Monday 4th June 2012 | 00:01

IPPR: Europe needs to dom more to support low carbon growth, says business

IPPR press release

Businesses across Europe say that governments need to send clearer signals to support low carbon growth and increasingly feel there is a ‘disconnect’ between government ambition and policies to support such growth, according to two new reports published by the think tank IPPR today (Monday 4th June).

IPPR interviewed business leaders in British industries that are critical to the low-carbon transition, including energy firms, transport, manufacturing, and so called ‘energy-intensive industries’. This was twinned with similar discussions with businesses, convened by IPPR and partner think tanks, in France, Germany, Spain and Poland.

The reports find that while some businesses in the UK and other European countries are starting to feel the pinch of rising energy prices and are worried about the impact of climate change regulations on competitiveness, others are taking advantage of green policies to develop new low-carbon technologies, reduce their energy costs and clean up their supply chains.

The global market for environmental goods and services is estimated to be $3.5 trillion and growing by 4 per cent a year. The report finds that businesses in Europe are well placed to capture new market opportunities with British firms leading the way in developing electric vehicles, offshore wind, hydrogen fuel cells and zero carbon cement. However they need stronger and more stable policy signals from government and the EU and an active industrial strategy to break down barriers to low carbon growth.

The reports recommend:

* Manufacturers need a new Green Deal to help them save on their energy bills, kicked off by a pilot scheme for small and medium-sized manufacturers.

* Serious consideration should be given to expanding the EU Emissions Trading Scheme to include imported energy intensive goods in order to create a level playing field for European businesses in the global market. This should be done in a way that is consistent with World Trade Organisation rules to ensure it is not protectionist.

* The Government’s unilateral Carbon Price Floor, which is reducing British competitiveness, should be scrapped with efforts instead focused on creating a central EU carbon bank to ensure greater stability in carbon prices for business.

* A 2030 target to reduce emissions in the energy sector should be introduced to speed up carbon reductions and provide longer term clarity for business as the EEF have called for.

* The EU’s multi-year budget should be refocused away from inefficient agriculture subsidies and structural funds and towards more funding for innovation. This should include greater coordination of major strategic low-carbon investments, especially for carbon capture and storage (CCS) technologies and offshore wind, in which Britain excels.

Will Straw, IPPR Associate Director, said:

“Long-term sustainable economic growth, productive British businesses and an ambitious decarbonisation policy go hand-in-hand. Sticking to a high-carbon growth path is an untenable and costly policy for the UK in the long-run.

“For many companies, climate change targets, policies and regulations are creating new market opportunities and boosting turnover. New clean-tech industries are sprouting up, while existing companies are switching their business models to take advantage of low-carbon technologies. Even for energy-intensive industries like steel there are opportunities to tap into supply chains for clean energy infrastructure projects.”

Stephen Radley, Director of Policy at EEF, the manufacturers’ organisation, said:

“Moving to a low carbon economy will create significant opportunities for UK manufacturers. But keeping a lid on energy costs must go hand-in-hand with exploiting green industrial opportunities. Uncompetitive energy prices are a major threat for manufacturers, including many of those developing low carbon technologies. The government needs to put the consumer the heart of its decarbonisation strategy by pursuing a policy that delivers the most cost-effective energy mix. IPPR’s report focuses on the key issues that need to be addressed for this happen.”