CBI Believe Climate Change Action Could Hit Economy

The government will put jobs and investment at risk if it adopts a go-it-alone approach to tackling climate change, says the new director general of the Confederation of British Industry.

Richard Lambert, preparing for next week's CBI conference in London - his first at the helm of the country's leading employers' organisation - said ministers must find a way of cutting carbon emissions "without destroying our economy".

In an interview with the Guardian, Mr Lambert said: "There are very legitimate concerns that unilateral action by the UK could seriously damage the competitiveness of our economy, with consequences for jobs and investment. CBI members don't say you shouldn't be talking about this. They all recognise it as a challenge and some see it as a business opportunity.

"But there are serious competitiveness issues. The biggest challenge in policy terms is to arrive at a sensible balance between averting climate change and protecting jobs on the other hand." CBI members thought the European Union's emissions trading system was flawed, but saw it as "the only game in town". Ideally, it should provide incentives for the good and punish the bad, but he said the system - in its second year - should be given time to bed down.

"We should be working like anything to tackle its shortcomings because we need to arrive at a robust price for carbon if everything else is going to flow from that." Mr Lambert said the right incentives were needed to provide the resources for big new investment in electricity capacity, including nuclear, and to ensure there were international partnerships that could "bring about emissions reductions in a way that does not destroy our economy". Britain faced the threat of an energy crisis over the coming months, he said.

"There is a risk of a very sharp [cold] spell in the first half of the winter that could cause problems." But the risks reduced during the second half as Britain's capacity to import energy increased with new infrastructure projects coming on stream.

During his first few months in the job, the CBI chief had picked up growing discontent among members about a range of issues, including tax and regulation.