You are now ready to lead the world

Jun 16 2009 by Sue Scott, Evening Gazette

MARTIN Luther King did not inspire the world by proclaiming “I have a nightmare”, CBI director-general Richard Lambert told a London School of Economics conference just days after attending the launch of the Great North Revolution in Darlington.

Citing the North East initiative as a “bold and visionary” example of how a region could lead not just economic, but social change, Mr Lambert said: “I suspect that all is required now to get things really humming is a socking great cheque from Lord Mandelson.”

He told the Politics of Climate Change conference that a “proper mix of incentives and regulation” was needed along with a shared national agenda on which “government, business and consumers could build a sustainable economy at an acceptable cost”.

But the first essential requirement was a robust price for carbon. Only a reliable carbon price would provide investors with the incentive they needed to develop the sort of low carbon alternatives, which are a key driver of the new sunrise economy in the North-east.

“Most businesses favour a cap and trade approach to establishing a price for carbon, as opposed to a direct tax levy,” said Mr Lambert. “That’s because they don’t trust finance ministers enough to give them such sweeping new powers, and they think it would take forever to agree on a cross border tax rate,” he said.

“Using the market mechanism guarantees reductions in emissions, and ensures that they will take place in the most cost effective manner.”

Mr Lambert said policy frameworks had to be both certain and credible because the investment projects necessary were very large, and for the long term. “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. And they won’t get to the starting point at all if they think the policies are incredible.”

He pointed to Italy’s incentive scheme for consumers switching to super efficient washing machines and fridges, asking “Why not do the same here?” But when it came to kick starting whole areas of the new economy with taxpayers’ money, he acknowledged there were conflicts, making oblique reference to EDF Energy’s recent swipe at the UK’s Renewable Obligation Certificate scheme, which favours all low carbon producers, except nuclear.

“It’s government’s job to provide the appropriate incentives and the penalties,” said Mr Lambert. “It’s up to business to respond with the products and services that will be required for the low carbon economy.