David Rose has a short article on my report for Roger Helmer MEP on the size of the UK’s green economy.
But documents obtained under the Freedom of Information Act reveal the true value of the green economy is actually between only £16.8 billion and £27.9 billion, depending on exactly how the term ‘green economy’ is defined. In other words, the official figures exaggerate the scale of the sector by up to 700 per cent.
Rose’s article is published just under James Delingpole’ article — which is also worth a read.
I’ve always thought that the government’s (current and previous) claims about the green economy were highly dubious. But they (or their staff at DECC/BIS, etc), have been very unhelpful. Last October, I asked them again for data relating to their estimates of the ‘Low Carbon and Environmental Goods and Services’ (LCEGS) market, after it had been claimed, yet again, that it was now worth £122 bn year. They refused, as they have done before, on the basis that the research is undertaken by a private company — Innovas, in the earlier reports, and K-Matrix more recently.
This is a defacto paywall protecting the government and its policies against anyone who wants to understand the basis of their decisions, but who is not sympathetic to them. It’s also a way of hiding dodgy dossiers and sexed up statistics. Indeed, BIS claimed in their responses to me that they had bought ‘off the self’ research from the companies.
But further inspection of earlier LECGS reports revealed that BERR/BIS had commissioned Innovas/K-Matrix, and had in fact worked with the company to develop the specification of the sector. So in fact, BIS had been lying. On this basis, I appealed against the two refused FOI requests, and an internal review found in my favour.
A scan through the LCEGS taxonomy — the list of markets included in the LCEGS sector — reveals that the government has been playing fast-and-loose with categories. It includes the production and distribution of a number of fossil fuels. It includes thing as daft as rubber-band powered cars. It counts activities that are actively polluting as ‘environmental services’.
The taxonomy given to me by BIS is here [MS Excel format] .
A draft copy of my report is here [PDF].
There are a few typos in the draft, but I’m not near a computer to fix them now. On page 15, for example, I write,
If the sales of methane, wood, wood gas, vegetable oil, biomass and peanut oil are as substantial as the LCEGS report claims, this would be remarkable. In energy terms, it is equivalent to nearly half of the UK’s energy consumption. Thus further investigation is required.
It should say
If the sales of methane, wood, wood gas, vegetable oil, biomass and peanut oil are as substantial as the LCEGS report claims, this would be remarkable. In market terms, it is equivalent to nearly half of the UK’s spend on electricity. Thus further investigation is required.
The government’s official estimate of £120 billion is, as the report explains, completely implausible. I find a figure of around £27 billion much more likely, but it may be as low as £17bn, after we exclude the emissions-trading sector, and take out the money for green taxes and subsidies to green projects.
Of the remaining market, one question I don’t ask is how much good it does, even on its own terms. If you were going to spend £16 bn a year on making a greener economy, why not just spend it on nuclear power?
UPDATE: my FOI Internal Review request. (More to follow)
Security & Information Rights (SIR) Department for Business,Innovation& Skills
APPENDIX A – Ben Pile – BIS communications Correspondence in relation to Innovas/Kmatrix LCEGS reports
APPENDIX B – passages from BIS/BERR and Innovas/Kmatrix LCEGS reports
APPENDIX C – BIS Response 1
APPENDIX D – BIS response 2
I am writing to request an internal review of the decision not to release data that forms the basis of the ‘Low Carbon and Environmental Goods and Services’ (LCEGS) reports, published by BIS (and formerly by BERR), and produced by Innovas/K-Matrix.
The LCEGS reports estimate the size of the LCEGS sector and are produced annually. To my understanding, this involved the creation of a database consisting of two main parts: i) a hierarchy of market sectors at five different levels of detail (i.e. column headings) ; and ii) data relating to market size, and employment etc, for each sector (i.e. data).
As the correspondence I have attached explains, my concern is that the data in question has been used to inform policymaking and the promotion of certain policy options in the public debate, but that the public have been denied the benefit of knowing what the LCEGS sector consists of. The published LCEGS reports contain only the top two levels of the database in categories so broad they may well encompass almost the entire productive economy rather than, as is implied, simply the ‘green economy’. The use of these reports to inform policy decisions or to make arguments in favour of certain policy options therefore creates opacity where there should be transparency.
This is a criticism I have raised with the department, and with the author of the first LCEGS report, John Sharp, shortly after it was published in 2009. However, the department continue to publish these reports in the same way.
In November last year I made a request for information about the database itself, and about the circumstances of the database’s creation. In particular, I wanted to see the column headings for each level of detail 1 through 4, though I would like now to see the same for levels 1 through 5. I also made a request for the estimates of each market sector.
My requests for the information under the FOI act were refused. However, there is a lack of consistency in the arguments offered by BIS, which furthermore do not tally with existing information, published by BIS itself. There are also some questions about the relationship between the department and Innovas/K-Matrix which are not properly answered. In spite of my requests, is still not clear whether Innovas/K-Matrix were either commissioned to produce research or simply sold an existing product to the department, off-the-shelf.
In email Appendix A.1, on 14 November (prior to the FOI request), Matthew Barker informed me that “The Low Carbon Environmental Goods & Services (LCEGS) report was commissioned by BIS”, but that the “agreement with k-matrix does not extend to releasing the unpublished data sets”.
In view of this, I asked (email Appendix A.2) for clarity on the agreement between BIS/BERR and Innovas/K-Matrix. Specifically, I asked what in the agreement prevented the release of the data. I was also puzzled about why the department would enter into such an agreement.
I received a reply on 11 December (Appendix C), which reiterated Matthew Brown’s earlier comment, and that the data “is exempt from disclosure under section 43 (2) commercial interests and should be withheld” (Appendix C, section 3) , on the basis that it “would be likely to prejudice the commercial interests of any person” (Appendix C, section 4).
The response also pointed out that the data I had requested “is not ‘publicly funded research'” (Appendix C, section 5) and that “the company created the dataset to fill an information gap in the market”, that BIS had paid “a commercial rate to use the data” as do “multiple users from [other] sectors” .
The response went on to outline a “public interest test” (Appendix C, sections 6 through 11), the logic or meaning of which is opaque, at best only re-iterating the protection of third party commercial interests.
Seeking clarity on this new decision, I submitted a further request for information (email Appendix A.9). In particular, I explained my view that the public interest test seemed arbitrary, and that a stronger argument in favour of transparency could be made (email Appendix A.2.2). I also asked how the department knew that Innovas/K-Matrix did not want the data I had requested to be made available, amongst other questions.
I received a reply on 1 Feb (Appendix D). According to this reply, the department had contacted K-Matrix in relation to my request (Appendix D, Section 3), but that this was a courtesy and that the decision ultimately lay with the department. K-Matrix were themselves unwilling to allow me to see the information, as was revealed by the email correspondence between them and the department (Appendix E).
The response also re-iterated the department’s view that “the public interest in favour of withholding this information outweighed the public interest in its disclosure”, (Appendix D, section 3), but without explaining the process by which the public interest was weighed against any competing interest.
However, literature published by Innovas and the department jointly challenges the advice given by the department following my enquiries.
For instance, in the first edition of the report, authored by John Sharp of Innovas, the introduction states that “The authors worked solely on BERR’s instructions and for BERR purposes” (Appendix B, 1.i)”. (My emphasis). The same report goes on to explain that BERR were involved in designing the specification of the database: “This hierarchy of sector‐specific markets and activities is built up from the product market level, and then aggregated into higher level activities agreed in consultation with BERR.” (Appendix B, 1.ii). This database had been intended “To provide BERR with the detail it requires for policy and strategy development” (Appendix B, 1.iii).
Furthermore, the BIS website advises that “BIS (then BERR) commissioned Innovas/K-matrix to undertake a market assessment of the size of the UK low carbon and environmental goods and services (LCEGS) sector in 2008”. (Appendix B, 2.i).
By definition, the advice that BIS/BERR commissioned Innovas/K-Matrix to undertake research and were consulted in the design of the research contradicts the advice that the department purchased an existing off-the-shelf product from the company/companies. For example, the advice in Appendix D, section 11, argues that “…regardless of the supplier of the database the Department would merely be a licensee of the intellectual property subsisting in the database and would be subject to the requirements of the FOI Act. If the Department were to pay for the data to be publicly available the costs would be significantly higher”.
The claim that the department purchased a licence to existing intellectual property seems to be untenable. The LCEGS reports, authored by the company themselves speak about the work being commissioned by the department, and designed according to its specification. Either the information in the report or the arguments offered by the department to explain its refusal to let me see the data are false.
Moreover, it would seem that while the department intended to make data available to business and non-profit organisations, critics of government policy or anyone simply wanting to understand the department’s “policy and strategy development” would be denied the opportunity, creating a problem for the department’s claim to be ‘set[ting] data free’. “The publication of the data is part of the coalition’s commitment to set data free by publishing it in a convenient format to enable business and non-profit organisations to use it easily and at minimal cost” (Appendix D, 2.i). Evidently, the intention was to put data into the public domain that would enable the promotion of certain policies, but not data that might reveal what was in fact meant by the term ‘Low Carbon and Environmental Goods and Services’.
In spite of the department’s claim that the research in question was not publically funded, at least £125,000 has been spent by the department on producing revisions of the report, which is only “one element of the contract” (Appendix D, section 5) between the department and Innovas/K-Matrix. It would seem that this report has been useful in the promotion — if not the design — of certain policies by the department itself and other organisations such as the CBI (“The Colour of Growth” report, 2012 – http://www.cbi.org.uk/media/1552876/energy_climatechangerpt_web.pdf ) and the REA (“Renewable Energy: Made in Britain” report, 2012 – http://www.r-e-a.net/resources/pdf/61/Renewable_Energy_-_Made_in_Britain_Executive_Summary.pdf). I note also that the London Mayor’s office has used the same data.
The department seems, by commissioning the work, to have effectively both created a market for the research, and marketed the company’s product and services to the wider governmental, third-sector, business associations and companies with an interest in environmental policies.
This in turn suggests that a much closer working relationship between the department and the company exists, again belying the department’s statements that an off-the-shelf product existed before it engaged the company to produce its research.
The research designed by BIS and completed by Innovas/K-Matrix has, at the very least, influenced the wider public debate. Meanwhile, claims made in that debate have been protected from scrutiny and criticism by a ‘paywall’ — the department’s claim to be protecting a third party’s intellectual property and commercial interests. In order to challenge the government’s policies, the advice that the department produces, or the arguments produced by other organisations in the wider public debate, it would be necessary to buy access to the database, and a licence to reproduce it for public consumption — something that is clearly beyond the means of most individuals and organisations.
In summary, it is clearly the case that the LCEGS sector has no meaning to anyone who lacks access to the complete list of column headings from the database, yet this research has influenced the direction of public policy. Thus, if transparent policymaking is important, there is a real public interest in releasing this part (column headings) of the research in question. I believe that the department’s ‘public interest test’ has not been reasonable, and that the department’s claim that the database is the intellectual property of Innovas/K-Matrix is at best incomplete, possibly misleading and certainly opaque. Furthermore, I believe that the responses to my requests for information have not been conducted in the spirit of the FOI Act. Finally, I believe that refusal to release data on the basis of protecting commercial interests is at best disingenuous, and raises serious questions about the use of third party research to advance policy decisions and arguments.
I would also like to draw your attention to the inclusion of my name in correspondence between the department and Innovas/K-Matrix. I believe that I am entitled to the same privacy that the department granted to individuals at the department and at the company, whose names were redacted in the correspondence between them, sent to me following my second request.
I look forward to your reply,
At first glance a comprehensive and damning report – well done, Ben. The reference to peanut oil reminds me of a ruinous episode in history called the Tanganyika groundnut scheme, which is surely a precursor of this kind of grand governmental debacle.
Regarding rubber band powered cars (and aeroplanes, too!) there are plenty of articles on the internet with easy instructions for making them, in fact – unfortunately, few of these appear to be large enough to carry humans or contribute to the economy very much. Demand for them would, I’d imagine, prove to be elastic.
Wow, that’s some list of green jobs. It includes:
– manufacture, supply, installation and maintenance of consumables for internal and external odour control
– noise and vibration consultancy services
– publication of noise and vibration leaflets and pamphlets, books, periodocals and multimedia publications
– manufacturing, supply, maintenance and rental of landforming equipment
– excavation and operation of landfill sites, and surveying of potential landfill sites
– collection, sorting supply and reworking of second hand clothes
– manufacture and supply of natural and decorative mulches, equestrian surfaces animal bedding and animal sanitary products
– manufacture supply distribution and installation of skylights
– design, development, research and production of steam engined cars
So every time you buy air freshener or cat litter, the checkout person becomes momentarily a part of the green economy. No wonder the size of the market is difficult to calculate
Excellent work Ben.
So another bad week for Mr Matrix. Jeremy Pelczer is not just the Chairman of Knowledge Matrix Asia Pacific Limited, he is also currently the Chair of the UK charity WaterAid, which was the subject a House of Lords EU-Sub Committee on External Affairs investigation last week.
It would appear that the European Court of Auditors found that fewer than half of the 23 sampled projects satisfactorily ‘delivered results that met the beneficiaries’ needs’. Around £50 million in EU grants has gone to WaterAid.
Also Prince Charles is President of WaterAid. So there is a connection between Pelczer and HRH. I don’t think this is a very healthy situation. It’s a bit like dealing with a Masonic Green Lodge.
As others have said, excellent work.
When you are fixing typos, the totals in the tables on pages 12 and 15 don’t match the figures that you give in the text.
I liked one entry in the taxonomy: ‘Manufacture of meteorological measurement’… surely not. :-)
On Pg 12, I’ve used the sum for ‘renewables’ as the sum for ‘environmental’ level 1 sectors. I’ll fix this.
On page 15, I think I’ve used the correct figure in the introduction — “The ‘Alternative Fuels’ sector is the largest level 2 sector in the LCEGS report. At £18.2 billion It consists of the following level 3 sectors. — but the table only has data for three of the five level three sectors. So presumably, ‘Batteries’ and ‘Bio Fuels Alternative for Vehicles Only’ make up the difference.
Ben, in your report you state “This report does not aim to estimate the actual size of the green economy,” However, I am interested in what your personal thoughts are, given that you have researched it as much as anyone.
How much is the new productive green economy of the UK in your opinion?
(By new I would exclude anything like nuclear and hydropower that would exist anyway, and by productive I exclude “consulting” and anything that either cannot be sold or replaces something that is sold.)
I had a look at the latest LCEGS report you link to in your report.
Here are some jewels. From the introduction:
“The analysis is quantitative rather than qualitative, emphasising what we believe “is” rather than what it means. The enrichment process of adding context and meaning to the data is quite rightly the prerogative of the industry and its specialist representatives. ”
If that means what I think it means, only true believers are allowed to comment.
From the Methodology:
“The threshold for including a company in the analysis is if at least 20% of sales activity can be directly attributed to the LCEGS Sector (as defined within this report)… For .. smaller companies we may have to extrapolate the percentage of sales based on product range and turnover … The exception to this 20% rule is for large companies where a small proportion of overall sales is a significant contribution to the UK LCEGS sector. While this is not an exact science, it is as accurate a method as possible… However, … it does mean that estimates of Sales Value, Company numbers and Employment may be higher than more traditional estimates.”
So small companies whose sales of LCEGS goods and services are “extrapolated” as being over 20% are included, plus large companies, even if their LCEGS input is less than 20%.
So what’s the point of the 20% cut off? And why should that give numbers which are “higher than more traditional estimates”? (Unless they’re including total turnover of companies which meet their peculiar criterion. Surely not?)
It looks as if your local petshop will be counted because sales of cat litter and animal bedding count for more than 20% of sales, and Tescos will get in because their total sales of these products are huge, even if only a small proportion of their sales. These outlets are then identified and their total relevant activity estimated and totted up, and the results compared with other sources such as Euromonitor’s global estimates of sector size.
So using their “bottom-up analysis” for 3000+ sub sub sub sub sectors in 53 countries means that someone has been through the yellow pages for, say, Venezuela, recording each pet shop and supermarket by its postal code, and estimated (by some mysterious process of “extrapolation”) its sales of animal bedding, cat litter, air fresheners, double glazed windows, etcetera.
Yeah, pull the other one kMatrix. It’s got lowcarbon air fresheners on it.