The House of Commons Environmental Audit Committee is warning that the Government's strategy to create a green economy is too focused on voluntary action and fails to set a clear trajectory or any time-bound milestones for businesses to achieve. The MPs want the Government to develop minimum sustainability standards with stakeholders and businesses

The comments come in the publication today of the Committee’s report The Green Economy – the outcome of its recent inquiry into the Government's efforts at building a green economy.

The MPs believe that green investment should play a key role in the UK's economic recovery but say that the Treasury still appears to see environmental measures as a cost or block to economic development. The Committee is concerned that the Government has delayed introducing mandatory emissions reporting for big business and is urging Ministers not to go back on their promise to do so.

The report says that the Government should fully incorporate the principles of 'Enabling the Transition to a Green Economy' into future revisions of the 'Plan for Growth' and that the UK needs a Treasury-led green economy strategy which addresses the economy as a whole. In future Budgets, there should be a greater consideration given to support for the green economy with expenditure involved in making the transition to a green economy seen as an investment, not simply a cost. Investment in renewable sources of energy would also increase UK energy security by reducing reliance on imported fossil fuels.

Making business report carbon emissions will be key test of Government's green credentials

Joan Walley MP, Chair of the Environmental Audit Committee, said:

"The Government promised a roadmap to a green economy, but two years in it seems to have stalled and we risk slipping back to business-as-usual.

Rising global demand for commodities and fossil fuels mean that prices will continue to rise in future, so it is incredibly short-sighted of the Treasury not to give businesses clear incentives to use resources in a smarter way.

Making businesses report their carbon emissions is one of the first steps we need to take on the road to a green economy, so it will be a key test of this Government's green credentials."

The report is urging the Government to:

• develop minimum sustainability standards with stakeholders and businesses
• set out how data on natural capital in the National Accounts will be used
• develop targets for improving the state of the environment, similar to the 'fiscal mandate' for the public finances, and establish transparent reporting against such targets
• use the Natural Capital Committee's work on a 'natural asset stock check' as one of the basket of indicators used to measure the green economy

The Committee says that the Government also needs to take a longer-term view driven by a clear definition of a green economy and that the current definition adopted by the Government crucially does not address all three interdependent pillars of sustainable development, including the social pillar, well-being and environmental limits.

Treasury sees environmental regulations as "nothing more than costly red-tape"

The Committee has also cautioned that Government plans to 'rationalise' the UK's environmental regulations must not be a smokescreen for relaxing rules protecting health, countryside or wildlife in a short-term pursuit of growth.

The Government has pledged to reduce over 10,000 pages of regulatory guidance, following its 'Red Tape Challenge', to help businesses comply with environmental laws -  theMPs point out that regulations have an important role in safeguarding health and the environment.

Joan Walley continued:

"The Treasury seems to see environmental regulations as nothing more than costly red-tape, but what we are talking about here are vital laws to give us clean air, safe food, and a thriving countryside. If this process reduces bureaucracy and improves outcomes, as the Government claims, then we will support it. But it would be irresponsible to get rid of sensible regulations in a desperate dash for growth and we will be watching Ministers very carefully on this."

Recent financial crisis shows risks of market-led approach to Green Economy

The MPs believe that the Government’s strategy does not set out a new, comprehensive or strategic approach for a green economy with targets to assess progress, but instead lists existing policies. According to the report, it also lacks a long-term vision of a green economy and is not the ‘roadmap’ that was earlier promised and reliance on consumer demand to stimulate the green economy is unlikely to work. The MPs warn that the recent financial crisis has demonstrated the clear risks from such a market-led approach, particularly when markets do not reflect the value of the services provided by nature - such as clean fresh water, pollination of crops, etc.

Joan Walley MP, Chair of the Environmental Audit Committee, concluded:

"Out of the ashes of the financial crisis we need to rebuild an economy that enhances human well-being, protects the natural world and delivers food and energy security for the future.

The Prime Minister should show leadership in the run up to the Rio Earth Summit and put the green economy at the heart of the Government's plans to revive the economy."