Memorandum submitted by Acre Resources
Ltd
SUMMARY
1. Being a leading green recruitment firm,
Acre has a strong interest in the emergence of a significant green
job market in the UK. We follow the market closely through our
own placements, surveying the market with our partners, and following
press reviews. We remain hopeful but concerned about the position
that the UK government is taking. We hope that the Environmental
Audit Committee will find this submission valuable, and that it
will be used to spur the government into capturing lost ground
in the green job market.
In this submission we hope to make the following
points;
(i) The thinking around legislative solutions
to climate change has now reached a point where we can see an
emerging solution, against which current government policies can
be judged.
(ii) The UK government can claim genuine leadership
in a number of important areas, for which we applaud them;
— Making long term commitments to reduce
carbon emissions;
— Enacting these commitments into law;
— Putting cap & trade at the heart
of their legislative solution;
— The imminent introduction of the Carbon
Reduction Commitment (CRC).
(iii) Cap & trade schemes will not start
to sufficiently influence decision making or green job markets
for at least three years, which makes the supporting local sector
policies of prime importance.
(iv) We look at the example of the energy sector,
which is arguably the most important sector from a green jobs
perspective, and we compare the performance of the UK government
to that in Germany. We find that as a result of different policies,
the UK's renewable job market is 10% of the size of Germany's.
(v) We are concerned that the UK is failing to
deliver leading local sector policies, and as a result we are
not preparing these sectors for the emergence of a global cap
& trade scheme. We believe there will be a real cost in terms
of jobs and exports of not establishing this knowledge in the
UK.
(vi) Putting in the right climate change legislation
is a commercial imperative, not something we ought to be doing
on moral grounds.
ABOUT ACRE
RESOURCES
2. Acre is widely regarded as the leading
green job recruitment firm. There are no surveys to back this
up, but we were one of the first entrants to the market (2003),
and we place a wide spectrum of roles from Energy Managers to
Heads of Sustainability at major firms. Acre has placed jobs with
over 20% of the FTSE100, and we have over 30,000 CVs registered
on our database of "green" professionals.
3. Acre is committed to sustainable business,
with an equal emphasis on both words. We collaborate with the
legislators (for example, we are supporting and actively raising
awareness within UK commerce of the CRC scheme, we do this with
full encouragement from DECC), but we also believe the market,
and the profit motive, is the only way we can solve the problem
in the timeframes we have. We do not come at this from the viewpoint
of most environmentalists or campaigners.
WHAT DOES
ACRE MEAN
BY THE
"GREEN JOB"
MARKET?
4. It may help the Committee if we explain
what we mean by "green jobs". Whilst the word "green"
is generally used in a broad context, including more traditional
sectors such as Contaminated Land, we are using it here in a narrow
sense to refer to sustainability or climate change. We then divide
"green jobs" into two sub-categories;
(i) Bright Green jobs
These are people who are hired for their knowledge
of sustainability or climate change. They are likely to have a
qualification in sustainability, and may have the role of "Sustainability
Consultant" within a consultancy firm, or be an in-house
expert such as "Head of Sustainability" or "Energy
Manager". This is a small and specialist market that we expect
to remain a tiny fraction of the national job market.
(ii) Pale Green jobs
Acre uses "Pale Green" to define those
who are primarily employed for their knowledge of a profession,
but where the issue of climate change underlines their job prospects.
For instance, in the renewable energy sector, a role might be
advertised as an "engineer", but the position may have
been created in response to legislation. Energy efficiency is
also a big component of this market—an illustration would
be a salesperson who works for a firm that develops intelligent
technology for managing energy usage in fridges.
Pale Green jobs are hard to measure, but we
estimate that these jobs could account for over 500,000 new UK
jobs over the next five years, assuming appropriate legislation
is put in place. At least half of these should come from renewable
energy jobs. We expect the following main Pale Job categories;
— Engineers—renewable energy &
energy efficiency.
— Accountants (including carbon auditors).
— Scientists (especially for Nuclear).
— Management (including Non-Exec Directors).
— Support roles (HR, admin etc).
ACRE'S
VIEW OF
THE APPROPRIATE
LEGISLATIVE SOLUTION
5. In this section we will outline what
we regard as an appropriate legislative solution to climate change,
as it is from this viewpoint that we will go on to judge the UK
government's performance. We base our position on that laid out
by Sir Nicholas Stern in his "Blueprint for a Safer Planet"
(April 2009), as we believe it represents the least cost solution
and the one that most Western countries seem poised to adopt.
For the sake of this paper we briefly summarise this position.
The main plank—cap & trade
6. Stern noted in his 2006 Stern Review
that climate change is the greatest and widest-ranging market
failure ever seen. The market is failing to correctly price the
environmental consequences of carbon-emitting products and services.
By identifying the problem in these terms, the natural solution
is to account for all the carbon that is emitted in getting goods
or services to market, and put a price on them through a cap &
trade scheme. The advantages of this solution are as follows;
(i) Cap & trade has a history of solving
environmental problems cheaply, with the main example being the
abatement of Sulphur Dioxide emissions in the 1970's in the US.
Prior to its introduction, the major polluters commissioned a
report that estimated it would add $12 million to their costs.
The actual cost turned out to be $500k, as the polluters found
ways of avoiding the emission of SO2.
(ii) It spurs the market to deliver energy efficiency.
Acre recently surveyed 1,200 climate change professionally (result
will be published on 3 June), and found that that their biggest
focus at the moment is on improving energy efficiency. If energy
prices increase because a carbon price is added, the market will
focus on ways of improving efficiency.
(iii) It is likely to attract entrepreneurs to
the issue, who otherwise may not engage. Not only does it attract
clean tech and energy efficiency entrepreneurs, but it also creates
a return for entrepreneurs who invest in technology that sequesters
carbon out of the atmosphere. It opens the door for the richest
person in the world being the person who can sequester carbon
at a cheap price, and sell it into the market. The right solution
should reward this person.
7. It is no surprise, therefore that an
increasing number of governments are committing to cap & trade
schemes, and in the long run the solution will be to join these
schemes up and create a global price for carbon.
Supplementary legislation
8. Stern is clear that only when a credible
global carbon price has emerged will businesses use it as a major
decision driver, and that this will take years to come into effect—probably
five to 10 years from now. The price of a tonne of sulphur on
the US Sulphur Dioxide market fluctuated from lows of $70 to highs
of $1,550, before eventually settling at $150 / tonne. Until certainty
is achieved, businesses will struggle to factor the carbon cost
into their long term planning.
9. As a result, it is vital that the government
initiates sector-based legislation to encourage the low carbon
development of these sectors. There are a number of key sectors
that currently account for significant amounts of emissions, some
of which are listed below. A failure to prepare these sectors
effectively will give them a painful and expensive transition
to a low carbon environment, particularly because of their long
investment cycles,
— Transport—improving efficiency
of cars, encouraging switch to grid-based solutions.
— Built environment—over 40% of emissions
are lost through buildings, and they represent some of the lowest
abatement costs. BREEAMS, EPCs and building regulations are a
step in the right direction, but have not been effective in taking
the issue into the board room.
— Energy—discussed below.
ASSESSMENT OF
THE UK GOVERNMENT'S
POSITION
Overall stance
10. There is little doubt that this government
is a leader when it comes to setting aggressive future targets,
and enacting these targets into law, but there is a well-documented
disconnect when it comes to introducing the policy that will allow
the targets to be met. This could be argued to be the worst of
all worlds, as it makes the voters feel that progressive action
is being taken, but it is storing problems up for the future.
We would applaud the introduction of key performance indicator
targets to be reached at short term intervals to impose accountability
and a responsibility to immediate action.
11. This disconnect would seem to stem from
two core beliefs. Firstly, that the costs of mitigating climate
change are high, and secondly, that the costs of not mitigating
climate change will only become significant beyond the end of
the next term of government. On this basis, an election-winning
strategy would be to recognise the extent of the climate change
problem, and set aggressive targets, but be in no hurry to introduce
the economic costs. It would support the Climate Change Bill and
back a 3rd runway at Heathrow Airport.
12. If this is a correct representation
of the government's stance, we believe it is strategically flawed.
It is based on delaying meaningful legislation, in the belief
that it is more expensive than it is likely to turn out to be,
and in doing so it will build up a long term adjustment cost for
the UK. A more commercial strategy would be to pursue stringent
legislation, creating technological advantages and a vibrant green
job market.
Cap & trade
13. With the UK Emission Trading Scheme,
introduced in 2002 and rolled into the EU ETS in 2006, the UK
government has been a leader in cap & trade and should be
applauded for this. The expected introduction of the Carbon Reduction
Commitment in April 2010, extending this to a further 5,000 businesses,
is another major step in the right direction.
14. It is hard to tell how many jobs will
be directly created by the UK's leadership stance on cap &
trade. The majority of the companies covered by the Carbon Reduction
Commitment will need an Energy Manager, if they do not already
have one, and our discussions with companies in this area suggest
that around 500-800 Bright Green jobs will be created by this
legislation.
15. The number of Pale Green jobs will come
down to how onerous the market deems the price of carbon to be.
It is fair to say that the effective price of carbon for the first
three years of any new scheme is weak in order for it to be adopted.
On this basis, it is hard to see how the CRC will generate more
than three jobs per participating company, which would make a
generous 15,000 new Pale Green jobs.
Energy sector—in comparison with Germany
16. Germany provides an example of how effective
energy sector green legislation can create new jobs and new export
income, and therefore provides a good yardstick for UK energy
legislation. In the mid 1990's Germany had virtually no renewable
energy sector, but the introduction of the Feed-in Tariff in 1999
with a guaranteed buying price for a 20-year period immediately
ignited the market. Some current statatistics about the German
renewable energy market;
— 9% of energy consumption comes from renewable
energy.
— 23,000 MW capacity as at the end of 2007.
— 20,000 turbines, more than any other
country.
— German manufacturers have a 37% market
share in the global turbine and components market.
— Earned Euro 6 billion in exports in 2007.
— By 2020, wind capacity is expected to
be 55,000 MW.
17. This success has translated in a sharp
growth of Pale Green jobs. According to the World Future Council
(March 2009), at the end of 2008 Germany had 285,000 jobs in the
Renewable Energy sector; Wind (34%), Biomass (39%) Solar (20%),
Hydropower (4%), Geothermal (2%) and other (2%). 35,000 of these
were new jobs created during the course of 2008.
18. The UK introduced its alternative, Renewable
Obligation Certificates (ROCs) in 2002, which obliges electricity
supplier to source a minimum amount from renewable sources. One
gets an immediate feel for the relative effectiveness of this
legislation by looking at the fact that only 2% of the UK's energy
needs are met by renewables, compared to Germany's 9%.
19. The UK picture is even bleaker when
it comes to jobs. It is hard to find reliable renewable energy
job figures in the UK, which is meaningful in itself, but the
BERR website estimates that around 8,000 people were sustained
by the renewable energy industry in 2003. The BERR website goes
on to say that the UK government expects its policy to generate
an additional 17,000 to 35,000 new renewable energy jobs by 2020—hardly
an aggressive policy, and it points to the current renewable energy
job market being less than 20,000 today.
20. In order to make a comparison with Germany,
we need to reduce the German figure by 27% to reflect the population
differential, arriving at 209,000 jobs. This very basic maths
would suggest that the UK's energy policy has created less than
10% of the green jobs that Germany's Feed-in-Tariff has created.
Summary of UK policy
21. Our view is that the UK government is
getting the overall legislative strategy right by putting a cap
& trade scheme at the heart of the legislative solution and
extending it to smaller businesses. It can still claim to be amongst
the global leaders in this regard, and it is likely to find that
other countries will increasingly adopt a similar stance.
22. However, we note that it is unreasonable
to expect these early stage schemes to have a significant impact
on business decision-making over the coming years, so we cannot
expect them to be a short term driver to a sustainable economy
nor a significant pale green job market. The responsibility for
this has to fall to sector-based legislation.
23. Acre has not analysed the green job
markets to come from the Built Environment or Transport sectors,
but it is likely that similar patterns would emerge. It is Acre's
opinion that the supporting legislation needs to be looked at
in earnest, with a view to nurturing the technologies and skills
needed to lead in a sustainable economy. UK PLC could be at a
major disadvantage if it has to import technology and knowledge,
when it could have created an extensive job market and a major
boost to exports.
CONCLUSION
24. Acre is a major beneficiary of a fast-growing
Bright Green and Pale Green job markets, but so is UK PLC. We
are now at a point where it is more likely than not that the world
is going to collaborate on green legislation, led by negotiations
between the US and China. Climate change policy is likely to be
a major disruptive force in the global economy, and therefore
be a major generator of new jobs.
25. Where these jobs and technologies are
created will be determined in large part on the supporting legislation
that is introduced in each country. Early adopters will be exporters
with vibrant job markets; late adopters will be importers and
have smaller job markets. Whilst some vested interests will lobby
against legislation, good policy makers will make balanced decisions
which will in most cases come down in favour of nurturing industries
of the future.
26. This represents a huge opportunity for
the UK, which has had a deep understanding of climate change and
policy. It feels to us that we are losing our opportunities to
be leaders in the new paradigm because of our political stances.
We hope that the Environmental Audit Committee fulfils its mandate
of auditing the government's performance effectively, and pressurises
it to seize the opportunities that remain for the taking. The
window is closing.
27 May 2009
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