The DTI appointed Ecotec to assess the export opportunities for UK suppliers of environmental goods and services. The global environmental market was worth $210 billion in 1992 - comparable to the aerospace sector - and is predicted to grow to $320 billion in 2000 and $570 billion by 2010.
Ecotec claims that its report "explodes the myth" that the UK environmental industry is uncompetitive and a poor exporter. This perception arose in the mid-1980s, when studies showed a serious decline in the sector's trading position, even in traditionally strong areas such as effluent treatment (ENDS Report 168, pp 15-17).
However, Eurostat data on trade in environmental equipment showed a trade surplus of $350 million in 1992 (see figure). Ecotec's Dr Richard Haines estimates that exports of environmental services - "an area where the UK is very much in the black" - bring the export figure to well over $1 billion.
Nearly half of the UK's exports went to other EC states in 1991, while 10% went to North America and 7% apiece to EFTA countries and East/South-East Asia. The UK has a "useful position" in the latter market, which is forecast to grow from just 2.4% of global sales to over 9% by 2010. In contrast, it is poorly represented in China and South America.
The UK's trading position in water and wastewater treatment is now particularly strong. Exports of environmental monitoring systems also greatly exceed imports, and Ecotec found that UK firms compete strongly with German suppliers on both price and quality. But the picture is less rosy in other sectors, emphasising that the factors behind the UK's deteriorating performance in the 1980s are still at work, and denting a claim by Trade Minister Richard Needham that its environmental industry is a "success story".
As Ecotec points out, "environmental companies, particularly smaller ones, thrive on the basis of their domestic market." This phenomenon has been particularly evident in the water industry since privatisation, where legislation has driven an unprecedented investment programme.
In other areas, however, the report notes that UK companies have been slow to develop technology "due to the slower implementation of regulations".
The UK has only a very small trade surplus in air pollution control equipment. Ecotec believes that "an immature and uncertain domestic market has disadvantaged UK players", and the recession and "variable enforcement" are holding back investment. As a result, says Dr Haines, "some companies are still trying to export second-rate technology into developing countries where it's simply not wanted".
Likewise, the UK's approach to contaminated land remediation is "technologically unsophisticated", and the lack of a proven track record is a great handicap to UK firms' overseas prospects.
In the waste management field, the report says that the UK's strong dependence on landfill and relatively lax environmental standards have reduced the scope for operators to develop innovative techniques. The UK is exporting successfully into niche markets such as landfill gas and leachate treatment, but is missing out in the growing market for integrated waste management services.
Overall, Ecotec says that UK firms are well placed to move into overseas markets, but must act quickly or "undoubtedly miss out to a strengthening competitor base". Developed countries are expected to dominate over 80% of the market in 2010, but increasing competition will come from developing countries' indigenous industries. Ecotec argues that UK firms should respond by seeking partnership agreements rather than attempting to compete directly. It sees their main opportunities as being the sale of design and service capabilities rather than manufacturing expertise.
Meanwhile, the Labour Party has published a paper which underlines the role of progressive legislation at home in creating a springboard for sales of environmental technology abroad.
Several world leaders, it says, have emerged as a result of tough domestic regulation: Germany (with desulphurisation technology), Japan ("deNOx" equipment), the USA (catalytic converters), the Netherlands (contaminated land remediation) and Sweden (incinerator emissions abatement). In contrast, Labour says, the Government's "dogmatic drive for deregulation" will impair UK industry's ability to develop products for sale to an increasingly environmentally conscious global market.
Labour also criticised the Government's record on supporting innovation in environmental technology. The approach, it says, has been to set up pilot schemes such as the recent ETIS and DEMOS programmes that "run for a few years then, before they have a chance to have an effect, cut off their funding".
Labour called for specific support to be given to the development of biotechnology, "clean coal" processes, biofuels and other renewable energy technologies, and fuel-efficient vehicles. It also wants ambitious targets to be set in areas such as renewable energy generation, an enhanced role for environmental considerations in public purchasing policy, and mandatory standards in fields such as energy efficiency.