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Sir Ian Cheshire: uncertainty over fourth carbon budget is 'extremely concerning'

Sir Ian Cheshire, chief executive of retail giant Kingfisher plc, has today warned that the investment climate is being harmed by the government's failure to confirm binding carbon targets for the mid-2020s, arguing that uncertainty over the fourth carbon budget was proving "extremely concerning".

Writing today on BusinessGreen, Cheshire, who is one of the most high-profile advocates for greener business models and also serves as an ambassador for WWF UK, said large numbers of businesses were now committed to cutting their greenhouse gas emissions, but efforts to decarbonise were being damaged by an absence of long-term policy certainty.

"Businesses across sectors recognise that there is no alternative to transitioning to a low-carbon economy," he writes. "But policy makers' indecisiveness on the fourth carbon budget review, which holds the key to cost-effectively meeting the UK's obligations under the Climate Change Act, is causing uncertainty at a time when we need to act quickly to mitigate the risks of a warming world."

He added that businesses were already facing escalating climate risks, as highlighted by the floods that hit the UK earlier this year. But he warned that businesses would struggle to address these risks without "a policy environment that eases the increasing volatility in financial and commodity markets, and supports a stable macroeconomic environment".

The government is currently undertaking a review of the fourth carbon budget, which was set under the Climate Change Act and currently requires a halving of carbon emissions against 1990 levels by 2027.

However, as part of a compromise deal brokered between the Conservatives and Liberal Democrats when the fourth carbon budget was first announced in 2011, it was agreed that the target would be reviewed in 2014 to ensure that it was not harming the UK's competitiveness and remained in the national interest.

The review has prompted speculation that chancellor George Osborne is keen to see the budget watered down – concerns that were fuelled by revelations that Treasury modelling had shown that the current budget could have a negative impact on GDP.

However, the Treasury's modelling has faced fierce criticism from green groups, who have accused it of failing to take account of the many economic benefits associated with lower carbon emissions. Meanwhile, the independent Committee on Climate Change has repeatedly argued that the current carbon budget targets represent the most cost-effective route towards the UK's overarching goal of cutting emissions 80 per cent by 2050.

Moreover, a number of business groups have lent their voice to the campaign for the current budget to be confirmed. Most notably, a group of chief executives and senior corporate figures, including Cheshire and a number of his peers at EDF Energy, Unilever, Shell, and BT, wrote to prime minister David Cameron earlier this year urging him to take an "early decision to keep the budget at its current level" and warning that "delay or confusion will add to the cost of doing business and undermine investment and job creation".

Cheshire argued that retaining the current budget would help the UK take advantage of a booming global market for green goods and services, while also increasing the chances of an international climate treaty being agreed at next year's UN Paris Summit.

"Like many other British businesses, we're already committed to a future that is economically and environmentally stable," he said of Kingfisher's environmental strategy. "But we can't do it on our own. We need clear signals from government about the shape of the future economic landscape that we will be operating in. Maintaining the fourth carbon budget is a critical first step in providing that certainty."

Source : James Murray - BusinessGreen

23 May 2014
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