CBI chief calls for right mix of 'carrot and stick' to deliver low carbon economy

Speaking at the Politics of Climate Change Conference in London today, he said Government, business and consumers must all play their part in delivering a low carbon economy, but he said Government must provide business and consumers with the right blend of incentives and penalties as well.

“Government can’t do the job by itself. Nor can business, or the general public. But with the proper mix of incentives and regulation, and by working together on a shared national agenda, Government, business and consumers can build a sustainable economy at an acceptable cost,” he said.

Lambert called for “a robust price for carbon” to give investors the incentive they needed to develop low carbon alternatives. He said, in the end, a combination of both cap and trade and tax would be needed to “get the job done”, but that for now a market mechanism would ensure reductions in emissions would take place in the most cost effective manner.

The CBI boss argued to get business on board the low carbon agenda, it was essential Government got the policy frameworks right. “Businesses will only step up to the plate to invest if they are confident that the rules are not going to be changed a little way down the road,” he said.

He criticised “incredible” policies, though, arguing that the EU renewables target of 20 per cent by 2020  “simply looks impossible”.

He said business and consumers needed the right blend of incentives and penalties, particularly in areas where big reductions in carbon were needed, such as in the housing stock and transport.

“There is obvious scope here for encouraging householders to make a difference by offering a blend of incentives and sanctions to implement energy efficient measures,” he said “[…] For instance, Italy’s consumers are rewarded for switching to super efficient washing machines and fridges – why not do the same here?”

Next on the list, Lambert said, Government and business had to work together to develop new energy sources and to build low carbon industries.

He said offshore wind was an obvious example, but it should not be stimulated to the extent that it damaged other low carbon energy sources, such as nuclear.

He said the car industry already offered a good example of where public and private collaboration was building new industries, in form of electric car production.

“I spent a couple of days in the North East this week and came away very excited by the work that’s going on there to develop electric cars and the infrastructure that will be needed to support them,” he said. “Business, the regional development agency and the Government are already getting on with the with job.”

Mr Lambert said companies had a role to play to encourage changes in behaviour to build a low carbon economy, but he said they would also have to do more to explain the environmental impact of their products and services to their customers: “Transparency is the key: greenwash is the enemy. Only if consumers trust what they are being told will they start to change their behaviour,” he said.
 
Finally, he said the public would not be bullied into making changes, so it was up to business to respond with the products and services that would be required for the low carbon economy and for Government to provide the appropriate incentives and penalties.

“We must create a positive model of a low carbon future – and one that connects with ordinary, every day life in the present,” he said. “No approach based mainly on threats and deprivation is going to work. Martin Luther King did not inspire the world by proclaiming: “I have a nightmare.”

The Politics of Climate Change was being held at the London School of Economics (LSE) and was organised by Policy Network in association with the LSE’s Centre for the Study of Global Governance. Other speakers included Terry Leahy, chief executive of Tesco, Lord Mandelson, Secretary of State for Business and Stelios Haji-Ioannou, the ceo of the easyGroup.