Putting the environmental sector at the heart of the Government’s industrial strategy

One of the driving ideas at the heart of Theresa May’s vision for Britain is the rebirth of a term that since the 1970s has been rarely uttered by those in government – industrial strategy. Backed by the creation of a new department, the Department for Business, Energy and Industrial Strategy, and championed by its Secretary of State, the Rt Hon Greg Clark MP, the foundations were laid out in the ‘Building our Industrial Strategy’ Green Paper published at the beginning of this year. The Green Paper mandates the need to “build on our strengths and extend excellence into the future”. As the leading trade association for environmental technology and services, at the Environmental Industries Commission we contend that the UK’s environmental sector is a strength to be built upon, and therefore should be central to the industrial strategy.

The environmental sector is one of the UK’s fastest growing. In the decade since EIC was formed in 1995 the value of the sector has grown tenfold – from £13 billion to £124 billion in 2015. Between 2010 and 2014 it grew by 11% compared to the 7% growth seen by the economy as a whole. It provides 373,000 largely skilled jobs, and contributes 1.6% to GDP with £29 billion of value added to the economy – more than pharmaceuticals or aerospace. The growth of the sector is all but guaranteed, as it is largely driven by Government initiative, and there is now a consensus across the main parties that climate change and the health of the environment in general are essential issues. For instance, the current commitment to combat poor air quality across the country will spur the growth of the air quality management sector, while the necessity to build new housing on brownfield land boosts the contaminated land remediation sector. 

The global market also poses a great opportunity for UK environmental business. The expanding middle-classes of emerging powers such as India and China necessitate governments to clean up their environments. The UK has both the expertise and innovative technology solutions required to meet some of that demand, but at the moment we aren’t doing enough to promote ourselves. UK environmental exports currently total 0.6% of the $1 trillion global market and even without increasing our share we predict 26,640 new jobs will be created by 2025. Increase that share by 50% and 40,000 new jobs will follow.

Despite the existence of world-class research and expertise in this country, there is still much room for improvement, and in relative terms the UK lags behind nations such as Finland, Denmark and Ireland. These nations have burgeoned the growth of their environmental sectors through government backing for research and development, and support for early-stage green investments to help pioneering technology reach the market. In Denmark’s case, 3% of GDP is invested in research and development, while $657 per capita is allocated for early-stage green investments (as in Ireland), compared to the UK’s $163.  In Finland, a 2012 strategy made ‘cleantech’ one of the four focal points of Finland’s economy. This included the setting up of a Cleantech Finland board, headed by their Prime Minister and including ministers, business leaders and key civil servants. Finland also prioritises the promotion of its green technology in all its international influencing activities.

We represent many small environmental technology firms that have come up with ingenious ways to deal with a plethora of environmental challenges. As amazing as this technology is, it often doesn’t get the market exposure it deserves. We are doing our part to promote our members’ work in Government and beyond, but the green industry also needs the firm backing of Government, whether that’s through early stage investment through bodies such as Innovate UK, favourable economic policy instruments that support the growth of green business, or by better promoting the sector for export.

By setting out an environmental industrial strategy, the Government can fight on two fronts – supporting the green industry is both economically sound and would help the UK, and by extension the world, to be more effective at tackling its environmental problems and building a sustainable future.

 
Sam Ralph is the Policy Executive at the Environmental Industries Commission, the trade association of the environmental services and technologies sector

The views expressed in this article are those of the author and are not necessarily shared by Bright Blue