Additional memorandum submitted by the
Department for Business, Innovation and Skills (BIS), Department
of Energy and Climate Change (DECC) and Department for Environment,
Food and Rural Affairs (Defra)
1. This note provides an update to the joint
Government memorandum submitted to the Environmental Audit Committee
in May 2009. It summarises significant further steps taken by
Government relevant to the Committee's "green jobs and skills"
inquiry since the submission of our original memorandum to the
Committee.
2. The UK Low Carbon Transition Plan,[11]
the UK Low Carbon Industrial Strategy[12]
(LCIS), the UK Renewable Energy Strategy[13]
and Low Carbon Transport: a greener future[14]
were published on 15 July 2009. Together these set out the policies
which will help drive the transition to decarbonising our economy,
and reflect how departments across Government are working together
to deliver the transition to a low carbon future.
THE UK LOW
CARBON TRANSITION
PLAN
3. The UK Low Carbon Transition Plan
(the Transition Plan) sets out a comprehensive strategy to
move the UK onto a permanent low carbon footing. The Transition
Plan plots how the UK will deliver emission cuts of 18% on 2008
levels by 2020 (and over a one third reduction on 1990 levels).
It sets out how the UK will achieve these reductions while maintaining
energy security, maximising economic opportunities and protecting
the most vulnerable.
4. As part of this overall framework, the Transition
Plan also sets out the policy framework to incentivise businesses
to reduce their energy use and seize the opportunities of the
move to a low carbon economy. The key measures set out include:
— Capping emissions from larger and
energy intensive businesses underpinned by the EU Emissions
Trading System, Climate Change Levy/Climate Change Agreements,
and the Carbon Reduction Commitment.
— Providing information and advice through
the Carbon Trust and Business Links.
— Providing financial support to
address capital barriers, particularly for SMEs, through the Enhanced
Capital Allowance scheme and through interest free loans.
— Stimulating innovation by investing
£405 million of funding announced in Budget 2009 over two
years to support the development of low carbon technologies and
removing barriers for innovators, for example through the launch
of an "Energy Generation and Supply" Knowledge Transfer
Network to enhance collaboration between innovators and support
developers navigating the funding landscape.
THE UK LOW
CARBON INDUSTRIAL
STRATEGY
5. Building on the Government's active industrial
strategy for Britain—Building Britain's Future: New Industry,
New Jobs[15]—the
core objective of the LCIS is to ensure that British businesses
and workers are equipped to maximise the economic opportunities
and minimise the costs of the transition to a low carbon economy.
British firms will benefit from the low carbon transition both
by catering to growing British and global markets for low carbon
goods and services, and also by using energy and other resources
more efficiently to reduce costs.
6. At the heart of the Strategy are three basic
principles for a positive environment for low carbon business:
— First, a long term strategic approach
from government—like the overall framework we have set through
carbon budgets, and the clear commitment we have made to nuclear
and renewable energy—which will enable businesses to invest
with greater confidence.
— Second, a pragmatic recognition that
intervention from government may be required in some areas to
accelerate and enable the transition to low carbon—in the
case of the LCIS this means support for the research and development
that will produce new low carbon technologies.
— Finally, recognition that government
has a responsibility to ensure that British-based companies and
people are equipped to compete for the new demand created by government
climate change policies. This has implications for our skills
policy, and the way we support the development of supply chains
in this country. Both these issues are addressed in the Strategy.
7. The LCIS identifies a number of low carbon
sectors in which the Government believes that the UK has the potential
to take a leading global role and where proportionate Government
intervention can unlock long-term competitive potential for British
based firms. Where market failures or barriers are preventing
businesses from unlocking these opportunities and undertaking
the transition in the most cost-effective way possible, it sets
out the Government's strategy for addressing them. This includes
the first investments from the £405 million for low carbon
industries and advanced green manufacturing announced at Budget
2009. Key funding announcements in the LCIS include:
— Up to £120 million to support
the development of a British based offshore wind industry,
including funding for new offshore wind energy manufacturing facilities
in the UK; investment in the development of next-generation and
near-market offshore wind technologies through large scale demonstration;
and improving the UK's capability in integrated offshore wind
testing.
— Up to £60 million to capitalise
on Britain's wave and tidal sector strengths, including investment
in Wave Hub—the development of a significant demonstration
and testing facility off the Cornish coast—and other funding
to make the South West Britain's first Low Carbon Economic Area.
— Up to £15 million capital investment
in order to establish a Nuclear Advanced Manufacturing Research
Centre consisting of a consortium of manufacturers from the
UK nuclear supply chain and universities.
— Up to £10 million for the accelerated
deployment of electric vehicle charging infrastructure.
— Up to £4 million for expanding
the Manufacturing Advisory Service, to provide more specialist
advice to manufacturers on competing for low carbon opportunities,
including support for suppliers for the civil nuclear industry.
— Up to £6 million to construct
low carbon affordable homes built with innovative, highly insulating
renewable materials.
8. The Strategy recognises that we need
to build on local and regional strengths in order to make the
most of the future economic benefits for Britain. For this reason,
it introduces the concept of Low Carbon Economic Areas (LCEAs),
and announces the development of the first of these, located in
the South West of England, focusing on the development of marine
energy demonstration, servicing and manufacture. A second LCEA
in the North East of England focussing on ultra-low carbon vehicles
has also been launched, supporting Nissan's investment of more
than £200 million over the next five years in a new battery
plant in Sunderland. The Government is working with local and
regional partners to develop further LCEAs in strategically important
low carbon sectors over the coming months.
9. The LCIS also recognises that this transition
raises significant challenges for our industrial workforce and
their families. As with previous structural changes to the economy,
the move to a low carbon economy will affect each business, worker
and family differently. The Government is committed to doing all
it can to ensure this is a just transition. For this reason, a
new Forum for a Just Transition, including representatives from
Central Government, national, local and regional bodies, Trade
Unions, business organisations, and third sector bodies, will
be established to consider these issues and advise government.
10. In September, the Government published
Jobs of the Future,[16]
setting out the areas—including the low carbon economy—where,
as a result of expected growth and emerging global trends, new
jobs will be created in the UK economy of the future. It identifies
how the UK's labour market is set to change, the potential employment
opportunities that key sectors of our economy could generate and
Government action to equip our workforce to win their fair share
of these jobs.
11. Looking further ahead, the Government
will develop an innovation roadmap to 2050, with industry and
others, showing innovation milestones for existing and new technologies.
The roadmap will help identify the innovation barriers and decision
points for technologies and support Government and industry to
prioritise resources and energy technology families which show
potential benefit for the UK.
SKILLS FOR
A LOW
CARBON ECONOMY
12. In the LCIS we set out a new commitment
from Government to work proactively with industry to ensure that
skills gaps are filled before they become a barrier to job creation
or business growth. Since July, good progress has been made, particularly
in the first LCEAs, where Skills Demonstration Projects are already
being developed to support the demonstration and commercialisation
of new technologies.
13. Under the leadership of SW Regional Development
Agency, the LCEA in Marine Energy is creating the conditions
for a dialogue between employers and skills providers to ensure
that skills solutions are developed as they are needed. Skills
funding streams are being aligned to support the delivery of an
industry-led skills plan, and "quick win" solutions
for the most pressing higher level skills needs. With support
from DWP, the Low Carbon Future Leaders graduate placement
scheme is being rolled out in the South West, before being implemented
in each LCEA as more are announced. STEM graduates will act as
a regional field force to stimulate SME engagement and demand
for low carbon skills.
14. In the North East, under the leadership
of One North East, skills partners and major manufacturers are
supporting the LCEA in Ultra-Low Carbon Vehicles. They
are looking at the feasibility of developing an Ultra-Low Carbon
Vehicle research centre to be used by colleges, universities and
business, and a sustainability centre to disseminate leading edge
expertise in Low Carbon Vehicle training. Gateshead College and
Sunderland University are working with Nissan and Smith Electric
Vehicles to develop a new apprenticeship programme and foundation
degree.
15. Energy and Utility Sector Skills Council
(SSC) is leading cross sector collaboration to develop a UK wide
Renewable Energy Skills Strategy, as part of their wider remit
for Low Carbon skills across the SSC network. With support from
DECC, BIS and the Devolved Administrations, they are leading a
project group with a number of SSCs to coordinate labour market
intelligence, and develop a skills action plan for the demand
and supply sides.
16. Public procurement is a crucial lever
in stimulating new demand for skills. To help drive progress we
have committed to using public procurement to promote investment
in skills both when letting new contracts, and when working with
existing contractors on a voluntary basis. BIS Ministers recently
announced that we will aim for 20,000 apprenticeships over the
next three years through Government procurement as part of our
wider aim to increase apprenticeship numbers.
17. As well as these specific actions, we
intend shortly to publish a National Skills Strategy and a
Higher Education Framework. Our aim through these documents
will be to ensure the skills system fully supports economic recovery
and delivery of skills for jobs of the future. This will include
looking at how the skills system can align more closely to regional
and sub regional economic development priorities through embedding
skills within the single integrated regional strategies being
developed by RDAs with Local Authority Leader Boards. Our intention
is that from 2010 our new Skills Funding Agency will ensure that
the skills system has the capacity and funding to support areas
of strategic importance to the economy. And we will look to the
UK Commission for Employment Skills to improve the intelligence
we have about strategic skills needs, with research into the needs
of priority sectors. In HE our focus will be on STEM and on boosting
employability and specific technical skills at undergraduate level,
and also on challenging employers to work with Government on a
co-investment basis on course design, careers advice and student
placements.
23 October 2009
11 http://www.decc.gov.uk/en/content/cms/publications/lc_trans_plan/lc_trans_plan.aspx Back
12
http://www.berr.gov.uk/files/file52002.pdf Back
13
http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/energy_mix/renewable/res/res.aspx Back
14
http://www.dft.gov.uk/pgr/sustainable/carbonreduction/low-carbon.pdf Back
15
http://www.berr.gov.uk/files/file51023.pdf Back
16
http://www.hmg.gov.uk/media/41730/jobs_of_the_future.pdf Back
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