Time for a green re-think

01 October, 2015

In recent times, however, many could be forgiven for feeling that UK Government, while having all our best interests at heart, are falling short of inspiring a high level of confidence in its environment strategies. However, as EEF – the manufacturers’ organisation – points out, the UK Government is at least starting to review the confusing mix of policies aimed at reducing industry’s contribution to climate change. EEF’s policy director Paul Raynes recently set out EEF’s thoughts on the reforms needed. One of the problems with the way we are governed, he said, is that “it is hard to criticise a policy without sounding like you are also carping about what the policy is trying to achieve”. However, he maintains that sometimes it is necessary to think again because policies are not going to achieve objectives we all support. In his view, green taxes are a case in point.

Raynes makes the point that Britain’s principled determination to atone for two centuries of industrial smog by putting business “in a fiscal hair-shirt” has not benefitted the world with all those tons of carbon saved. “Other countries have simply sold us steel and paper whose prices are uninflated by carbon taxes,” he remarked. Raynes added that against the 36 per cent reduction in UK domestic emissions since 1990, we simply allowed our overseas suppliers to emit carbon worth all but 7 per cent of that. He argues that climate change policy is surely about saving the planet, rather than about licensing our supply chains to wreck it on our behalf. Raynes considers that this doesn’t feel like a policy mix that is going to get us to the ambitious climate change targets we all support. Indeed, EEF encouraged the Chancellor to take a good hard look at the energy tax and efficiency policies he has inherited from previous administrations, and his July budget has begun that with a review of a limited portion of these. “Unsurprisingly, manufacturers see that as just a start to the rethink that’s going to be needed,” said Raynes. He believes punishing business for using energy is not really doing the job of accelerating Britain’s low-carbon transition.

A newly published EEF report makes a simple proposal for what that rethink should aim to do. Raynes comments that this new research suggests energy or carbon prices alone may never, realistically, be high enough to deliver the level of improvement required. “So why not replace the stick of ever-higher policy costs with the carrot of positive incentives for green investment?,” he reasoned. In more detail, EEF is suggesting some practical short-term steps to simplify what it sees as the tangle of green levies, target what Government funding survives the spending review into encouraging research and investment in green technologies, and use regulation and other levers to pull industry into a green future.

EEF has a strong argument. The whole milieu surrounding environmental responsibility and our economy looked at from a ‘green’ perspective should be much more inspiring and motivating for businesses. There should be more of a focus on incentivising firms to look at green strategies in the same positive way that they aim for increased profits. Instead, high emission-related taxation and the seeming propensity to source more renewable energy-generating collateral such as wind turbines from foreign suppliers rather than giving many of the contracts to UK companies seems largely to be the order of the day. Now is the time for a serious Governmental re-think.

Ed Holden

Editor