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Green And Growth Or Green Versus Growth?

EEF has released the first of a two part study into perceived conflicts between green and growth which reveals 75% of manufacturers believe environmental policies have damaged competitiveness.

At a briefing yesterday EEF invited key industry representatives, trade union leaders and policy makers from government to preview the findings of Green and Growth: an interim report on a sustainable alternative.

A panel of experts considered the report findings before taking questions from those gathered at EEF’s London headquarters. Key points for discussion were the need for reassurance that revenue raised by green taxes would be sensibly re-invested in green research and skills development. Delegates were also worried by a lack of stability in government policy.

EEF highlighted the findings from the report which will likely shape the second stage of research. Some of the foremost were that while manufacturers are taking steps to equip themselves for low carbon manufacturing with 80% of companies have invested in energy efficiency, 75% say the cost of environmental policies has risen and will damage competitiveness.

Emphasizing this final point it was revealed that 50% of manufacturers contributing to the research believe incentives to invest in energy efficiency and low carbon technologies are better outside the UK.

EEF has said these findings will lead the next stage of the research to assess four major areas. These will be:

• The need for a strategic shift: so the cost effectiveness of green policy for business is taken into account more fully.

• The need for a wider focus: so that policy focuses less on the production process and more on the full life-cycle of products. It is hoped this will widen the scope of reducing emissions in the UK as well as putting energy intensive industries, like steel which contribute a great deal to the building of low carbon infrastructure, on a better footing.

• The establishment of a more certain environment: to support confidence in the UK as a stable investment region.

• The formation of coherent approach: which considers policy in the round, not in silos. EEF will call for climate change policies to be placed in the broader context of issues like innovation policy, tax reform and access to finance.

On this last point Robert Pollock, head of climate change and energy in the business and international tax group of HM Treasury, challenged EEF to also consider how any proposed changes to green policy, for instance scrapping the carbon floor price, would be compensated for. He asked whether the revenues would be replaced with money taken from hospitals or schools.

Mr Pollock also said that expected revenues from taxes like CRC were overestimated in industry.

Philip Pearson, senior policy officer at TUC had suggested that expected revenues from a combination of green taxes in the UK would be around £10 billion by 2015. Mr Pollock said the reality would be more like £5bn.

EEF will publish the second part of its Green and Growth report in November this year. The report will include recommendations to government on specific policy changes required by industry and how to link policy on capital allowances and R&D tax credits more coherently with green intentions.

Ian Goldsmith a member of the panel and head of public affairs UK & EU at Tata Steel concluded the meeting with some thoughts on how climate change policy formation and implementation ought to be approached. “It is not the absolute cost that matters,” he said. “It is the relative cost.”

The Manufacturer, 14 September 2011