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Decoupling Growth from Carbon:

Possibilities and PoliciesPresentation to the Economy and Environment Panel

Seventh European Forum for Science and TechnologyEfficiency of European Science and its Global

Competitiveness

Professor Paul EkinsProfessor of Energy and Environment Policy

King’s College London

Thursday 22nd May, 2008University of Economics, Prague

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The Challenge of Carbon Decoupling

• Decoupling: a decline in the ratio of the amount used of a certain resource, or of the environmental impact, to the value generated or otherwise involved in the resource use or environmental impact. The unit of decoupling is therefore a weight per unit of value.

• Relative decoupling: in a growing economy, the ratio of resource use (e.g. energy consumption) or environmental impact (e.g. carbon emissions) to GDP decreases

• Absolute decoupling: in a growing economy, the resource use or environmental impact falls in absolute terms

• If GDP growth continues, climate stabilisation at levels of CO2 concentration that limit global average temperature increases to 2oC will require a degree of absolute decoupling of GDP from carbon emissions that is outside all previous experience

UK Carbon Emissions – 2002

Domestic in home

Business

Aviation

Source: “The carbon emissions in all that we consume”, Carbon Trust, 2006

Domestic transport

Total = 165 mtc

18

8847

11

Business and public sector emissions(excluding transport, distribution and supply industries)

Source: “The UK Climate Change Programme: Carbon Trust, 2005

25 mtc 13 6 10

0%

20%

40%

60%

80%

100%

Large EnergyIntensive Industry

Large Non-

EnergyIntensive

Public Sector

SMEsManufacturing

(direct)

Manufacturing

(electricity)

UK emissions targets

0

100

200

300

400

500

600

700

800

1990 2000 2010 2020 2030 2040 2050

Kyoto GGH Target (2008 – 2012)

Domestic CO2 goal: 20% by 2010

Domestic CO2 goal: 60% by 2050

26% - 32% “budget cut” by 2020

Mil

lion

s of

ton

nes

of

CO

2 eq

uiv

alen

tC

limate C

han

ge B

ill Com

mitm

ents

Categorisation of environmental policies

• Market/incentive-based (also called economic) instruments: include emissions trading, environmental taxes and charges, deposit-refund systems, subsidies (including the removal of perverse subsidies), green purchasing, and liability and compensation (EEA (2006, p.13).

• Regulation instruments, which seek to define legal standards in relation to technologies, environmental performance, pressures or outcomes. Can also include imposition of obligations, e.g. renewable and energy efficiency obligations in the UK.

• Voluntary/self-regulation (also called negotiated) agreements between governments and producing organisations. Economic actors may enter into these in order to forestall the introduction of market-based instruments or regulation.

• Information/education-based instruments e.g. Eco-labels, ‘smart’ meters, may be mandatory or voluntary.

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Policies for carbon decoupling (1)

• Economic instruments: importance of resource and emission prices, driver of efficient use, emission and waste reduction

• Energy taxes: climate change levy (carbon reduced by 3.5 mtc by 2010), fuel taxes (EU emissions half what they would have been at US prices)

• Emissions trading: EU ETS; Carbon Reduction Commitment

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Policies for carbon decoupling (2)

• Regulation• Renewables Obligation• Energy Efficiency Commitment (Carbon Emissions

Reduction Target)• Integrated Pollution Prevention and Control (control of

non-carbon emissions may increase carbon emissions)

• Voluntary agreements• Climate change agreements• EU fuel efficiency agreements (targets will not be met;

targets will be mandatory in future, i.e. Regulation)

• Information/education• Energy efficiency labels for appliances (e.g. A-rated

fridge freezers 0-80% market share in 6 years)

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Combinations of policy instruments

• Market transformation• Result of the combination of a number of policy measures

affecting different actors, including: EU energy labelling; marketing campaigns (e.g. Energy Efficiency Recommended branding and advertising) by the Government and its agencies (e.g. EST); consumer advice from Energy Efficiency Advice Centres; media coverage on climate change; retail staff training and point of sale material from the EST; EU Minimum Performance Standards; EEC funding for incentives for consumers to purchase the energy-efficient models.

• EU Integrated Product Policy• SCP; state aid; voluntary agreements; standardisation;

environmental management systems; eco-design; labelling and product declarations; greening public procurement; encouragement of green technology; and legislation in areas including waste and chemicals.

• SCP (see next slide)

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UK SCP Strategy

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Products Strengthening domestic and international measures to improve the environmental performance of products and services, including improved product design

Production Improve resource efficiency and reduce waste and harmful emissions across business sectors

Consumption Influence consumption patterns, including proposals for new advice for consumers

Procurement Sustainable procurement in the public sector, to make the UK a leader within the EU by 2009

Innovation Support for innovation to bring through new products, materials and services

Sustainable business

Increase transparency, corporate responsibility and skill in business and other organisations

Waste Increased emphasis on reducing waste at source and making use of it as a resource

Environmental Tax Reform (ETR)/Green Tax and Budget Reform

• EC 1993, Chapter 10: “An insufficient use of labour resources and an excessive use of environmental resources”, leading to the conclusion “If the twin challenge of unemployment/environmental pollution is to be addressed, a trade-off can be envisaged between lower labour costs higher pollution charges”.

• Green taxes/charges are levied on resource use or polluting environmental emissions

• Revenues from green taxes (or from reducing environmentally harmful subsidies) allow other taxes to be reduced

• Some portion of the revenues can be used for essential environmental spending (e.g. on infrastructure) that is otherwise difficult to finance

ETRs in Europe• Denmark, Finland, Germany, Netherlands, Sweden and UK

– all very small; different tax base (energy, CO2, sectors), tax rates, revenue recycling, exemptions; all have exemptions because of competitiveness fears (COMETR)

Economic and environmental effects of ETR• Green taxes reduce environmental resource use• Green taxes achieve efficient resource use and

environmental improvement at least cost by promoting• Static efficiency (equal abatement cost)• Dynamic efficiency (incentives for innovation)• Awareness of inefficient resource use• Abatement technologies can lead to new industries

• Reduction of other distorting taxes reduces net cost of abatement (revenue neutrality)

• If innovation, awareness, industrial cost reduction, reduced distortions are greater than abatement costs, then environmental improvement can be achieved at net gain to the economy – green economic growth (double dividend)

Policy conclusions

• Relative, but not absolute, carbon decoupling (carbon emissions have risen in UK since 1977, despite Climate Change Programme policies)

• (Much) More stringent application of policy instruments (especially price-based to avoid rebound effects) is required

• Environmental tax reform (ETR)• Political feasibility• Implications for economic growth

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Growth in UK living standards: business as usual

GDP per capita 2006=100

0

75

150

225

300

2006 2020 2030 2040 2050

Source: HM Treasury Assumption of 2% per annum productivity growth, Long-term Public Finance Report, December 2005

100

2.4 times current level

Growth in UK living standards: with 60% emissions cut

0

75

150

225

300

2006 2020 2030 2040 2050

GDP per capita 2006=100

100

0.3 – 2.0% lower

Business as usual 60% emissions cut

National Industrial Symbiosis Programme (NISP)

• What is ‘Industrial Symbiosis’ ?“Industrial symbiosis engages traditionally separate industries and other organisations in a collective approach to competitive advantage involving physical exchanges of materials, energy, water and/or by products together with collaboration on the shared use of assets, logistics, experts and knowledge transfer.”Modified from Chertow, Yale 2000

Connecting Industry – Creating OpportunityThrough the Intelligent Use of Information

Industrial Symbiosis for a circular economy

Naturalresources

Products

Waste (to disposal)

Linear system

Circular systemProducts

Waste to resource

Natural resources

Naturalresources

Products

Waste to resource

What is NISP?

• 12 regional offices across the UK - England, Wales, Scotland, & N. Ireland

• 12 Business led Programme Advisory Groups (Corus, Veolia, Lafarge, BMW, Bombardier etc)

• Independent Board (Governance)

• Funding £8.5M 2007/8

• 90 + Practitioners

Regionally Delivered, Nationally Coordinated

PAG Members

• Corus• Marley Eternit • NEC Ltd• ConocoPhillips• Anglian Water

Services Ltd• Associated British

Ports• SITA • RIX BioDiesel• Scottish & Newcastle• Shell• Peel Investments• Foster Yeoman• Bombardier

Corporates

• Premier Automotive Group

• BOC• Clancey• IKEA• Johnson Matthey • Wedgwood• Sainsburys• Rentokil• Millennium

Chemicals• Lafarge Cement• Coors Brewers • Severn Trent• Veolia• Tarmac

SMEs

• B.C.R Company • G&P Batteries• Overtone Recycling • Premier Waste• Renewable Energy

Growers• Pennine Fibre

Industries• Firth Rixson Castings• Country Chef• The Cheese Co.• Green BioDiesel• Alutrade• Betts• Kingpin• Auto Waste

Solutions

Micros

• Link Waste• Arrow

Environmental• Marches Wood

Energy Network• Akristos• Kito Engineering

Solutions • Facility Water

Management• Enviro (Grimsby) • Clarkson Enterprises

• Sustainable Resources

• Advantage Waste Brokers

• UK Recycling• Analytichem

Who are NISP’s 9500+ Members?

KEY POINTS • Business led• 9500 + members (Sept ‘07)• All sizes: Multi-nationals, SMEs, Micros, Entrepreneurs • All sectors dealing with all resources

NISP Vision

“Bring about long term business culture change through profitable actions that result in measurable environmental and social benefits making a significant contribution to international sustainability”

NISP INCREASES

Jobs

Sales

Learning

Bottom line

Innovation

New business

Inward investment

Knowledge transfer

Utilisation of assets

NISP REDUCES

Use of Virgin resources

Use of potable water

Hazardous waste

CO2 emissions

Transport

Pollution

Landfill

Costs

Risk

What NISP achieves …

NISP helps create real business opportunity

NISP Outputs so far …Metrics… April 2005 – March 2008 Delivery Per £ inv

Increased sales £123.4m £49.36

Cost savings to business £89.2m £35.68

Private Capital Investment £110.1m £44.04

Virgin raw material savings (tonnes) 5.99m 2.4t

Carbon savings (tonnes) 4.43m 1.77t

Water savings (tonnes) 9.22m 3.69t

Waste diverted from landfill (tonnes) 3.39m 1.36t

Hazardous Waste (tonnes) 333,188 -

Jobs Created / Safeguarded 1870 -

• Some words on stats verified, understated, England only• Future capacity enormous …

NISP International ImpactAwards…• Ranked Defra No.1 BREW project 2005/6, 2006/7, 2007/8

• European Exemplar project of Eco-Innovation

International outreach• USA

• Chicago• US EPA meeting October 2007 in Washington

• Europe … Potential for roll out via the European Environmental Technologies Action Programme (ETAP) … Romania, Eire, Portugal

• Yunnan Province, China 2007, Mexico City 2007+ UNIDO + World Bank

• Sustainable Development Dialogues – Mexico, China, Brazil, South Africa, India

National Industrial Symbiosis Programme (NISP)

• NISP as a (still small-scale) exemplar

• Programme Director: Peter Laybourn

• Operational Director: Ian Bryan

• National Chairman: Professor Paul Ekins

Phone : +44 121 433 2650

E-mail : peter.laybourn@nisp.org.uk

Web : www.nisp.org.uk

www.international-synergies.com