Scottish Government

GREEN JOBS STRATEGY REVIEW

Job Creation in Sustainable Industries

Main findings

'Green Jobs' Creation

Very few governments have developed 'green jobs' strategies. Many have broad sustainable development policies, with interventions designed to help meet international regulations. These are supported by economic development policies designed to simulate the growth of specific environmental technology markets. These typically do not have specific job creating objectives.

Denmark and Sweden are exceptions as both ran 'Green Jobs' creation programmes in the late 1990's as a part of broader environmental economic development policies. These were moderately successful, creating approximately 1,000 permanent jobs in Denmark and 600 in Sweden.

Organisations such as the Friends of the Earth, WWF, the Canadian Labour Congress and FEESE (Fostering Employment in the Environment Sector in Europe) have suggested policies to promote the development of employment in sustainable industries. The FEESE recommendations in particular are useful as they are based on studies into environmental employment creation activities in Germany, Sweden and Finland.

Drivers

The majority of investment in the development of environmental industries in Europe is driven by EU legislation, particularly national targets set out in the Renewables Directive and the Landfill Directive.

Interventions

The policy interventions that are used by governments to promote sustainable development fall into four categories: regulatory instruments, economic instruments, public/information instruments and land use/urban planning. Economic and regulatory instruments are the most commonly used, with economic instruments increasingly preferred. This is because they typically have the dual benefit of reducing unsustainable activities and raising funds to support sustainable activities.

Denmark as an example of best practice

The most effective policies for jobs creation in sustainable industries are those which combine national industrial and environmental policies. Denmark's policies can be regarded as best practice, with the country seen to be the world leader in the development of environment-focused economic policy. This focus is being maintained despite the fact that the Green Party, which invested heavily in the development of environmental technology capabilities, is no longer in power.

The Danish Government has recently scaled down its investment in renewable energy, becoming more selective about investment in the development of environmental technologies. It is using cost benefit analysis and market based instruments to achieve more cost effective solutions. The country is still expected to maintain its lead in wind energy and carve out a substantial market share in other technologies such as energy from waste.

Sustainable industry support

Investment in the development of specific technologies or industries is a very effective way of creating long term, and often high value employment. This can be seen in Denmark and Spain with wind energy, in Germany and Japan with photovoltaics and in the US and Canada with fuel cells.

For example, Denmark's policy of supporting the development of the wind industry has, according to the Danish Wind Industry Association, led to the country's dominance of the wind energy market and the creation of over 20,000 jobs. The expertise developed in wind energy has also helped support the growth of other renewable energy technologies.

Opportunities & capabilities

There are significant growth opportunities for Scotland in the three key markets studied: renewable energy, waste management & recyclates and cleaner technologies & processes. These markets are at different stages of development with marine technologies in particular offering opportunities over the long term. Scotland has the opportunity to become a world market leader in wave and tidal technologies.

Scotland has significant capabilities both within these industries and within industries requiring similar skills, experience and infrastructure. Expertise developed in the oil & gas industry, for example, will underpin the development of offshore renewables.

Research Methods

The report is based on desk research using secondary market research, internet searches and other published information in the public domain.

Jobs Creation in Sustainable Industries

Introduction

Considerable local, regional and national government interest exists in creating sustainable economic policies which limit the impact of growth on the environment. However, due to the diversity of, and considerable overlap in, environmental technology and related sectors and sub-sectors there is no recognised or agreed definition of what constitutes 'Green Jobs'. This has caused confusion and made it difficult for policymakers to set boundaries for economic development. A number of governments and their agencies, both in the UK and overseas, have developed, or are in the process of developing, policies to create jobs in the environmental industries as part of their future plans for sustainable economic development. This provides an opportunity to learn from current experience and best practice.

The Scottish Executive also plans to implement a 'Green Jobs Strategy' to stimulate future economic growth and sustainability. Three areas, relating to the supply of goods and services that will benefit the environment have been initially identified as having particularly strong potential to provide future growth and employment opportunities for Scotland, namely:

• Renewable energy e.g. wave, tidal stream etc
• Waste management, recycling and recyclates (products)
• Cleaner technologies and processes e.g. equipment to improve efficiencies

Growth in these areas is being driven to the EU Renewables Directive and the EU Landfill Directive. As with all EU governments, the Scottish Executive has set out policy and funding commitments to help meet these targets. Business support is being undertaken by organisations such as the Enterprise Networks, including activity relating to market creation and stimulation. Examples include diversification programmes to help existing companies transfer capabilities into renewable energy.

The Scottish Executive will undertake a major consultation exercise in summer 2004 to obtain wider opinion on a future 'Green Jobs Strategy' for Scotland. Scotland however, already has considerable resources, capabilities and competencies in wider environmental sectors that could be further developed as part of a future 'Green Jobs Strategy' and there is a risk of missed opportunities for jobs creation.

Most of the environmental sectors have already been evaluated in terms of future market prospects. An opportunity exists therefore to review additional scope to create jobs in sustainable industries in Scotland.

Project Plan

This project was designed to highlight opportunities to provide a range of activities that will support the Scottish Executive in the development of a future 'Green Jobs Strategy' for Scotland. The project was carried out in two phases.

Phase 1. International Strategy Review

The main objectives of the review were to:

• identify UK and overseas developments in job creation in sustainable industries at a national and regional government level
• assess current and, where possible, future green fiscal and intervention polices
• evaluate what impact (if any) intervention strategies have had on the development of jobs in sustainable industries

The review is based on desk research using internet searches, secondary market research and other published information in the public domain.

Phase 2. Opportunity / Capability Profile

The objective of this phase was to assess potential opportunities to create jobs in the Scottish Executive's three areas of interest: renewables, waste management & recyclates and cleaner technologies.

We undertook a review of future opportunities for employment creation relating to goods and services in each sector, based on global market size and growth rate forecasts. This included an assessment of opportunity development requirements and supply chain issues for each market sector.

An opportunity / capability table has been used to identify areas where there is a strong fit with Scotland's existing capabilities, and where there are capability and skills gaps. It also highlights those areas holding the most promise for new and existing Scottish businesses and in which government intervention is likely to yield the best results.

Leading strategies for job creation in sustainable industries

Overview

Very few governments have developed specific 'green jobs' strategies. Many have broad sustainable development policies, with environmental considerations influencing economic policy, but these typically do not have specific job-creating objectives. Denmark and Sweden (to a lesser extent) are exceptions. They are seen to be world leaders in the development of environment-focused economic policy and have specific 'green job' creation objectives and programmes.

Organisations such as the Canadian Labour Congress, Friends of the Earth and FEESE have developed specific 'green jobs' policies/recommendations and lobby governments to have them implemented.

Countries

The table below summarises the activities of countries that are active in the development of employment in sustainable industries and/or sustainable technologies. A broad indication of the impact these have had on employment or industrial development is also shown.

The following country profiles provide an overview of strategies which have been designed to create jobs in sustainable industries, where they exist, and the targeted development of renewable technology industries.

Denmark

Denmark is recognised as the leading country in the world in the development of green economic policy. Its policy of fostering green economic growth has been in place since the early 1990's. A timeline of Denmark's green industrial development is given in Appendix C and is summarised below.

Early 1990s

• Green procurement policy for public institutions

1993 to 1997

• Detailed regulation and control, with target setting and subsidies for renewable energy
• Introduction of green taxes with a focus on energy and transport

1997 to 1999

• Policies to support the research and development of new products and processes, and to promote new technology uptake
• Development of a 'Green Jobs' concept and policy, leading to the creation of 1,000 permanent jobs

1999 - 2002

• Sustainability is a driving force in industrial policy
• Government conducts a dialogue with over 300 CEOs, leading to the development of a 'Green Business Strategy' (see Appendix B) - substantial funding for environmental technology development
• Shift in policy to promoting environmental protection through technological innovation

2002 +

• New government in power, in which the Green Party is no longer a majority
• Innovation and development funds cut and subsidies cut
• Focus on the use of cost benefit analysis and the achievement of cost effective solutions through the use of market-based instruments (see Appendix B and below)
• Increased use of international partnerships to spread development costs and risks

The Danish Government's latest policy statement (from 2003) is 'Making Markets Work for Environmental Policies', which focuses on making better use of free initiative and market-based mechanisms to solve environmental problems. Economic instruments, regulatory and voluntary instruments (agreements, labelling, technological innovation) are being used to influence market players.

Future cleaner product initiatives will include a focus on information, innovation and the dissemination of environmentally friendly products. The initiatives will target specific product groups which are judged to be of economic and environmental significance. The focus will be on creating partnerships and dialogue with market players concerning the supply, marketing and demand for cleaner products. The Government intends to initiate a 'dynamic process involving a simultaneous increase in both the supply and demand for environmentally friendly products and services, where the environment is a much more important competitive factor in the market than is the case today'.

The existing Danish domestic market for environmental technology solutions is not large enough to develop competitive enterprises on the global market. Denmark recognises, however, that environmental technology innovation is an area where the country has strengths. It plans to strengthen its cooperation with EU partners and believes it has 'a good chance of becoming a pioneering force in globally furthering a green industrial development…and that Danish companies may obtain a strong competitive position in the global market of the future'.

As it has limited resources, the Ministry of Science, Technology and Innovation is carrying out technological foresight analyses in order to prioritise environmental technology innovation initiatives. It is also investigating ways in which environmental technology research can be incorporated into R&D within specific technology areas, such as nanotechnology. It plans to strengthen the interaction between industry and knowledge institutions to achieve better and less expensive solutions.

Sweden

The Swedish Government's Environmental Code, introduced in 1999, built on and replaced 15 separate environment laws. It includes measures to strengthen competitiveness in the environment-related sector, through entrepreneurship, the involvement of consumers, export promotion, etc. Initiatives which have an impact on the creation and support of jobs in sustainable industries are public procurement, industry consultation, innovation & export support, networking, the renewable energy programme and the Local Investment Programme. These are outlined in Appendix B.

The initiative that has had the greatest impact on 'green' jobs is the Local Investment Programme, which provides grants to Swedish municipalities, with the joint aims of increasing the pace of the changeover to sustainability and creating new jobs. During the period 1998-2001, local investment programmes created approximately 11,500 'years of work' and generated around 600 permanent jobs (in a wide variety of sustainable industries), lasting after 2001. It also created new technologies, new methods and new markets, particularly in the areas of energy efficiency and biogas production from organic waste.

Germany

While Germany does not have specific policies for creating employment in sustainable industries, it has a strong track record of supporting the development of markets for sustainable technologies. The majority of support has been legislation driven, particularly in waste & recycling and wind energy, where strong markets have developed. Its current 100,000 roofs programme, which provides householders with grants to install solar energy systems, has made Germany the leading European producer, developer and exporter of photovoltaics.

USA

As with Germany, the US focuses on market creation, rather than job creation. A combination of national programmes and state-based programmes are used to support the development of environmental technologies. Individual states are responsible for the development of both environmental and employment policies. Examples of national programmes include a $1.7bn investment over 4 years in the development of fuel cells, and the million roofs project which provides grants for the installation of domestic photovoltaic systems. State-based programmes include the Renewable Energy Assistance Programme in Wisconsin and the Green Building Tax Credit in New York (both discussed later in the report).

The US has developed a substantial waste recycling market, much of this driven by market forces, rather than specific government interventions. Statistics show that more than 1 million jobs have been created in recycling and reuse.

The Environmental Trade Promotion Working Group develops strategies to promote the development of environmental trade. It also provides a package of technical and legal assistance to companies looking to export. It has been successful in assisting US waste management companies to enter emerging and developing markets.

Canada

Canada has a 'Federal Vision for Sustainable Development to 2025' and a 'Sustainable Development Strategy for 2004-2006'. The latter contains an element of jobs-related economic development, with one its four themes being the use of innovative economic instruments to develop and support sustainable development, including the use of innovative agreements with industry to further sustainable development goals. The focus is on encouraging industry to embrace sustainable production through the use of economic incentives and instruments.

Human Resources Development Canada (HRDC) has its own 'Sustainable Development Strategy for 2004 to 2006'. HRDC's mandate is 'to assist all Canadians in their efforts to lead rewarding lives, as well as to promote a fair and safe workplace, a competitive labour market with equitable access to work, and a strong learning culture'. The 'green jobs' element of their strategy focuses on getting the disabled, aboriginal and long-term unemployed into work and does not have a specific economic development focus.

Examples of sustainable job creation activities by various Government departments under the banner of sustainable development are given in Appendix B.

Canada has recently invested in the development of its fuel cells research and development capabilities. In a recent DTI report, Canada was seen to be the world leader in this embryonic market. In the long term, this should lead to the development of a large number of jobs.

Spain

Much like Germany, Spain has invested heavily in the use of wind energy and in the development of its wind energy industry. It is currently the second largest market in Europe for wind energy and its major producers are active in the international market. Figures were not available for the number of jobs created.

Japan

Japan has invested heavily over a number of years in the use of solar energy, both domestically and commercially. It is the world leader in the development, production, use and export of photovoltaic systems. It is currently supporting the development of technologies for biomass and energy from waste, as well as funding fuel cell development.

France

In order to meet its obligations under the EU Renewables Directive (21% of electricity consumption by 2010), France has set renewable energy targets for biomass, wind energy, geothermal energy, small hydro and biogas, with the most significant being for wind. Here it aims to make wind energy profitable for small investors and to open a wide range of sites across France. Feed-in tariffs and investment subsidies are being used. It is currently behind target.

Independent of the support for renewables, pockets of environmental expertise have developed in France. The regions of Rennes and Lyon, for example, have both developed a very strong focus on the environment sector. Both have a large number of primarily small companies, supported by specialist courses run at the local colleges and universities, with which strong links have been established. With limited government investment, these regions have over time become national centres of expertise in the environment.

UK

Within the 1999 strategy 'A Better Quality of Life: a Strategy for Sustainable Development', the UK Government provides a wide range of objectives, all of which have an impact on the development of jobs in the green economy. Its sustainable consumption and renewable energy objectives and initiatives are given in Appendix B.

Support for technological development in new and renewable energy falls under the Technology Programme and is delivered through the new Collaborative R&D business support product.

In addition, the DTI's Capital Grants Scheme funds demonstration projects, both reducing the costs and risks involved and helping the Government to meet its targets for renewable electricity supply within the UK. The New Opportunities Fund is also contributing £50 million to renewable energy projects, as a part of its Transforming Communities Programme.

This funding is split between three key priorities:

• offshore wind projects
• projects generating electricity from energy crops
• small-scale biomass heating schemes

Wales

Wales has not produced policies that are specifically targeted at creating jobs in sustainable industries, but at the outset of the Welsh Assembly it made a core commitment to sustainable development, which has now developed into a proactive approach to green economic development. This is set out in 'A Winning Wales: National Economic Development Strategy of the Welsh Assembly' and is based on the UK Government's 'A Better Quality of Life: A Strategy for Sustainable Development for the United Kingdom'.

Its economic development vision is 'to achieve a prosperous Welsh economy that is dynamic, inclusive and sustainable…[and that] economic growth is not sustainable where the interests of the environment and our established communities are disregarded'.

Details of the Welsh Strategic Plan, which should have an impact on the development of employment in sustainable industries, are given in Appendix B.

EU/EC

The EU has a sustainable development policy, which feeds into the national Government sustainable development policies. It does not have a specific policy targeted at creating 'green' jobs.

The EC has identified sectors where there is a positive link between environment and employment. They recommend that these sectors should be the focus of supportive policy measures at European, national and local level. These are detailed in Appendix B.

Organisations

Canadian Labour Congress

The CLC is a labour union which works closely with Environment Canada, the Government's Environment Agency. It has developed a policy framework for a Green Job Creation Campaign, including a definition of a Green Industrial Policy. Details are included in the Appendix A.

Other Canadian labour unions also have 'green jobs' policies. The Communications, Energy and Paperworkers Union, for example, has a policy which focuses on renewable energy, energy efficiency and public transportation, and the Industrial, Wood and Allied Workers Union is focused on securing federal investment for intensive silviculture and just transition programmes.

Friends of the Earth

In 1998 Friends of the Earth prepared a document called 'Making Jobs Green' as the UK component of a European project coordinated by the European Environmental Bureau. The aim of the project was to raise awareness of economic activities that simultaneously protect the environment and create jobs. Its specific aims in agriculture, manufacturing, sustainable energy, transport and water are included in Appendix A.

FEESE

FEESE (Fostering Employment in the Environment Sector in Europe) is an EU-funded organisation which investigates employment trends, provisions and needs in the field of environmental technologies

Research carried out by FEESE in the environmental industry in Germany, Sweden and Finland came up with very similar issues and recommendations for the three countries. These are summarised in Appendix A.

International policy interventions

EU policy instruments/interventions

Within Europe, European Directives have stipulated the environmental responsibilities of Member States and EU based companies, helping to stimulate the market for 'greener' products and processes. Four main economic instruments are used in EU sustainable development policies:

• Charges and taxes: environmental charges/payments made on the use of the environment, e.g.
  • emission charges/taxes, based on the quality or quantity of the pollutant
  • product charges/taxes, levied on products that are harmful to the environment either when produced, consumed or disposed of
• Marketable permits or emission trading - environmental quotas which, once allocated by the relevant authority, may be traded internally or externally.
• Deposit-refund systems - payment of a deposit on a potentially harmful product. When the expected pollution is avoided, the deposit is returned.
• Subsidies for environmental purposes - financial assistance ranging from grants to soft loans and tax breaks, acting as an incentive for polluters to change their ways of operating.

Based on EU policy, regulations on emissions and the development of Best Practice Environmental Options within the UK have already led to a growth in demand for green products. The Scottish Executive has the ability to develop targeted policies to build on this regulation.

ISSD policy instruments/interventions overview

According to the International Institute of Sustainable Development, many existing and emerging policies tend to prioritise short term economic and social objectives at the expense of long-term environmental sustainability. It points to increasing evidence of the close linkages between economy and environment suggesting a need to rethink existing policies. It breaks down the instruments/interventions that can be used to support long term sustainable development into the following four categories :

• Regulatory instruments
• Economic instruments
• Public/information instruments
• Land use/urban planning

A further breakdown of these categories and examples of actual interventions are given in the following pages.

Regulatory instruments

A broad range of regulatory instruments are used by governments around the world. The majority of these are used to help countries meet international commitments. Examples include performance standards, ambient standards, technology standards, limits, bans, prohibitions, phase outs and quotas.

The following examples are specific to Germany, but could be implemented elsewhere.

Car Takeback Decree

Germany passed legislation which underpins a producer responsibility agreement formed between the government and the car industry. Under the agreement, manufacturers take back end-of-life vehicles at no cost to the last owner and without imposing a surcharge in the price of a new car. It aims to reduce the share of non-recoverable parts from 15% in 2002 to 5% by 2015.

Azo dyes prohibition

Germany prohibits the import of textiles containing certain azo dyes, which account for 70% of all dies used and could release any of 20 harmful amines. This regulatory instrument was also implemented to encourage the production of organically grown cotton, as well as prompting large textile mills to invest money into researching substitutes for banned substances.

Packaging decree

The German Packaging Decree promotes refillable packaging as ecologically advantageous. Defying an ongoing legal challenge from the European Commission (which sees the system as anti-competitive as importers do not have the necessary systems in place), as well as pressure from parts of industry to abandon it, the proposed decree retains the country's 72% refill quota for most beverage containers. A mandatory deposit is paid on all one-way packaging if the 72% rate is not achieved.

Economic instruments

Economic instruments are increasingly preferred to regulatory instruments as a national means of promoting sustainable development. This is because they typically have the dual benefit of reducing unsustainable activities and raising funds to support the development of sustainable activities. Economic instruments include:

• Fiscal instruments, charge systems & financial mechanisms, e.g:
  • Taxes on pollution, inputs, products, land use, royalties & resource;
  • Tax differentiation, investment tax credits, accelerated depreciation, other tax exemptions/allowances, subsidies
  • Charges on emissions/effluent, depletion, inputs, products, users, access fees, road use
  • Feebates, where producers or consumers pay a flat fee for an action, but are compensated if production/consumption falls below a specified level
  • Grants/soft loans, environmental or green funds, debt-for-nature swaps, distributive credits, location/relocation incentives
• Market creation - tradeable emission permits, catch quotas, water shares, resource shares
• Property rights - land titles, water rights and use rights
• Green procurement - joint implantation, deposit-refund systems, performance bonds

Some examples of successful policies implemented in the 1990's are given below.

Pollution taxes in Denmark

The aim of the tax was to encourage substantial savings in energy and encourage the growth of cleaner energy and renewable energy. Most manufacturing industries were targeted with new or increased pollution taxes, while income taxes were lowered. A CO2 tax was also introduced (industry paying 600 Dkr (£70) per tonne of CO2 for energy used for heating and 200 Dkr (£23) per tonne of CO2 for energy used for production), with the income partly being used for energy efficiency measures. For energy-intensive production, the CO2 tax can be exempted if the firm agrees to make use of the best available energy saving technologies.

Renewable energy assistance programme in the US

The aim of the grants / soft loans in this measure was to encourage the use of renewable fuels in Wisconsin, supporting companies that produce or use renewable energy with sales of less than $100m. Grant awards of up to $75,000 were available for eligible firms to assist them in assessing renewable fuel feasibility or to reduce the capital cost of installing renewable energy systems.

Green building tax credit in the US

In May 2000 New York introduced an incentive package for developers who build environmentally sound commercial and residential buildings. This 'green building credit' is aimed at encouraging the housing materials and construction industries to adopt green practices on a large scale by providing tax credits to building owners and tenants who invest in increased energy efficiency, recycled/recyclable materials and improved indoor air quality. The use of fuel cells, ozone-friendly air-conditioning and photovoltaics in particular is encouraged through the credit scheme. The hope is that economies of scale will be created, making greener products competitive with existing technologies in the domestic market.

Korean Deposit Refund Programme

The aim of the programme is to promote waste recycling. Producers of paper, metal cans, glass bottles, PET bottles, batteries, tyres, lubricants and home appliances are required to deposit money (the amount depending on the product) with the Ministry of the Environment. They then receive reimbursements according to their retrieval and treatment performance. The Korean Resources Recovery and Reutilisation Corporation purchase the products subject to this system and is responsible for their recycling. This has prompted the producers to take a great deal more responsibility for the recycling of their products.

Tax breaks for low-emission vehicles in Japan

As part of the Japanese government's commitment to reduce carbon dioxide emissions, it is providing consumers with tax breaks if they purchase hybrid and other low-emission vehicles (primarily produced by Nissan and Toyota). The Government has also overhauled the vehicles-related tax structure to reduce tax rates for vehicles with high fuel efficiency and raise the rate for those with poor fuel consumption. The government has also imposed a road tax, a tonnage tax, and a petrol consumption tax on motor vehicles.

Wind energy programme in Denmark

Denmark levies a tax on all electricity and the major support mechanism for wind energy in the 1990's was a partial rebate of the this tax (a production subsidy of 0.27 Dkr per KWh for electricity generated from renewable sources). The aim of the rebate was to reduce CO2 emissions and to increase the share of Denmark's gross energy consumption provided by renewable energy to 35%, or perhaps even 50%, by 2030. The rebate scheme was supplemented by subsidies which are designed to convert central heating systems to district heating and to expand the existing district heating network. The Danish government also employs other policy instruments (see Appendix C) to encourage the wind energy industry, e.g. subsidies, grants, partnerships, regulations.

Scheme for funding green jobs in Denmark

Up until the end of 2000 (see Appendix C for details on Denmark's green industrial development), the Danish Ministry of Environment and Energy provided financial support for projects which create new jobs in environmental areas. All companies, organisations, public bodies and individuals with ideas for creating new jobs could apply for funding, up to a maximum of DEK 250,000, or 70% of costs of new and existing staff costs working on the project.

Public/information instruments

Public and information instruments include education & training, public information campaigns, eco-labelling, partnership projects, voluntary agreements and pollution release inventories. Examples of green purchasing and public information instruments are given below.

Green procurement in Sweden

The aim of the policy adopted by a number of municipalities in Sweden (from 1995) was to ensure that environmental criteria are included in municipal procurement policies. As old contracts expire, the policy states that specific criteria are used for the development of all new contracts. This includes, for example, that suppliers declare packaging, transport and waste material. Products or services which are purchased and conform to the environmental criteria, or products which are eco-labelled, are separately coded. This makes it clear for each municipality how large a proportion of purchasing has been environmentally adapted. While no specific targets or penalties were set, it signalled to suppliers that they were more likely to win contracts if they were 'greener' than the competition. This has both increased the market for producers of green products and encouraged existing suppliers to the government to adopt green practices.

Federal Procurement Challenge in the US

The Federal Procurement Challenge is a voluntary, government-wide commitment that uses the buying power of the federal government to create new markets for energy saving technology and products. Agency heads commit their organisations to purchase products that are in the upper 25% of energy efficiency for all similar products. The Federal Energy Management Programme helps participants to identify energy-efficient products that meet their needs at a reasonable cost. Twenty-two federal agencies, representing 95% of federal purchasing are participating.

Green Seal in the US

Green Seal is an independent, non-profit organization which has developed a Seal of Approval for products and services. Working on Federal, industry and consumer levels, Green Seal promotes the manufacture and sale of environmentally responsible products. Its environmental standards are developed on a category by category basis (30 categories) and once a category is chosen, a study of the environmental impacts of the products is carried out. The proposed standards are then circulated for public review and comment.

The Green Seal Buyers Program also publishes a green buying guide to assist businesses to buy green products and services.

Green Seal consults with manufacturers on certification. If products do not meet Green Seal's standards, Green Seal will inform the manufacturer of the reasons and will work with the company to make the required changes, if desired.

EcoReDesign project in Australia

The Australian Government funded EcoReDesign Program (1997-2000) assisted Australian manufacturers from a wide variety of sectors to improve the environmental performance of their products through innovative R&D strategies. The project created case studies and produced an information video and manual for wider adoption by Australian companies, designers, engineers, and others involved in new product development.

Land use / urban planning

Possible interventions in this area include resource management, physical planning, waste collection systems and the development of mass transit systems. As such, these relate to the provision of core services by central and local government, or make up components of broad sustainable development policies. Large numbers of jobs can be created or maintained as a result of land use / urban planning interventions, but they are not typically designed with this in mind.

Opportunity / capability profile for Scotland

Overview

In this study, we have focused on the opportunities for Scotland in three key markets:

• Renewable energy
• Waste management & recylates
• Cleaner technologies & processes.

Profiles of these markets (renewable energy as a whole) are provided in Appendix E, including growth forecasts, drivers, opportunities, challenges and Scotland's capability fit. These profiles are summarised below. Options for intervention are also provided, along with an assessment of the potential impact on jobs growth.

Markets overview & growth forecasts

Global environmental markets are forecast to grow at 2.9% per annum to 2010. Growth in the markets which are the focus for this study, will be much faster and there are substantial opportunities for Scotland in these areas. Although renewable marine energy and clean technologies industries are currently small, JEMU and Renewables UK (part of the DTI's Renewable Energy Industry Directorate) forecast substantial global growth over the next 5 to 10 years as emerging and demonstration technologies are commercialised. These forecasts are summarised below.

* World Offshore Energy Report 2002 - 2007, Renewables UK

** Global Environmental Markets and the UK Environmental Industry - Opportunities to 2010, JEMU

Renewable Energy

The renewable energy sector covers the supply of technologies and services for the generation, collection or transmission of energy from renewable sources such as biomass, solar, photovoltaic, wind, tidal and geothermal sources. It includes the manufacture of equipment, design, construction, installation, management and operation of RE facilities. Approximately 1,500 jobs were sustained by the industry in Scotland in 2003, 22% of the UK total. Hydro power currently makes up the bulk of Scotland's current renewable resource, providing 11% of Scotland's electricity. ¹

The UK market for renewable energy was approximately £290m in 2002, with £80m attributed to Scotland, and forecast to grow at average of 12 to 15%% per annum to 2010. ^1,2

In Scotland, strong growth is forecast in wind projects as well as wave and tidal research. As biomass, solar and hydro have struggled due to regulation and lack of support, energy from wind is set to make up the bulk of new renewables capacity until 2010. Scotland is forecast to take a 39% share of the UK onshore wind power market by 2010, with significant growth in offshore wind. ³

Waste management

The waste management sector covers the supply of products and services for waste collection, treatment, disposal, minimisation and recycling. With 72,000 employees, it is the largest environmental sector in the UK. ⁴

The UK market for waste management was £4.6bn in 2000 and forecast to grow to £9bn in 2010. By 2020, Scotland is forecast to produce 4.6m tonnes of municipal waste, an additional 1.4m tonnes per annum compared to 2002. Scotland's target is to move away from the 91% reliance on landfill in 2002, to 31% landfill, with 69% recycling/composting/conversion to energy in 2020. ⁴

Clean technologies & processes

Cleaner Technologies and Processes (CTP) aim to minimise waste at source by adopting integrated pollution control in place of end-of-pipe techniques. The JEMU definition of CTP is as follows:

The supply of equipment and expertise for the cleaner, more resource efficient technologies, processes or products, which for example, decrease material inputs, reduce energy consumption, recover valuable by-products, reduce emissions or minimise waste disposal problems.

CTP encompass a range of disciplines including aspects of product design, materials technology, process engineering and process control.

As a relatively new environmental technology market, the CTP market is currently small. The global CTP market in 2000 was estimated at $5 billion. North America and Western Europe are the largest regional markets with $1.9 billion and $1.8 billion respectively. ⁵

The market is forecast to grow massively through to 2010. The Joint Environmental Markets Units (JEMU) predicts a $26.2 billion global market in 2010, growing at a compounded annual growth rate of 18%. ⁵

Although the deployment of CTP in the UK lags behind many other developed countries, there are signs that industry in beginning to switch from end of pipe solutions to integrated pollution control. A government survey of environmental expenditure by UK industry showed an almost doubling of integrated pollution control capital expenditure from 1997 to 1999, accompanied by a fall in end of pipe solutions. ⁶

Scotland's capabilities

Expertise developed in existing industries can be transferred to support the development of these markets. Experience from Scottish wind industry and the oil & gas industries, for example, will underpin the development of offshore renewables. Current capabilities by category are summarised below.

Renewable energy

According to the DTI's gap analysis, 240 companies were active in Scotland in the production, development and export of existing and emerging renewable energy technologies. These provide 1,540 jobs. ⁷

Approximately 150 of these companies are involved in wind energy, providing around 1,180 jobs (approx 77% of total renewable energy jobs) - 550 in development, 610 in construction and 20 operational.

According to research conducted by Scottish Enterprise in 2001, of the 116 companies involved in renewable electricity in Scotland at that time, 17 were manufacturers (8 in wind) and 51 were developers. The Vestas manufacturing wind turbine facility at Campbeltown currently employs 150 people. According to the research, component supply is not expected to create much employment, especially in Scotland - a local supply chain will take a long time to be created. ⁸

Waste management

The industry ranges from small, local SMEs to multinationals. Multinational waste management companies will continue to grow across Europe, including in the UK where companies from EU countries (such as France and Germany which have longer histories of recycling and technology development) are strong. Examples of large, dominant companies include UK Waste, Onyx (French), SITA (French), European Metals Recycling Ltd, RWE (Germany) and Schaffer Bins (Germany). The smaller waste management technology providers focus on niche markets, such as waste shredders, bins, sorting equipment and vehicles.

There are opportunities for diversification from other sectors such as engineering industry, metal fabrication and plastic product manufacture.

Cleaner technologies

Electronics is a major manufacturing industry in Scotland, with particular strength in systems for automotive, telecommunications, medical and defence end user markets. The offshore oil and gas industry in Scotland ensures the presence of major chemical refineries, which in turn promotes industries such as plastic packaging.

CTP clearly provides opportunities for a vast range of suppliers, from environmental consultancy to process automation and management training to product design. Although CTP specialists are likely to develop in the future, current suppliers provide solutions as part of their standard product offering, mostly undertaken by the process control, process engineering and automation specialists. Many of these companies do not see themselves as providing environmental technologies even though many have developed CTP expertise.

Scotland capability summary

The following table shows the typical elements of supply chains for renewable marine energy, clean technologies and waste management, along with Scotland's current capability strengths in these areas.

Key: high capability medium capability low capability

Limited information exists in the public domain on the core capabilities and competencies existing in sector and sub-sector of marine energy, clean technologies and waste management. It should also be noted that many of the companies along the core supply chains may also supply, or have the potential to supply into the wider green economy. For the purposes of this review, Scotland's capability strengths were assessed in terms of the number of active companies supplying goods and services, where there is scope to expand into the three highlighted 'green' markets.

Opportunities

A broad range of opportunities for Scotland have been highlighted by governmental and private organisations. These are summarised by category below.

Renewable energy

Wind is forecast to be the major source of new renewable energy across the UK for the next 10 years, offering manufacturing opportunities in Scotland, particularly for components that are difficult to transport.

Scotland has substantial natural wave and tidal resources, along with the European Marine Renewable Energy Test Centre. Given sufficient support, there are significant national and global opportunities for manufacturing and service.

The forecast revival of the global hydro market will offer opportunities for both equipment and service supply.

Development of the UK fuel supply chain for biomass will provide opportunities for the agricultural and forestry industries and could lead to significant long term employment.

The UK is experienced with PV technology and there is potential for a strong and competitive industry, particularly within secondary manufacturing.

Waste management

Demand is increasing for a very wide range of technologies and services in areas such as recycling and composting technologies/services, materials reprocessing, recycling product design, energy from waste technologies, landfill gas systems, incineration equipment, waste minimisation advice, waste policy studies, waste management vehicles, shredders and compactors.

Waste management is currently one of the least active areas for UK export development. Opportunities do exist, however, in developing countries thanks to the restructuring and privatisation of waste management operations. Landfill expertise and cost-effective waste management equipment will be in particular demand. Consultants already involved in export markets need to strengthen links with the UK waste management industry, alerting it to opportunities.

Cleaner technologies & processes

The provision of innovative technologies and services is key to exploiting CTP opportunities. Suggestions to support and facilitate this exploitation include:

• Encouraging foreign direct investment - providing technology, skills and expertise to address weaknesses in domestic supply chain and transferring proprietary knowledge and best practices to strengthen local capacity.
• Emphasising the importance of on on-going training - recipients need support in the form of intensive training to ensure the technology is retained and progressed in the longer term and effectively diffused through the recipient's operation.
• Establishing 'users groups' - increasing suppliers and recipient communication to enable benefits to accrue from modifications and improvements

The establishment of a Cleaner Production Centre in Scotland would catalyse and mainstream cleaner technologies and processes. The centre would collect information, such as case studies, and disseminate it to interested parties and, through affiliated organisations, would provide training, applied research, technical assistance, regulatory assistance and possibly financial assistance.

Opportunities - alternative markets

Other opportunities in alternative markets that have been suggested for Scotland include:

• Development of internationally competitive forestry & fisheries industries.
• Promotion of sustainable building design & construction.
• Support the further development of the organic produce market.
• Development of the fuel supply chain (agriculture & forestry) to support the long term development of the biomass energy industry.
• Develop the photovoltaic industry to an internationally competitive level.
• Further grid development to cope with renewables.

Jobs growth potential

There is very limited international evidence on the impact of government interventions to create jobs in the environmental sectors . Assessment of jobs growth in Denmark, where there has been a large number of interventions, is limited to the wind industry, which now supports over 20,000 jobs. Spain has also invested to create a significant wind energy industry.

Any intervention would build on existing support for research, development and commercialisation of renewable energy and waste technologies. Scottish Universities have considerable expertise in these areas and Scottish Enterprise, along with industry support organisations, is already very active in market development.

Even though there are only a few companies in the market at present, jobs growth potential in wave and tidal energy is particularly strong. In the long term, given sufficient support, there is the potential to replicate Danish and Spanish success in creating employment in renewable energy.

Strategic options

Differing interventions have different impacts at the varying stages of market development. The following table shows examples of interventions that have been used to achieve the actions required at the relevant stages of market development for the five key technologies for Scotland.

Conclusions

Despite the pressure and suggestions from environmental groups such as Friends of the Earth and the WWF, which see the creation of 'green jobs' as an effective way of achieving sustainable development, few countries have specific policies designed to create and develop green employment. Most choose to intervene to meet international regulations or to stimulate the growth of specific environmental technology markets to help meet renewable energy or waste disposal targets.

Denmark is the major exception. It is the most advanced country in the world in terms of environmental regulation and sustainable technology development. It has recognised the opportunities for developing sustainable industries that can compete on a global scale and have gradually been developing green industrial development and green jobs strategies over the past 10 to 15 years. One result of this sustained activity is the domination of the global wind energy market and the creation of over 20,000 jobs supporting the industry.

Over the long term, Scotland has the opportunity to emulate Denmark's success in the wind industry by supporting its embryonic, but world-leading wave and tidal renewable energy industry. In the short to medium term, offshore wind, clean technologies and waste management & recycling also offer opportunities for jobs creation, building on existing capabilities and competencies. Jobs will be created in these high growth industries without intervention, but support will speed up this process and help Scotland to become internationally competitive.