Energy-Saving News

CBI Misses Point: Energy Efficiency = Competitive Advantage

Posted on 13. Jan, 2010 by Ross in Government Policy, Industry News, United Kingdom

The UK is only on track to meet its self-imposed carbon reduction targets because of the current recession, leading the Confederation of British Industry (CBI) to issue a stark and misguided choice in the aftermath of the failed Copenhagen conference: maintain competitive advantages or chase carbon targets.

The UK economy has suffered its longest recession on record, with a 6% economic contraction leading to a 2% carbon emissions reduction in 2008, the most recent year for which data are available. The Environmental Audit Committee, in a report published yesterday, said Britain should accelerate efforts to reach an international agreement on reducing carbon emissions and ensure that they peak globally “as soon as possible.” Tim Yeo, Conservative MP and chair of the Environmental Audit Committee, said:

At the moment, we are only on track to meet the targets in our first carbon budget period because of the impact of the recession. The slower our progress, the less credibility we will have internationally.

The UK Government currently aims to reduce carbon emissions by 34% from 1990 levels by 2020, according to the country’s (and the world’s) first Carbon Budget. Yeo’s committee recommended the government raise this to a 42% cut “once it is on track to meet its current targets.” Greater energy efficiency and more renewable and nuclear power generation are the key components of the national strategy for reducing emissions.

CBI Fearmongering Over Competitive Advantage.

The CBI, usually supportive of government efforts to pursue a low-carbon economy, responded strongly against the Environmental Audit Committee report, stating that the UK should be careful of eroding the competitive advantages of its companies by increasing its carbon goals before other nations also do so.

The new-found caution from the CBI is largely in the wake of the failed Copenhagen conference. Many companies were relying on a strong international commitment to carbon emission reduction to further justify the pre-emptive efforts that they are making in energy efficiency projects, and to create a stable investment future within to plan more effectively. Business leaders were amongst the most disappointed observers of the collapse in the talks, due to the uncertainty which still persists in the markets from the fragmented approach of different nations to climate change legislation. Touching on those fears, CBI Director of Business Environment Neil Bentley said:

We need to be wary of being two steps ahead of the rest of the world. Without a level-playing field internationally, U.K. businesses could find themselves at a disadvantage, and some firms may simply shift production to countries where emissions targets aren’t as tough.

Why The CBI Is Wrong

Reducing carbon emissions however, when pursued vigorously and effectively, can produce the opposite result to the one alluded to by the CBI’s statement. Rather than putting businesses at a competitive disadvantage, a significant competitive advantage can be gained by choosing the right ways to reduce energy use and the carbon footprint of products and services. Conversely, outsourcing is far more risky, with developing economies suffering from routine energy shortages and power rationing as the growth in energy infrastructure continually failing to match the growth in demand for energy from both the industrial and residential sectors.

Indeed, there is no such thing as green business: just good business.

With government funding available for energy efficiency projects from the Carbon Trust’s Big Business Refit, taking on energy saving projects not only confers a competitive advantage by reducing costs but it can be achieved without paying for it, resulting in positive cash flow from day one.

The CRC Energy Efficiency Scheme, due to start in April this year, will actually benefit half of those 5,000 companies included by refunding more than was initially spent each year in carbon credits. Simple steps to reduce emissions through energy efficiency are all that is required for companies to rise up the league tables, reap the financial rewards and benefit from the extra PR boost that such performance will bring.

Redesigning products to use less resources not only reduces the carbon footprint of the product, but protects the manufacturers from market price instabilities from excessive demand, international tariffs or conflicts.

Contrary to the stance of the CBI, carbon reduction can confer strong competitive advantages to a company. Whilst government targets and legislation are important, even in their absence smart executives are spotting the value in a low-carbon economy and are driving towards those goals.

Is your company doing the same?

Image by damo1977 @ Flickr

Related posts:

1. UK Government Plans Climate Change Adaption, UK Consumers Need To Adapt To £4,700 Energy Bills
2. Carbon Trust Farms Interest With Free Agricultural Loans For Energy Efficiency
3. CBI: We Want Energy Efficiency On Driving Tests
4. Meet The CRC Energy Efficiency Scheme
5. UK Energy Efficiency Home Loans Take A Lesson From The Carbon Trust

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Tags: carbon reduction, CBI