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Why businesses need incentives for resource security

This is a guest post by Julie Hill, author of The Secret Life of Stuff, and a Green Alliance associate.

Later this spring, the government will publish its Resource Security Action Plan. The Plan is a response to business concerns about resource availability, since Chinese restrictions on rare earth exports, and the price spikes induced by high global demand and commodity speculation, have set off panic in all directions.

Resource stewardship rather than resource security
It is also, however, an opportunity for government to recognise the crucial role of a more circular economy in the future availability of resources, as well as in significantly reducing the environmental impacts of securing them.  ‘Resource Security’ should really be understood as ‘better resource stewardship’.

Incentives to leave resources in the ground
When Vince Cable spoke to the Green Alliance/CBI conference in December, he was clear that we are not ‘running out’ of key resources; rather the problem is the damaging pollution that is a side effect of much of our consumption – greenhouse gas emissions above all.  So the main thing the Plan should do is spell out the means to tackle these ‘externalities’. As economist Dieter Helm eloquently put it in a recent interview, there is enough fossil fuel around to ‘fry the planet several times over’.

What businesses need are incentives to leave those fuels  in the ground. Extrapolating that argument to other key resources that entail  large amounts of carbon, and often water too, in their journey to becoming products (I’m thinking particularly of plastics, metals, and other minerals) we could start to shape new economic instruments that guide businesses towards  low-carbon, water efficient and low waste options the whole way along the product chain, from extraction through to final disposal.

Designing in resource recovery
In our report ‘reinventing the wheel’ we recommend some new UK-based economic instruments that would lessen the impacts of products and materials by making them part of a more ‘circular’ economy. These include a ‘recovery reward’ to incentivise better collection and recovery of the metals in electronic products; a levy on mineral phosphate to encourage re-use of organic nutrients, and a possible levy based on the recyclability of products.  All of these bear on the most crucial stage of product development – design.

Vince Cable has heard that message, because he spoke of the opportunities for businesses to mitigate resource risks by designing for recovery, recycling and material substitution.   He also signalled a willingness to take a ‘hard look’ at the possible benefits of a system of stronger individual producer responsibility for electronic goods, taking on board our criticism of the lack of incentives for better design in the current WEEE regime. It is clear that an approach to resources based on stewardship could have significant benefits for innovation, and thus competitiveness, in the UK.

Clear signals needed
The Resource Security Action Plan will inevitably contain a mix of policy approaches – including calls for voluntary action, and reiteration of existing government mechanisms and incentives. But without measures that send very clear signals to the markets in which our resources flow, it is unlikely to change much. The climate is too difficult for most businesses right now to consider radically changing what they do without being sure of a level playing field, and thus a decent return on investment. Based on Vince Cable’s speech, we await the plan with optimism.

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Green Alliance is a charity and independent think tank focused on ambitious leadership and increased political support for environmental solutions in the UK. This blog provides space for commentary and analysis around environmental politics and policy issues as they affect the UK. The views of external contributors do not necessarily represent those of Green Alliance.