|Christian Ecology Link|
Presentation by John Cridland, CBI
Thank you…. Very timely that we should be discussing climate change.
The Climate Change Programme which we have worked to since 2000 is about to be reviewed both in the UK and in the EU.
And a major new contribution to tackling CO2 emissions is about to be launched on 1 January – a Europe wide Emissions Trading Scheme.
Our country is uniquely well placed to help to lead these developments – climate change is a key priority for the UK’s Presidency of the G8, and of the EU in 2005.
Rest assured that business, and the CBI, will do our bit to honour our Kyoto commitments, which business supports, to reduce CO2 emissions by 12.5% by 2010. As we have already heard we need to do this to protect the environment. Business needs to do it to reduce its energy costs – a particular concern at present with energy bills having risen by 40% over the last year, driven up, in part, by the rising price of oil.
And we are doing our bit. CO2 emissions by industry are already 6.3% below 1990 levels, and those of power stations are 15.5% lower. Energy efficiency is a priority for many businesses.
So business can speak from a position of strength but certainly not one of complacency. Business has to take a practical and pragmatic approach to tackling climate change. We have to ensure that British businesses are competitive so that jobs as well as the environment are protected. A balance between the economic, social and environmental pillars is at the very heart of the concept of sustainable development.
Making sure that climate change policy is cost effective and competitive doesn’t always make business popular, but it is necessary – as necessary as climate change policies themselves. We take our responsibility seriously, recognising the threat of climate change to all our futures.
What we need are global responses. We support the Kyoto protocol. It is encouraging that Russia has now come ‘on board’. But USA, China and India do not have such international commitments. This already puts UK business at a competitive disadvantage. With the Government committed to a 20% CO2 reduction target, rather that the 12.5% required by Kyoto it is vital that this impressive leadership can draw other countries – even other European countries – to do the same. We must have multilateral solutions to climate change – especially as the UK is responsible for just 2% of global greenhouse gas emissions.
So how do we make progress? And what can industry do?
In the remainder of the presentation this morning I want to mention five priorities for action if we are to create a resource efficient low carbon economy.
First that we have the right climate change policy
Second that we create efficient energy markets
Third that we encourage industry by using market based measures in preference to regulation
Fourth that we learn the lessons of existing climate change measures affecting businesses.
and finally that industry’s contribution is matched by the rest of society.
First then the review of climate change policies. Businesses key concern is that this reflects the global nature of the impacts and of the responses to climate change. We must find a way to bring the Americans and the Chinese on board. Our other key concern is that we must act across the whole society – frankly the burden of meeting the UK’s Kyoto target cannot fall on business’ shoulders alone.
Second we need to ensure that environment and energy policy support each other. More needs to be done to make a success of the Government’s promotion of renewable energy – which business supports – At the moment there is not sufficient confidence in this policy to generate the investment which is needed. And controversial as it may be, at some point the question of nuclear power has to be addressed.
If we get the right policies in place we then need to deliver those policies with the most appropriate measures. For industry the best way to reduce carbon emissions is to encourage trading in carbon. My third point. My organisation, the CBI, developed the UK’s own voluntary emissions trading scheme and we are now in transition to a mandatory European scheme.
But I’m using business jargon! What is emissions trading? Well it is a Kyoto approved way of helping businesses reduce greenhouse gas emissions in the most efficient manner. Energy intensive businesses and power stations, 1000 businesses across Britain responsible for 46% of our CO2 emissions are covered by the EU scheme. They are set a cap on how much CO2 they can emit. If they can reduce their emissions below their cap they can sell the excess permit to other businesses who cannot keep within their cap. So a market for energy efficiency is created. Business has an incentive to act. A win win situation.
That’s if the scheme works well.
But its vital that other European countries have equally demanding limits on their emissions to those in Britain, and the jury is still out on this. Sometime this month the European Commission will approve each nation’s National Allocation Plan. British business is not convinced that they will be rigorous in policing these. For example France, Spain and Italy have sought to protect their industry by excluding chemical and car manufacturing from emissions trading. If this is not reversed, and it may be, there will be a real question as to how ambitious the British Government should be.
We are vigilant on this because we have to learn the lessons of previous climate change initiatives affecting business. The one which gets business leaders most concerned is the climate change levy.
The Climate Change levy is a tax on businesses’ use of coal, gas and electricity designed to encourage energy efficiency. The most ‘energy intensive’ sectors can get an 80% discount on the tax if they enter climate change agreements to meet challenging energy efficiency targets. This is designed to protect business competitiveness. 13,000 individual facilities have done so. This is good news. But the problem is that many businesses are not eligible for such discounts. Because of arbitrary rules plastics manufactures has not been covered whereas competing businesses in paper and glass may well be. Manufacturers and retailers have been particularly affected by the levy.
With the start of emissions trading and the current massive increase in energy prices business believes that the Climate Change levy needs revisiting.
So business is making a major effort to reduce its CO2 emissions. So we should. But the question is whether other parts of society are doing enough too. My final point.
As I mentioned at the beginning of my presentation, Industry has reduced its CO2 emissions by 6.3% since 1990. Power stations have reduced theirs by 15.5%. But emissions from transport have risen by 4.6%, and those from households by 10.2%.
Are we as individuals doing enough? We need to get more personal commitment to energy efficiency in the home, and use more resource efficient forms of transport. Only in this way can we tackle climate change on the one hand whilst also keeping business competitive to create the wealth we all depend on the other.
The Holy Grail, if we can move towards it, of sustainable development.