Memorandum submitted by the Association
of Chartered Certified Accountants (ACCA)
1. INTRODUCTION
1.1 The Association of Chartered Certified
Accountants (ACCA) welcomes the opportunity to respond to the
Environmental Audit Committee's inquiry into the prospects for
green jobs and policies aimed at increasing employment in environmental
industries. Our global footprint and expertise puts us in a strong
position to comment on these issues.
1.2 ACCA is the global body for professional
accountants. We aim to offer business-relevant, first-choice qualifications
to people around the world who seek a rewarding career in accountancy,
finance and management.
1.3 ACCA has its headquarters in London
and 141,330 of our members, students and affiliates are based
in the UK. Globally, we support our 131,500 members and 362,000 students
throughout their careers, providing services through a network
of 82 offices and centres around the world.
1.4 We have been actively involved in the
unfolding debate on corporate social responsibility since 1990,
helping businesses and organisations realise the growing importance
of sustainability to them. In particular, we have promoted transparency
and best practice by championing the extension of corporate reporting
to include the social and environmental aspects of a business.
1.5 In 2002 ACCA became the first professional
body to be awarded the prestigious Queen's Award for Sustainable
Development. We are also members of the advisory group of the
Climate Disclosure Standards Board and of the Executive Board
of the "Accounting for Sustainability" project launched
by HRH the Prince of Wales.
1.6 Figures show that the UK green goods
and services sector is already the 6th biggest in the world, worth
£107 billion per annum and employing over 880,000 people
in the UK.[88]
2. SUMMARY OF
KEY POINTS
2.1 The move to a low carbon economy should
be done as quickly as possible and with collaborative international
effort unseen on a global scale before.
2.2 The "green" component of the
UK's stimulus package should be at least 20% of the total, consistent
with the recommendations of Lord Nicholas Stern. The announced
stimulus has not therefore taken advantage of the opportunity
to reinvigorate the economy with green growth and jobs.
2.3 ACCA believes that the Treasury should
publish an assessment of the net impacts of its fiscal stimulus
package on the environment.
2.4 ACCA welcomes the 2009 Budget as
the first low-carbon budget, and supports the government on the
adoption of an ambitious emissions target for 2020. Investing
in the green economy is an effective way to stimulate economic
recovery, boost investment and create jobs. The Government must
continue this momentum.
2.5 ACCA believes that funding pledges will
need to be sustained over time and backed by coherent policy if
the Government's long-term targets are to be met. While many of
the measures announced in the Budget are a step in the right direction,
they are not yet enough to achieve the announced 34% greenhouse
gas reduction target by 2020. For example, unless financial support
for renewables announced in the 2009 Budget is accompanied
by policies and measures aimed at improving both the planning
system and the grid, the UK is likely to miss its renewable energy
goals of 15% by 2020.
2.6 The UK has a significant opportunity
to become a world leader in low carbon technologies such as wind,
tidal, carbon capture and storage and clean vehicles. However,
this cannot be achieved without clearer, stronger and longer-term
commitments and policies from Government.
2.7 ACCA believes that the Low Carbon Industrial
Strategy (LCIS) represents the Government's greatest commitment
so far to making a low carbon economy happen, but that it does
not yet contain enough concrete proposals.
2.8 ACCA believes that the Government has
to provide industry with the right set of regulations, Government
grants and other incentives, and to create the investment climate
that will encourage the investment of private capital required
to build a low carbon economy. This means consistency, clarity
and certainty in the implementation of policy and legislation.
This is the only way we can green the economy in the midst of
a recession.
2.9 Many of the points in the LCIS focus
on the longer term, such as the establishment of new nuclear power
plants. ACCA believes that there needs to be a greater focus in
the LCIS on policies that make a difference immediately, and that
the Government needs to ensure that it is agile enough to ensure
that the planning system and the incentives enable developments
to take place.
2.10 The UK will not be able to take advantage
of the emerging environmental industries market unless we have
the right skills base and policies to promote future growth in
the country's environmental industry. We recommend that the Government
outline its plans to develop the skills base for the UK's environmental
industries in the form of an environmental industry growth strategy.
3. How can the UK maximise the environmentally
positive opportunities arising from changes in public spending
intended to help tackle the recession?
3.1 While politicians struggle to retain
votes and work economies out of recession, it is crucial that
they acknowledge the climate crisis as well. Acting early, as
key policy documents, economic forecasts and project proposals
are urging, will raise our chances of diverting catastrophe at
a reduced financial and environmental cost, while building a strong
green economy.
3.2 To have any chance of reversing climate
change, moving to a low-carbon economy is key. A low carbon economy—one
that relies very little on fossil fuels and energy sources with
high greenhouse gas emissions—will improve the planet's
success rate of tackling the climate predicament. It can be done.
Masdar City in Abu Dhabi is under construction and aspires to
be the world's first zero-carbon, zero-waste city powered entirely
by renewable energy sources. Britain has set the pace by setting
a legal target of 80% reduction in carbon emissions by 2050 (1990 baseline).
The move to a low carbon economy should be done as quickly as
possible and with collaborative international effort unseen on
a global scale before.
3.3 HSBC has published a report[89]
ranking 17 countries by the green elements of their economic-stimulus
packages. South Korea has set aside 81% of its fiscal stimulus
to investing in a green economy. China has allocated 38% and the
US 12%, behind Germany and France. The UK, however, is investing
just 7% of its stimulus in green areas.
3.4 April 2009 saw the UK's first low
carbon Budget. The Chancellor committed over £1.4 billion
of extra targeted support to the low-carbon sector, to help combat
climate change and support low carbon industries and "green
collar jobs". ACCA welcomes this and supports the government
on the adoption of an ambitious emissions target for 2020. Investing
in the green economy is an effective way to stimulate economic
recovery, boost investment and create jobs. The Government must
continue this momentum.
3.5 ACCA believes that funding pledges will
need to be sustained over time and backed by coherent policy if
the Government's long-term targets are to be met. While many of
the measures announced in the Budget are a step in the right direction
they are not yet enough to achieve the announced 34% greenhouse
gas reduction target by 2020.
3.6 Of the various measures in the Budget
2009, ACCA particularly welcomes the additional boost for renewables
supported by the boost for Renewable Obligation Certificates (ROCs)
and new investment from the European Investment Bank (EIB) aimed
at relieving project finance. However, unless this financial support
is accompanied by policies and measures aimed at improving both
the planning system and the grid, the UK is likely to miss its
renewable energy goals of 15% by 2020.
3.7 Energy efficiency is a significant short-term
opportunity for the UK to reduce emissions, but the £375 million
to support energy and resource efficiency in businesses, public
buildings and households over the next two years, and £70 million
for decentralised small-scale and community low-carbon energy
announced in the 2009 Budget is insufficient, especially
in the absence of tighter fuel efficiency standards for vehicles
and appliances.
3.8 More attention should also be focused
on establishing the policies needed for renewable heat and micro-generation.
These are not yet in place, and far greater funding is needed
to make them viable for households and small businesses.
3.9 The UK has a significant opportunity
to become a world leader in low carbon technologies such as wind,
tidal, carbon capture and storage and clean vehicles. However,
this cannot be achieved without clearer, stronger and longer-term
commitments and policies from Government.
4. To what extent will the Government's long-term
policy framework, including environmental regulations, tax changes
or new market instruments, encourage low-carbon investment and
increase employment in environmental industries and their associated
supply chains?
4.1 The global financial crisis and spreading
economic downturn, the associated volatile markets and extensive
job loses, the unprecedented collaborative £3 trillion
finance sector bailout have all led to the question: what type
of future does the green economy have?
4.2 For pessimists, the current economic
downturn has substantially delayed green economy plans, with governments
now pre-occupied with the recession and focusing on fiscal stimulus
measures. The phenomenal financial bailout has prevented any large
scale investment in climate change mitigation and the green energy
sector. The economic downturn will lead to a decline in direct
investments and reduce the rigour of future climate change legislation
and environmental taxes to protect the competitiveness of industry
in the dire financial climate.
4.3 For optimists, the twin crunches of
climate and finance has led to a unique and incredible opportunity
to re-build the global markets with systems sympathetic to climate
change, that value societal and environmental costs, and that
are sustainable in the truest sense. The trillion dollar banking
sector bailout is proof that governments can work together, quickly,
to help resolve global catastrophes. The green labour market will
thrive within the green economy, the future of the planet will
improve, and equity among society will begin to become re-balanced.
4.4 One group of eminent optimists, the
Green New Deal Group, has prepared a substantial and technically
robust proposal to governments in order to "pull the world
back from economic and environmental meltdown". Their work
has been inspired by Roosevelt's New Deal that was launched to
halt the Great Depression of the 1930's. Structural changes to
international financial and taxation systems, together with calls
to invest in energy systems, are comprehensively proposed. Their
agenda, which requires action at local, national, regional and
global levels, includes calls for:
— executing a bold vision for, and investing
in, a low-carbon energy system;
— creating and training a "carbon
army" of workers;
— ensuring more realistic fossil fuel prices
that include the cost to the environment; and
— re-regulating the domestic financial
system.
4.5 The UN and leading economists have recently
launched a similar reform package—their Green Economy Initiative
(GEI)—which aims to "mobilise and re-focus the global
economy towards investments in clean technologies and natural
infrastructure to combat climate change and trigger an employment
boom in the 21st century". The project has identified changing
patterns of employment and investment resulting from efforts to
reduce climate change and its effects are already generating new
jobs in many sectors and economies, and could create millions
more in both developed and developing countries.
5. The economic and social benefits of planned
green investments and the extent to which the changes in spending
will contribute to sustainable development and environmental protection.
5.1 The 2008 Pre-Budget Report announced
a £535 million package of fiscal stimulus measures designed
to tackle economic and environmental problems simultaneously.
However, very little of the £3 billion total stimulus
was focused on green technologies and most of the announced funding
was already committed elsewhere. At the same time, a significant
amount of it was used for road building and widening, rather than
on investment in public transport. At the same time, the Government
has taken the decision to go ahead with a third runway at Heathrow,
something which calls into question the consistency and credibility
of the Government's policies on climate change and which will
hamper the country's ability to meet climate change targets. ACCA
believes that the Treasury should publish an assessment of the
net impacts of its fiscal stimulus package on the environment.
5.2 Through a purely economic lens, the
Stern review—published in October 2006—estimated that
"business as usual" would incur a 5-10% loss of global
GDP. When taking into account other issues such as impact on the
environment and human health, total estimated cost of climate
change increases to a 20% reduction in consumption per head. Alternatively,
taking some immediate drastic action to stabilise carbon emissions
by 2050 was estimated to be at a cost of about around 1%
of GDP—significantly less than the "business as usual"
scenario.
5.3 The Stern Review found that, by 2050,
investment in energy security and environmental clean-up technologies,
a fundamental part of the fabric of a low-carbon economy, would
be over US$13 trillion. The proliferation of new industries
and employment would be overwhelming.
5.4 Despite the recession, a number of governments
and corporations are already harnessing the potential gains that
green-collar investment can bring:
— In a bid to stimulate the Australian
economy, its Prime Minister, Kevin Rudd, has called for a "solar
revolution" and has provided an A$500 million fund to
promote renewable energy.
— The new US President, Barack Obama, has
made an encouraging start. He has recruited Nobel prize-winning
physicist Steve Chu as the next energy secretary. Chu promoted
research on biofuels, solar power and energy efficiency in his
previous roles. The President has also appointed one of the world's
leading climate change experts, John Holdren, as director of the
White House Office of Science and Technology Policy.
— Portugal has emerged as an unexpected
success story in terms of the transition to a low carbon economy.
Using existing hydro technology and cutting edge wind, solar and
tidal technologies, they confidently predict 31% of energy requirements
coming from renewables by 2020.
— British Telecom plc (BT) is the UK's
biggest customer of green electricity. It has recently announced
it will build its own wind farms which will be operational by
2012 and provide 25% of its UK electricity needs by 2016.
BT has a comprehensive, detailed climate change strategy covering
its operations, customers, employees and suppliers. In 2007, its
chief executive pledged to lead in the business response to climate
change.
— Wal-Mart Stores Inc. has established
a partnership with many of its suppliers to facilitate the creation
of green jobs in the United States. At an inaugural meeting of
the Wal-Mart Green Jobs Council, participants identified their
top catalysts for creating green jobs.
5.5 The Government should ensure that it
looks at and learns from best practice from around the world.
6. Will the green fiscal stimulus maximise
employment opportunities in environmental industries, and what
is the nature of the jobs that might be created?
6.1 The "green" component of the
UK's stimulus package should be at least 20% of the total, consistent
with the recommendations of Lord Nicholas Stern. The announced
stimulus has not therefore taken advantage of the opportunity
to reinvigorate the economy with green growth and jobs.
6.2 The United Nations has predicted an
acceleration of green job creation in the years ahead, as well
as the creation of a large number of jobs across many sectors.
This coincides with Lord Stern's calculation that a "massive
shift towards low-carbon technologies will be accompanied a shift
in employment patterns" and that "25 million people
will be working in these sectors by 2050".
6.3 The term "green-collar" has
been described in various ways, but the clearest is perhaps this
definition from the UN:
"Green jobs are those in positions in
agricultural, manufacturing, R&D, administrative, and service
activities aimed at alleviating the myriad of environmental threats
faced by humanity. Specifically, but not exclusively, this includes
jobs that help protect and restore ecosystems and biodiversity,
reduce energy, materials, and water consumption through high efficiency
and avoidance strategies, decarbonise the economy, and minimise
or altogether avoid generation of all forms of waste and pollution."
6.4 The typical green economy industries
include renewables, energy efficiency in buildings, organic agriculture
and sustainable transportation. Many jobs already exist in energy-efficiency,
sustainability and corporate social responsibility sector.
6.5 As "green" investment continues,
particular sectors where the UK is likely to benefit include,
for example (this is not an exhaustive list):
— Specialist construction (for example,
constructing wind farms).
— Construction (including building new,
energy efficient or eco homes and retrofitting the UKs existing
housing stock and places of business).
— Energy efficiency (such as installing
solar panels, roofers, insulation installers, building inspectors).
— Research and technology, especially in
terms of software, machinery and equipment (such as coming up
with new ways to build efficient biofuel engines, smart metering
and other green technology developments).
— Transport (including those required to
expand and maintain public transport systems, eg civil engineers,
building service engineers and electricians).
— Financial services (for example, accountants,
to assist with carbon forecasting, accounting and management etc.).
— The same jobs as people are currently
employed in (for example, machine operators in factories, people
transporting goods etc.).
National Examples:
— Germany is a low-carbon, green
economy success story, already employing a quarter of a million
people in the renewables sector alone with a turnover of 24 billion
Euros. Predictions push the renewables workforce figure up to
710,000 by 2030. A UNEP report in 2008[90]
predicts that Germany's renewable energy sector will be larger
than the automobile and machine manufacturing in the next 10 years.
— Australia's national science agency,
CSIRO, has explored the skills, innovation and workforce dimensions
of the transition in Australia to a low carbon society. The key
results have found that achieving rapid transition to sustainability
would have no detrimental impact on national employment. Employment
in sectors with high potential environmental impacts will grow
strongly, with increases of more than 10% over 10 years.
This will add 230,000-340,000 new jobs in the transport,
construction, agriculture, manufacturing and mining sectors.
— The USA's House and Senate have
recently approved Obama's economic stimulus package. A healthy
US$100 billion will be allocated to energy efficiency and
renewables' programmes, including $20 billion of tax breaks,
$30 billion for investing in smart grid technologies and
$10 billion to spend improving the energy efficiency of public
sector buildings. A further $16 billion has been pledged
to be used on mass transit and high-speed rail link projects.
— The American Solar Energy Society has
predicted as much as a quarter of the US workforce could have
a "green job" by 2030.
7. What does the Low Carbon Industrial Strategy
need to deliver, how, and by when?
7.1 BERR and DECC have published the LCIS.
The document highlights a range of companies in the UK that are
already taking advantage of low carbon opportunities, and sets
out the scope and ambition of the Government's plans. It aims
for "step changes" in four key areas, namely: improved
energy efficiency; the development of an energy infrastructure
for a low carbon future; the establishment of the UK as a global
leader in the development and production of low carbon vehicles;
and the positioning of the UK as the best place to locate and
develop a low carbon business by developing its skills, infrastructure,
procurement, research and development.
7.2 ACCA believes that the LCIS represents
the Government's greatest commitment so far to making a low carbon
economy happen, but that it does not yet contain enough concrete
proposals. We acknowledge though, and welcome, that BERR and DECC
are gathering input from businesses and other interested parties
before a final strategy document is published in the summer.
7.3 ACCA believes that the Government has
to provide industry with the right set of regulations, Government
grants and other incentives, and to create the investment climate
that will encourage the investment of private capital required
to build a low carbon economy. This means consistency, clarity
and certainty in the implementation of policy and legislation.
This is the only way we can green the economy in the midst of
a recession.
7.4 Many of the points in the LCIS focus
on the longer term, such as the establishment of new nuclear power
plants, which are unlikely to be built for at least 10 years,
and which only begin to produce low carbon energy once they have
been switched on (until that point in their construction release
huge amounts of greenhouse gas emissions).
7.5 ACCA believes that there needs to be
a greater focus in the LCIS on policies that make a difference
immediately, and that the Government needs to ensure that
it is agile enough to ensure that the planning system and the
incentives enable developments to take place.
8. Do you have any comment on the skills
base for the UK environmental industries, and the effectiveness
of Government policies to improve and enlarge it?
8.1 The UK will not be able to take advantage
of the emerging environmental industries market unless we have
the right skills base and policies to promote future growth in
the country's environmental industry. The Government outlined
its views in its publication Building a low Carbon economy
Unlocking Innovation and Skills,[91]
which acknowledges the need to develop a skilled workforce and
create partnerships with businesses and education institutions,
as well as stating that the Government has to set a long-term
policy framework.
8.2 We recommend that the Government outline
its plans to develop the skills base for the UK's environmental
industries in the form of an environmental industry growth strategy.
8.3 ACCA further believes that there should
be an increase in financial support to universities and scientific
institutions for research and development into innovative environmental
technologies. This would assist in developing the skills required.
8.4 ACCA would support the Government taking
a formal approach to facilitating high-quality training, for example,
in ensuring sustainable construction. We also note that many of
the companies involved in the environmental sector are small,
medium and micro companies, which are often among the most innovative.
There should be a special focus on supporting these enterprises
with training.
8.5 Further, ACCA believes that promoting
career opportunities in the environmental sector, especially amongst
young people in schools, colleges and universities, through support
for industrial placements and developing vocational qualifications,
would particularly assist in developing skills over the long-term.
8.6 The environmental sector, (apart from
in the services sector), is in many cases a highly qualified sector
in terms of technical and scientific skills (geologists, engineers,
microbiologists etc). These areas would benefit from particular
support.
28 May 2009
88 http://www.berr.gov.uk/files/file50254.pdf Back
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