What resource efficiency can do for the industrial strategy
I am delighted to become the chair of the Circular Economy Task Force at such a critical moment for resources policy. 2017 has much for us to get our teeth into. The task force’s next phase of work will have two important strands: the implications of Brexit for the resource sector and the importance of resource productivity for the UK’s industrial strategy. As I recently blogged on the former for CIWM, I will focus on resource productivity here.
The industrial strategy green paper recognises that the UK needs a low carbon, resource efficient and resilient economy for the future. This shouldn’t be surprising. If I had a bottle of wine for every study identifying billions of pounds of savings from resource efficiency, I’d have a very impressive wine cellar. Despite its potential to boost business competitiveness resource policy in the UK has not been strategic, joined up or nearly ambitious enough.
But that could be about to change. As well as the industrial strategy, the government has three other new strategies in play: the National Infrastructure Assessment, the 25 year plan for the environment and the clean growth plan. So, for the first time in England, we have not one, but two industry-facing, economic documents, alongside two focused on the environment, all offering the chance to think more strategically about resource efficiency.
Rare opportunity for a coherent strategy
The resource sector in England has been crying out for a coherent strategy for years, so the coincidence of these four major strategies is a rare opportunity to finally put this in place, preferably drawing on the experience of Northern Ireland, Scotland and Wales. It isn’t all down to central government, but a lot is.
Resource productivity is mentioned in the industrial strategy green paper, but the final strategy must integrate it comprehensively if the government wants to retain and create high quality manufacturing jobs in the UK. Businesses exposed to volatile commodity and currency prices find it hard to be competitive.
Lack of up front thinking about recyclability makes it more expensive to deal with a product at the end of its life. For instance, Tetra Pak cartons can now be recycled, but for decades after their introduction they had to be landfilled or incinerated. We need to think now about how to handle new 3D-printed components to avoid the same mistakes again.
Currently, there is no coherent incentive to use secondary raw materials rather than virgin materials, which is part of the reason why last year the UK exported over 600kT of scrap plastic and imported around 500kT of virgin plastic. Differential taxation could help to address this.
Whether it is improvements to, or an extension of, producer responsibility, ecodesign, data, taxation or support for lean manufacturing and secondary markets, the government needs to set out specific policy measures.
Uncertainty about recycling and waste diversion targets is seriously hindering infrastructure and investment. Ideally, we’d see a clear statement confirming that the EU’s 2020 targets will still apply and a plan to adopt policy aligned with EU’s circular economy package, at least out to 2025. The four new strategies should also indicate how the government intends to go beyond this point, given that some of them have longer time horizons.
We need an innovation drive
Innovation which makes products, business models and manufacturing processes more resource efficient should be core to the industrial strategy. Last year, Innovate UK allocated just over one per cent of its budget to research in this area. There is clearly room for improvement. The government itself can also promote innovation through its own procurement and showcasing good practice. It should also seek to avoid regulation becoming a barrier, classifying products made from recovered material as waste, for example, makes it impossible to commercialise them. SUEZ’s investment in innovative new recovered MDF will have no route to market if can’t be sold in B&Q alongside virgin products.
Meeting the industrial strategy’s aims with a circular economy
There is an inherent tension between the prime minister’s vision of an “economy that works for all” and increasing productivity, since more employment is often correlated with lower productivity. This has been especially true in the UK, with its reliance on low skill, low wage jobs; in 2013, the UK had a higher proportion of these jobs than any OECD country bar Spain.
More resource efficient business models offer a solution. Their ability to provide jobs at all skill levels, as a Green Alliance/WRAP study found in 2015, should be recognised and encouraged in the strategy. Opportunities for skills development should also be supported, for example, via greater funding for the sector’s pathfinder apprenticeship.
It is worth looking at the recent parliamentary report on industrial strategy for a good introduction to the general economic picture. It makes a strong case for a ‘mission-based’ approach, rather than a vertical sector approach, so government support would be channelled towards addressing the big challenges of the future. With such obvious economic, social and environmental benefits, increasing resource productivity and developing a more circular economy is an excellent place to start.