BRITAIN HELPS CUT OVERSEAS POLLUTION

The Times of London

Thu, Apr 02 1998

HALF of Britain's responsibility for cutting global warming gasses will be met through green energy schemes in the developing world, under plans being drawn up by the Government.

The proposals, which are supported by other European countries, will lessen the cost of the agreements signed in Kyoto in December, reducing the need for an increase in fuel prices and tougher controls on British industry. The rest of the cuts will be met by setting up clean power stations and other green energy projects in the Third World, for which Britain will claim emission credits.

Michael Meacher, the Environment Minister, who was speaking in advance of this weekend's G8 environment ministers' meeting at Leeds Castle in Kent, said that it was important to have a cap on the amount of pollution that rich countries could offset overseas.

He said that meeting 50 per cent of the European Union's target of an 8 per cent cut by 2010 was far more sensible than the position held by the United States, which wants to meet all its agreed cuts by trading pollution credits with Russia.

2) CLIMATE CHANGE REPORT PRESENTED TO THE UK PRIME MINISTER

M2 Communications

April 3, 1998

The Advisory Committee on Business and the Environment (ACBE), today published its report to the Prime Minister on how business can contribute to meeting the challenge of Climate Change.

It recommends a programme of measures, including increased take-up of new technology, voluntary agreements, market transformation, trading, support for renewables, and consideration of a carbon tax.

Prime Minister Tony Blair said the report sets out clear objectives and a comprehensive framework for planning the UK's response to climate change.

He said:

"This report is a major contribution in the campaign to meet the climate change challenge. It shows that UK business is taking the challenge seriously and coming up with concrete ideas to help reduce Greenhouse gases. This contribution is vital if we are to fully meet the commitments we signed up to at the Kyoto summit. As the report highlights, cutting global warming gases is a challenge, an opportunity not a threat."

The report follows up ACBE's interim advice presented on 4 December at the Prime Minister's summit with ACBE and other Business leaders, including Sir Colin Marshall, President of the CBI, on the eve of the Kyoto Conference and is intended to stimulate wider debate in business before the Government publishes it programme of measures for consultation later this year.

ACBE's report indicates that the challenge of meeting our energy needs as consumers by developing new products and services with less reliance on carbon can be met. This requires Government to create a long term flexible policy framework which stimulates innovation and new technology, while also providing sufficient incentive to change behaviour across all sectors including housing and transport.

David Davies, Chairman of ACBE said: "Behavioural change is needed in our approach to energy and there are substantial commercial opportunities available to the UK if we get our policy framework right. There is scope for early action on encouraging new technology and market transformation as well as voluntary agreements to cut carbon emissions in many business sectors but these may not be sufficient in themselves to meet the UK's legally binding targets.

"We have therefore recommended that if further measures are required, Government should consider the case for a carbon tax, providing it is set at a level which does not lessen UK competitiveness, that its revenues are fully recycled, and used to encourage low carbon technology, that it is targeted to achieve change in behaviour, and should not fall exclusively on business.

"In this context, I welcome the Chancellor's announcement of Sir Colin Marshall's Review looking at economic instruments for energy and I am today sending Sir Colin Marshall a copy of our report. Although this is only one of the areas we considered, it is extremely important that Government now looks at this issue in detail."

In reply, Sir Colin Marshall said: "ACBE's work both before and after Kyoto has been invaluable. I am looking forward to reading their new report and I am delighted that David Davies has agreed to help me in coming months so that we can build on the work of his Committee".

Notes to editors

CLIMATE CHANGE : A STRATEGIC ISSUE FOR BUSINESS

Executive summary and main recommendations

Summary

1. ACBE has accepted the case for action on Climate Change and endorsed the role of the UK Government's leadership in seeking to obtain a legally binding agreement at Kyoto on reductions of greenhouse gas emissions.

2. Under the Kyoto Protocol, the EU has agreed to reduce emissions based on a basket of 6 gases by 8% of 1990 levels by the period 2008 to 2012. The UK's legally binding target will be greater than the 8% for the EU as a whole and will be achieved as part of a staged programme towards the aim of achieving 20% CO2 savings by 2010.

3. ACBE welcomes the leading part played by the UK in reaching agreement at Kyoto. It believes the challenge of Climate Change can be met providing there is a firm baseline of international agreement building on the achievements of Kyoto, and that the UK and its competitors adopt a flexible but comprehensive long term policy framework which engages every consumer, homeowner and transport user as well as business.

4. For business, the principal objectives of that framework must be to stimulate innovation, accelerate the take up of new technology, harness commercial opportunity, and provide the necessary incentives to achieve behavioural change across all sectors.

5. In preparing a UK programme of measures, Government needs to follow a phased approach and to develop its policies in close consultation and partnership with business. Individual business sectors provide a natural focus for taking this forward, not least because of the differential impacts of measures on different sectors.

6. Many of the measures which will tackle Climate Change need to be tested on a larger scale, their costs and benefits fully assessed and flexibility retained to be able to change course in the light of practical experience, developing technology and impacts on competitiveness. Trading of carbon emissions between businesses internationally could offer substantial benefits.

7. The essence of the Climate Change challenge is to meet our needs as consumers by developing products and services with less reliance on carbon based energy. Much has already been achieved but there is clearly substantial scope to go further by stimulating market transformation - developing new products and services - and by using less energy in domestic, transport and production activities.

8. Achieving behavioural change on this scale will need a mix of awareness raising, measurement, and ensuring that the framework within which business works provides the right incentives to deliver a new focus on energy. Equally important is the development of new low carbon technologies, as well as carbon sequestration techniques, which will maximise the UK's opportunities to win competitive advantage from this process and minimise costs over the long term.

9. In the short term the emphasis should lie on raising awareness in all sectors, on ensuring that businesses measure and report on carbon and energy use and that wherever possible voluntary agreements are developed to accelerate the take-up of existing cost effective energy efficiency opportunities. The introduction of the regulatory regime of Integrated Pollution Prevention and Control (IPPC) and the scope for increased take up of CHP and renewable energy are also critical. Government needs to put in place incentives to exploit the scope for carbon savings in products through market transformation, through a home energy efficiency programme and through the effective choice and management which an integrated transport policy must deliver. Government should also act to increase incentives for technological innovation and to co-ordinate, with business, opportunities to exploit climate change research.

10. These measures may not be sufficient to deliver the legally binding target which the UK is likely to acquire as a result of the shareout of the "EU bubble" agreed at Kyoto.

In considering additional measures, Government should carry out further work on the potential of a carbon tax. ACBE's view is that, if additional measures are required, there is a case for such a tax providing it is set at a level which does not damage UK competitiveness, that its revenues are fully recycled, that it is targeted to achieve behavioural change and that it does not fall exclusively on business.

11. In the medium and longer term, the further development of low carbon technology and carbon fixing will be critically important. So will be trading of carbon permits internationally and Government should act now to ensure that a regime is developed to make this attractive to business. There is also substantial scope to boost energy generated from renewables to reach a 10% target by 2010, provided Government and business increase their support for this sector now, and to obtain further gains through market transformation and incentives for homeowners and transport users to switch to low carbon technology.

12. As a first step, there is a need for sectors and individual businesses to engage with the issues which Climate Change raises. ACBE will help to encourage debate and spread awareness, beginning with its seminar for businesses in May and will respond to the Government's consultation paper on a UK programme of measures later in the year.

PRINCIPAL RECOMMENDATIONS

1. Targets for sectors including domestic and transport. A UK National programme with targets and supporting policy measures is needed to reduce global warming gas emissions from all sectors and this should include proportionate savings from the domestic sector and transport.

2. Meeting Demand with new Products and Services. Policies are needed to stimulate the market transformation process, and to encourage manufacturing sectors to enter into voluntary agreements to achieve increased levels of energy efficiency through new products and services. Government should put in place a consistent, long term policy framework for innovation which gives business the confidence that investments will be rewarded in the market place.

3. A stronger business focus on energy efficiency and carbon saving. Much has already been achieved; but there is significant scope for further CO2 savings through increased efficiency in all sectors. Business should report on carbon consumption, on a basis which allows sectoral comparison and relates to output measures. Business should also seek information on fuel breakdown from energy suppliers and report on energy derived from Combined Heat and Power and renewables.

4. Voluntary agreements. Every business sector should consider whether it is practicable to reach a voluntary agreement, with targets set in terms of efficiency improvements, so that the potential of this approach can be clearly demonstrated. Sector voluntary agreements should be defined by the end of 1999, so that it is clear which sectors can adopt this approach.

5. Negotiated Agreements. For the medium term, business and Government should give further consideration to the option of negotiated legally-binding sectorial agreements, accompanied by appropriate incentives.

6. Regulation - Integrated Pollution Prevention and

Control (IPPC). IPPC should be the preferred instrument for achieving energy savings in major installations and energy intensive industries. It should apply a requirement on the energy intensive industries which is commensurate with that applied to other business sectors by other means. IPPC should be implemented in a way which maintains the option of carbon trading between installations, and which maintains the option of access to international trading.

7. Economic Instruments - a Carbon Tax. ACBE believes that in order to help secure a change in the approach to energy and to meet the Government's targets, an economic instrument in the form of a tax may be necessary. However if adopted, such a tax must be part of a comprehensive programme of measures and introduced on the basis that it does not lessen UK business competitiveness, that is revenues are fully recycled by encouraging low carbon technology and by being otherwise revenue neutral, that it is targeted to achieve changed behaviour and should not fall exclusively on business. This should be supported by clear Parliamentary undertakings with regard to fiscal neutrality and the recycling of revenues in particular.

8. Trading and joint implementation. Flexible international mechanisms such as trading should be established as soon as possible on a business to business basis. The UK should take an active role, in establishing these mechanisms and stay closely involved in the international negotiations on trading and joint implementation. The structural arrangements necessary to enable trading to take place and to ensure a strong business input into the design of trading arrangements should be the subject of a further ACBE report for consultation within 12 months.

9. Combined Heat and Power (CHP) and Renewables. Government should take action to ensure that the regulatory barriers to the wider use of CHP continue to be tackled. There should be a new voluntary Business Commitment to Renewable Energy, set at 1% rising progressively to 10% by 2010, providing Government maintains and increases NFFO funding, and providing the cost of such energy is and remains competitive with prices currently obtainable. Government and the Regulator should also increase incentives for domestic take-up of solar power, for example through the Regulator allowing domestic PV installers to sell surplus electricity back to the grid at the same price as they have been charged for non PV purchases.

10. Nuclear Power. Provided that high standards of safety and environment protection are maintained - and that decommissioning liabilities are fully funded, nuclear power will continue to be important as a means of helping to deliver the UK's Climate Change targets. The Government should ensure that this potential is fully investigated.

11. Technology and Research. Business has an important contribution to make in developing technology which will help to meet the UK's targets and Government needs to ensure that funding is available for well targeted climate change related product development and research on the lines of the United States' Climate Change initiative. This should include energy technology and such areas as energy

efficient vehicles, buildings and renewables. ACBE also recommends that a Business-led Climate Technology co-ordination centre be set up to coordinate research and assist in the commercial exploitation of new technologies.

12. Climate Change Impacts. Business Sectors should

identify how far they are likely to be affected by changing weather patterns in the UK and the possible longer term consequences of Climate Change so that issues of particular concern can be addressed strategically.