Good business environment

OECD Observer

Mixing competition and the environment might raise some eyebrows, but they may help each other. Take the UK’s energy market reform.

According the OECD’s latest environment review of the UK, the resulting “dash for gas” in power generation should enable the UK to meet its 12.5% greenhouse gas (GHG) reduction target under the Kyoto Protocol. The switch from coal to gas fuel in thermal power production, driven largely by the liberalisation of the UK electricity market, led to a 20% reduction in CO2 gas emissions in the UK over the period 1990 to 1999.

This was the easy part; reductions in CO2 and other GHG emissions will be more difficult and costly to achieve in the future, the review says. The lower electricity prices brought about by market liberalisation have acted as a disincentive to conserve energy on the part of consumers. But with further measures in place and still being written, the UK’s climate change programme forecasts that national GHG emissions will be 15% below 1990 levels in 2010.

For instance, the Non-Fossil Fuel Obligation, part of the 1989 Electricity Act, required electricity supply companies to get specified amounts (2.8% in 2000) of new generating capacity from non-fossil sources, including renewables. A new proposal on the table, the Renewables Obligation, expects to increase that amount to 10% by 2010, if consumers agree to shoulder some of the cost.

Another promising regulation is the Climate Change Levy (CCL), a charge levied on businesses and public sector organisations for energy use. It adds about 15% to typical energy bills, but the carrot is that businesses which accept and subsequently meet energy reduction targets get an 80% discount on that levy. As of June 2002, over 40 CCL agreements were in place, covering 5,500 companies in some 13,000 sites. Britain’s efforts to push the environment higher up the policy agenda have also put into motion such “no regret” measures as the road-fuel duty escalator, the landfill tax credit programme and the emissions trading scheme.

But privatisation has not yet worked the same wonders in water services, according to the environmental review. While the report congratulates the government on its decoupling of economic growth from environmental pressures like CO2 increases, the UK’s overall environmental ranking is only average compared to other OECD countries. The survey, a follow-up to the first report in 1994, advises that more attention needs to be given to such areas as waste and waste-water treatment infrastructure; agriculture and urban runoff; nitrogen pollution; and marine habitats and biodiversity conservation measures.

©OECD Observer No 235, December 2002

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.4% Nov 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.6% Nov 2017
Last update: 16 Jan 2018


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018