Memorandum submitted by the Environmental
Industries Commission (EIC)
The Environmental Industries Commission (EIC)
would like to take this opportunity to contribute to your Inquiry
into the Water Framework Directive (WFD), following the Committee's
announcement of 24 July.
1. THE ENVIRONMENTAL
INDUSTRIES COMMISSION
EIC was launched in 1995 to give the UK's environmental
technology and services industry and strong and effective voice
with Government.
With over 225 Member companies, EIC has grown
to be the largest trade association in Europe for the environmental
technology and services (ETS) industry. It enjoys the support
of leading politicians from all three major parties, as well as
industrialists, trade union leaders, environmentalists and academics.
2. KEY RECOMMENDATIONS
The WFD is not only good for the environment,
but will also create jobs and revenue for the UK.
The UK should prepare for the implementation
of the Directive in a timely fashion, and not leave its implementation
to the last minute. An example of a step in the right direction
would be to start a review of the UK's outdated River Quality
Objectives.
The UK should plan a clear step-by-step approach
to meeting the WFD, allowing industry time to develop and implement
solutions.
3. BENEFITS/"POSITIVE
EXTERNALITIES" OF
THE WFD
EIC welcomes the WFD, as not only good for the
environment; but also as it has many benefits/"positive externalities",
which will create GDP gains.
The WFD will drive an increase in levels of
riparian activities, help to improve the resource productivity/efficiency
of mainstream industry, drive innovation generally, and to help
boost the UK's hugely valuable pollution control industry.
3.1 River amenities: It is important that
it is not just the costs of a measure that are assessed, but also
the benefits it will cause to those activities or individuals
it is designed to benefit.
The significant economic, social and environmental
benefits of the WFD have been assessed in the (former) DETR's
report "Potential Costs and Benefits of Implementing the
Proposed Water Resources Framework Directive" (1999). The
benefits include:
— increased visitor levels to riparian
attractions;
— increased recreational use of rivers
generally;
— an increase in angling (and the issuance
of rod licences); and
— increased property values, and generally
improved quality of life, for those living near rivers
The report concludes that it estimates the benefits
from higher water quality in the UK at up to £4.4 billion.
3.2 Savings in mainstream industry: High
environmental standards, driven by regulation, have also been
shown to bring cost saving for industry through greater resource
productivity. For example, the UK's Envirowise programme has demonstrated
the very significant cost savings that can be achieved from reducing
waste and pollution.
Envirowise notes that "simple and inexpensive
measures can typically reduce water consumption by up to 50%"
and that the true cost of water is often not appreciated by companies.
Factors such as water treatment, pumping, maintenance, effluent
discharge, capital depreciation, the value of lost raw material
and product should be considered, and not just the cost of the
water company supplying water. The WFD will encourage companies
to reap the savings of higher efficiency.
The benefit of environmental regulations was
also highlighted in a recent report for the EU—"the
Benefits of Compliance with the Environmental Acquis for Candidate
Countries—which found the benefits for central and Eastern
European "candidate" countries of meeting EU environmental
standards ranged from Euro 134 to 681 billion.
3.3 Innovation in industry: New environmental
standards also drive innovation and boost productivity. This is
clearly evidenced in a recent report from Imperial College London.
The report, "Innovation and the Environment: Challenges and
Policy Options for the UK" (2001), found that environmental
regulation can stimulate innovation. This both reduces the direct
costs of compliance and can actually reduce overall costs for
industry as the new low-polluting technologies and practices can
be economically superior to the polluting options they replace.
3.4 Environmental Technology and Services
Industry: The UK risks missing out on the huge opportunities in
the rapidly growing global market for environmental technology,
unless action is taken by the UK Government to implement European
Directives effectively and in a timely fashion.
The Government's own report, "Global Environmental
Markets and the UK Environmental Industry: Opportunities to 2010"
(DTI/DEFRA Joint Environmental Markets Unit (JEMU), 2002) reveals
the value of the industry—the world market for environmental
goods and services is currently a massive US$515 billion—comparable
with the aerospace and pharmaceutical industries—and is
forecast to grow to US$688 billion by 2010.
It also notes that the UK has a successful environmental
industry, employing 173,000 people, but its 4.7% share of the
world market compares poorly with France's 7% and Germany's 11%.
It goes on to highlight that "the UK has not kept pace with
overall EU performance in increasing environmental exports".
The UK's record, particularly in 1980s and 1990s,
of slowly implementing EU Directives is a significant factor in
this failure and one that must be addressed when preparing to
implement the WFD. EU Members that implement new environmental
protection measures ahead of others gain significant "first
mover" advantage and create a home market from which to export
new environmental solutions. The most recent example is with CFC
control—the UK is buying German technology to safely dispose
of refrigerators because Germany had the regulations in operation
years ahead of the UK (see also Section 3.1 below).
4. NEED TO
ACT NOW
The UK needs to start to move towards the targets
set in the WFD now. It is far better for mainstream industry to
have clear targets and timescales, and therefore the time to develop
and implement solutions, rather than to have to rush to implement
Directives.
Timely implementation of Directives creates
effective regulation, which provides a level playing field for
mainstream industry, so that companies know what standards they
(and their competitors) are required to achieve, by what date,
and can plan (and invest) accordingly.
4.1 Past UK implementation of Directives:
The case of the UK Government's disastrous handing of the fridges
issues is a case in point, and an experience that should not be
repeated. The Environment, Food and Rural Affairs Committee's
report into the fridge issues, the "Disposal of Refrigerators"
(House of Commons, 2002) notes that, "whilst the European
Commission must accept some blame for lack of clarity, the overwhelming
responsibility for mishandling the implementation of Regulation
2037/2000 lies with the Government".
As the report observes, the Government's failure
centred around its insistence on holding a semantic and legalistic
debate over the Directive's wording, which delayed any moves to
start preparing for the Directive. If there had been an acceptance
that the Directive was good for the UK in principle, and sensible
steps were put in place to meet its requirements, we would not
have incurred the £40 million costs noted in the report,
we would not have fridge mountains and we would have domestic
capacity (generating revenue for the UK) to deal with the foam
from fridges.
Instead of the "win win" of higher
environmental standards and a stronger domestic UK ETS industry,
we have a "lose lose" situation of fridge mountains
and boosting sales of overseas ETS solutions providers.
4.2 "Gold plating": The Government
is regularly warned by UK industry not to "gold plate"
EU legislation by moving beyond the requirements of Directives.
This sometimes emerges as an argument to implement Directives
at the last minute. As set out above this approach is damaging
to the environment and to mainstream industry and stops the UK
ETS industry leading the way in developing innovative solutions.
Starting now on the implementation of the WFD is not "gold
plating" but good planning.
4.3 Definition of "good" water
status: It is important that the UK Government strongly encourages
the European Commission to define clearly the standards and definitions
in the WFD. However, the UK Government should not use this as
an excuse not to act, at it is clear that the direction of the
WFD is to improve water quality and many measures (eg revising
the River Quality Objectives) can be taken now.
4.4 River Quality Objectives (RQOs): These
were largely set in the 1970s and have not been reviewed. At present,
89% of rivers meet their RQOs, but, considering how far environmental
technology and citizens' legitimate expectations about the cleanliness
of their environment have advanced, this is a disappointing performance.
However, the WFD will radically affect the minimum standard rivers
will have to meet to be deemed acceptable as the WFD sets a clear
objective that they must all reach "good" status by
2015. A large proportion—28%—of UK watercourses are
currently rated as being of "fair" status. Much of the
"fair" category will not meet the EU's "good"
status and see a significant proportion of UK watercourses that
fall under the fair category will have to be improved.
The UK should start to tighten its RQOs now,
to help ensure that it meets the targets set in the WFD in the
most effective way.
5. ENFORCEMENT
OF WATER
POLLUTION CONTROL
POLICY
Environmental regulation plays a key role in
setting standards that industry must meet in order to protect
the public and the environment. The environmental regulatory framework
brings and huge range of benefits, including high quality rivers
and drinking water in the most effective way.
Inconsistent enforcement of environmental regulation
undermines not only environmental protection and the competitiveness
of the UK ETS companies, but also undermines the corporate "good
citizens" that have invested in environmental protection
as their competitors are being allowed to pollute for free. It
is therefore vital that the body implementing the WFD—the
Environment Agency—is properly funded and resourced to take
on its responsibilities.
5.1 Current EA performance: At present,
the EA is already failing to meet Government targets on industrial
discharge to watercourses. A Parliamentary Question (which EIC
arranged to be tabled) revealed that 21.5% of the 4,277 significant
consents to discharge to watercourses held by industry did not
comply with their legal limits in 2000. Furthermore, only 67.3%
of consents in force were monitored in 2000. The new figures also
reveal that only 10% of consents were reviewed and updated in
2000. In the North West only 2% of consents were reviewed, whereas
the target is to review 25% each year.
It is therefore of serious concern (environmentally,
to the UK ETS industry and to mainstream industry's many "good
corporate citizens") that the EA will not be able to meet
its obligations under the WFD, thereby potentially reducing the
benefits to the UK that would result from full implementation
of the Directive; not to mention the economic implication of non-implementation
from European Court of Justice penalties.
The EA's December 2001 Board meeting concluded
that it would need significantly more resources to fulfil its
duties. The WFD is only one of many European Directives that the
UK will have to implement—the Landfill Directive, the Integrated
Pollution Prevention and Control Directive and the End-of-life
Vehicles Directive will also all need EA resources.
A paper to the Board, by the EA's Director of
Environmental Protection, assesses that, using current regulatory
approaches, the EA will need an additional 1,300 staff to meet
its increasing regulatory burden, the annual level of permitting
activities will more than double in the next two years and there
will be a direct increased cost of more than £60 million
per year (without taking into account costs such as support and
accommodation).
5.2 Comprehensive Spending Review 2002:
The figures for monies allocated to the EA under the CSR are not
yet available, but, as shown above, it is clear that the EA needs
more resources and we hope that the Committee can look at the
funding allocated in the CSR and provide comment if the funding
levels are not commensurate with the EA's responsibilities.
Environmental Industries Commission
19 September 2002
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