Report for Defra on the “Further Benefits of Business Resource Efficiency” . The research analysed the financial savings that businesses could achieve if they were to become more efficient with the materials, energy and water that they used. It concluded that UK business could save around £23bn per year from resource efficiency measures that are either no or low cost and avert 29 million tonnes of carbon dioxide equivalent emissions (CO2).

1. Oakdene Hollins
Further Benefits of Business
Resource Efficiency
 Peter Willis, Economist
 22nd November 2011, UKNEE Seminar

2. Agenda
• About Oakdene Hollins
• Further benefits of business resource efficiency:
• Aims & objectives
• Barriers to resource efficiency
• Headline findings
• Waste hierarchy
• Ease of implementation
• Policies
• Further research

3. About Oakdene Hollins
• Consulting to business on sustainable
products, services and clean production:
Sectors: Services:
• Food & Drink • Market Appraisal
• Technology Appraisal
• Textiles & Clothing
• Protocol & Standards Development
• Metals & Mining
• Economic Modelling
• Wastes Management • Lean Manufacturing Projects
• Chemicals & Materials • Financial Impact Assessment
• Sustainable Innovation • Management of Research Projects
• Ecolabelling Advice
• European & UK Policy
• Carbon Footprinting
• Critical Review of LCAs

4. Oakdene Hollins’ Published RE Research
• Further benefits of business resource efficiency, Defra
(2011)
• Quantification of the business benefits of resource
efficiency: further research, Defra (2009)
• Quantification of the business benefits of resource
efficiency, Defra (2007)
• Waste arisings in the supply of food and drink to
households in the UK, WRAP (2010)
• Study into the feasibility of protecting and recovering
critical raw materials, European Pathway to Zero
Waste (2011)

5. Defra Study Research Aims & Objectives
1. Estimate the low cost resource efficiency savings
2. Estimate resource efficiency opportunities requiring
capital investment (payback greater than 1 year)
3. Assess the impact of existing Government policies
4. Review the significance of the waste hierarchy
5. Identify barriers for uptake, by company size
6. Quantify the effect on the competitiveness

6. Previous Resource Efficiency Opportunity (2006)
£2,500
£2,000
£1,500
£m per year
£1,000
£500
£0
Road freight Food & drink Retail et al Chemicals, Construction
rubber & plastics
Waste Energy Water

7. Barriers to Resource Efficiency
Genuine Constraints: Justification for Policy:
• Financial: • Market Failures:
• Upfront cost • Split incentives
• Lack of capital • Information
• ‘Hidden’ Costs: • Externalities
• Management time • Behaviour/Motivation:
• Transaction costs • Lack of prioritisation
• Disruption • Inertia
• Incompatibility • Rules of thumb
• Training • Loss aversion
• Support / maintenance • Organisation

8. Methodology
• Previous study based on case studies & site audits
• Different approach taken due to lack of this data
• This study investigated the change in resource
efficiency since the 2006 baseline.
• Longer term potential savings calculated using
multiple and varied sources of existing data
• Analysis of barriers, waste hierarchy and policy
initiatives based on literature reviews
• Effect on competitiveness of the UK economy
measured as a proportion of a sector’s GVA

9. Current Resource Efficiency Opportunity (2009)
£45,000
£40,000
£35,000
£30,000 Payback
£m per year
greater
£25,000
than 1 year
£20,000
£15,000
No cost /
£10,000 low cost
£5,000
£0
Energy Waste Water

10. Headline Findings
• Low cost opportunities of £23bn for 2009
• Competitiveness: represents 15% of industrial sector
profits, 2% of service sectors profits
• Low cost opportunities to avert 29 Mt CO2e per year
• Greatest opportunities in waste and in 4 sectors
• Opportunities with payback >1 year of £33bn
• Overall carbon benefits of 90 million tonnes CO2e
(13% of UK’s annual GHG emissions)

11. Major Low Cost Opportunities
£5,000
£4,500
£4,000
£3,500
£3,000
£m per year
£2,500
£2,000
£1,500
£1,000
£500
£0
Chemicals / Metals Power & Road Construction Textiles / Transport &
minerals utilities Freight wood / storage
paper
Energy Waste

12. Significance of Waste Hierarchy
£600
£500
£500
Cost of food waste management (£/t)
£400
£300
£200
£100
£30 -£52 -£54
£0
Waste Reduction Animal feed Anaerobic Digestion Landfill Disposal
-£100

13. Significant like-for-like Progress has been made
• £1.2bn or 12.3Mt CO2e of savings realised in 3 years
£4,000
£3,500
£3,000
£2,500
£m per year
£2,000 2006
2009
£1,500
£1,000
£500
£0
Energy Waste Water

14. Sensitivities & Caveats
• Focus on cost neutral savings, poor accounting of
hidden costs and savings, could lead to error
• Long term forecasts differ in the methodology used
• Estimated that 70% of long term interventions are
achievable cost-effectively using current technologies
• Volatility in commodity prices means that GVA may
not accurately reflect physical output in some sectors
• Water consumption data the least robust dataset
• Tradeoffs may exist between some different types of
resource efficiency opportunities

15. Ease of Implementation
10
Generic services
9
energy efficiency
Domestic type water
8
efficiency
Ease of implementation
Mixed waste Unavoidable
(0=difficult, 10=easy)
7
segregation waste diversion
6
5
Industrial process Industrial process Road freight
4
water efficiency energy efficiency fuel efficiency
3 Waste reduction
2
1
0
0 1 2 3 4 5 6 7 8 9 10
Size of Opportunity
(0=low, 10=high)

16. Environmental Engagement, by Company Size
Level of engagement
small small-medium medium large
Corporate size

17. Policies
Type Name Resource
Landfill Tax Waste
Integrated Pollution Prevention and Control Waste
Policies Carbon Reduction Commitment Energy
EU Emissions Trading System Energy
Climate Change Agreements Energy
Business Resource Efficiency & Waste Programme All
Initiatives Freight Best Practice programme Energy
Enhanced Capital Allowance Scheme Energy
Courtauld Commitment Waste
Voluntary Halving Waste to Landfill Waste
Agreements FDF Five-fold Commitment All
BRC ‘Better Retailing Climate’ All

18. Policy: Landfill Tax
100,000 45
90,000 40
80,000 35
Standard Rate (£ per t)
70,000
Landfill Volumes (t)
30
60,000
25
50,000
20
40,000
15
30,000
20,000 10
10,000 5
0 0
1998 2000 2002 2004 2006 2008
Landfill Volumes Standard Rate
Source: Landfill tax bulletin, HMRC (2010)

19. Policy: Energy
• Analysis of the Policy Coverage
complementarity of EU ETS
13%
major energy policies EU ETS
/ CCA
• Overlap between EU Residual
24%
14%
ETS and CCAs
• CRC with greatest
‘unique’ coverage
• Policy gap of 24%
CCA
14%
CRC
35%
Source: Assessing the carbon dioxide emissions and cost effective carbon savings
potential for organisations not covered by EU ETS, CCAs or CRC, DECC (2010)

20. Policy: Dft Freight Best Practice
Average fuel efficiency savings per user
£3,500
£3,000
£2,500
£2,000
£1,500 FBP user
Non-user
£1,000
£500
£0
Small Medium Large Overall
Fleet Size
Source: Freight Best Practice Impact Assessment, DfT (2007)

21. Policy: WRAP Courtauld Commitment
Cumulative food waste savings (kt)
8,400
8,300
8,200
8,100 2007/8 saving
2008/9 saving
8,000 2009/10 saving
Baseline
7,900
7,800
7,700
2006/7 2007/8 2008/9 2009/10
Source: The Courtauld Commitment – Target Evaluation, WRAP (2010)

22. The way forward
• Resource efficiency could be seen as a potential
contributor to economic growth
• Emergence of resource security as a strategic issue
• Voluntary agreements – on the current policy agenda
as opposed to expensive programmes
• Sector specific studies on how to realise savings –
several under way (see next slide)
• How to target SMEs – a perennial issue
• EU Resource Efficiency Roadmap – the agenda is
moving to European level

23. Oakdene Hollins’ Current RE Research
• Review of business waste prevention, Defra
• Food, retail, hospitality, construction, automotive, offices
• Developing waste and water resource maps for the
UK drinks supply chains, WRAP
• Lean thinking in the food supply chain, Defra
• Food manufacturing, distribution, retail, foodservice
• Resource efficiency in clothing from a retailer/supplier
perspective, WRAP
• Research into waste generated by the cost sector of
the UK hospitality and food service industry, WRAP

24. Peter Willis
peter.willis@oakdenehollins.co.uk
Thanks for listening!
24