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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)The Green Industrial Revolution |
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Apparently I'm the first Secretary of State for Trade and Industry to address a Greenpeace conference. Many of my predecessors under previous Governments tended to regard environmental issues as a nuisance -something that got in the way of business. Of course Norman Tebbit did famously tell people to get on their bikes. But I don't think reducing pollution was his main consideration. Industrial policy was seen as something fundamentally opposed to environmental improvement. Well, I wouldn't be here today if I subscribed to that view. This Government was elected on a platform of modernisation and renewal. To modernise our institutions, our policies, our economy. The purpose of our modernisation programme has been to enable Britain to meet the rapid and profound changes we are experiencing-changes driven by factors such as globalisation, the growth of new technology and the internet. Some have seen environmental issues as standing outside this process. Some environmentalists want to 'stop the world'.They see economic and social change as going in completely the wrong direction. I understand these concerns. I recognise that there are powerful forces at play. But the precise way these currents play depends on the direction and the shape that society decides to give them. The main characteristic of the modern world is change. The role of Government must be to manage the process of change. Not to resist it. But not just to let it happen, regardless of the consequence. Instead, we must harness change - shaping it, helping people cope with change, helping us take advantage of it. So while we reject old forms of industrial policy -which all too often have been harmful to the environment-we do believe in active industrial policy - shaping markets, helping companies innovate, and equipping people to adapt to change. This is the approach that must guide us in dealing with the environmental challenges we face. The very nature of the environmental challenge lends itself well to this active and modernising approach. It must also be about improving the quality of life for all our people. It is another reason why tackling the environmental agenda must be part of our core mission. In fact, these key elements - more efficient use of resources, an active policy, and the need to address social exclusion - work hand in hand. Tax or other measures which encourage efficient use of resources and more environmentally sustainable technologies help to create new jobs and wealth, which in turn enable us to tackle social exclusion. By achieving our environmental objectives we can improve quality of life and open up new job opportunities. In many ways the direction of the modern economy bolsters our attempts to integrate the environment and business success. For most of our history wealth and power has come from physical resources - land, raw materials, coal, iron and steel. In this, the 21st Century, it will increasingly come from human capital. In every sector of our economy that means greater use of leaner, more intelligent technologies. The replacement of paper by IT. New forms of energy. In short, the knowledge economy will be a more environmentally sustainable economy. These developments increasingly enable environmental and economic goals to merge. Just as we have seen an industrial revolution, so I believe that with new technology as a key driver we are on the verge of a green industrial revolution. The way this process develops is not pre-determined. But with Government playing its role and business responding positively, it will be a vital part of our future. Today I want to set out a green industrial policy for realising that aim. To understand the need for this we have to agree on some fundamental propositions. We can not continue to pollute the environment and consume resources in the way we have over the last two hundred years. We all know that is unsustainable. We therefore need demanding, long-term objectives and goals to improve our productive use of resources, and to cut waste and pollution. That is not a threat to business, to growth, to prosperity. It is the key to our future prosperity. This is a fact that many businesses already recognise. In the modern global economy, companies know they must constantly innovate and raise productivity. To do so in the future, business must embrace the green industrial revolution. To meet national and international environmental targets. To meet consumer demand. And to improve their own competitive position. As Sir John Browne of BP has said, "The enlightened company increasingly recognises that there are good commercial reasons for being ahead of the pack when it comes to issues to do with the environment." And if you need more convincing, just look at the relative performance of companies on the Dow Jones. In the first half of this year, the return on equity of the Dow Jones Sustainability Group Index averaged 15%, compared with just 8% for companies in the regular Dow Jones Index. In the past companies - and government - have focused primarily on increasing labour productivity. That has been essential in order to overcome the productivity gap with our international competitors. It remains essential because the gap is still too big. But gaining in importance, especially in the future, is environmental - or resource - productivity: getting the most out of finite resources, maximising our use of renewable resources and minimising waste. This is certainly good for the environment. But it makes good business sense - improving efficiency, cutting production costs, reducing dependency on increasingly expensive finite resources. New technologies, better design, new processes, new ways of doing things will mean major increases, up to ten fold or more by some estimates, in economic output per unit of energy, materials or land. And that means competitive advantage. But the green industrial revolution will also be demand driven. There is already a growing consumer market for environmentally-friendly products and for the products and services of businesses that behave in an environmentally responsible way. Consumer demand will only increase that market. Of course, the structure of the economy will change in response to the new consumer demands, to environmental regulation and taxes and from the development of more efficient, more environmentally friendly technologies and processes. But this is not something to despair at. There is no evidence that past environmental protection has costs jobs or that greater environmental productivity will do so. New technologies are creating new jobs. The global market for environmental goods and services is currently estimated at 335 billion dollars - comparable with the world markets for either pharmaceuticals or aerospace - and is forecast to grow to 640 billion dollars by 2010. This is why we must aim to be among the front runners in the green industrial revolution. Business must embrace this challenge. Making environmental considerations part of mainstream business activity. But Government has an important role to play in taking forward an active industrial policy which provides the building blocks, the framework and the support for environmentally sustainable businesses. This is why John Prescott and I now have a joint performance target for our Departments to improve the environment and the sustainable use of natural resources. And today I am publishing the Department of Trade and Industry's sustainable development strategy - which sets out how we will work towards this target. The aim of the strategy is to improve resource productivity. We will begin measuring its success in terms of reducing the level of greenhouse gas emissions and levels of waste disposal relative to GDP. These should give a good indication that we are moving in the right direction in breaking the automatic link between economic growth and use of resources. But we need to develop better measures of overall environmental productivity which business and Government can use to monitor progress. I want to open a dialogue on how we can take this forward. The DTI is the department for business. That is why we cannot be complacent on environmental issues. We cannot ignore climate change. Nor can we afford to tolerate inefficient use of resources, waste and pollution. We have to have environmental objectives and targets for cutting emissions, for improving recovery of materials, re-use and recycling. What we can and will do however is to help business be ready for and able to cope with change. We have to give clear signals to business on what lies ahead. Setting demanding objectives and targets, underpinned by regulation where necessary, is an important driver of innovation. But Government should avoid over-prescriptive regulation and micro-management. Focusing on outcomes - rather than the detailed way in which business achieves them. And targets - whilst demanding - must be introduced over timescales that give businesses time to adjust and to develop new, commercially viable solutions. Giving business, especially smaller firms, the flexibility to achieve objectives in the way which best suits them. I believe that this is the best way to secure the business commitment we need. Where it is clear the direction that environmental obligations are going, government can work with industry to ensure we are able to seize the new business opportunities. Not just regulating and leaving business to sink or swim. But helping business adapt. That includes helping to fund research to identify and develop the products of the future that will be needed to meet tougher regulatory standards and consumer demands. Advances in technology crucially depend on our science base. That's why, in our two spending reviews, the Government has boosted investment in science and technology. Environmental research and development will benefit from this increased investment. For example, DTI, the Research Councils and industry will shortly be launching a new joint programme on sustainable technologies worth at least £30 million over five years. We must also provide the support and conditions for new, environmentally sustainable industries to grow. And encourage innovation and best practice. We are extending the joint DTI/DETR environmental best practice programme for a further five years at a cost of £32million. This programme is already estimated to be saving business over £100 million per year. Businesses like Walkers Crisps in Peterlee, who secured cost savings of nearly £1 million in one year by improving waste segregation. More generally, we need to incorporate sustainable development into our whole approach to business support. This is a significant cultural change but one which I am committed to my Department embracing. In the past, DTI practice sometimes lagged behind the more progressive business thinking. Trying to see off the environmental agenda instead of looking at how it can create new opportunities for business. I am clear that our new role must be to look at what more we can do to identify environmental business opportunities and to work with business to improve environmental productivity. One of the areas I want to look at is what more we can do to enable small firms to embrace the green industrial revolution. The Small Business Service will work with the small business community to make sure they have the information and advice they need to rise to this challenge. I also want to bring environmental productivity into the mainstream of everything the DTI does. To make sure we help business rise to the challenges and opportunities in this area. In small firms support, innovation, science and technology, e-commerce, trade services and regional support.
Within DTI, I intend strengthening our sectoral teams, especially in industries with future growth potential, to support business innovation and growth. This will include adding further to our large stock of secondees from the private sectors with relevant experience and knowledge. Because much of this future growth will come from clean technologies and products, I will ensure that some of these new secondees will have expertise in the environment,to help us identify the environmental challenges and opportunities in each sector. In energy the opportunities and threats are perhaps most clear. Climate change means we have to look at ways of reducing greenhouse gas emissions not just up to 2010 but, more importantly, well beyond. That means generating energy using low or no carbon sources such as renewables. The arguments in favour of moving towards increased use of renewable energy are compelling. Our aim is to encourage the renewables industry to provide a growing proportion of our energy supplies in a competitive energy marketplace. We want to bring renewables firmly into the mainstream of our energy supplies. And we are prepared to take bold action to achieve this.
Our policy is one which combines appropriate regulation with a market based solution. To place an Obligation on all licensed electricity suppliers to provide a specified minimum proportion of electricity from renewable sources but to leave the choice of renewable source to the market. Today I am publishing a consultation document on a new Renewables Obligation. Our target is to supply 5% of UK electricity from renewables by 2003 and 10% by 2010. Continuing concern over global warming points to an even larger contribution beyond. At European level there is consideration being given as to whether energy from waste incineration should be included in national targets for renewables. We in the United Kingdom would particularly welcome views on this issue during the consultation process. Proposals in our consultation document mean that renewables will be able to attract a higher price in the marketplace. A price that could reach around double that for electricity generated from fossil fuels. And this is in addition to their exemption from the Climate Change Levy. Through the Obligation, we are proposing to focus support on the renewables that need it most. That is why we will exclude large-scale hydro from the Obligation. I am also aware of the strong views held about energy from waste incineration being part of the Obligation. I have given this careful consideration and decided that energy from waste incineration should be excluded from the Renewables Obligation. All in all, these proposals offer the renewable energy industry a market worth up to £ 1 billion a year by 2010. I know that some advocates of renewables fear that the New Electricity Trading Arrangements will be bad for renewables. This should not be the case, particularly in view of the Obligation and Climate Change Levy exemption. We are also working with OFGEM and industry to ensure that the New Electricity Trading Arrangements support our aims for renewables. In particular, OFGEM is working with industry to ensure that we can accommodate on our distribution systems the growing contribution from renewables and other environmentally friendly forms of generation, such as combined heat and power. I think I can truly say that renewable energy is coming in from the cold. We shall soon have the UK's first offshore wind turbines commissioned, off Blyth and the first energy crop project at Eggborough. I would like to see these exciting developments replicated elsewhere throughout the UK and on a larger scale. We are therefore proposing capital grants to help early offshore wind and energy crops projects compete with the more established renewables under the new Obligation. Some UK businesses are among the leaders in business thinking and action world-wide on sustainable development. They know this is something consumers are increasingly concerned about and they know the importance of company reputation in the modern economy. Equally, shareholders need to know if a company is building up potential environmental liabilities. Effective and meaningful disclosure of companies' environmental performance and polices is therefore very important. The current independent review of company law is examining the whole area of transparency and disclosure. This is something which I will look at very carefully when the Review delivers its final report to me next Spring. We are also promoting environmental objectives in pushing for a new round of world trade talks. We will be seeking to establish a framework which ensures that an open trading system makes the maximum contribution to improving the quality of people's lives. At the start of the 21st century we face three significant challenges. To protect our environment from climate change and pollution. To improve our competitive position in a global, knowledge driven economy. And to extend wealth and prosperity to all our people. I believe that the key to these challenges can lie in leading a green industrial revolution. Raising environmental productivity and ensuring that Britain is at the cutting edge of new sustainable technologies. Not only to protect the environment. But to ensure that British business wins in world markets. Creating the jobs and prosperity we need. We shouldn't underestimate the challenge. But by working together - business and Government - I believe we can meet them. |
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Other speeches by Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)
(the following are available from the archive) |
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