Green business groups applaud ambitious carbon budgets

The UK's leading green business groups have today urged firms to act now to enhance their energy efficiency and bolster investment in low carbon technologies in the wake of the climate change committee's recommendation that the government should adopt more ambitious emission reduction targets.

The calls for emission cuts of at least 21 per cent by 2020 form the centrepiece of the committee's Building a low carbon economy report, which also sets out recommendations for the government's first three five-year carbon budget and outlines plans for a major overhaul of the country's power generation and transport infrastructure.

While the government will have the final say on whether or not to accept the committee's targets and recommendations, Craig Bennett of the Corporate Leaders Group on Climate Change said that firms should assume that the report will be rubber stamped by the government with relatively few changes.

"One of Ed Miliband's first acts as climate change secretary was to accept the committee's calls for an 80 per cent cut in emissions by 2050," he said. " In that light, the expectation has to be that the government will adopt the budgets as they stand or it will have to come up with a very good reason as to why not."

He added that while the business community would offer a wide range of reactions to the new targets, members of the Corporate Leaders Group on Climate Change, including E.ON, BSkyB, Shell and Tesco, would welcome the new report.

"We have always argued that the targets need to be guided by science and that is what the committee seems to have done," he said.

Bennett said that businesses should be looking to prepare now for how the carbon budgets will impact their operations.

"What we have seen today is the targets and recommendations on how to meet them, not the policies themselves," he said. "But there are a number of no brainers that will definitely happen and business should prepare for: energy prices will go up and tougher standards on energy efficiency will be introduced. "

He added that those companies that will have the least problem adapting to these new realities will be those that act first to enhance their energy efficiency.

Tom Delay, chief executive at The Carbon Trust, said that the budgets would also present numerous business opportunities for those companies that act quickly to develop low carbon technologies and business models.

"The case for massive investment in low carbon energy technology acceleration could not be stronger," he argued. "This should be seen as an opportunity to stimulate the economy by cutting billions from the nation's fuel bills through mass energy efficiency, by the UK becoming the global hub of low carbon innovation, and by creating vibrant new low carbon businesses."

The committee's recommendations are likely to face criticism from some businesses which are expected to argue that they meeting the targets will represent an unacceptably high cost at a time of recession.

However, Alex Lambie, director at energy advisory firm Green Helpline, argued that even the committee's prediction that meeting the targets would result in a reduction in GDP of just one per cent by 2020 was unnecessarily pessimistic.

Equating the shift to a low-carbon economy with the switch in the 1980s and 90s to an IT-enabled economy, he argued that the move was likely to bolster the bottom line of most firms.

"Across businesses and society we are going to see sweeping changes, but they are not going to be as painful as people expect," he said. "This is just another technology change, and it is something we have been through before with other technologies… it is easy to talk about red tape, but this is all about improving efficiency and boosting the bottom line."

But Stephen Hale of business lobby group the Green Alliance warned that while the report's targets were to be welcomed, they could not be achieved without clear leadership from government.

"[The] government must take immediate and far-reaching action in transport, housing and the power sector," he said. “The committee is right to advise the government to go beyond existing commitments… but the UK government must plan for success."