Skip to content

UK Green Policies Holding Back Growth, Say Manufacturers

Britain’s climate change and carbon policies are increasing the cost of going green for manufacturers and preventing economic growth, according to a new report by the EEF.

Launching a new campaign to find alternative solutions to deliver green growth for Britain, manufacturers body EEF released an interim report, ‘Green and Growth’, today that claimed unnecessary burdensome regulations and an inefficient raft of climate change policies meant the UK was losing the battle to invest in growth. An accompanying survey of senior manufacturing executives revealed the growing scepticism about Government green policies within the manufacturing sector, where 75 per cent of firms have seen the cost of environmental policies rise over the past two years.

Singling out policies such as the renewables target, the Carbon Reduction Commitment and the Carbon Floor Price, the EEF said that current Government green policies were in some cases imposing unilateral costs on manufacturers that were delaying growth and limiting the extent of decarbonisation.

“We’ve bound ourselves to the costly renewables target and we’ve focused on the easy to tax sources of carbon emissions, such as manufacturing production,” said EEF director of policy Steve Radley.

“This approach is unsustainable. It leaves UK manufacturers at the sharp end of too many poorly designed policies, delaying rebalancing and limiting the extent of decarbonisation.”

Survey findings

The EEF, which has a membership of over 6,000 companies, found in a survey of 76 senior manufacturing executives that 80 per cent of firms were investing in energy, resource efficiency or waste efficiency while those taking action to reduce carbon emissions had grown by 30 per cent to 84 per cent since 2009.

But while manufacturers were making environmental improvements, confidence in the Government’s approach to green growth was not matching, the EEF said. Pointing to figures on energy prices, carbon emissions and carbon efficiency before the recent recession and comparing them to after the recession in the 1990s, the EEF said there appeared to be no relation between the rise and fall of electricity prices and those of carbon emissions and carbon efficiency.

“In the eight years before the recent recession, electricity prices rose by 44.4 per cent, carbon emissions fell by 4.4 per cent and carbon efficiency rose by 19.9 per cent” yet, the report goes on, “in the eight years after the 1990s recession, electricity prices fell by 24.3 per cent, carbon emissions fell by 5.2 per cent and carbon efficiency rose by 27.1 per cent.”

Such figures show the UK is “losing battle to invest in growth”, the EEF survey report said.

Of those whose views were sought in the survey, 75 per cent said they believed UK climate change and carbon policies would damage the competitiveness of UK businesses. Worryingly, only one in eight thought current policy would boost investment, while half of those interviewed saw better incentives in energy efficiency and low carbon technologies abroad.

Call for action

Aiming to generate debate to find solutions to the ‘green and growth divide’ it refers to, the interim report calls for action in four key areas. These include shifting strategy so that decarbonisation doesn’t impose unilateral costs on manufacturers; a shift in focus away from reducing emissions from production towards lifecycle emissions; a shift towards policy stability so that manufactuers have confidence to invest long-term in low carbon markets, and shift towards a more holistic and coherent policy mix, where climate change policies are part of broader context of issues such as innovation policy, tax reform and access to finance.

“If we’re going to do better, then we need to think and act differently. We need to see a wholesale shift to a more sustainable approach to climate change and ways of achieving this,” said Radley.

The EEF will publish specific policy recommendations in a final report due to be published on the autumn.

GreenWise, 13 September 2011