Greenest government? First-year report

17th May 2011


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IEMA

Business groups and environmentalists pass judgement on the coalition government's first 12 months in power

Last May, the then new prime minister, David Cameron, promised that the coalition government would be “greener” than any of its predecessors. “I don’t want to hear warm words about the environment. I want to see real action. I want this to be the greenest government ever,” he declared.

Earlier this year, he reiterated this pledge in a message to WWF, supporting Earth Hour 2011 on 26 March. In it, Cameron cites the planned Green Deal (to make buildings more energy efficient) and Green Investment Bank (GIB) and electricity market reform as examples of the government fulfilling its green aspirations.

One year on, how do others rate the government’s progress? Is it living up to its greenest-government-ever pledge? the environmentalist has asked the Aldersgate Group (the views expressed here are entirely those of the chair, Peter Young, rather than the group as a whole), EEF, Environmental Industries Commission (EIC), Environmental Services Association (ESA) as well as IEMA to pass their verdict and write a report card on the coalition’s first 12 months in office.

Energy and carbon emissions
Overall rating: poor progress being made

Aldersgate Group rating: some progress being made, but could do better
Aldersgate Group comment:
A very mixed bag, ranging from good progress (such as implementing the Renewable Heat Incentive (RHI) and carbon-floor price, and extending Climate Change Agreements (CCAs) to 2023) to going backwards (eg the Carbon Reduction Commitment Energy Efficiency (CRC) scheme losing all incentives and destroying the commitment not to harm the principles shifting to more environmental taxation by turning the CRC into a straight money-grabbing tax, and the destruction of investor confidence with the way the review of the feed-in tariff (FIT) has been handled).

The overall picture looks like good intent, but until all government departments can be seen to be committed to moving in a consistent direction, especially the Treasury and Cabinet Office, the value of good policy from the likes of DECC and Defra is devalued by market scepticism over permanence and resilience.

EEF rating: poor progress being made
EEF comment:
Worryingly, it is impossible yet to make a judgment. On climate change policy, we are still in the dark as to the government’s vision of the future of the CRC, the shape of the new suite of CCAs and whether it plans to mandate greenhouse-gas reporting.

The lack of certainty must be addressed urgently. But it is important that government steps back and reviews the climate change policy landscape in its entirety. One thing is clear – manufacturers will be paying a lot more for their energy in future thanks to the proposed carbon-floor price, yet another layer of cost that the generators will pass through to manufacturers and other customers as a result of energy and climate policies. We have genuine fears this will see companies making future investments in regions of the world not subject to similar costs, which would be totally counterproductive.

EIC rating: poor progress being made

EIC comment: Insufficient commitment to the challenge of our age. The coalition government has been radical on cuts, but not on climate change.

ESA rating: some progress being made, but could do better

ESA comment: The government is working hard to try to square the circle of how a market-led electricity market can be counted on to deliver low-carbon energy, but it is not clear that it has found the answer. From the waste management sector’s perspective, it is vital that market reform properly reflects the reliability and renewable content of heat and electricity produced by energy from waste in all its forms.

The CRC also needs a rethink; the removal of revenue recycling from the scheme has created an insanely complex form of energy taxation that no one seems to like.

IEMA rating: poor progress being made
IEMA comment:
Progress is now being made in providing longer-term clarity and certainty over the regulatory framework for energy and climate policy, but there’s an awful long way to go yet. The ongoing review of the CRC, following the decision not to recycle allowances, really served to undermine business confidence, but it also has the potential to deliver emission reductions much faster than would otherwise have been the case. The recent about-turn on the commercial use of FITs is another example of policy on the hoof – the tendency to tinker with newly established rules undermines credibility and trust. The snail-like pace towards getting the first commercial-scale carbon capture and storage (CCS) scheme up and running is also of concern.

Finally, the lack of urgency from the government to implement mandatory carbon reporting for companies under the Climate Change Act 2008 isn’t exactly the hallmark of one that wants to become the greenest ever.

Investment and taxation
Overall rating: poor progress being made

Aldersgate Group rating: poor progress being made

Aldersgate Group comment: The £3 billion core funding and one-year acceleration for the GIB saves this from being a backwards area, but in green taxation the irrelevant penny off road fuel and changes to the CRC give a really regressive signal.

Budget reductions are potentially worrying for the bodies at the lead of transitioning us to a low-carbon economy, probably most so for the Carbon Trust and the Environment Agency.

The ability to deliver regional growth and exploit green competitive advantages around the country looks distinctly dodgy at the moment but it is too early to call if the government’s chosen approach can ultimately be made to deliver at the scale required.

EEF rating: poor progress being made

EEF comment: The decision not to recycle payments under the CRC back to participants has blunted the policy considerably. We are left with a tax that will fail to provide the incentives that would have been provided by an elegant mix of carrots and sticks, which was at the heart of the original scheme.

The government, as a result, has shown it doesn’t actually really understand business. The cut in services to businesses as a result of funding cuts to the Carbon Trust is deplorable. While there is little doubt the trust needed to revisit and refocus its offerings to manufacturing, to cut virtually all of its manufacturing-facing services is a step backwards.

We are slightly more heartened by the progress made on the GIB, but we believe it will only make a real difference to the UK’s low-carbon future if its investment remit is maximised to include low-carbon manufacturing of all types, as well as decarbonisation investments for existing manufacturing.

EIC rating: going backwards
EIC comment:
The Treasury needs to get fully behind the transition to a green economy. Environment Agency cuts must not reduce proper enforcement of regulatory standards or we’ll be giving a competitive advantage to the laggard polluters.

ESA rating: some progress being made, but could do better
ESA comment:
The landfill tax escalator has unquestionably been a significant driver in improving the UK’s recycling performance. The government’s post-2014 landfill tax floor-price guarantee helps to provide some longer-term certainty, which should help the development of more recycling and recovery infrastructure for the nation’s waste. The proposed GIB could also be a significant help for the development of green infrastructure if it is able to fill the post-financial crisis lending gap and get hard-to-finance waste management projects off the ground.

IEMA rating: poor progress being made
IEMA comment:
There has been some good news, although this is only in the context of a relative position given the poor state of the public finances: research funding for science, technology and innovation has fared better than other areas of public sector expenditure.

However, in international terms, UK government support looks poor. There is a missed opportunity with the GIB not having the power to quickly harness and leverage private investment.

The commitment from the chancellor [in the recent Budget] to increase the proportion of total tax revenue from environmental taxes is welcome. Budget cuts to central government programmes mean that the environment bodies have been hit hard.

While the intention to integrate environment and sustainability into all government departments is one that should be supported, it’s far more likely that the people with the necessary skills and capability across government will not be seen as “delivering frontline services”!

Planning and regulation
Overall rating: poor progress being made

Aldersgate Group rating: poor progress being made
Aldersgate Group comment:
The one in, one out regulation rule stands out as being the most odious policy. There is plenty of merit in reviewing, and then removing or simplifying inferior regulations but this should be entirely based on merit.

And in an environment where we have some massive market failures, the need to turn to more regulation is inevitable, even if all other measures are considered as well. We needed an overhaul of a constipated planning system, but to use the Budget to announce planning policy does not seem right.

The Sustainable Development Commission (SDC) may well have outlived its useful purpose but the notion of Defra bringing big departments to account on sustainability is not credible.

At the moment, the single most important outcome is to ensure that the definition of “sustainable”, in the presumption in favour of sustainable development, is drawn wide and deep – and not reduced to a de minimus definition, barely hiding a rabid commitment to support any economic development.

Such a failure would be a far more serious blow to sustainability than the unwelcome demise of the SDC.

EEF rating: going backwards
EEF comment:
One in, one out sounds good, but we’ve yet to see it. Given that the government can only really apply this approach to domestic legislation, it really is not clear how far this can be applied in the environmental policy arena.

We are still seeing more legislation for environmental professionals to contend with rather than any real effort to simplify and streamline what exists.

Climate change policy is a clear area where government can put its rhetoric into practice: manufacturers are subject to overlapping and complex policies that are all trying to achieve the same thing but pulling in different directions, at great cost.

We need more than one in, one out. We need to see regulatory balance being sought in this crowded policy arena.

EIC rating: poor progress being made
EIC comment:
Plans for “better” and “smarter” regulation must not be a smokescreen for deregulation and weakening of environmental protection.

ESA rating: poor progress being made
ESA comment:
The government is struggling to reconcile its laudable wish to devolve power to local communities while still facilitating investment in infrastructure upon which the quality of life of citizens depends.

Waste management infrastructure is a classic example. Without the deployment of several billion pounds worth of investment in new facilities it will not be possible to meet the environmental targets set out in EU Directives, yet most types of waste infrastructure have a hard time in the planning system.

The Budget did seem to herald a belated recognition that a more positive planning system can benefit everyone but, as always, the proof will be in the pudding.

IEMA rating: going backwards
IEMA comment:
The new government has attacked the planning system with passionate ideology. However, its attempts to dismantle regional planning have ended up in the courts for failure to properly assess environmental impact.

And when the government does get its way (as it will) in removing this layer of planning, there is little evidence as yet that local enterprise partnerships will be able to fully embrace the environment: how are we going to optimise waste management infrastructure to enable a resource-cyclical economy?

The government’s statement that it will “introduce a new presumption in favour of sustainable development, so that the default answer to development is ‘yes’” is of real concern.

In terms of deregulation, all the focus in terms of environment seems to be on using third parties to support regulatory inspections. There’s a complete lack of vision around business responsibility, deregulation and environment.

Waste and resource efficiency
Overall rating: some progress being made, but could do better

Aldersgate Group rating: some progress being made, but could do better
Aldersgate Group comment:
At least the landfill tax is now creating new investments; we could do worse than build on these to set carbon targets for resource management as well, as Scotland looks set to do after publishing its protocols for calculating carbon footprints of waste.

It remains to be seen if the changes to the support for anaerobic digestion are sufficient; until the other reviews are complete most of the outcomes remain uncertain, so we’ll give the government the benefit of the doubt as the intentions on waste and resource efficiency are sound.

The cry to support truly sustainable procurement, however, looks forlorn, with nothing tangible in place to make this a reality.

EEF rating: poor progress being made
EEF comment:
We get a sense that the government is struggling to make the most of the opportunity to consider waste regulation in the round. We need the government to radically review this regulatory domain so we can make the most of the resources that are within our reach.

That means a focus on the barriers faced by businesses of all sizes – not just issues around municipal waste. Tinkering around at the edges is of little value.

EIC rating: some progress being made, but could do better
EIC comment:
All of British industry needs long-term policy targets to drive the transition to a resource-efficient economy.

ESA rating: some progress being made, but could do better
ESA comment:
Recycling and recovery rates continue to improve, although this is mainly down to the combined achievements of the waste management sector, households and local authorities.

A real judgment on the new government’s performance in waste policy must await the outcome of the Waste Review. The government must provide a policy and regulatory framework that enables the waste and resource management industry to focus on ambitious targets without prescribing how those are to be achieved.

Every option, from co-mingled collections to anaerobic digestion, has a role to play in maximising resource efficiency – the government must support the whole family of waste technologies.

It also needs to think much harder about how it can better use its own market power as a procurer of waste management services and a buyer of products. By seeking to reduce waste, by contracting only with quality operators who extract maximum value from the wastes, and by demanding recycled product and waste-derived energy in place of virgin materials and fossil power, this government has the ability to catalyse green growth and resource efficiency.

IEMA rating: some progress being made, but could do better
IEMA comment:
Generally going in the right direction. The key test will be the results of the Waste Review. IEMA would like to see a shift in thinking and approach away from waste to one more clearly centred around the sustainable use of resources and the creation of a circular resource economy.

IEMA believes that the government should recast the current waste policy as a national resources policy.

Conclusion

The government has made good decisions in several important areas, but its overall performance is poor. Extending CCAs, setting a carbon-floor price and confirming the start of the RHI is progress.

Turning the CRC into a carbon tax and its plans to reform the planning process and introduce a “one in, one out” strategy for regulation are all considered retrograde steps.

The only policy area that receives a favourable rating is waste and resource efficiency. But even then our panel suggests that the government could do better.

One year in, and the coalition has a very long way to go to meet its commitment to be the “greenest government” ever.


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