cost reductions of new technologies such as renewables and continue the low carbon sector’s positive contribution to the UK economy.
Nick Molho added: “Yesterday, business leaders from all across the economy showed that they were willing to make significant investments in the UK’s efficiency and low carbon infrastructure, reduce the cost of new technologies and deliver economic growth. If it wants to unlock this much needed investment, the government must use the upcoming spending review to show its commitment to rapidly growing the UK’s energy efficiency and low carbon infrastructure.”
In a new report from the Aldersgate Group out today, leaders from multiple sectors of the economy, academia and civil society set out the key policy priorities in this parliament that will allow the UK to meet its carbon targets on time, on budget and in way that will be beneficial to the UK economy.
The report, A Brighter, More Secure Future: Low carbon priorities for the new government gathers contributions from leaders drawn from sectors as varied as the telecoms, manufacturing, finance, retail, construction, cement, energy and engineering consultancy industries as well as prominent academics, consumer groups and NGOs.
In it, the Aldersgate Group urges policy makers to provide clarity as soon as possible on the funding and level of ambition for low carbon technologies beyond 2020, prioritise the improved energy efficiency of the UK’s infrastructure, continue the positive work done to date in international climate negotiations and provide the necessary support to vulnerable parts of society and the economy in doing so.
The report, which will be debated at a high profile event tomorrow (8th July 2015) in Guildhall jointly hosted by the City of London Corporation and the Aldersgate Group, argues that the environmental and low carbon goods sector is already playing a key role in the UK’s continued economic recovery, with an annual turnover in excess of £122bn in 2013. But the sector is now at a crossroads and needs clear policies for the decade ahead to ensure its continued growth.
Nick Molho, Executive Director of the Aldersgate Group said: “Last week’s report from the Committee on Climate Change showed that decarbonising the UK’s economy could be done affordably. This report goes further and shows that tackling climate change can provide significant economic opportunities for the UK and make our economy far more competitive and resilient to shocks in the future.”
Contributors set out key policy recommendations that would ensure the UK’s transition to an efficient and low carbon economy stays on track and is delivered in a way that is as economically beneficial as possible to the UK.
The report highlights that there are major economic growth opportunities ahead in low carbon energy, transport, information and communications technology, smart grids and energy efficiency, but emphasises that businesses need unambiguous assurance that if they invest in decarbonising the economy, they must be able to count on sufficiently stable and long-term policies and won’t be at risk of retrospective policy changes.
Nick Molho added: “The recommendations that business, academic and civil society leaders have set out in this report will help the UK meet its emission targets on time, on budget and in a way that’s economically beneficial. We urge the government to take note of them and put forward stable policies for the decade ahead.”
Joan Walley, Chair of the Aldersgate Group said: “One crucial area for government engagement will be to continue driving ambition to achieve binding commitments at the climate change negotiations in Paris at the end of this year. But as many businesses in our report make clear, the UK’s positive stance in international negotiations must be backed up by credible and stable policies at home to rapidly grow an efficient and low carbon economy. The government now needs to set out its plans for the low carbon economy in the very near future.”
Following the publication of the Committee on Climate Change’s Progress Report to Parliament, the Aldersgate Group urges the government to rapidly put in place robust policies that will allow the UK to meet its existing carbon budgets on time, affordably and in a way that could deliver significant economic benefits for the UK.
Nick Molho, Executive Director of the Aldersgate Group said: “The government faces several critical decisions during the early months of this Parliament to ensure that the deployment of energy efficiency and a wide range of low carbon infrastructure remains on track and the cost of new technologies continues to be cut. Policy and funding gaps, particularly after 2020, must be filled urgently.
"In the run up to the important climate change summit in Paris later this year, it is vital that the UK’s very positive role to date in these negotiations is seen to be backed up by continued tangible commitments to decarbonise its economy at home. This is all the more the case, given the recent announcements on onshore wind and the future of the Green Investment Bank.”
The Aldersgate Group, which will be publishing a major report next week on the government’s climate and energy policy priorities, argues that an early decision on the extension of the Levy Control Framework and a reboot of energy efficiency policy, with clear objectives and proposals tailored to different types of energy efficiency measures, will allow businesses to continue investing and innovating in the UK, delivering important infrastructure, cost reductions and economic growth.
Uncertainty about future funding could see projects being delayed and have a particularly damaging impact on supply chains and continued cost reductions.
Nick Molho said: “The offshore wind sector provides a good example of the benefits produced by a clear policy framework. The cost of energy from UK offshore wind farms has fallen by almost 11 per cent in the past four years, with the UK the world leader in this sector. However,offshore projects can take up to ten years to build, so the industry is already looking to the mid-2020s for some clarity about expected levels of deployment.”
Nick Molho added: “The report’s dual focus on tackling and addressing the potential impacts of climate change in the UK is welcome and highlights the importance of the government setting out a coherent vision on climate change, which must include improving the resilience of the UK’s infrastructure to its impacts. This will require good co-ordination between the government’s adaptation strategy and its objective to rapidly improve the state of the UK’s natural capital such as the ecological condition of farmed countryside.”
Following the announcement made by the Secretary of State for Business, Innovation and Skills Sajid Javid this morning, the Aldersgate Group stresses that any reforms to the Green Investment Bank must ensure that its public mission to reduce risk for investors in low carbon and environmental projects remains firmly in place. In addition, the government must retain a significant and sufficient shareholding in the Bank to convince the market that it remains firmly behind its mission.
The Aldersgate Group, whose business members represent a wide range of economic sectors and a collective turnover in excess of £300bn, is strongly supportive of the positive impacts that the Green Investment Bank (GIB) has had in reducing the cost of capital, increasing the quality of projects and mitigating policy risks for its mandated areas of investment
From significant co-investments in efficient street lighting to major offshore wind projects, the GIB has played an important role in reducing the risk profile of some low carbon projects that were harder to finance and has already mobilised over £5bn of investment in the UK’s low carbon economy.
The right level of private ownership in the GIB should be agreed through transparent analysis and in-depth consultation with the finance community to determine the optimum level of government shareholding that continues to maximise private finance's willingness to invest in the green economy throughout the lifetime of this parliament and beyond.
Nick Molho, Executive Director of the Aldersgate Group, said: “The injection of private capital into the Green Investment Bank could be a positive development but only if the Bank’s public mission to drive investments in low carbon projects perceived as riskier is fully maintained and the government retains at least a significant shareholding, allowing it to demonstrate a meaningful stake in the continued success of the Bank.
Failure to provide such reassurance would, just a week after retrospective policy changes on onshore wind, send negative signals to low carbon investors, threatening inward investment flows and undermining the low carbon sector’s important contribution to the UK’s continued economic recovery.”
Nick Molho added: “With a few months to go ahead of the climate change summit in Paris, it is also critical that the UK’s positive leadership in these negotiations does not become undermined by a perception abroad that the government is diluting its domestic commitments and abandoning its own stake in the future growth of the UK’s low carbon economy. Retaining at least a significant holding in the Green Investment Bank and making rapid decisions in key areas such as the future of the levy control framework will be key here.”
The Aldersgate Group also reiterated some of the key recommendations from its recent cross-industry report on the future of the Green Investment Bank, highlighting the importance going forward for the Bank to have greater flexibility in leveraging private finance and in investing across a broader range of environmental projects such as those aimed at improving the state of the UK’s natural capital.