Resource efficiency will improve UK competitiveness

Paul Ekins (c) SERI polfreeThis post is by Professor Paul Ekins OBE, director of the UCL Institute for Sustainable Resources, University College London.

There are many reasons to increase resource efficiency in an economy like the UK’s. Among them are the need to reduce pressure on natural resources in a world with growing populations and economies; to reduce the vulnerability to imported material’s supply shocks and price volatility; and to avoid the environmental impacts of natural resource extraction, even where they occur outside the UK.

But perhaps the main reason to improve resource efficiency in current economic and political circumstances is to improve the UK’s national competitiveness.

Most natural resources come at a financial cost. Using less of them in relation to economic output reduces costs to firms and makes them more competitive. More competitive firms can more easily win in markets at home and abroad. Increasing exports, while reducing our resource imports, benefits the UK’s trade balance.

There are substantial opportunities for increasing resource efficiency across most sectors of the economy, and convincing evidence that it will deliver macroeconomic benefits. These are the main messages from the UN Environment’s International Resource Panel report, Resource efficiency: potential and economic implications, of which I was the lead author. Commissioned in 2015 by the G7 governments during the German Presidency, resource efficiency remains a major theme running through the Italian G7 Presidency this year. The governments of the world’s largest economies are, it seems, increasingly paying attention to the evidence that higher resource efficiency can deliver economic, environmental and resource benefits.

The report also highlights that intelligent public policy is required for these benefits to be delivered. Market forces by themselves will get some of the way there, but there are numerous constraints to increased resource efficiency, which are well documented in terms of both their existence and how they can be addressed by government action. The UK has, in the past, been something of a pioneer in relevant policies, such as landfill taxation, support for industrial symbiosis and legislation for extended producer responsibility. But the appetite for such progressive measures appears to have diminished in recent governments.

It is time for that to be rekindled. The Industrial Strategy green paper contains the odd welcome reference to resource efficiency, but there is little sign that the concept is at the heart of government thinking. One remedy would be for BEIS and the Treasury to give as much attention to resource productivity as they do to labour productivity, to signal that resource efficiency should be a key consideration across all government policy. That really would signal seriousness of intent to make the UK more competitive by adding more value to the materials which overwhelmingly the UK has to buy from abroad.

Industrial strategy fit for the future: perspectives on building a competitive UK economy’ brings together the views of seven respected thinkers from politics, business, trade unions and academia on the kind of economy the industrial strategy should be building and the role low carbon and resource efficiency can play.

Green Alliance set out the case for low carbon and resource efficiency to be the key underpinning principles of a modern industrial strategy, in a short report and animated infographic.

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