2011: the year ahead

1st February 2011


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IEMA

the environmentalist asks policymakers, regulators and business leaders what the main issues facing practitioners will be over the next 12 months.

Janez Potocnik

European commissioner for environment

Potocnik

I see three main challenges ahead, each as important as the others.

The first relates to resource efficiency, a key part of Europe 2020, the EU strategy to help us out of the current economic crisis.

The goal is to decouple economic growth from our use of resources, and support a shift towards a low-carbon, eco-efficient economy.

It’s a way of stimulating green innovation, green growth and jobs. It’s about doing more with less, and about learning to live within our means.

It means asking whether it’s wise to run our economies in such a shortsighted way, borrowing from the planet, when we don’t know how to repay our ecological debt.

The second challenge is biodiversity loss, and the launch of a new strategy to ensure that the natural world gets the protection it needs for the coming decade.

This often means convincing industry that biodiversity is not an environmental luxury, but the life-support system of our planet and the basis of human prosperity.

The third task is to improve the implementation of environmental legislation. A surprising amount of damage is done through inadequate enforcement of laws on the statute books. I want to ensure that the legislation in place is used effectively.

But the biggest test environmentalists will face in the coming 12 months isn’t any of the above: it will be sticking to our guns.

When economic growth is faltering, there are always calls for governments to lower environmental standards, and to provide more flexibility in their application.

The challenge will be to refute those short-term arguments, and show how a healthy environment is the foundation we need for sustainable economic growth. Now that’s a challenge we cannot afford to fail.


Martin Baxter

Executive director of policy at IEMA

Martin BaxterUK businesses will need to keep a keen eye on the policy landscape in 2011.

A number of policy themes are coming together that make a powerful case for businesses taking a strategic approach to the environment and sustainability.

While much recent attention has been given to the changes to the Carbon Reduction Commitment (CRC) Energy Efficiency scheme and the decision not to recycle allowances, there will be further developments on the price of carbon during the year, including a review of the Climate Change Levy (CCL) and the introduction of a minimum carbon price (see p.8).

The chancellor’s budget in March will clearly be important in this regard.

The decisions on mandatory greenhouse-gas (GHG) reporting and the broader issue of directors’ social and environmental reporting duties, following the government’s consultation on re-introducing the Operating and Financial Review, will maintain a focus on corporate disclosure and transparency.

Publication of the white paper on the natural environment in spring 2011 will help to remind business that there’s more to environmental management than just climate change.

Providing direction on issues including how the economy should reflect the true value of nature’s services in the way business is done.

This will have an important bearing on future environmental policy. The desire to see reduced costs of regulation for businesses will have a clear environmental focus.

Businesses should expect to see more in the line of de-regulation, with activity developing around the role of environmental management systems.

For those businesses involved in new developments, the significant changes to the planning system, ongoing reform of consenting processes for critical national infrastructure, together with the localism agenda, will all serve to maintain a climate of uncertainty.


Neil Bentley

Director of business environment at the CBI

Neil Bentley“The greenest government ever” is an aspiration that should be applauded, but by 2011 we should expect to see the results. The coalition has already made a start.

The Green Deal, electric-car investment, new energyinfrastructure work: there will be plenty for us all to get our teeth into.

I can see both green taxes and GHG reporting moving higher up the agenda – especially as the government must make the decision soon on whether or not to introduce mandatory reporting in 2012.

Following the debacle where the CRC was fundamentally changed in the small print of the spending review, the government must persuade businesses that they will approach these issues openly, engaging with those that will be affected and ensuring that what is decided will be for the longterm benefit for all.

We will also get to see the detail of the Green Investment Bank (GIB). While it has less funding than many expected, I believe this still has the potential to encourage the investment needed to bring low-carbon innovations to the marketplace.

The devil will be in the detail, but if done correctly the GIB could be a great boon to the British economy.


Ed Mitchell

Director of environment and business at the Environment Agency

Ed MitchellBudget cuts will almost certainly dominate the agenda for the environment in 2011. The austerity measures being put in place present major challenges that cannot be dismissed lightly.

However, we need to keep our focus on delivering for people and the environment.

The test will be findng ways to continue to deliver results that are cost effective and targeted yet sufficiently ambitious in the face of the significant environmental challenges we face.

The Environment Agency is committed to retaining the high ambitions of its corporate strategy for 2010 to 2015.

We will continue to focus on protecting and improving air, land and water quality; driving the wiser and more sustainable use of resources; and reducing the future impact of climate change and responding to its consequences.

These are essential for the environment and we must not lose sight of them over the coming year.

Central to delivering these priorities will be continuing to build on and improve the way we work with others, including local authorities and communities. Working locally to find solutions to environmental problems will make the best possible use of public money.

Empowering communities to lead on driving improvements to their environment will require a better understanding of local needs and priorities.


Tim Yeo

MP for Suffolk South and chair of the Energy and Climate Change Committee

Tim YeoDavid Cameron has promised that his government will be the “greenest government ever”. My committee will be responsible for holding the prime minister to his pledge.

The CRC has set challenging emissions caps for business; many have expressed disappointment that the spending review announced that revenues from the scheme would not be recycled to participants and that the scheme now amounts to “just another tax”.

To retain business confidence in the scheme, it is vital that the government delivers on its promise to simplify and reduce the burden on business.

It is clear that fossil fuels will continue to form an important element in the UK’s energy requirements for the foreseeable future, but if the country is to remain on track to meet its climate-change commitments, it is equally clear that carbon capture and storage technology will have to be used for both coal and gas generation.

The government has pledged to introduce emissions performance standards (EPSs) for electricity generation (see p.8) – while the form of these is not yet decided, the EPSs will undoubtedly pose a new challenge to the power sector.

More broadly, the UK can look forward to great changes in the way that the energy market operates. As the country emerges from recession, and as technology provides for greater electrification of transport and domestic heating, demand for electricity will continue to rise.

Electricity generation to meet this rising demand will have to come increasingly from renewable resources, but this poses its own challenges to the operation of the grid, as the wind is not always blowing and the sun is not always shining when demand for electricity is greatest.

The technology is emerging for the development of smart grids that will enable demand to be smoothed over the day, reducing reliance on the more carbon-intensive peak capacity that can be fired up at short notice.

At a European level, it is clear that the EU emissions trading scheme (ETS) cap needs to be tightened, with a concomitant rise in the carbon price.


Gareth Stace

Head of climate and environment policy at the EEF

Gareth StaceThe number of climate and environment challenge facing UK manufacturers in 2011 is likely to increase from 2010, just as last year saw greater challenges than previous years.

We will see key decisions made on EU regulation including the ETS and the EU Directive on waste electrical and electronic equipment (WEEE).

On the domestic front, we will see revised waste policy and carbon tax, with attempts to unravel the complex, confusing and costly UK climate-change policy landscape.

With the packaging targets for 2011 and 2012 remaining unchanged we could see packaging waste recovery note prices tumble, which is good for obligated businesses but not for long-term investment in the recycling infrastructure.

In the spring, Defra will publish its response to its “Waste Review”. This is an opportunity for the environment department to finally be bold on waste policy and hopefully to think wider than just waste by changing the focus towards a UK resource strategy that could also address the looming issue of global material security.

Proposals for the recast WEEE Directive are expected to kick off again in February. A key issue for manufacturers will be the call for a significant increase in member state collection targets, anywhere from 65%–85% by 2016.

Such a significant increase will likely add substantial cost increases to producers of electrical and electronic products.

Alongside the target increases, producers could also be made fully responsible for WEEE collection costs.

The 2011 Finance Bill will contain proposals for an upstream carbon tax and reform of the CCL.

Alongside this will be decisions on the future of climate change agreements, with more changes to the CRC scheme and the government making a decision on whether to introduce mandatory GHG reporting. It’s going to be a busy year and I didn’t even mention the GIB.


Paul Pritchard

Head of corporate responsibility at RSA

Paul PritchardUK businesses face a number of challenges of an operational nature. The ongoing implementation of CRC will be interesting but in some ways it’s rather more a concern for central government than it is for business. Quite a few of us have been supportive of CRC as an enlightened (if rather complex) approach to carbon reduction in non-intensive energy users.

The change to a straight tax, while understandable in terms of Treasury thinking, means it is going to be harder for us in future to feel we are part of a collaborative process.

The bigger and broader challenge, however, is surely around products and services. We can afford to give ourselves at least a small pat on the back for the speed with which the organisational footprint reporting has been standardised, but the expertise is only slowly moving into the product side.

A Fairtrade label is certainly valued and while many may not know the exact meaning or process that sits behind it, there is a general acceptance that it is a good thing – and trusted.

We aren’t anywhere near that for green issues. If we look at some of the really good work on carbon labelling in the retail sector it feels as though it hasn’t achieved anything like widespread recognition or acceptance.

Even if I am being optimistic I can’t see this happening in 12 months but we could make some genuine progress.


Peter Young

Strategy director at SKM Enviros and chair of the Aldersgate Group

2011 is going to be tough but better than 2010. The drive for renewables and low-carbon electricity generation, a smart grid and energy efficiency will remain strong and create a lot of opportunities for the environmental and energy sectors: from carbon capture and storage and off shore wind, to the London Energy Partnership and community-driven energy efficiency schemes with many projects of intermediate scale in between. The introduction of the Renewable Heat Incentive, probably in June, is welcome and will be a further business driver.

The relentless rise in landfill tax – one of the most successful green tax policies, which begs the question why can’t we have more of them – will mean that recent hiccups in the waste private finance initiative programme [the government cancelled seven projects as part of the spending review] will be overcome with more merchant facilities delivering the alternative resource-efficient options for our wastes.

The built environment will benefit from a greater emphasis on refurbishment, and transport infrastructure will also continue to slowly reduce its massive investment deficit; however in no way will this resurrect the construction sector given the continuing low level of new build.

Critical to 2011 feeling better than 2010 will be private investment in green schemes, and the early creation and funding from receipts of the GIB is far more important than the not inconsiderable funds pledged.

The signal that the GIB is an urgent and durable priority will by itself show that the UK economy is serious about investing in new green technologies and markets. Achieving this competitive edge will be vital not just for 2011, but for the UK to prosper over the rest of the decade.


Cllr. Gary Porter

Chair of the Local Government Association’s environmental board

Gary PorterThese are tough financial times, and both national and local government need to think radically about how they can meet environmental challenges without being able to spend public money on anything like the current scale.

Defra’s spending settlement includes continued investment in flood and coastal erosion risk management, but at a significantly lower level. Yet flood risk is increasing and the insurance industry is making noises about no longer providing affordable cover in high-risk areas. We think the government’s calculations of the costs to councils of taking on new responsibilities for flood-risk management from next April are an underestimate.

The story on waste is similar. There is less money around, but the EU landfill targets, which will land us with hundreds of millions of pounds in fines if they are missed, are not going to go away.

Environment secretary Caroline Spelman has rightly decided to look at current waste policies. This will involve looking at ways that councils can work with local businesses to cut the cost of waste collection to businesses and taxpayers.

And it will involve giving the third degree to the government’s approach to meeting European targets. And there’s action at the EU level too, with the European Commission due to publish proposals for new legislation on energy efficiency.


Peter Kellett

Chair of the UK Environmental Law Association

Peter KellettI’d highlight four challenges. First, new emissions limits will be set through a binding fourth carbon budget (2022–27) (see p.11), while the “one-in, one-out” rule will be applied in an attempt to stem the flow of environmental law.

Yet the reviews of Ofwat and of waste policy, and white papers on water and the natural environment, could all produce new regulations.

Second, reform of existing regulatory regimes is likely to continue. The long-awaited review of the complex contaminated land regime is likely to be under way.

Civil sanctions can now be used by the Environment Agency and sanctioning powers may be expanded to cover permitting. Further implementation of the Flood and Water Management Act is planned.

A key issue to watch is the extent to which “excessive costs of litigation for third parties could be reduced following court rulings.

Easing the ability of third parties to challenge decisions is likely to increase costs and delay development.

Third, radical institutional reform is planned in 2011 through the Public Bodies Bill. Assuming the Bill becomes law, it will promote a more fluid approach to the way regulatory functions are organised. Work to examine the case for a single environment body in Wales is already under way.

Finally, the Localism Bill (see p.10) is likely to reexamine the long-running tension in environmental law between central control and local empowerment.

The effects of the abolition of regional targets and the integration of the Infrastructure Planning Commission’s work within government are two areas to watch.


Paul Ashley

Group sustainability champion at Mott MacDonald

Paul AshleyOur view of the next 12 months can be described as warily confident. The water and power sectors in the UK have benefited from regulatory settlements that have given us a visible stream of planning, construction and maintenance work.

This has helped to keep our environmental teams very active, as has Crossrail and a number of other major projects. I expect this situation to continue through 2011.

Outside the UK, some countries and sectors are clearly growing faster than others.

Even where major development projects are shelved, such as in some Gulf states, planning for the future often proceeds apace, ready for when investment money flows faster.

And some sectors, notably international development projects for environmental management and sustainable urban living, appear healthy for the immediate future, as does the reconstruction programme in Iraq with its associated environmental planning and management.

In the UK, Europe and some other countries – China and, increasingly, India – the sustainable development trends of the last few years will continue.

In the UK, the government has been running consultation programmes to bring whole-life carbon footprinting of major projects into public investment decision-making, and to address the adaptation needs of national infrastructure.

These will demand new approaches to project appraisal, allowing for non-financial carbonrelated criteria, and assessment of complex long-term environmental risks.


David Symons

Director at WSP Environment & Energy

David SymonsReaders of the environmentalist know that sustainability is a huge opportunity. And we know about Plan A, Ecomagination, Sustainability 360 and other leading strategic corporate sustainabilityprogrammes.

Yet in spite of this opportunity and the evidencebase of M&S and GE, among others, many businesses continue to see the environment as an operational issue, tangential to core business strategy.

The fact is, the prevailing approaches to sustainability are so fragmented and so disconnected from business and strategy as to obscure many of the greatest opportunities for companies to benefit society.

If, instead, corporations were to analyse their prospects for sustainability using the same frameworks that guide their core business choices, they would discover that it can be much more than a cost, a constraint, or a charitable deed – it can be a source of opportunity, innovation, and competitive advantage.

Sustainability as strategic opportunity is the key opportunity for 2011. And 2012. And 2013.


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