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Going green needn’t mean going slow Phil Woolas MP, Minister of State (environment), examines the response to climate change

There used to be a tendency to be gloomy about climate change. For a long time the discourse seemed to be dominated by prophets of doom or people insisting that we needed to return to some sort of pretechnological pastoral existence.

In light of that, it is not at all surprising that many turned away from the warnings, they felt the issue was too big and that they couldn’t make a meaningful contribution.

Furthermore there had been the widespread feeling that green policies were against growth, against innovation, and against competitiveness. Even two years ago, who would have thought we would have reached the historic agreement in Bali that commits all nations to a roadmap that will lead to global cuts in greenhouse gases? Two years ago who would have thought we would have a Climate Change Bill that will make the UK the first country in history to have legally binding targets to cut CO2 emissions? Or that the Nobel Peace Prize would be awarded to a panel of scientists as they demonstrated incontrovertibly that climate change is happening and that it is man-made?

We have now moved forward at an astounding rate and as we have come together to take action, the horizon has changed as the gloom and apocalyptic visions have been replaced by optimism. There is an acknowledgment that we are all in this together, an acceptance that we must act now, and many have realized that a low-carbon economy presents exciting opportunities. It’s important to emphasize that, as far as business is concerned, we can’t ignore the facts any longer, we can’t turn the clock back, even if we wanted to, and doing nothing is simply not an option.

The Stern Report makes it quite clear that there is serious work to be done to mitigate against climate change. We are heavily reliant on business to lead on this work and to provide investment and innovation. But if we fail to take the initiative, then things will still continue to change and the costs would be 10 times higher, perhaps more. Fortunately, British business is already taking advantage of the opportunities climate change presents, to work to drive innovation in low-carbon technologies and take advantage of the global jobs boom in green technology sectors. Over the past 10 years, we have shown it is possible to decouple economic growth from growth in greenhouse gas emissions. We have seen innovation in renewable energy, particularly in offshore wind and next-generation solar technology, as well as alternatives to fossil fuels, all being developed in the UK.

We have seen companies developing more energy-efficient electrical goods and removing some of their least efficient from the market. Heavy industry has just entered Phase 2 of the EU Emissions Trading Scheme, which sets a cap on the level of emissions within the EU. In the financial sector, the UK is emerging as a world leader in finance and business services, particularly in carbon markets. Globally, the Environmental Industries sector was estimated to be worth £274bn in 2005, and is expected to grow to £342bn by 2010 and just under £40 bn by 2015. I am deeply proud of this record, and we need to build on that to continue the pace of change.

The government is playing its part in setting that pace. We have very ambitious CO2 reduction and renewables targets. Businesses will need to reduce their carbon intensity by over 90% by 2050 – an average of around 5%, year on year, from 2007. We are working to remove fiscal and regulatory barriers to encourage development and take-up of low-carbon energy technologies and energy-efficiency measures. We are pushing for international agreement on aviation and shipping emissions.

As part of the EU’s wider climate and energy package, we are pushing for the EU ETS to set tight caps on carbon allowances, to give business long-term certainty to invest in low-carbon growth. Business is responsible for 30% of UK emissions, not including transport, and it will need to play its part in meeting those targets, alongside efforts by government and individual citizens. We have also worked closely with the CBI and other business sectors on the Climate Change Bill. On initiatives such as the Carbon Reduction Commitment, which introduces a new cap and trade scheme for large non-energy-intensive organizations, we have a wide range of partners who have played a key part in developing a policy that will deliver financial benefits for its participants as well as benefits for the climate.

The other main impact business has is on consumers – and conversely, consumer demand for greener products will have an increasing effect on the way companies do business. The Department for Environment, Food and Rural Affairs (Defra) recently completed a study profiling the different levels of response by the public to green issues. There are some people who are way ahead of all of us, and others who will never be convinced. However, the vast majority of people are either actively looking to take positive steps on climate change or willing to make the right choices if presented with them. The government is playing its part through its Act on CO2 awareness campaign, but information campaigns are not enough.

We are looking to business to enable people to live a low-carbon lifestyle, whether it’s low-emission cars, energy-efficient products, or perhaps most importantly by looking at how mass market products and services are manufactured and delivered in order to reduce their carbon footprint. There is a lot of work to be done, and not a lot of time to do it. Within the UK, there is not one measure that will solve this problem, but working together, all these individual parts add up to make a huge difference. The UK is not alone in this fight. We are obviously working closely with our EU partners, but we recently reached agreements with China too and, of course, the US.

I don’t think it is controversial to say that the US has come a long way over the past few years on the issue of climate change. The US has, for the first time, seriously committed to engaging in discussions on a post-2012 international climate change framework under the UNFCCC. It has also demonstrated its increased engagement by hosting a meeting of major energyconsuming and greenhouse-gas-emitting countries that supports and adds momentum to the UNFCCC process.

As the international picture begins to take shape, we can catch a glimpse of the post-carbon global economy and what the structures of that economy might look like. The UK government’s instrument of choice for pricing carbon is emissions trading. Trading is an economically efficient way of achieving emissions reductions since it provides companies with the flexibility to respond in the most cost-effective way. Trading does not generate unnecessary regulatory burdens, allows businesses to make their own choices on priorities, and minimizes the costs of reducing emissions.

A number of national and regional carbon-trading schemes are emerging around the world. Linking carbon-trading schemes globally can increase market liquidity and improve costeffectiveness. A number of countries, such as Australia and New Zealand, are working on trading schemes of their own and have already expressed interest in linking with the EU Emissions Trading Scheme. A global carbon market will expand international business relations and open up access to low-cost carbon reductions that are available across the world. It makes sense there should be a global solution to a global problem.

Most encouraging is the progress in the US at city and state level, and the UK is working closely with policy makers in California and the Western Climate Action Initiative, as well as the North-Eastern states, to help develop emissions trading schemes and investigate possibilities for future linking – this work supports our objective of achieving a more effective global carbon market.

But I would stress that there needs to be a truly global response to this issue, it can’t be just about one nation, or even a group of nations. Similarly it can’t just be about government or business or consumers. We all need to work in partnership to complement each other’s efforts. If we are successful in this, it won’t be a struggle, it will be a mass movement which changes the way we live, the way we work and the way we do business.

The UK government’s instrument of choice for pricing carbon is emissions trading

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