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Lack of government commitment to low carbon economy is putting potential job growth at risk

21 June 2010

New research from The Work Foundation shows that confusion over regulation and a proliferation of agencies and bureaucracy is putting the creation of jobs in the low carbon economy at risk. The low carbon economy has been identified as a potential area for economic growth and job creation.

 

The report, A 2020 Low Carbon Economy analyses the current potential for developing a low carbon economy and concludes that the government has a crucial leadership role to bring clarity to develop this important part of the economy. It calls on the government to create a central point of contact on all matters concerning the low carbon economy to cut through the bureaucracy and confusion.

 

The author of the report, Charles Levy, researcher in the knowledge economy programme, said: “Current public policy and financial support for the low carbon economy is complex and highly nuanced. More than £2bn of support for these activities was announced by the previous government in the past three years, but it is hard to establish if this is new funding or just reallocation of already committed monies. We urgently need an audit of spending.

 

“A hugely complex web of monetary flows, regulatory activities and confusing lines of accountability has developed among dozens of public sector organisations that decide how to spend the cash.”

 

One of the biggest challenges is that low carbon is not a sector in its own right but rather a cross-sector of low carbon emission activities. These span across a very wide range, from retrofitting of loft insulation in older buildings and developing wind farms through to the complex world of carbon finance and carbon trading. This complicates the vital task of establishing effective frameworks of support from which these activities can develop. Legislation or regulation which is positive for one part of the low carbon economy will often impact negatively on other areas.

 

The report also concludes that business confidence is severely eroded by the confusion surrounding the low carbon industries and services. Business and investors are reluctant to invest in the industry when there is not a clear commitment from government.

 

Charles Levy explained: “The lack of business and investor confidence is a major obstacle to developing internationally competitive low carbon industries. A key cause of this is a lack of clarity and commitment from the government. It is still failing to offer confident leadership in the form of clear and consistent signals about the future value of these activities, and to establish clear frameworks which can support investment and offer confidence that publically dominated skills providers will offer the skills required by the low carbon economy.

 

“This lack of commitment from the government is also eroding Britain’s competitive advantage and is threatening our leadership and expertise in technologies for carbon capture and storage.”

 

The lack of clarity is a particular issue for skills supply. If business does not demand skilled labour in low carbon activities then universities and other training institutions will not offer opportunities for training. The expectations of individuals of the likely future returns from investing in these skills are not adequate to support this demand, resulting in a potential skills gap when the low carbon economy grows.

 

The research noted that the unreliability of demand for low carbon activities, the unpredictability of their supply and the uncertainty of future skills supply mean that basing policy on the prediction of the future growth of these activities is very risky.

 

The analysis instead developed three scenarios for the future development of low carbon activities and compared each with the current situation. All three scenarios predicted increasing demand for activities which reduce carbon dioxide emissions, but they differed in how this is reflected within economic activity:

 

• A low carbon technology implementation sector – the successful development of economic activities focused on reducing carbon emissions through the implementation of existing and developing technologies;

• Manufacturing-led growth in low carbon activities – the development of world class, export orientated low carbon activities based on manufacturing;

• A low carbon services led sector – the development of world class, export orientated low carbon activities based on business, financial and technical services.

 

Charles Levy noted, “The scenario analysis has confirmed the potential of low carbon economic activities. We can expect the implementation of low carbon technologies to create large numbers of relatively low skilled jobs. However, urgent action is still required to support the innovative activities which could create many of the highly skilled jobs of the future.”

 

 

Notes to editors

   

  1. Charles Levy is available for interviews and briefings.
  2. The report is part of the Knowledge Economy programme which aims to set out a credible view of what a balanced and sustainable economy would look like in 2020, and describe the options for government, organisations and institutions for getting there.
  3. This is the first of five sector-based studies: on energy and the environment (low-carbon); health-care and the health science base; creative and cultural services; high-tech manufacturing (manu-services); and high-tech services.
  4. The report, A 2020 Low Carbon Economy by Charles Levy is available at: www.theworkfoundation.com.
  5. The Work Foundation is the leading independent authority on work and its future. It aims to improve the quality of working life and the effectiveness of organisations by equipping leaders, policymakers and opinion-formers with evidence, advice, new thinking and networks. www.theworkfoundation.com.

Media enquiries

 

Gideon Benari

0207 976 3584 or 07825 527 040  GBenari@theworkfoundation.com