Memorandum submitted by EEF
ABOUT EEF
With over 6,000 business members from the manufacturing
community (employing approximately 1 million employees) and more
than 20,000 associate companies, EEF is dedicated to fostering
enterprise and evolution across manufacturing to keep industry
competitive, dynamic and future focused. As the only membership
organisation dedicated entirely to manufacturing, we are an established
UK leader in the delivery of business services, government representation
and industry intelligence. Commercially driven and re-investing
profits for the benefit of industry and members, EEF's trusted
influence means that manufacturing companies are particularly
receptive to the advice and service offerings of carefully-selected
partners with whom we choose to work. Our network of offices in
England and Wales keeps us close to our members, allowing us to
focus on local issues and thereby to function as a unique community.
Our London office provides a focal point for development of our
broad portfolio of business services designed to deliver maximum
value. From London, EEF provides first-class representation with
government and regulatory bodies and supports our local offices
in their programmes to influence regional policy. Our structure
places us at the heart of the UK business community. EEF's broad
service portfolio is delivered by an unparalleled team of experts
including 30 economists and policy specialists, 90 HR and legal
advisers, 150 health, safety and environment advisors, 20 occupational
health specialists and around 200 trainers, based in our regional
offices and in centres of excellence nationwide.
OVERVIEW
Whether the UK's statutory targets for greenhouse
gas reductions are consistent with the Government's objective
of limiting global warming to no more than 2°C and whether
they are enforceable
1. As carbon dioxide (CO2) is a global gas
and climate change is a global problem, it is certain that any
possible solution must also require global action. The new American
administration has increased optimism that an international agreement
at the UN meeting of ministers in Copenhagen can be achieved.
A truly global agreement will enable GHG emissions reductions
to be made at least cost, by countries undertaking action at home
but also by offsetting their impact through investment in low-carbon
projects in other parts of the World.
2. EEF believe that the most effective,
transparent and long-term solution to limiting globalwarming to
no more than 2°C is a global cap on emissions, delivered
through a cap and trade scheme, which would aim to place all participants
on an equal footing. This does not advocate setting the same target
across all countries, but seeks to deliver a "level playing
field" that fully addresses the critical issue of "carbon
leakage". We also believe that carbon tax systems could be
an equally effective method of reducing global emissions and should
not be discounted from future discussions.
3. Only through swift and concerted international
agreement and action can global warming be limited to no more
than 2°C. Despite setting itself the highest carbon reduction
target for 2020, than for any other developed country, there is
no reward for the UK acting on its own. It must ensure any action
is measured and inline with other developed countries. However
the steps that it has taken to date to show its commitment to
the challenges of dangerous climate change that we all face is
applauded.
The extent to which the Committee on Climate Change's
recommended budgets to 2020 are consistent with the UK's target
for 2050
4. EEF agree that early and significant
action is necessary if the dangerous and irreversible effects
of climate change are to be averted at least cost. We, therefore,
consider that the Committee on Climate Change's recommended budgets
to 2020—which were recently adopted by the Government—are
consistent with the UK's target for 2050. However, we have strong
reservations whether this ambition can, in reality, be delivered
through current action and commitment.
5. That so much of our ability to meet the
2020 target relies on efforts to decarbonise the UK economy through
the introduction of electric vehicles, installation of carbon
capture and storage (CCS), facilitating new nuclear build and
renewable technology is concerning. These technologies, which
will substantially help to deliver our objectives, have yet to
be developed or scaled-up to an adequate level of commercial activity
and it is highly questionable whether the carbon emissions can
be realised from these technologies before 2020.
6. The Chancellor's recent Budget announcement,
which adopted the Committee on Climate Change's recommended budgets
to 2020, also provided £405 million to support low-carbon
industries and advanced green manufacturing. Whilst a welcome
investment, other funding announcements, it appears, were brought
forward from existing projects and is not, in the main, additional
funding which was requested and is required to set the UK on a
course towards its 2020 target. EEF criticised the level of funding,
initial calculations indicate that the new funds only constitute
to about a quarter of one% of government spending.
7. The recent report on green stimulus by
Lord Stern and others suggests that the World should spend around
0.8% of global GDP in the next year on green stimulus measures
for the UK this would translate to around £11 Billion. Clearly
the UK is a long way off achieving this goal. Disappointed that
the Chancellor had not gone far enough to meet this ambition,
EEF has called for the government to ensure that further funding
commitments designed to achieve its carbon reduction goals, and
realise opportunities for business, must: be bolder; be new; and
be for the long term.
The suitability of the climate models and the
validity of the assumptions used by the Committee on Climate Change
in setting carbon budgets.
8. EEF is not best placed to provide detailed
analysis on the suitability of the climate models and the validity
of the assumptions used by the Committee on Climate Change (CCC)
in setting carbon budgets. However, we understand that the models
and processes used by the CCC have drawn broadly consistent conclusions
with other investigations into the emissions reduction required
to limit the risk of exceeding 2°C.
The basis on which the Committee on Climate Change
arrived at the UK's share of the global effort to cut emissions.
9. EEF is not best placed to provide detailed
analysis the basis on which the CCC arrived at the UK's share
of the global effort to cut emissions. However, we are receptive
to the "equal per capita emissions" approach outlined
in the CCC report. This assumes that in the long-term every person
on the planet is entitled to an equal share of GHG emissions,
which would imply a per capita allowance of between 2.1 to 2.6
tonnes CO2-equivalent (assuming a global population in 2050 of
about 9.2 billion). A global deal on this basis would require
that the UK reduces emissions to between 78% and 82% by 2050 versus
the 1990 baseline—this includes bunker fuels used for international
aviation and shipping and emissions relating to land-use. This
is both a fair and equitable approach to tackling a global problem.
The frequency with which targets and budgets should
be reviewed and updated to take account of new scientific evidence
10. Given the inherent uncertainty of climate
science, and the variability of modelling techniques and data
which may be used to predict behaviour, it is important that a
sound body of reputable evidence is used to substantiate claims
for change (eg InterGovernmental Panel on Climate Change). New
single sources of evidence should notdetermine budgetary changes.
11. Business needs certainty and time to
react to possible new investment cycles. Any efforts to review
and update the greenhouse gas targets and carbon budgets must
take into account actions and impacts to the UK economy. We would
strongly recommend that any review was supported by a formal consultative
process for relevant stakeholders.
12. Similarly, any review should consider
the role that carbon offsetting can play in helping the UK to
meet its targets. If efforts to decarbonise the UK economy by
2020 through the introduction of nuclear, CCS, and renewable technology
falters, as looks the case, then there is a real likelihood that
offsetting provides the only equivalent opportunity for the UK
to meet its targets. The government's 34% target for 2020 currently
relies on action being met through UK action alone; action which
we question may not be practically possible or can be cost effectively
achieved.
13. Where it is possible that new abatement
technologies are developed faster than originally perceived, could
be implemented cost effectively, and deployed nationally, then
clearly there is an overwhelming argument to bring the targets
forward.
The compatibility of current Government policies
with achievement of the overall budget, how individual government
departments can ensure policies are consistent with overall carbon
budgets, and the potential role of departmental tradable carbon
allowances; and 5 EEF submission to the Environmental Audit Committee—Inquiry
into the UK's Carbon Budgets
14. As already expressed within this response,
EEF is concerned that current government policies and incentives
do not go far enough to decarbonise the UK economy and meet its
2020 target. It is essential that development in nuclear and renewable
technology is accelerated and that CCS is scaled up for industrial
use as soon as technologically and economically possible. EEF
welcomed the Chancellor's recent announcement of additional support
for carbon capture and storage (CCS) but warned that it must form
part of a broader strategy to develop an industrial base and generate
employment around this extremely promising technology.
15. The Government's low-carbon industrial
strategy was received cautiously by EEF. We believe the commitment
to place the UK at the forefront of the low-carbon industrial
revolution is, without question, a national priority. And that
the economic opportunities, especially in manufacturing, are potentially
significant. However, were disappointed that the strategy lacked
a clear framework to translate vision it into reality and ensure
that the UK is the number one destination for low-carbon businesses.
The government must recognise that these are extremely competitive
markets and governments around the world are making equally ambitious
plans.
16. Government can also follow through on
its low-carbon industrial strategy by leveraging the power of
public procurement to help accelerate the deployment and development
of alternative energy technologies. Amongst other things, this
will require creative thinking from public procurers and a procurement
process which is better tailored to innovative businesses. Such
action will go some way to ensure that government departmental
policies are consistent with overall carbon budgets.
17. Government is also in a strong position
to exert influence through the nationalised banks to lead on a
programme of green procurement and responsible lending which would
have significant influence on broader UK commercial and industrial
activity.
The issues around using emissions trading (both
credits from the EU Emissions Trading Scheme, and carbon offset
credits) to meet UK carbon budgets, including the standards that
should apply to such credits
18. EEF believes that the option of meeting
domestic targets through carbon credits derived from emission
trading schemes is essential. Emissions should be reduced where
it is most cost-effective to do so. Therefore, there should be
as few restrictions as possible over the quantity and sources
of credits which can be used to meet the UK's targets.
19. The success and support for offsetting
can only be achieved if credits represent actual emissions reductions.
Credits should not be counted unless assurances exist that emission
reductions associated with such credits are genuine, sustainable
and fully verifiable to a standard comparable to that agreed by
the Clean Development Mechanism (CDM) Executive Board.
20. If this mechanism is adhered to then
linking these schemes to domestic, or international trading schemes
should only add to their ability to deliver reduction targets
and achieve the aim of limiting the change in our climate.
21. However, it is critical that any approved
carbon credits (eg CDM) must be assessed to be additional ie that
the planned emission reductions would not occur without the additional
incentive provided by carbon credits. Therefore, we would urge
the government to note that `additionality' is key to the integrity
of carbon markets and should be a prerequisite for carbon reduction
incentives and regulations in future public policy including the
formulation of the UK carbon account. EEF believes that if the
UK government is aiming to structure a carbon account that reflects
meaningful incremental emissions reductions, additionality is
required and needs to be assured. There should be as few restrictions
as possible over the quantity and sources of credits which can
be used to meet EU targets.
22. Furthermore, for the carbon markets
to remain credible enough to be used for compliance against future
carbon mandates, the UK needs to protect the credibility of existing
carbon markets. Government should encourage carbon offset markets
that can help reduce greenhouse gas emissions. This requires that
both government and non-governmental organisations find ways to
select and target emissions reductions that are additional and
measurable.
23. EEF advocates that government need to
work closely with EU and international partners to improve the
rules of the CDM, but strongly urge that businesses be given adequate
information and consulted on the process at an early stage. Standards
for additionality need to be clear, stringent and measureable
in order to avoid injecting uncertainty into the carbon market.
27 April 2009
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