Memorandum submitted by the Engineering
and Technology Board (ETB) and the Royal Academy of Engineering
(RAEng) (with the support of the Institute of Marine Engineering,
Science and Technology (IMAREST), the TWI (The Welding Institute),
the Chartered Institution of Water and Environmental Management
(CIWEM), the Chartered Institute of Plumbing and Heating Engineering
(CIPHE), the Institute of Physics (IOP), the Institution of Chemical
Engineers (IChemE), the Energy Institute, the Institution of Highways
and Transportation (IHT), the Institution of Mechanical Engineers
(IMechE), and the Engineering Council UK (ECuk))
1. The Engineering and Technology Board
(ETB) and the Royal Academy of Engineering (RAEng) with the support
of their partners welcome the opportunity to jointly respond to
the Environmental Audit Committee's Green jobs and skills inquiry.
In our joint response to the inquiry, we have drawn on our experience
and that of our partners as previously outlined.
2. The ETB is an independent organisation that
promotes the essential role of engineers, engineering and technology
in society. The ETB partners business and industry, Government
and the wider STEM community. For more information about the ETB
please visit www.etechb.co.uk
3. The Royal Academy of Engineering (RAEng)
brings together the country's most eminent engineers from all
disciplines to promote excellence in the science, art and practice
of engineering. The Academy's contribution to this response has
been formulated from the views of a number of Fellows of the Academy
with expertise and experience of relevant fields in both industry
and academia. For more information about the RAEng please visit
www.raeng.org.uk
4. EXECUTIVE
SUMMARY
5. To provide the best prospects for the
economy and consequently for green jobs the Government should
make it very clear what forms of technology it will support and
fund and the incentives that will be in place for businesses that
deliver these solutions. Additionally, given the complexity and
scale of meeting the climate change challenge, it is crucial that
the ultimate goal is clear—namely decarbonisation of the
energy system—and that the mechanisms put in place to achieve
this goal are as straightforward as possible and consistently
adhered to. This will only be achieved through effective dialogue
and partnerships between government, professional engineering
institutions and industry.
6. Three particular 2009 Budget proposals that
could have a significant impact on carbon reduction and environmental
protection are the £9 billion efficiency savings target,
the £750 million Strategic Investment Fund and potentially
part of the £1.7 billion support for job centres.
7. The national and global drive towards
low carbon technologies and greener services will undoubtedly
result in many opportunities for new industries and jobs. If the
UK is to benefit from this, clear, consistent and durable policy
frameworks are needed.
8. The aim of the green agenda within Government
should not be to maximise employment in the sector but primarily
to maximise carbon reductions. Once conditions are in place to
achieve this then the contribution of these industries to the
economy and the associated employment can be maximised in the
long-run.
9. The Government's stated desire, as part
of the DIUS's Science and Society programme, to increase societal
engagement in science and engineering, particularly with young
people, would have widespread social benefits in terms of technological
literacy, opportunity, overcoming the digital divide, increasing
the supply of engineers and scientists working on the climate
change agenda and allowing people to engage in the political process
in a more technologically aware manner.
10. Data from a number of sources indicate
that there is significant potential for growth in the UK and global
renewable energy markets. Additionally we have identified associated
careers in photovoltaic power generation, micro wind energy generation,
biomass and micro hydro generation systems, as being "electrical
trades and installation," "plumbing," "heating
and ventilation" and "air conditioning and refrigeration."
There is also a rising demand for a skilled workforce for other
low carbon technologies such as nuclear, carbon capture and storage,
smart grid systems, and low-carbon transport.
11. Given the interim goal of the Climate
Change Act is to achieve a 26% reduction in carbon emissions by
2020, we would advise that support be provided as soon as possible.
An ideal opportunity for this would be the Pre Budget Report later
this year. It should also be noted that it will require constant
and considerable innovation to develop the necessary technologies
and to keep the UK internationally competitive. This innovation
depends upon the continued health of the UK science and engineering
base and increased links between that base and UK business.
12. It should be noted that although the
term "green jobs" is widely used by the Government,
it does not have a common, accepted definition. This poses a problem,
not just in responding to this inquiry, but more seriously, in
trying to design policies with this as their objective.
13. FULL RESPONSE—ARRANGED
BY KEY
ISSUE
14. Prospects for green jobs and policies
aimed at increasing employment in environmental industries
15. Before answering the questions posed
by this inquiry, it should be noted that although the term "green
jobs" is widely used by the Government, it does not have
a common, accepted definition. This poses a problem, not just
in responding to this inquiry, but more seriously, in trying to
design policies with this as their objective. In terms of technologies,
"green" covers all renewable forms of generation but
also low carbon generation. Energy efficiency must also be included
within the term "green" and this can cover both products
and services. When it comes to occupations, a job that is entirely
"green" is rare. Some jobs may be, but what is more
common is a trend in professions to be less "brown".
It is beyond the scope of this response to provide a definitive
definition of "green jobs" but in general, we will consider
any training, occupation or skill concerned with renewable or
low carbon energy or energy efficiency to be included in the term.
16. Given the rate of expansion already taking
place in the low carbon sector, together with the potential of
the global market in low carbon technologies to be worth $3 trillion
by 2050[92]
and with the Government's ambitious proposals for reductions in
carbon emissions, there is inevitably going to be a considerable
increase in the number of jobs available in this sector, especially
in the North East, North West and Scotland in fabrication, engineering
and manufacturing. We would however stress that employment in
renewable technologies should not be regarded as an end in itself
but rather as a beneficial corollary of the necessary expansion
and diversification of energy system. If the right conditions
are in place to promote research, development and investment in
this sector, then more green jobs (of a permanent nature) are
likely to result than if the emphasis had been on maximising employment
on a short-term basis in this industry.
17. Government policies in this area such as
the legal mandating of carbon targets through the Climate Change
Act and the related introduction of carbon emissions quotas; the
moves towards low carbon technologies and the newly announced
Strategic Investment Fund are likely to have beneficial impacts
on green business in the UK and consequently on green jobs.
18. The latest data shows significant increases
taking place in both applications (8561) and acceptances (1640)
for Chemical Engineering in Higher Education with 71% and 74%
respective increases since 2001-02. These increases correspond
to the launch of the Institute of Chemical Engineers' (IChemE)
careers campaign Whynotchemeng?.[93]
It should also be noted that non graduate positions will be equally
important and while the situation within Further Education is
also improving it is not showing the same rate of growth as Higher
Education.
19. Where Government policy is clearest,
it is easier for businesses and education providers to plan for
their future requirements and to respond effectively. The relatively
strong emphasis that has been given to nuclear power as a future
source of energy makes it easier for the sector to project future
prospects. This, coupled with a clear and consistent regulatory
framework, has allowed more advanced planning to occur.
20. As a result, Cogent's Sector Skills
Council Skills Report[94]
has forecast the need for up to 11,500 new entrants into the nuclear
industry by 2015, rising to 16,500 depending on early retirements.
21. The type of jobs generated by each form
of technology will vary markedly. For example, most of the jobs
in the nuclear sector are likely to be highly skilled jobs as
will those employed in the installation of offshore wind turbines.
However, much of the low tech manufacturing jobs are likely to
be based overseas and therefore will not provide much UK based
employment. This is also true of the majority of the high end
design work. But there will be demand in the UK for mid level
technician positions to operate and maintain the various forms
of low carbon technology and this is a section of the workforce
that should not be neglected.
22. To provide the best prospects for the
industry and consequently for green jobs the Government should
make it very clear what forms of technology it will support and
fund and the incentives that will be in place for businesses that
deliver these solutions.
23. How can the UK maximise the environmentally
positive opportunities arising from changes in public spending
intended to help tackle the recession
24. Amongst the public spending measures
announced in the 2009 Budget were three particular proposals that
could have a significant impact on carbon reduction and environmental
protection—the £9 billion efficiency savings target,
the £750 million Strategic Investment Fund and potentially
part of the £1.7 billion support for job centres.
25. Amongst the measures that could be adopted
to achieve efficiency savings would be the improved insulation
and energy efficiency of the public estate and similar measures
to increase the fuel efficiency of Government transport vehicles.
In order to achieve this, the Government should allow tenders
to fulfil these aims, setting ambitious minimum standards without
specifying particular technologies that could fulfil them. This
would provide an incentive for suppliers to innovate methods and
technologies to meet these contracts that could have wider application
in energy efficiency in the private sector.
26. In addition, we propose that it is possible
to bring forward the environmentally positive progress that is
intended to be achieved through major infrastructure projects,
such as carbon capture and storage or a modern "smarter"
grid system. Doing so would also provide some part of the supply-side
impetus that the economy needs to help recover from the recession.
27. Given the scope that exists within the
Government's budget, as a consumer of £175 billion of goods
and services per year it is likely that a substantial part of
the Government's desired savings could be achieved in this way.
As such we would recommend that these forms of savings be given
the highest priority in the Government's Pre Budget Review later
in the year. In many cases it will be possible to deliver these
savings whilst making use of the Government's procurement chain
to support nascent green technologies and inject momentum into
low carbon markets at a time when other sources of finance are
likely to be lacking.
28. The £750 million Strategic Investment
Fund has the potential to provide considerable support to parts
of the low carbon economy. It remains to be seen how this will
be administered in full but we welcome the additional £50
million funding that has been provided to the Technology Strategy
Board which has made a key contribution in this sector in recent
years.
29. Furthermore, a particular area where
the measures announced in the Budget could be used to benefit
low carbon industry and employment in the UK would be to follow
the proposals set out by the ETB[95]
and apportion a significant part of the £1.7 billion funding
for Job Centres to re-training in growth industries in the low
carbon economy. As identified above, there is a need to develop
the necessary skills throughout the UK and as early as possible
to ensure that the carbon emission targets in 2020 and 2050 are
met.
30. Apportioning part of the funding in
this way would have the additional benefits of increasing interactions
between the Job Centre, local businesses and Further Education
colleges and of preventing skills being lost during the recession
which may be required at a later stage.
31. The degree to which the Government's
long-term policy framework, including environmental regulations,
tax changes or new market instruments, will encourage low-carbon
investment and increase employment in environmental industries
and their associated supply chains
32. The prevailing difficult economic situation
has made wealth creation and employment two priority issues for
the Government, this has resulted in large sums of money being
paid in the form of subsidies. This difficult economic situation
comes in the midst of more long-term challenges already facing
the UK, and the world, of climate change and security of energy
supplies. It would therefore seem an obvious strategy to attempt
to address both these issues simultaneously by expanding the low
carbon industrial base and increasing the number of jobs in the
sector.
33. The UK is already subject to both European
and national long-term policy frameworks intended to reduce emissions
of greenhouse gases and increase the proportion of renewable sources
of energy. The EU's ambitious 20:20:20 package aims to dramatically
reduce its carbon output by 20% over the coming decade. There
are several strands to this policy, including the requirement
of the UK to supply 15% of its total energy from renewable sources
by 2020—from a level of less than 2% in 2005.
34. This is matched by equally challenging
UK legislation. The Climate Change Act, which came into effect
in November 2008, was the first to enshrine in law national greenhouse
gas emissions reduction targets—80% by 2050. While the science
of climate change indicates strongly that cuts of this level are
needed from the world's developed countries, the engineering and
socio-economic realities of how they can be achieved are far from
being resolved.
35. In order to achieve these long-term
policy goals, a number of regulations are already in place. These
include European directives and mechanisms such as the EU Emissions
Trading Scheme (ETS) which effectively levies a cost on around
half of the carbon emissions of the UK, principally from large
electricity generators and industry. The ultimate aim of this
scheme is to set a price for carbon that would be sufficiently
high enough to make low carbon technologies commercially competitive
against the more traditional fossil fuel based alternatives.
36. In the UK there is a raft of regulations
and mechanisms that either tax carbon emissions or subsidise carbon
reductions in various sectors of the economy. There are, amongst
others, the Renewables Obligation (RO) scheme which provides subsidises
for renewable electricity generation, the Climate Change Levy
that taxes non-domestic energy usage and the proposed Carbon Reduction
Commitment that will introduce a cap and trade scheme into the
business and public sector.
37. The major challenge facing the Government
is matching the stated goals of the policy frameworks with the
mechanisms designed to achieve them. If the goals are not clear
it is likely that mechanisms will miss their mark. The goal of
the Climate Change Act is clear enough—to reduce greenhouse
gas emissions. But when this is considered alongside the EU targets
to increase the proportion of renewable energy the ultimate target
becomes less clear. Low carbon and renewable are not equivalent
and a policy designed to increase the amount of renewable energy
such as wind or solar electricity on the system may be at the
expense of low carbon forms of generation such as nuclear or carbon
capture and storage. Given the complexity and scale of the challenge,
it is crucial that the ultimate goal is clear—namely decarbonisation
of the energy system—and the mechanisms put in place to
achieve this goal must be as straightforward as possible and consistently
adhered to.
38. This clarity and consistency is of the
utmost importance in terms of investment in low carbon industries
and services. Moving into new areas of business or developing
new technologies is fraught with risk, especially financial risk.
In making decisions about the future direction a company may take,
or which small businesses deserve to be lent money, the more certainty
there is in the durability of the tax and regulation regime it
will operate under, then the easier it is to make a proper assessment
of the risk and potential return on investment and to create the
confidence to commit. Several current factors, such as the increase
in business rates from 5% to 20% for wind farms and the long delay
in the decision on round 3 licenses for offshore wind farms are
having the opposite effect and are adversely impacting on both
confidence and stability in the industry.
39. The current economic recession has highlighted
the level of financial uncertainty business must contend with.
In the course of less than a year the price of oil dropped from
over $140 per barrel to less $40 per barrel, before rebounding
to $70 today.[96]
This volatility has had a disastrous effect on low carbon technologies
which had been reaching a point where they were becoming commercially
competitive. Investment in low carbon technologies (such as wind
turbines) has suffered as a result. Fuel prices will continue
to fluctuate and credit and investment will remain difficult to
obtain. A clear policy such as the 80% greenhouse gas reduction
in the Climate Change Act will keep the Government's focus on
supporting such technologies. This is crucial if businesses are
to survive through a period of increased uncertainty and provide
the continued expansion in low carbon industries, necessary to
reach the designated targets.
40. The specific form of the mechanisms
is also clearly important and many existing regulations are in
urgent need of review. An example of this is the regulations governing
biogas production by anaerobic digestion. Current legislation
governing biogas production, by anaerobic digestion, is out of
line with European states that are the most innovative in this
technology such as Norway, Denmark and Sweden. This technology
presents a clear opportunity to convert some wastes into bio-fertilisers
and also into biogas (renewable, low emission, energy). The water
industry already has digesters and the expertise to operate them.
It also has the expertise to use digestate to good agronomic effect
whilst protecting the environment from adverse effects. The digesters
have the potential to be "turbo-charged" by simple retrofit
to treat twice or three-times as much material in compliance with
Animal By-Products Regulations to "enhanced treated"
status. Unfortunately, as a result of legislation, the use on
land of digestate from sewage sludge and digestate from food waste
are regulated differently, so water companies are inhibited from
co-digestion. As a consequence, the waste loses some of its biogas
potential before it gets into the digesters and energy is squandered
in treating disposed material. There is no difference in the environmental
impact or function of these different digestates but UK policy
remains wedded to the distinction. This presents a clear opportunity
to reform regulation and improve environmental outcomes.
41. In other cases, the way in which the
mechanism is managed is of greater importance than the specific
form of the mechanism. For example, there are a number of alternative
methods of subsidising renewable energy such as the RO scheme
or feed-in tariffs. Adopting the right one is obviously pertinent
and requires continued scrutiny to ensure it is functioning correctly
and achieving the desired results. However, if a better mechanism
is identified, switching from one framework to another too quickly,
without giving industry and business time to adapt, is likely
to cause as much damage as staying with the inferior scheme. A
similar situation exists where necessary step-changes in performance,
such as investment in renewable energy, require step-changes in
financial incentives and market regulation. In that case, such
radical changes need to be planned and implemented in a way that
gives investors the maximum amount of information on which to
base their investment decisions.
42. The national and global drive towards
low carbon technologies and greener services will undoubtedly
result in many opportunities for new industries and jobs. If the
UK is to benefit from this, clear, consistent and durable policy
frameworks are what are needed most.
43. Economic and social benefits of planned
green investments
44. As outlined above, the expansion of
the green technology sector will have the beneficial consequence
of creating significant numbers of green jobs, especially in those
sectors where the Government has clearly set out its intention
to permit, support and incentivise the operation and development
of a particular technology, such as nuclear power. This will itself
provide significant economic and social benefits. The location
of many likely sites for developments in those sectors of the
UK suffering from a lack of inward investment would also deliver
further social and economic benefits in those areas. Further to
this is the fact that the green agenda is something that provides
significant motivation to young people, and has been shown to
increase their interest in science and engineering and potentially
thereby increase societal engagement with wider scientific issues.
45. Given the strong geographical spread of engineers
and technicians throughout the UK, with over 95% of engineers
working outside Central London, it is possible for some of the
areas that the Government is considering, such as sites in the
North-West, South-West and Wales to benefit substantially from
these kind of investments without being at a disadvantage in terms
of skills. The ETB's Engineers Make It Happen programme,[97]
which works with education providers and businesses in Wales to
increase the supply of engineers, has found a strong willingness
to engage and develop engineering and technology skills amongst
Further Education students and lecturers in Wales.
46. The Government has stated a desire,
as part of the DIUS's Science and Society programme, to increase
societal engagement in science and engineering, particularly with
young people. This would have widespread social benefits in terms
of technological literacy, opportunity, overcoming the digital
divide, increasing the supply of engineers and scientists and
allowing people to engage in the political process in a more technologically
aware manner. The Power Sector Skill Strategy Group's[98]
study cited in Engineering UK 2008 found that amongst 15 year
olds, genuine green work by businesses (rather than cosmetic "green
washing") had a significant impact in motivating and encouraging
young people in this way.
47. The proposed investments could therefore
have significant advantages in motivating young people throughout
the country to increase their scientific engagement and to pursue
careers in the engineering sector. This would in turn deliver
significant economic advantages to the UK through resultant contributions
to the science, engineering and manufacturing base and workforce.
48. The nature of the jobs that might be
created in green industries as a result of the green fiscal stimulus
49. Data from a number of sources indicates
that there is significant potential for growth in the UK and global
renewable energy markets.
50. In order to meet the EU 2020 renewable energy
target[99]
the Government, in its Renewable Energy Strategy, expects a third
or more of the UK's electricity to come from renewable sources
by 2020. This would represent an increase from around 5 GW capacity
at present to around 35—40 GW. The majority of this increase
is expected to come from wind, both on and offshore, with a significant
contribution from biomass and waste. For example, the Government's
Renewables Advisory Board envisions an additional 13 GW of onshore
wind, 18 GW of offshore wind and 4 GW of biomass with solid recovered
fuels (waste) on the system by 2020. While it must be noted that
the engineering realities of achieving such targets are extremely
challenging, the aspirations in themselves will drive considerable
investment in these technologies.
51. Increases in other renewable technologies
are also expected over the coming decade. The UK already holds
a leading position in the development of wave and tidal stream
power and although the total installed capacity is only estimated
to be around 1 GW by 2020 the potential for continued investment
both in the UK and abroad is clear. In the case of tidal range
power, much depends on what decision is taken concerning the Severn
tidal power projects. Any of the proposed schemes would involve
massive investment and result in a large number of jobs, however,
there is less potential for this technology to be deployed around
the globe.
52. This gives a strong indication that
the jobs associated with these energy sources are likely to be
the greatest growth areas for green technology in coming years,
both to supply UK energy needs and ideally, as part of an export
orientated UK industry in these fields.
53. Engineering UK 2008 identifies associated
careers in photovoltaic power generation, micro wind energy generation,
biomass and micro hydro generation systems, as being "electrical
trades and installation," "plumbing", "heating
and ventilation" and "air conditioning and refrigeration."
There is also a rising demand for a skilled workforce in other
low carbon technologies such as nuclear, carbon capture and storage,
smart grid systems, and low-carbon transport.
54. In addition to these, welding and fabrication
jobs from operator through supervisor to engineer level, are necessary
to support growth in green industries. Additional supporting roles
in inspection, quality assurance/control, and health and safety
will also be generated. Offshore installations will require surface
and air transport operations, and specialised operators for both
topside and subsea construction, inspection and maintenance activities.
55. All of these specialised roles require
accredited training and certification to assure staff competence
in delivering the product to required levels of safety and quality.
The role of the Government in this sector should be to ensure
that there is no financial disincentive to train in advance of
the emerging need by providing tax allowances to employers who
provide such training to their workforces.
56. The Low Carbon Industrial Strategy, what
it needs to deliver, how, and by when
57. The Low Carbon Industrial Strategy aims
to meet the requirements of the Climate Change Act and reduce
carbon emissions by 80% by 2050. As the strategy notes, this will
require that by that date every unit of output in Britain will
have to be produced with a fraction of the carbon used today.
58. In addition to this, the strategy calls for
a much greater contribution by the low carbon economy to the UK's
economic growth as a whole, seeking to put the UK amongst those
countries which are researching and developing the technologies
that the global economy will depend on in future. To achieve these
goals it is necessary for the Government to work in concert with
industry experts and the third sector. A good example of an initiative
that the Government could replicate or support is the Chartered
Institute of Plumbing and Heating Engineering's (CIPHE) GreenPlumb
initiative.[100]
The scheme is a voluntary scheme for CIPHE members (fully qualified
plumbing and heating professionals), requiring certification in
renewables technologies and a mandatory commitment to Continuing
Professional Development.
59. Some of this reduction in carbon intensity
will be achieved if the EU Directive target of 15% of energy being
generated by renewables by 2020 is met. This will in turn require
a well trained and specialised workforce. Engineering UK 2008[101]
sets out the need for a massive expansion of the workforce in
renewables, based on the Government's most recent Energy White
Paper. With amongst others, 147,193 workers needed in combined
heat and power projects, 74,479 workers needed in micro wind energy
and 110,046 needed in ground source heat pump technology.
60. On a wider level, these requirements,
as well as the other ambitions of the strategy, including carbon
capture, low carbon vehicles and energy efficiency will require
constant and considerable innovation to develop the necessary
technologies and to keep the UK internationally competitive. This
innovation depends upon the continued health of the UK science
and engineering base and increased links between that base and
UK business.
61. The UK is both geographically well placed
and technically capable of implementing the Low Carbon Industrial
Strategy and gaining a world-leading understanding of the related
technologies. Early implementation of pilot plant projects in
the USA and Germany is affording those countries technical and
commercial advantage. With demographic trends retiring more competent
engineers, especially metallurgists, out of the UK energy, oil,
gas and chemical sectors each year than Higher Education can replace,
carbon capture and storage projects must be accelerated to capitalise
on existing expertise.
62. In addition, the ETB has in the past
called for tax allowances for those businesses that invest in
research and development or scientific enrichment programmes,
to incentivise businesses to undertake such research in the UK
and to invest in our science base. This could be augmented by
further tax allowances for companies that are researching or developing
green technologies in the UK.
63. The Government could also provide support
to third sector attempts to reduce total UK emissions, thereby
taking advantage of existing expertise in the field. The CIPHE's
GreenPlumb initiative is an excellent working example of the sort
of scheme the Government could support in this regard.
64. Increased protection for patents for
small businesses through a "Green Patent Protection Scheme,"
whereby the costs of retaining patents for green technologies
are supported by the Government would provide further incentive
for research and development in this sector and provide the UK
with a significant competitive advantage.
65. Given the interim goal of the Climate
Change Act is to achieve a 26% reduction in carbon emissions by
2020, we would advise that this support be provided as soon as
possible. An ideal opportunity for this would be the Pre Budget
Report later this year.
1 June 2009
92 http://www.number10.gov.uk/Page13791 Back
93
http://www.whynotchemeng.com Back
94
http://www.cogent-ssc.com/ Back
95
ETB: 22.04.09 Media Release-Government must prioritise training
and re-training to achieve budget goals in low carbon and emerging
technologies. Back
96
4.00 pm 29 May 2009. Back
97
http://www.engineersmakeithappen.co.uk/home.cfm Back
98
http://www.euskills.co.uk Back
99
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/175/175.pdf Back
100
http://www.ciphe.org.uk/GreenPlumb/ Back
101
Engineering UK 2008, p121; the Engineering and Technology Board. Back
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