Environmental coalition says the challenges posed by sustainability require a rapid transition to a green economy

Environmental regulation is essential for economic recovery and UK competitiveness, claimed a report launched by Britain’s Energy Minister Mike O'Brien.

Far from presenting a crisis for environmental policy making, the challenges posed by the credit, resource and energy crunches actually reinforce the urgent need to accelerate the transition to a green economy, said the Aldersgate Group, a coalition politicians and green businesses.

The new parliamentary session is an opportunity for the government to steer the UK economy towards recovery onto a more sustainable path, both financially and environmentally, said the report.

Peter Young, chairman of the Aldersgate Group, said: "Far from being an indulgence that would damage competitiveness, the low carbon economy is an essential component of the economic recovery. The government must grasp this unique opportunity to reform unsustainable business practices, boost competitiveness and stimulate green jobs and wealth."

The report argues that:

The natural capital assets that lay the foundations for our economy and society should not be off-balance sheet items in a similar way to the to the risk exposures and subsequent heavy losses incurred in the banking sector during the 2008 credit crunch.

In response to the upward trend in energy, water, raw material and waste disposal costs, systematically addressing environmental performance is one of the most cost-effective measures businesses can undertake to boost competitiveness - which currently lags far behind major trading partners such as Germany, France and Japan.

While the international credit and liquidity crisis is curbing the appetite for long-term lending, the growth fundamentals for clean energy investment remain robust and an explicit industrial strategy with planned support for particular technologies is required to build the jobs and expertise of the future.

Keystone policy objectives such as increasing resource efficiency and decarbonising the economy will only be achieved if they are adequately reflected in price signals, both in the valuation of policy options and in the market price.

Businesses with strategies aimed at long-term value are demanding more regulation, so that they can address emerging challenges with certainty and provide a competitive edge.