A new business survey shows that even the leading businesses will fail to exploit many of the low carbon options open to them and that radical business transformation is unlikely before 2020.
At a special meeting of the All Party Parliamentary Climate Change Group today, the Centre for Low Carbon Futures - in collaboration with the ESRC Centre for Climate Change Economics and Policy - launched a policy paper reporting the research.
Based on a nationwide survey of over 400 of the larger and more engaged companies, it presents unique insights into current business perspectives on investment in energy and carbon management.
It also looks ahead at the implications of business expectations for the longer term transition to a low carbon economy. The data was collected with the Business in the Community and The Prince's Mayday Network membership network.
Technological and economic optimism around possibilities for decarbonisation have played a critically important role in enabling political action on climate change. They enabled the UK to adopt the 2008 UK Climate Change Act - a world-leading piece of legislation that recently led to the adoption of a target of a 50% reduction on 1990 levels of greenhouse gas emissions by 2027.
However, the assumptions that underpin this optimism are not always debated with business realities not fully explored and the report aims to address this. Professor Andy Gouldson leading the study from the University of Leeds said: "We developed the survey to look at the proportion of the available low carbon options that businesses realistically expect to have exploited by 2020 - which is something that hasn't been widely explored until now.
"We wanted to find out through what forms of change energy and carbon savings are anticipated and to explore the main drivers and barriers that are shaping investments."
The survey asked respondents, predominantly directors or energy/environmental managers, for their assessment of the prospects for change in their organisation. A mixed picture of results appeared.
On the positive side businesses have faith in climate science, are highly aware of options for reducing energy use and carbon footprints and are confident in the economic opportunities for doing so.
However, business confidence in government targets for 2020 and 2050 is low, there is restricted access to capital and management time and opportunities for knowledge sharing between industry sectors are poorly developed.
Prof Andy Gouldson said: "While prospects for incremental change are high, the prospects for the radical change needed to transition to an energy efficient, energy secure, low carbon economy are much lower.
"In fact many of the available options for energy and carbon management are likely to remain unexplored even in 10 years time. Government must provide more certainty on its carbon reduction targets and it should introduce innovation friendly policies that combine standards, incentives and capacity building measures".
- 58% of companies surveyed were highly confident in climate science and 65% have high or very high levels of confidence in the economic opportunities associated with decarbonisation
- However only 19% were highly confident in the UK Government's 2020 emissions reduction target - and only 14% had high levels of confidence in the 2050 emissions reduction targets
- Business activity in the area of energy and carbon management is not recession proof. 46% of respondents said that investments are highly or very highly sensitive to the broader economic climate
- 42% suggested that investments in energy management are highly or very highly sensitive to energy prices
- Energy and carbon management are given a fairly high priority by the boards of many organisations with 53% suggesting high or very high levels of board commitment
- 64% rate the prospects for incremental changes being made as high or very high, but only 25% rate the prospects for radical changes being made as high or very high
- Despite the need for urgent action on climate change, under current conditions it seems very likely that even amongst the leading businesses the UK will see a continuation of business as usual but in a slightly more efficient form in the next ten years.
Key policy recommendations
- To strengthen the credibility of the 2020 and 2050 UK emissions reductions targets providing businesses with clarity and certainty, which could help, unlock investment
- To create an enabling policy framework not only through regulation and incentives but also through capacity building and the strengthening of learning networks
- To create and communicate visions of radically de-carbonised business showing what can be done by different sectors and sizes of organisation to build confidence and commitment
- To help ensure the leaders can go further and faster without being held back by the followers.
- To take steps to ensure that energy and carbon management are integral aspects of strategic as well as operational decision making in business.
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