Memorandum submitted by the Regional Development
Agencies (RDA)
England's Regional Development Agencies (RDAs)
welcome the opportunity to submit evidence to this important Inquiry.
This submission represents the joint views, agreed by all nine
RDAs in England. Each RDA may also respond individually on matters
considered to be of particular regional significance where necessary.
RDAs are business-led organisations established
by the Government to promote sustainable economic development,
including low carbon and resource efficient regional economies.
We work with key public and private sector partners to increase
the economic performance of the regions and reduce social and
economic disparities within and between regions.
RDAs see developing a low carbon economy as
offering significant economic and environmental benefits to the
UK, both as we recover from the economic downturn and in terms
of achieving a long term sustainable future; RDAs have an important
role in maximising the opportunities it presents for UK businesses.
In response to the Committee's specific questions:
1. What opportunities exist for the creation
of a green new deal whilst pursuing a low carbon economy? Which
technologies have the biggest potential? Has the Government done
enough in its stimulus package?
The publication in March of the Government's
Vision for the Low Carbon Industrial Strategy,[65]
the funding announced in the Budget to support "Investing
in a Low Carbon Britain" and the forthcoming Low Carbon Industrial
Strategy itself offers a once in a lifetime opportunity to transform
the way we do business and position the UK to take full advantage
of the global opportunities presented by the rapidly expanding
low carbon/environmental goods and services sector. It is essential
that we do not revert to old ways as we move out of recession
and that future economic growth is both low carbon and promotes
more sustainable patterns of production and consumption.
The recent report commissioned by BERR (Low
Carbon and Environmental Goods and Services: an industry analysis,
March 2009[66])
highlighted that the UK the market for renewable energy (and other
environmental technologies) is estimated at £106 billion/year
and globally this figure is over £3 billion/year with
an annual growth rate of 4% which represents a tremendous opportunity
for UK businesses.[67]
In employment terms this translates to some 881,000 jobs
in the UK. Renewable energy and low carbon technologies account
for about 80% of the environmental technologies sector.
In our view, there are several technologies
which offer great potential, and clearly both off and onshore
wind will continue to be an important component of the low-carbon
energy mix. Wind is the most mature and best established renewable
energy technology and to deliver on the UK's 2020 15% renewable
energy target a major increase in wind energy generation capacity
will be required. Given the difficulties of introducing renewable
energy to the transport and for heat supply, electrical generation
may well carry the greatest burden in achieving this target with
perhaps upwards of 50GW of additional wind generation capacity
required. In this context the RDAs welcome the Government's aspirations
for major growth in offshore wind (an additional 25GW by 2020)
and were pleased to see the additional incentives provided in
the budget (which appear to have enabled the London Array Consortium
to commit £2 billion to building the first 630MW phase
of the 1 GW wind farm).
There has been significant progress in the offshore
sector (with the UK now having overtaken Denmark as the largest
offshore wind generator) which demonstrates how new markets can
be created relatively quickly. There is scope for further expansion
in onshore wind provided planning barriers and other obstacles
such as grid connection are addressed. We also see significant
opportunities in the shorter term to develop biomass, energy from
waste, solar/PV, biogas and micro-regeneration technologies. In
the longer term, we see major potential for wave and tidal energy
and RDAs are actively investing in the development of these and
other innovative technologies such as hydrogen fuel and electric
vehicles.
RDAs agree that improved energy efficiency in
homes and businesses has a key role to play in moving to a low
carbon economy. Energy saving can yield significant cost savings
for householders and businesses and can deliver carbon savings
far more cheaply that investing in renewable and other low carbon
forms of energy production. The increased penetration of loft
and cavity wall insulation, as well as the development of markets
for solid wall insulation and other measures for "harder
to treat" properties, implied by the Government's targets
in the draft Heat and Energy Saving Strategy presents substantial
new business opportunities for less technologically advanced but
nevertheless necessary low carbon investment.
Overall, the Government has made a very good
start but more will be needed to meet the renewable energy targets.
RDAs welcome the package of Government fiscal and regulatory incentives,
including the £405 millionm allocated to support low
carbon and green technologies announced in the Budget which marks
a significant commitment to this agenda at a time of significant
pressure on public spending. RDAs are committed to working closely
with BERR, DECC and other interested departments, to ensure that
this injection of funding is used to maximum effect. RDAs have
been driving forward the development of low carbon, resource efficient
regional economies for some time now and we have a good deal of
learning and good practice that we are willing to share with the
Committee.
2. How realistic are the Committee on Climate
Change's projections for the use of different types of new technologies?
What is needed to achieve the development and deployment of them?
RDAs support the view of the Committee on Climate
Change that a range of technologies exist that could deliver the
carbon emissions targets. In particular, the RDAs strongly support
the central tenet that decarbonisation of electricity generation
is the key to achieving emission reduction goals, combined with
the deployment of low carbon vehicle technologies. There is no
debate that the required renewable technologies already exist
and combined with an increased deployment of nuclear power, would
result in a major reduction in the carbon intensity of power generation.
However, power generation is very capital intensive and without
the required fiscal incentives the private sector will not invest.
The challenge for Government is to create an attractive long term
investment framework as a counterbalance the prevailing weak economic
climate and current low prices for fossil fuels and traded carbon.
However, one important lesson from the development
of the wind sector that RDAs would wish to share is the importance
of focussing on the development of supply chains and skills if
maximum benefits are to be realised for the UK economy. There
is no primary manufacture of large wind turbines in the UK and
currently there are only an estimated 4,000 people directly
employed in the sector in the UK, compared to 23,500 in Denmark
and over 38,000 in Germany;[68]
the vast majority of the high value added manufacturing takes
place outside the UK. A good deal of work is in hand involving
RDAs to ensure that businesses, particularly SMEs, are aware of
the opportunities for supplying goods and services and are supported
in developing the capacity and skills to access new opportunities.
Given the difficulties associated with attracting
a major manufacturer to the UK the engagement of UK ports in offshore
wind development provides is important in maximising the value
off offshore wind developments to the UK. This is an important
conduit for the involvement of UK supply chain companies. Offshore
wind farms can be constructed without the involvement of a UK
port the RDAs welcome DECC's initiative in bringing together port
owners/operators and the wind industry. RDAs clearly have an important
role to promote and support dialogue and engagement between suitable
ports and the offshore renewable energy industry.
Support for low-carbon innovation clearly has
a key role in driving forward the "green economy", and
we welcome the work of the Energy Research Partnership and the
initiative of the Energy Technologies Institute, Technology Strategy
Board and Carbon Trust to produce a joint innovation strategy
to clarify and improve the targeting of their support.
We would also like to highlight the recommendations
of the Commission on Environmental Markets and Economic Performance
(CEMEP),[69]
which identified what was needed for the UK to maximise benefits
from the growing global market opportunities for low/zero carbon
products and services (as identified by Stern) resulting from
the imperative to tackle global warming. CEMEP highlighted the
need for more urgent Government support and incentives for low-carbon
innovation and market development in order to gain first-mover
advantages in the face of global competition.
RDAs work with a wide range of partners to support
research and demonstration of innovative technologies, products
and services. We would, however, highlight the difficulties companies
have in securing investment to take new technologies from demonstration
to full-scale commercial application. It will be important for
the Energy Technologies Institute, Technology Strategy Board and
Carbon Trust continue to work with RDAs to develop programmes
such as the TSB's call for research on carbon abatement technologies,
to improve collaboration between business and academia.
Closely allied to innovation is the need to
support skills development at all levels. Although work is ongoing
to address vocational skills through the formation of sector specific
skills academies the long term decline in interest in STEM subjects
is a worrying trend. These subjects provide the basic grounding
for many of the engineering, scientific and technical occupations
that are required to support a low carbon economy.
3. What are the most important drivers, nationally
and internationally, for a low carbon economy in the UK? To what
extent do the outcomes of the international negotiations at Copenhagen
matter?
Decisions at Copenhagen need to be backed up
by multilateral policy actions to create the frameworks for investment
in low carbon technologies and create global markets for these
technologies. The fiscal and regulatory measures that are translated
from policy have already been described but the essential drivers
are that:
— low carbon technologies must be cost
competitive with the fossil fuel alternative; and/or
— regulation demands the deployment of
low carbon technology.
Decisions at Copenhagen will therefore be critical
in committing the international community to make substantial
cuts in carbon emissions, thereby driving the development of global
markets in low carbon technologies that UK companies are well
placed to exploit. In the short term, however, the substantial
fall in the price of carbon under the EU Emissions Trading Scheme
is having a detrimental impact on low carbon investment and needs
to be addressed.
4. How important is it to the UK economy
that it becomes a leading developer and exporter of low carbon
technologies? What Government policy needs to be in place to do
this?
The recent HMG publication "New Industry,
New Jobs"[70]
highlighted the fact that the UK can only maintain its global
economic position through the growth of knowledge-based high added
value industries. Innovative, low carbon technology falls squarely
within this category and it is a large and growing market as outlined
in our response to Question 1. With its strong science and engineering
base, the UK is well placed to exploit this growing market.
The RDA view is that a "green revolution"
needs to be driven from the regions as well as nationally, building
on distinct regional advantages and opportunities. For example,
Yorkshire &Humber as a relatively high user of fossil fuels
has a strong interest in carbon abatement technologies; the South
West has a strong focus on marine energy, while the North West
has a strong nuclear agenda. The RDAs are well placed to work
with Government and its agencies, providing in depth regional
knowledge and market intelligence.
5. Are we seeing impacts of a downturn on
demand and investment in low carbon technologies? If so, how can
this be addressed given the need to meet long term targets? What
obstacles to investment are there?
Energy generation is very capital-intensive
and there is strong evidence that, where developers are reliant
upon bank finance, investments are being deferred. However[SEEDA1],
utility companies are often the prime developers for renewable
energy projects and are willing to make long term investments.
The recent Budget announcement of an additional £525 million
of support for offshore wind development and the ROCs for developing
renewable technologies are clear signal that Government recognises
the threats to investment as a result of the recent economic crisis.
6. What is the potential role for public
procurement and policies such as the 2016 zero carbon homes
target in driving investment, development and job creation?
Public procurement and policy plays a critical
role in driving investment, development and job creation. One
example of this is the implementation of the NWDA's Sustainable
Buildings Policy which sets standards in 10 key policy areas for
commercial developments in the region seeking NWDA funding with
the aim of meeting the challenges of climate change.
The policy applies to all new major refurbishment
projects over £500,000 and is supported by a series
of mandatory primary and secondary key performance indicators,
which are applied depending on the total cost of the development.
These include a progressive pathway to zero net carbon, waste
and water by 2020 and a mandatory target of "BREEAM
excellent" for new build and "very good" for refurbishment
projects.
One particular investment in a regional town
centre upgrade has focussed on environmental sustainability as
the key driver in order to:
— Recycle or reuse 90% of all existing
materials being removed from site.
— Recycle 90% of all packaging materials
and source its reused.
— Reduce waste factor from the construction
process.
— Create incentives for employees to reduce
waste.
— Promote good practices and be recognised
within the industry.
— Engage a high proportion of local businesses.
— Employ local people and participate in
local apprenticeships.
The partnership between the client and developer
has been a success in realising the benefits of sustainable procurement.
The partnerships collectively made significant headway in both
social and community benefit, in local employment and local suppliers
through to local community projects. Following the success of
the sustainable construction initiative the developer has utilised
the knowledge and experience gained during the project to implement
a company wide environmental initiative, incorporating the benefits
of sustainable construction and reinforcing the existing environmental
policy and practices.
Public procurement has a key role in stimulating
market development for low-carbon products and services. Several
RDAs are working with other public sector bodies in their regions
to improve the alignment of their specification and procurement
policies to deliver low-carbon market stimulus. CEMEP highlighted
the importance of "forward procurement" (ie committing,
at some future date, to purchase a product which does not yet
exist) in generating "innovation pull".
May 2009
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