UK environment industry missing global opportunities

Global Environmental Markets and the UK Environmental Industry: Opportunities to 2010 has revealed that “the UK has not kept pace with overall EU performance in increasing environmental exports”. Although the UK has a successful environment industry employing 173,000 people, it has only a 4.7% share of the US$515 billion (£364 billion) world market, compared to France’s 7% and Germany’s 11% shares.

By 2010, the world market is predicted to grow to by 3% to US$688 billion (£487 billion), with the highest growth rates in developing countries, particularly in areas such as water and wastewater treatment, waste management, air pollution control and environmental monitoring. According to the report, it is a market comparable in size to sectors such as pharmaceuticals or aerospace, with 85% of the market in developed regions such as North America, Western Europe and Japan.

Nevertheless, there are some areas where UK companies are doing well. According to the report, among the very large international companies that are emerging are firms such as the UK water plc’s. “These international businesses will become increasingly dominant in world markets as the environmental industry continues to consolidate,” says the report.

Currently, overseas markets account for 15-20% of the UK environment industry’s turnover, comparing reasonably favourably with countries such as the US, where the figure is 10%; the Netherlands, at 12%; Sweden 14% and Japan, 15-20%. However, for some countries the figure is much higher. The environment industry in both Finland and Denmark have 50% of their markets based outside their home countries.

Areas in which the UK is falling behind are waste recycling and renewable energy generation – linked to the low use of such technologies within the UK itself. However, “in the fields of air pollution control and environmental instrumentation, the relatively slow market conditions in the UK have meant that well-established UK suppliers have increasingly turned to overseas markets”, says the report.

In particular, says the report, within all sectors of the UK environment industry there needs to be greater development of innovative environmental technologies and services. “Failure to innovate and invest in R&D will lead to UK suppliers missing out on substantial opportunities in overseas markets and in the UK,” says the report. “A mix of instruments will be important in promoting innovation, including:

• the use of investment incentives, including tax allowances to support environmental technologies in their early phases of development, such as the Green Technology Challenge;
• the formulation of long-term strategies for the development of environmental technologies and for solving environmental problems;
• the strengthening of networks for innovation – involving industry, environmental suppliers, investors, academic institutions, regulators and national and regional government organisations;
• the use of public procurement policies to encourage the development and use of innovative technologies; and
• the development of innovation funding programmes, such as Sustainable Technologies Initiative (STI), in partnership with industry and private sector sources of capital.”

“This report highlights the opportunities that are being created across the globe as we face up to environmental challenges such as pollution of air, water and land, and climate change – but it also warns that the UK is lagging behind in exploiting these opportunities,” said the Director of the Environment Industries Commission (EIC), Merlin Hyman.

“Our competitor governments provide a wide range of legislative, fiscal and R&D support for their environmental industry,” said Hyman. “Action by the UK government is now vital if our industry to win in global markets. In particular the Government’s planned Green Technology Challenge must be extended to support innovative environmental technologies across the environmental agenda.” (see related story).

Global Environmental Markets and the UK Environmental Industry: Opportunities to 2010 is published by the DTI/DEFRA Joint Environmental Markets Unit (JEMU) and was written by environmental consultants Environmental Resources Management. The report is available from JEMU by emailing jemu-tpi@dti.gov.uk.