Written evidence submitted by the Aldersgate
Group
INTRODUCTION
1. The Aldersgate Group (AG) is a coalition of
businesses, NGOs, professional bodies, MPs and others that provide
leadership on vital sustainability issues. We promote the case
that strong environmental policies are essential for economic
competitiveness and seek to be a catalyst for fast and effective
change. The AG engages actively with key decision makers in government,
business and civil society to contribute to the future development
of UK economic and environmental policies.
2. Please note that the views expressed in this
document can only be attributed to the AG and not to individual
members.
How can mechanisms to ensure the sustainability
of Government operations, procurement and policy-making be improved
and further embedded and mainstreamed across Government departments?
3. Sustainability is a major challenge to both
strategic and operational management of all organisations including
Government. It requires new thinking, innovation and integration.
Any overhaul of the mechanisms for ensuring that Government procurement
and policy-making accelerates the transition to sustainability
will need to address the significance of this challenge.
4. The Aldersgate Group believes that addressing
the long-term environmental challenges of climate change, energy
security and resource depletion are just as critical for our wellbeing
as the Government's response to the global recession and reducing
the budget deficit. Mainstreaming sustainability will require
several changes in Government processes.
5. Mechanisms will need to be far more effective
at challenging existing conventions and assumptions and in order
to do so will need to stimulate timely input of new and different
perspectives from both inside and outside Government.
6. Prices must reflect environmental realities.
While it is invariably complex to price environmental externalities
(by which we mean environmental changes that impact human welfare
and the biosphere but are not reflected in markets), current prices
are a long way off providing a sufficient incentive for investments
at the pace and scale required to meet environmental challenges.
The Aldersgate Groups believes that the current carbon price is
not sufficiently stable, high or credible to stimulate the required
investment in low carbon technologies. Conventional mechanisms
based on cost benefit analysis do not effectively address the
uncertainty, irreversibility and thresholds in environmental wealth
implicit in climate change. The non-market price for carbon should
be used in the assessment of procurement decisions.
7. The Government must also ensure that all policy
and procurement mechanisms within Government are far more tightly
geared to UK carbon budgets. For example, in particular, it would
make the reality of environmental limits have traction with decision
makers and it would encourage - even demand - policy integration
to ensure that the collectively government investment and public
policy decisions did not breech the budget.
8. The scale and speed of the required transition
to a low-carbon resource efficient economy will require mechanisms
that accelerate and maximise the economic opportunities for the
UK. As resource efficiency and related innovation increasingly
become primary benchmarks of a successful economy, the UK will
need to address critical resource constraints and ensure long-term
competitive advantage. This will require that the mechanisms to
mainstream sustainability in government facilitate this integrated
approach. For example, the UK's £175 billion public procurement
budget is a massively underused lever for progression towards
a low carbon, resource efficient economy.
Was the SDC successful in fulfilling its remit?
Which aspects of its work have reached a natural end, or are otherwise
of less importance, and which remain of particular continuing
importance?
9. The SDC has made valuable contribution to
advancing sustainability across government. Its independence has
allowed it to provide advice to Government that has drawn on a
wide variety of relevant perspectives and disciplines and that
is not constrained by political pressures or existing conventions.
Its recent work on a Sustainable New Deal and delivering neighbourhood
sustainability retrofitting are good examples of this.
10. The SDC has also played a significant role
in the growing debate over whether there is a need to rethink
the conventional approach to growth as sustainability asks important
questions about the assumptions made by that approach and its
ability to deliver sustainable development. The Aldersgate Group,
in line with other business based organisations such as the World
Economic Forum, believes it is important for this debate to be
had in public and whilst not endorsing its findings recognises
the important contribution to the debate made by SDC's publication
Prosperity Without Growth.
In formulating a future architecture for sustainable
development in Government, how can it take on board wider developments
and initiatives (eg to develop "sustainability reporting"
in departments' accounts) and the contributions that other bodies
might make (eg Centre of Expertise in Sustainable Procurement)?
11. Wide-ranging environmental challenges cannot
be effectively addressed through segmented government. Departmental
carbon budgets are welcome and should be monitored by the Climate
Change Committee. The Treasury should assume a greater leadership
role, expanding the scope of its carbon budgets and making the
design of environmental regulation a key objective in the management
of the economy. A resource productivity drive must also be supported
across government departments.
How, without the assistance of the SDC, will the
Government be able to demonstrate that it is "the greenest
government ever"?
12. The Government needs to ensure its decisions
are well informed and take longer term environmental, economic
and social consequences fully into account. New arrangements must
include activities to improve policy innovation and long term
performance. To achieve this, the sustainable development agenda
needs to be the responsibility of a senior minister with a cross-government
remit and supported by a dedicated policy team.
13. The Aldersgate Group published a report entitled
Accelerating the Transition just before the General Election
that sets out eight priorities for the first 100 days of the new
Government to ensure an effective transition to a low carbon and
resource efficient economy. These have been slightly modified
so as to act as a benchmark for the "greenest government
ever".
(1) Ensure that prices reflect environmental
realities. In particular, the UK should
work with its European partners to tighten the EU ETS cap, principally
by increasing the EU's overall emissions reduction target for
2020 from 20% to 30%. This must be leveraged to the maximum possible
effect to incentivise other nations to increase their own emission
targets in the ongoing international negotiations for a new UN
climate change treaty. Further EU ETS reform should aim to tighten
limits on the use of carbon offsets credits[26],
introduce the auctioning of permits at a faster pace[27]
and introduce an auction reserve price[28].
As these measures will require pan-European agreement when there
is currently little political appetite for reform, a contingency
policy must be action to underpin the domestic carbon price by
creating a price floor at a sufficiently credible and effective
level.
(2) Don't rely on pricing alone. Although
important, pricing remains a blunt instrument. Government should
aim both to reduce the UK's carbon intensity and to help UK business
become a world leader in resource efficient products and services.
Well designed and effective regulation is necessary for both these
objectives. A comprehensive domestic energy efficiency plan is
vital for a cost effective transition to a low carbon economy
and the Government's Green Deal needs to be rolled out widely,
quickly and effectively.
(3) Simplify the regulatory framework.
Too often, environmental policy has been an ad hoc response to
an isolated challenge. This is rarely effective and often creates
unintended consequences elsewhere. The Government should rationalise
the large number of complex environmental regulations (and regulatory
bodies) that are creating unnecessary administrative burdens and
ensure a more uniform (and effective) carbon price across all
regulations.
(4) Create an ambitious Green Investment Bank.
Following the publication of the report
by the Green Investment Bank Commission, it is essential that
the Government builds on this bold vision by swiftly putting forward
credible proposals for a strong, powerful and effective institution.
The AG has published a joint statement with Transform UK that
sets out recommendations that the Green Investment Bank should
address. This must include sufficient capitalisation of at least
£4-6 billion for the first four years.
(5) Stimulate low carbon industry. The
Government must have a credible strategy for removing market barriers
and ensuring the UK is a world leader in the development of environmental
goods and services. This must include a sufficient framework to
accelerate growth, jobs and innovation in targeted sectors, as
well as skills development [both high level STEM (Science, Technology,
Engineering and Maths) skills and the generic "green skills"
increasingly required of all employees to support the move to
green, low carbon workplaces].
(6) Improve accountability across government.
Wide-ranging environmental challenges cannot be effectively addressed
through segmented government. Departmental carbon budgets are
welcome and should be monitored by the Climate Change Committee.
The Treasury should assume a greater leadership role, expanding
the scope of its carbon budgets and making the design of environmental
regulation a key objective in the management of the economy. A
resource productivity drive must also be supported across all
government departments.
(7) Incorporate a lifecycle approach.
Effective management of resources necessitates a consideration
of the whole resource cycle. UK waste policy must move away from
a linear model and look towards "closing the loop".
In particular, the Government should encourage the use of recycled
materials in UK manufacturing and construction, either via green
procurement in the public sector or by a voluntary code in the
private sector leading to competitive advantage. The AG supports
the Government's drive to implement immediate carbon reductions
across the government estate that seeks to outperform carbon budgets
and should also focus on how public procurement could be improved
to contribute to the achievement of sustainability objectives.
(8) Plan a just transition. The
radical decarbonisation of the economy has the potential to be
a major source of wealth and employment. It will also involve
massive and complex changes that will create losers as well as
winners. The role of the Forum for a Just Transition should be
expanded, so that it reviews the social impact of carbon budgets
and has a formal advisory role to the Green Investment Bank.
18 October 2010
26 Carbon offsets incentivise cheaper emission reductions
through investments in projects outside of the EU ETS. However,
they generally lower the carbon price and can reduce potential
benefits for the domestic economy. Back
27
A recent Carbon Trust study finds that low carbon manufacturing
would be severely weakened if all sectors currently deemed at
risk of carbon leakage by the Eureopean Commission received free
allocation of permits. See Carbon Trust (March 2010) Tackling
carbon leakage: Sector-specific solutions for a world of unequal
carbon prices. Back
28
Alternatively, a floor price could be underwritten by revenues
generated through the auctioning of permits. Back
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