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49355201 Final Report May 2011

FINAL REPORT

ENVIRONMENTAL PROTECTION EXPENDITURE BY INDUSTRY: 2009 UK SURVEY

Department for Environment, Food and Rural Affairs

May 2011

Ref. 49355201


The views and recommendations expressed in this report are those of the authors and do

not necessarily represent the views of the Department for Environment, Food and Rural

Affairs, its ministers or officials.


Project Title: Environmental Protection Expenditure Survey by Industry 2009

Report Title: Environmental Protection Expenditure Survey by Industry 2009

Project Ref: 49355201

Status: Draft Report

Client Contact Name: Rocky Harris / Mohammad Ali

Client Company Name: Department for Environment, Food and Rural Affairs (Defra)

Issued By: URS Corporation Ltd

Document Production / Approval Record

Issue No: 1

Name Signature Date Position

Prepared by

Daniel Tuck

Laura Quinton

Consultant

Principal Consultant

Checked by

Kristelle Haslam

Project Manager

Approved by

Sally Vivian

Project Director

Document Revision Record

Issue No Date Details of Revisions

1 April 2011 First draft

2 May 2011 First revised

Final May 2011 Final draft

49355201 Final Report May 2011 i

TABLE OF CONTENTS

Page No

EXECUTIVE SUMMARY 1

1 INTRODUCTION 8 1.1 OBJECTIVES 8 1.2 DEFINITION OF ENVIRONMENTAL PROTECTION EXPENDITURE 9 1.3 SURVEY SCOPE AND BACKGROUND 9 1.4 REPORT STRUCTURE 10

2 SURVEY METHODOLOGY 12 2.1 MODIFICATIONS INTRODUCED IN THE 2009 SURVEY 13 2.2 SAMPLING METHODOLOGY 14 2.3 DATABASE DESIGN 14

3 CONDUCTING THE SURVEY 16 3.1 Methodology 16 3.2 TOP COMPANY FOCUS 17

3.2.1 Additional findings from the Top Company follow-up 17 3.3 HELPDESK SUPPORT 18

4 ANALYSIS OF RESPONSES 19 4.1 Response Rates 19

4.1.1 Weighted Response Rates 19 4.1.2 Response Bias 20

4.2 Methodology 20 4.3 Survey Completion Time 21

5 SURVEY RESULTS AND ANALYSIS 22 5.1 Total expenditure 22 5.2 EXPENDITURE BY ENVIRONMENTAL MEDIA 23 5.3 EXPENDITURE BY INDUSTRY SECTOR 26 5.4 COST SAVINGS AND INCOME 26 5.5 ENVIRONMENTAL PROTECTION EXPENDITURE BY INDIVIDUAL SECTOR 29

5.5.1 SIC 05 to 09: Mining and Quarrying 29 5.5.2 SIC 10 - 12: Food Products and Beverages, and Tobacco Products 31 5.5.3 SIC 17 : Paper and Pulp 33 5.5.4 SIC 19: Coke & Refined Petroleum 36 5.5.5 SIC 24 -25 Basic & Fabricated Metals 38 5.5.6 SIC 20 & 21: Chemicals and Pharmaceuticals 40 5.5.7 SIC 35 & 36: Electricity, Gas and Water 43

5.6 DRIVERS FOR CAPITAL EXPENDITURE 46 5.7 ENVIRONMENTAL MANAGEMENT SYSTEMS 46

6 RECOMMENDATIONS FOR FUTURE SURVEY 48 6.1 GENERAL 48 6.2 SAMPLE FRAME 48 6.3 VALIDATION 48

Environmental Protection Expenditure by UK Industry: 2009 Survey

49355201 Final Report May 2011 ii

6.3 ANALYSIS 49

ABBREVIATIONS & ACCRONYMS 50

49355201 Final Report 1 May 2011

EXECUTIVE SUMMARY

This report presents the findings of a research commissioned by the Department for Environment,

Food and Rural Affairs (Defra) and undertaken by URS Corporation Limited (URS), to estimate the

expenditure by UK industry on environmental protection in 2009.

The primary objectives of the study are:

• To provide Defra with annual estimates of environmental protection expenditure by UK

industry.

• To enable Defra to provide these estimates to the European Commission as required under

the EU Structural Business Statistics Regulation 58/97.

In addition to these broad objectives, annual data from the survey can be used to assess how

expenditure is changing and to compare the levels of expenditure of UK industries relative to those in

other EU countries. The data also enable companies and trade associations to benchmark their own

environmental spending against that of their sector and industry as a whole, both in the UK and the

EU. Furthermore, information on companies’ environmental expenditure and trends can be used to

support evidence based policy-making.

This is the thirteenth survey of this type; previous surveys were carried out in 1994 (a pilot survey),

1997, and annually between 1999 and 2008. The 2009 survey was conducted in three phases

between May 2010 and June 2011 and overseen by a steering group with representatives from Defra

and the Office for National Statistics (ONS).

Methodology

In 2009, the survey was provided to companies within the following Standard Industrial Classification

(SIC 2007) categories:

• Mining and Quarrying

• Food Products and Beverages and Tobacco Products

• Pulp and Paper

• Coke and Refined Petroleum

• Basic and Fabricated Metals

• Chemicals and Pharmaceuticals

• Electricity, Gas and Water

The UK Government’s Inter Departmental Business Register (IDBR) provided a stratified random

sample of 974 companies across these industries, who were invited to complete a postal or web

based questionnaire on a voluntary basis. The sampling procedure was designed to target sectors

where the expenditure was expected to be greatest, based on feedback and findings from previous

surveys. The total number of validated responses was 171, giving a valid response rate of 17.8 %.

The responses were subjected to a range of detailed validation checks.

The survey analysed the following expenditure patterns in UK industry:

• Operating expenditure (OPEX), which consists of in-house operating costs of a company’s own

environmental protection activities, and also payments to others for environmental protection

services including waste disposal.


49355201 Final Report May 2011 2

• Capital expenditure (CAPEX), which consists of ‘end of pipe’ investments (expenditure on

equipment to clean up at the end of the production process) and integrated investment

expenditure (expenditure on equipment which reduces or eliminates emissions and discharges as

part of the production process).

The following were also identified:

• Income and savings resulting from environmental protection activities carried out in 2009

• The environmental media (areas) affected by the spending, namely waste water, air, solid waste,

soil/groundwater, noise/vibrations and nature protection.

• The use of Environmental Management Systems

Key findings for 2009

The main findings from the 2009 survey are as follows:

• Gross spending on environmental protection in 2009 by UK industry for the selected sectors was

an estimated £3.3 billion.

• Operating expenditure (OPEX) accounted for 58% of the total environmental protection

expenditure, with capital expenditure (CAPEX) making up the remaining 42%.

• The greatest operating spend comprised water protection measures accounting for 46% of total

environmental OPEX, followed by solid waste at 20% of total operating cost.

• Spend on wastewater accounted for 69% of total CAPEX, followed by air protection measures

with a 22% share of total CAPEX spend.

• This spending was offset by an estimated income from the sale of by-products of £17.5 million

and an estimated overall cost saving of £146 million.

• Of the industry sectors covered in the 2009 survey, the primary spending sector was, by far, the

Electricity, Gas, and Water sector (81% of total expenditure). Followed by Food Products and

Beverages and Tobacco Products with 10% share of total expenditure in 2009.

• In 2009, 81% of surveyed companies had implemented an environmental management system

(EMS). Of the EMS in place, 63% were ISO14001 certified, 37% were certified to another

recognised standard (e.g. BRC Global, BS8555), and the remaining 19% were not certified.

Year-on-year comparisons

Direct comparisons between survey years should not be made, due to the following reasons:

• The most important difference between the 2008 and 2009 surveys and previous surveys is the

SIC used; SIC 2007 was used to group 2008 and 2009 datasets, whilst previous survey data were

grouped using SIC 2003. While 2008 and 2009 survey methodology is broadly consistent with

that of the 2007 survey, there are a small number of companies which are reclassified into a

different main SIC grouping under the new classification.

• In addition, the coverage of the 2007, 2008 and 2009 surveys was restricted to a limited number

of industry sectors, which had previously been more comprehensive.

• Following a review of the survey methodology, outcomes and drivers in 2006, a number of

changes were made to the survey design and layout for subsequent surveys. The key change was

a reduction in the sample size and specific targeting of key sectors for the annual survey with a

more comprehensive survey on a four yearly basis.



• It is possible for one company’s expenditure to affect the final figure to a considerable degree; an

individual company may make a large “one-off” investment during the active survey period and

then return a small or even a zero response in the following survey. This variability along with the

smaller sample frame has led to larger confidence intervals during the reduced surveys in 2007,

2008 and 2009.

The 2007 survey did not include basic & fabricated metal sector, which was included in 2008 and

2009 surveys. Furthermore, the change to SIC 2007 may have affected the results. In light of this,

the following charts include confidence ranges as well as absolute figures for total spending reported

in 2007, 2008 and 2009.

A summary of total expenditure between 2007 and 2009 is presented in Figure E1.

Figure E1. Summary of environmental protection expenditure by UK businesses: 2007 to 2009

2009 2008 2007

Total expenditure (£M)

% of gross


% of gross


% of gross

Capital expenditure

End of pipe 947

(92 – 1,802)

29 652

(11 – 1,294)

20 185

(33 – 337)

6

Integrated processes 443

(0 – 918)

13 790

(29 – 1,551)

24 522

(0 – 1,139)

16

Sub-Total 1,389

(259 – 2,519)

42 1,442

(420 – 2,465)

45 707

(59 – 1,356)

21

Operational expenditure

In-house 1,222

(318 – 2,126)

37 606

(237 – 974)

19 811

(105 – 1,518)

24

External 628

(212 – 1,044)

19 1,065

(217 – 1,913)

33 1,709

(804 – 2,614)

51

R&D 72

(0 – 177)

2 118

(0 – 275)

4 116

(0 – 301)

3

Sub-Total 1,922

(935 – 2,909)

58 1,788

(779 – 2,797)

55 2,636

(1416 – 3,857)

79

Gross expenditure

Total gross spend 3,311

(1,600 – 5,022)

100 3,231

(1,368 – 5,093)

100 3,344

(1,814 – 4,873)

100

By-products income 18

(0 – 42)

1 11

(0 - 22)

0 104

(0 – 275)

3

Total net expenditure

3,293

(1,559 – 5,027)

- 3,220

(1,357 – 5,082)

- 3,239

(1,700 – 4,778))

-

Total cost savings 146 - 106 - 94 -

Note: Comparisons between years should be treated with caution.

End-of-pipe Capex shows an increase, but a larger decrease for integrated processes has resulted in

an overall decrease for total Capex. An increase in end of pipe expenditure may have resulted due to



process operators focussing their budget and spend on emissions abatement as apposed to investing

in new process / production plant and equipment due to economic uncertainty.

Total Opex has increased compared to 2008, with a shift in expenditure to in-house services and

away from external parties, but with a decrease in R&D spend. This shift may be attributed to less

outsourcing / buying in of services and more internal maintenance of equipment and an increase in

internal training, so having the in-house expertise as appose to needing to use a third party; together

with an increased focus on resource efficiency, including waste and water minimisation resulting in a

reduction in the disposal costs associated with solid and liquid waste and wastewater. The decrease

in research and development (R&D) spend may also be linked to economic uncertainty.

Cost savings show an increase which can be associated with campaigns and efforts associated with

resource efficiency, including waste and water minimisation, product reworking / reuse. The increase

in by-product revenue may be associated with Environment Agency/WRAP quality protocols end of

waste criteria being developed and Environment Agency Regulatory Position Statements providing

regulatory clarification on, if and when, a waste ceases to be a waste.

Industrial symbiosis may also have contributed to the by-product revenue increase, bringing together

separate industries and organisations from all business sectors with the aim of improving cross

industry resource efficiency and sustainability; for example involving the physical exchange of

materials and/or by-products.

A breakdown of total expenditure by key industry sectors between 2007 and 2009 is presented in

Figure E21.

Figure E2. Total environmental expenditure by industry sector: 2007 to 2009.

0

10

20

30

40

50

60

70

80

90

Min

ing a

nd

Quarr

yin

g

Food,

Bevera

ges

& T

obacco

Paper

Pro

ducts

Coke &

Refined

Petr

ole

um

Basic

&

Fabricate

d

Meta

ls

Chem

ical and

Pharm

aceuticals

Ele

ctr

city,

Gas

and W

ate

r

Pro

po

rtio

n o

f T

ota

l S

pen

d (

%)

2007

2008

2009

1 It is important to note that basic and fabricated metals was not included in 2007, resulting in a zero value in

figure E2.



Of the industry sectors covered in the 2009 survey, the primary spending sector was, by far, the



Figures E3 and E4 show the expenditure across environmental media for operating and capital

expenditures between 2007 and 2009.

Figure E3. OPEX by environmental media: 2007 to 2009.

0

10

20

30

40

50

60

Water Air So lid Waste Soil/

Groundwater

No ise Nature Other

Media

Pro

po

rtio

n o

f T

ota

l S

pe

nd

(%

)

2007

2008

2009

Note: ‘Other’ includes, for instance, environmental regulatory charges.

Opex was the highest by media for water followed by solid waste. Water shows a large increase

compared to 2008 and ‘Other’ a large decrease, which may be associated with definition

interpretation, for example associated with site infrastructure/maintenance.



Figure E4. CAPEX by environmental media: 2007 to 2009.

0

10

20

30

40

50

60

70

80

Water A ir Solid Waste Soil/

Groundwater

Noise Nature Other

Media

Pro

po

rtio

n o

f T

ota

l S

pen

d (

%)

2007

2008

2009

Note: ‘Other’ includes, for instance, environmental regulatory charges.

Capex was the highest by media for water followed by air, which were also the highest for end of

pipe and integrated expenditure, end of pipe being the larger amounts for both media; suggesting

larger investments in wastewater/aqueous wastes treatment, possibly associated with meeting

compliance limits and water reuse and recycling in on site processes; and air emissions abatement to

meet compliance limits and possibly associated with continuous automated monitoring equipment.

The continuing increase of capital expenditure on water is likely to be driven by legislation - primarily

permitting regulations (e.g. the Water Framework Directive, and the Environmental Permitting

Regulations) - which imposed increasingly stringent environmental standards for emissions to air, and

water and wastewater treatment, and have also extended to the industry sectors that are subject to

process-related regulation.

Environmental Management Systems

In 2009, 81% of surveyed companies had implemented an environmental management system

(EMS). Of the EMS in place, 63% were ISO14001 certified, 37% were certified to another recognised

standard (e.g. BRC Global, BS8555), and the remaining 19% were not certified.

Figure E5 presents the types of environmental management systems used by different industries,

i.e. and where ISO14001-certified EMS, an EMS certified to another recognised standard, or an

uncertified (‘in-house’) EMS.



Figure E5. Types of EMS by SIC Sector

20% 30% 40% 50% 60% 70% 80% 90% 100%

Mining & Quarrying

Food, Beverages & Tobacco

Paper & Pulp

Coke & Refined Petrol

Chemical & Pharmaceuticals

Basic & Fabricated Metals

Electricity, Gas & Water

EMS Percentage Uptake

ISO14001

non-ISO

Other

Companies in the Basic & Fabricated Metal and Electricity, Gas & Water sectors were most likely to

have an EMS in place (100%). Of the sectors surveyed, the former were most likely to have their own

in-house system, whilst the latter were most likely to have a certified EMS (100%).



8

1 INTRODUCTION

This report presents the results of the thirteenth annual survey commissioned by the Department for

Environment, Food and Rural Affairs (Defra) and undertaken by URS Corporation Limited (URS), to

estimate expenditure by UK industry on environmental protection in 2009. Previous surveys were

carried out in 1994 (a pilot survey), 1997, and from 1999 to 2008.

In 2009, the survey was distributed to total of 974 companies across the Mining and Quarrying; Food

Products and Beverages and Tobacco Products; Pulp and Paper; Coke and Refined Petroleum; Basic

and Fabricated Metals; Chemicals and Pharmaceuticals and the Electricity, Gas and Water sectors, as

defined by the UK Standard Industry Classifications for Business (SIC) in 2007.

The following sections of the report summarise analysis findings from the 2009 questionnaires

returned by participating UK companies. The 2009 data is presented alongside 2007 and 2008

Direct comparisons between survey years should not be made, due to the following reasons:

• The most important difference between the 2008 and 2009 surveys and previous surveys was the

change to the SIC used. The main classification system used to analyse the 2008 and 2009

datasets was SIC 2007, which is the latest system available reflecting the changes in the UK

industry. In previous years, the SIC 2003 system had been used; while the survey methodology

is kept consistent with the 2007 survey, there are a small number of companies which are

reclassified into a different main SIC grouping under the new classification. This is not thought to

affect the main results and comparisons with previous years should generally be possible.

• In addition, the coverage of the 2007, 2008 and 2009 surveys was restricted to a limited number

of industry sectors, which had previously been more comprehensive.

• Following a review of the survey methodology, outcomes and drivers in 2006, a number of

changes were made to the survey design and layout for subsequent surveys. The key change was

a reduction in the sample size and specific targeting of key sectors.

• The process of generating estimates of sectoral expenditure means that it is possible for one

company’s expenditure to affect the final figure to a considerable degree; it is possible that an

individual company may make a large “one-off” investment during the active survey period and

then return a small or even a zero response in the following survey. This variability along with the

smaller sample frame has led to larger confidence intervals during the reduced surveys in 2007,

2008 and 2009.

The 2007 survey did not include the Basic & Fabricated Metal sector, which was included in 2008 and

2009 surveys. Furthermore, the change to SIC 2007 may have affected the results. In light of these

issues, comparisons include confidence ranges for the total spending reported in each year, as well as

absolute figures. However, comparisons between years should still be treated with caution.

Further information regarding modifications and changes is provided in Section 2.1.

1.1 OBJECTIVES

The primary objectives of the study are:

• To provide Defra with the data from which annual estimates of environmental protection

expenditure by UK industry could be calculated; and



9

• To enable the UK Government to meet the requirements of the European Union (EU) Structural

Business Statistics Regulation 58/97, which provides a tool for regular data collection on the

variables and economic activities and is designed to give information on the service sector.

In addition to these broad objectives, annual data from the survey can be used to assess how

expenditure is changing and to compare the levels of expenditure of UK industries relative to other

EU countries. The data enable companies and trade associations to benchmark their own

environmental spending against that of the industry as a whole, both in the UK and the EU.

1.2 DEFINITION OF ENVIRONMENTAL PROTECTION EXPENDITURE

The Statistical Office of the European Community defines environmental protection expenditure as:

‘…the sum of capital and current expenditure on environmental protection activities.

Environmental protection is an action or activity (involving the use of equipment, labour,

manufacturing techniques and practices, information networks or products) where the main

purpose is to collect, treat, reduce, prevent, or eliminate pollutants and pollution or any other

degradation of the environment resulting from the activity of the company. Environmental

protection expenditure may relate to activities that generate marketable by-products, or results

in savings, or are financed by subsidies or capital allowances. In such cases, environmental

protection expenditure should be reported gross of any such cost offsets.’

Environmental protection expenditure includes: expenditure to reduce or prevent emission to air and

water; expenditure to protect or clean up soil and groundwater; expenditure to prevent noise and

vibration; and expenditure to reduce, treat and dispose of waste materials. Expenditure may be

operating expenditure (OPEX) or capital expenditure (CAPEX).

OPEX includes the operating costs of a company’s own environmental protection equipment and

services and also payments to others for environmental protection services (including waste

disposal and sewage treatment).

CAPEX consists of end-of-pipe expenditure and expenditure on integrated processes. End-of-

pipe capital expenditure is defined as expenditure on equipment used to treat, handle, measure or

dispose of emissions and wastes from production. Examples include effluent treatment plants,

exhaust air scrubbing systems and solid waste compactors.

CAPEX on integrated processes relates to new or modified production facilities designed to

integrate environmental protection into the production process. This might include adaptation of an

existing installation/process whereby the integrated expenditure is then the total purchase cost of the

adaptation. It also includes installing a new process in which the design takes environmental

protection into account. In this case, the expenditure counted is only the extra cost compared with

installing a less environmental friendly alternative.

Energy costs are not included in the definition of environmental protection expenditure, except where

energy is specifically used to run environmental protection equipment or services. Expenditure on

health and safety equipment or services is also excluded.

1.3 SURVEY SCOPE AND BACKGROUND

The current 2009 survey covers expenditure incurred during the financial year April 2009 to March

2010. In accordance with the EU Regulations, industries that have been surveyed are those in NACE2

2 NACE: General Industrial Classification of Economic Activities within the European Communities (the EC statistical office (Eurostat) classification scheme of economic activities).



10

sections C, D and E (extraction, manufacturing, energy and water supply). Therefore, in 2009, 974

companies were invited to participate in the survey, across the following industry sectors:

• Mining & Quarrying

• Food Products & Beverages, and Tobacco Products

• Pulp and Paper

• Coke & Refined Petroleum

• Basic & Fabricated Metals

• Chemicals & Pharmaceuticals

• Electricity, Gas & Water

Expenditure estimates are presented for the following:

• In-house and external operating costs (e.g. research and development, regulatory charges etc)

• End-of-pipe capital investments;

• Integrated or ‘clean’ technology capital investments

• Income and savings (e.g. the sale of environmental protection by-products)

This expenditure is also reported by the environmental media to which they relate, as shown below:

• Wastewater: Collection and transport of wastewater, the prevention or reduction in quantity of

wastewater and of substances in wastewater, the prevention of incidental water pollution, the

treatment of cooling water before draining to the surface or groundwater and monitoring of

surface water.

• Air: Prevention or reduction of gaseous, liquid or particulate emissions to the atmosphere, and

the monitoring of air emissions.

• Solid Waste: Prevention or reduction of waste, including the collection, transport, treatment and

disposal and monitoring of waste.

• Soil/groundwater: Decontamination of polluted soils and cleansing of polluted groundwater.

Includes the protection of soil and groundwater against pollution infiltration, monitoring of soil

and groundwater, and the transport and disposal of contaminated soil.

• Noise/vibration: Measures to decrease noise and vibration levels at source, to isolate receivers

from noise/vibration and the monitoring of levels. Protection of the workplace is excluded.

• Nature protection: Protection of species, landscapes and habitats; rehabilitation of damaged

landscapes due to past or current actions. Reforestation is included.

This survey succeeds the Defra surveys carried out in 1997 and 1999 to 2008, and research on

environmental protection expenditure in 1994 (pilot study). The reports from these surveys can be

downloaded at: http://www.defra.gov.uk/statistics/environment/environmental-survey/survey-results/

1.4 REPORT STRUCTURE

This report consists of the following sections:

Section 1 Introduction

Section 2 Survey Methodology and Preparation

Section 3 Conducting the Survey



11

Section 4 Analysis of Responses

Section 5 Survey Results and Analysis

Section 6 Recommendations for Future Surveys

This main report is supplemented by detailed annexes, which are presented as separate documents:

Annex 1 Survey, Technical Guidance Note and Cover Letters

Annex 2 Validation of Responses

Annex 3 Response Codes for Sorting Correspondence

Annex 4 Drivers behind Participation

Annex 5 Output of Data Analysis

Annex 6 Grossing-up Procedure

Annex 7 Method for Derivation of Standard Error and Confidence Intervals

The report and annexes can be downloaded from Defra’s website:

http://www.defra.gov.uk/statistics/environment/environmental-survey/survey-results/



12

2 SURVEY METHODOLOGY

The survey comprised three overlapping phases conducted between May 2010 and May 2011, which

can be sub-divided into the following individual tasks/activities.

Figure 2.1. Summary of 2009 survey tasks/activities

Phase (timescale) Activities / Tasks

Review the previous year’s survey and introduction of modifications.

Promote survey results.

Participate in the Steering Group meeting.

Pre-survey

(May 2010

– June 2010)

Request company data from the UK Government’s Inter Departmental Business

Register (IDBR).

Select sample from the IDBR and carry out subsequent database work

Review and submit mail out materials to Defra

Amend and approve mail out materials as required

Coordinate printing and preparation of the mail out materials

Email notice of the survey dispatch

Dispatch survey pack to companies

Provide Helpdesk support

Data entry of survey returns

Dispatch the reminder postcard

Resend surveys as required

Dispatch reminder letter

Undertake Top Company follow-up phone calls

Survey

(June 2010

– January 2011)

Other follow-up calls

Creation / updating of validation process

Continuous validation (statistical and via participant consultation)

Grossing/aggregation of results

Estimation of non-response bias

Provide a copy of survey database to Defra

Analyse the survey data.

Analysis &

Reporting

(December 2010

– May 2011)

Final reporting and feedback.

Progress of the survey has been guided by a Steering Group, chaired by a professional statistician

from Defra.

A selection of the activities described above is discussed in more detail below.



13

2.1 MODIFICATIONS INTRODUCED IN THE 2009 SURVEY

Several modifications that were introduced during previous surveys were carried through to the 2009

survey, which in particular sought to improve awareness, help with definition issues and widen

ownership of the survey. These include, for example, the following activities:

• Top Companies (specifically selected based on their employee number and turnover as well as if

they had responded to a number of previous surveys) received a slightly different cover letter to

the other recipients, which emphasised different issues.

• Prior to the launch of the survey, an e-mail was sent out to all companies that had responded to

the 2008 survey. The e-mail invited each company to participate in the survey and also to

provide information from the previous survey. This enabled the company to prepare for the

survey and provided the Helpdesk with the right contact details.

In addition, 2009 survey questions relating to environmental management systems (EMS) were

slightly amended to enable more comparable responses. Other minor modifications made to the

survey are described in the Figure 2.2 below.

Figure 2.2 Changes to the 2009 Questionnaire Design

Section / Question Modification

Instructions Helpdesk email address Email address simplified to [email protected]

Contact details

Company name Space added for respondents to specify the company name.

Contact details

Company reference number

Company reference number added to ‘Contact Details’ section.

1.1 (a) In-house operating costs

Narrative added to remind respondents not to include wages and bills etc.

1.1 (a) In-house operating costs

Title amended to ‘In-House Environmental Operating Costs’.

1.2 Operating costs paid to external organisations

Boxes B and C indicated as ‘minimum responses”, and the information for them can be found on waste and water bills.


Box added so companies can explain whether the cost includes water supply and removal of effluent.


Reference amended from ‘IPC Authorisation’ to ‘Environmental Permit’.

2.1 - 2.2 Capital expenditure ‘Energy efficiency’ and ‘climate change’ tick-boxes added as a reason for Capex spends.

2.3 Reason for capital expenditure

‘Financial savings’ have been added as a potential reason for Capex spends.

2.3 Reason for capital expenditure

Title amended to ‘Main Reason for Environmental Capital Expenditure’.

3.1 Cost savings and income

Text clarified (‘annualised’ changed to ‘annual’)

3.1 Cost savings and income

Units of measurements amended to include financial cost.

4.3 a-c EMS costs Clarification of questions and amendments made to layout.



14

2.2 SAMPLING METHODOLOGY

The sampling procedure was designed to target the sectors where the expenditure would be greatest,

based on feedback and findings from previous surveys. In 2009, 974 companies across the relevant

SIC 2007 sectors were selected from the IBDR sample data (see Figure 2.2). The respective SIC

2003 codes are provided for reference only.

Figure 2.2. Industry sectors covered by the 2009 survey

SIC

2007

Industry SIC

2003

Industry

05 - 09 Mining & Quarrying 10 - 14 Mining & Quarrying

10 - 12 Food Products & Beverages, Tobacco

Products

15 - 16 Food Products & Beverages, Tobacco

Products

17 Paper and Pulp 21 - 22 Pulp & Paper, Publishing & Printing

19 Coke & Refined Petroleum 23 Coke, Petroleum & Nuclear Fuel

24 - 25 Basic & Fabricated Metals 27 - 28 Basic Metals & Metal Products

20 - 21 Chemicals & Pharmaceuticals 24 Chemicals & Chemical Products

35 - 36 Electricity, Gas & Water 40 - 41 Electricity, Gas & Water

To maintain a degree of comparability between surveys before and after the SIC revision in 2008, it

was decided that SICs 19 and 35-36 (Coke & Refined Petroleum and Electricity, Gas & Water) would

be sampled for all companies with 10 or more employees. SIC 05-09 (Mining & Quarrying) would be

sampled for companies with 50 or more employees and all the remaining sectors would be restricted

to just companies with 200 or more employees.

2.3 DATABASE DESIGN

Survey data has been collated and stored in an Access database. The database was intended for use

by URS personnel:

To gather information from postal questionnaires and other correspondence, to carry out continuous

validation checks of the data entry process and to record all the phone calls made to the responding

companies when confirming the data.

• To conduct statistical analysis of each year’s data

There are a number of advantages of building the validation checks into the data entry system:

• Checks could be run more frequently

• The results of any follow up calls or validation changes were recorded. The validation tests took

account of the data types and conversions

• There was no delay between the data entry and the return of the validation checks

• Companies could be contacted promptly after returning their completed questionnaires with any

queries.

After the validation tests were run, the results were stored for manual validation. The records within

the list would not change until the validation tests were run again.



15

Details of the validation process are presented in Annex 2.



16

3 CONDUCTING THE SURVEY

3.1 Methodology

The stages involved in the survey implementation are summarised in Figure 3.1.

Figure 3.1. Survey Implementation Summary

Activity Number of

companies involved

Description

Pre-survey email 69

Prior to the survey questionnaire being launched, an email was sent out to all companies that responded to the 2008 survey, were included in the 2009 survey and for whom email addresses were held. The email invited the company to participate in the current survey and also provided summary information from the previous survey.

Survey questionnaire 974 The questionnaire was distributed as a package comprising a cover letter, a questionnaire, a fax back form, relevant Technical Guidance Notes and a freepost envelope.

Post-survey postcard 893

This first reminder mail-out increased the volume of calls to the Helpdesk requesting assistance and survey resends.

The reminder postcard was not sent to companies that had already returned the survey or declined to participate.

Reminder letters 861 This reminder mail out represents 90% of the companies initially surveyed, and produced an increase in calls to the Helpdesk.

Top company questionnaire received

30 The Top Companies were approached via a series of dedicated telephone calls.

Number of questionnaires received

171

This equates to an overall response rate of 17.8%.

The volume of questionnaires returned was highest between the 8th and 9th weeks of the survey, corresponding with the written and phone call reminders.

Companies removed from sample

7 Seven companies were removed from the sample after validation checks.

* A number of companies were contacted more than once.

One of two types of cover letter was included in the survey package depending on the category of the

company:

• ‘Top Companies’: The 50 ‘top companies’ by turnover and the ‘top 50 companies’ by number of

employees were selected from the IBDR data (with some organisations featuring in both). In

addition, companies with over 250 employees in SICs 05-09, 10-12, 17, 19 and 35-36 were

included. In total, 164 ‘top companies’ were provided with a tailored cover letter.

• General companies: The letter emphasised potential benefits of participation, and also

highlighted that the information collated in the survey might be used to satisfy the corporate

governance requirements.

Examples of the questionnaire, all cover letters and the Technical Guidance Notes are provided in

Annex 1.



17

3.2 TOP COMPANY FOCUS

The focus on the Top Companies was changed from a ‘Top 100 interviews’ in 1999 to a ‘Dedicated

Top Company Follow-up’ for the 2000 survey. Owing to its success in increasing participation levels,

the dedicated Top Company follow-up (i.e. repeat calls etc) was continued for all subsequent surveys.

In order to increase the response rate, the Top Companies that had stated that they would fill in the

survey but had not sent it back, were contacted at the end of the survey period in order to let them

know the surveys would still be accepted.

Since the adoption of this Top Company follow up approach the following advantages have been

consistently identified which has led to this being an integral part of the survey design each year:

• Feedback received from companies is an integral part of the questionnaire design for the

following year.

• Organisations were pleased to be considered as Top Companies and owing to the classification

said that they would do their best to participate in the survey.

• The follow-up telephone conversations were helpful in data validation and quality control process.

• The calls also provided an insight into the way companies had interpreted the questions and

answered them.

• Key expenditure issues that were particularly relevant to the company were identified and might

be used for future reference during validation.

• The telephone calls enabled the survey team to build on their existing contact lists, and helped

minimise future issues normally experienced in identifying and contacting the right person within

the different organisations.

• The calls also helped to establish a good working relationship with the company to help the

survey process both for the current year and those years to come.

In previous years, the reasons for non-responses included a lack of interest or inability to complete

the survey. Therefore, in order to improve participation, efforts were made to increase the profile of

the survey during the Top Company telephone calls; for example, by explaining the purpose and

objectives of the survey and offering as much assistance as possible.

3.2.1 Additional findings from the Top Company follow-up

The following were the key findings from the reminder call phase for the Top Companies:

• The most common reason for declining to participate was a lack of available resources or time to

complete the survey. The second most common reason for declining was that the company did

not have the required accounting procedures in place.

• Requests for resends were particularly prevalent where questionnaires had been sent to unnamed

persons; calls made to the Top Company helped to establish named contacts.

Through making the following up calls 110 companies were successfully contacted and were ‘closed

out’ compared with 121 companies in 2008. Closed out means that the appropriate person was

contacted and it was confirmed that they had either:

• Returned their survey to the address given on the form

• Received the survey and would be returning it shortly and definitely by the extended

deadline.



18

• Not received a copy of the survey, or had mislaid the copy they were sent and would like to

be issued with a replacement (in the majority of these cases copies were issued by e-mail, a

few were issued by post or fax).

• Would not be returning their survey due to various factors including lack of time and

personnel, inability to obtain the information required and company policy not to complete

non-compulsory surveys.

3.3 HELPDESK SUPPORT

A Helpdesk, with direct phone line, fax and email, was available to participating companies

throughout the survey period. Companies were encouraged to use any or all of these methods to

contact a member of the URS survey team.

Contact made through the Helpdesk provided an insight into the information from which the data had

been derived, allowing the data to be validated more efficiently and feedback to be obtained from

companies regarding their individual experiences with the survey.

These facilities, in conjunction with the website, have proved to be a valuable part of the survey

process. The feedback provided has enabled the survey team to find the reasons for participation

and constraints identified by potential survey participants. Annex 4 identifies the main drivers

behind participation and also the reasons why companies declined to participate. This feedback will

be utilised when designing future surveys.

Companies that used the Helpdesk service commented that it had provided useful information,

clarification and assistance in completing the survey form. In addition, the Helpdesk phone calls were

utilised to persuade companies to respond to the questionnaire even if they had thought that the

survey was not relevant to them.

The website has been maintained and continually updated throughout the year. The website address

is: http://www.defra.gov.uk/statistics/environment/environmental-survey/.

The website has been used in conjunction with the Helpdesk to provide companies with additional

copies of the questionnaire, technical guidance notes and other information relating to the survey.

Where appropriate companies were directed to the website in order to obtain another copy of the

2009 survey or to download online a questionnaire. When survey resends were requested the

website was used as a primary source of providing another copy of the questionnaire, a copy sent by

e-mail and fax was used as a secondary source and a postal copy was only offered as a final resort.

A web-based questionnaire, created in 2007 and 2008 has continued to be used. This approach was

introduced in 2005, but not used due to technical problems for the 2006 survey.



19

4 ANALYSIS OF RESPONSES

4.1 Response Rates

From a sample of 974 companies, the total number of validated responses was 171, giving a

response rate of 18%. The response rates are summarised in Figure 4.1 below.

Figure 4.1. Survey response rates: 2007 to 2009

2009 2008 2007

Questionnaires sent out 974 1,008 955

Questionnaires returned* 171 204 175

Response rate (%) 18 20 18

*Only responses used for analysis are counted here.

A summary of response rates by individual sector is shown in Figure 4.2.

Figure 4.2. Response rates by industry sector: 2007 to 2009.

0 5 10 15 20 25 30

Mining and Quarrying

Food Products, Beverages

& Tobacco Products

Pulp & Paper


Basic and Fabricated

Metals

Chemicals and

Pharmaceuticals

Electricity, Gas and Water

Response %

2009

2008

2007

*The Basic and Fabricated Metals sectors were not surveyed in the 2007.

4.1.1 Weighted Response Rates

The overall response rate given above assumes each company as an equal contributor to the final

figures. The sample frame for previous survey years was designed to target higher spending sectors

and the largest employers. This meant that the effective response rate measures in some cases were

somewhat higher, in terms of expenditure covered.



20

The 2009 sample frame was designed to take a census of companies over a given size within a

smaller set of highest spending industry groups. The effective response rate measured by the

number of employees in the sampled companies was 21%, although it should be noted that this

might be influenced by the fluctuations in the numbers employed during the year of the survey. The

effective response rate measured by spending proportion was 65%; the sample frame was geared to

the largest employers in the highest spending sectors with the aim of increasing the coverage of

expenditure.

4.1.2 Response Bias

As in previous years’ surveys, the following potential response bias has been identified in the 2009

survey:

• Companies with zero or low expenditure are more likely to respond because they have less of the

questionnaire to complete.

• Companies with dedicated environmental resource are more likely to respond, and have greater

data availability.

• Companies that have completed the survey in previous years are more likely to participate and

submit a completed questionnaire.

The effect of these possible biases is likely to be reduced by the stratified sampling and grossing

arrangements (refer to Annex 6 for further details). This means that using a relatively large number

of cells (determined by size of company and SIC) to categorise companies with similar characteristics

that any bias is then ‘contained’ within the cell.

The repetition of the survey over a number of years has allowed for measures to be taken to obtain a

better understanding of the potential and likely significance of these response biases. For example, a

number of companies respond and state they will not participate, as they have zero environmental

expenditure.

4.2 Methodology

Caution should be exercised in comparing datasets from different survey years (e.g. 2007, 2008 and

2009) for a number of reasons. For instance:

• The ranges indicated by the confidence intervals for the total expenditure were relatively large,

owing to the small sample size. Hence, the absolute values should be compared with caution.

• The process of generating estimates of expenditure from the sample sets means that it is possible

for one company’s expenditure to affect the final figure to a considerable degree, e.g. through a

large ‘one-off’ investment (e.g. capital equipment upgrade). This principally relates to capital

expenditure rather than operating expenditure, which would be expected to be generally more

consistent from one year to the next.

Details of the derivation of standard error and confidence interval are presented in Annex 7.



21

Where a single response distorts the calculated total, the company has been excluded from the

grossing procedure and added back at a later stage. The decision to do this is undertaken on a case

by case basis. The 2009 data responses received from seven companies were identified as potential

outliers, which could potentially distort overall expenditure figures; these responses have been

grossed in accordance with Annex 6.

4.3 Survey Completion Time

Responses indicated that companies with less than 50 employees took an average of only 50 minutes

to complete the survey, whereas those with between 50 and 250 employees spent an of average 2

hours 17 minutes completing the questionnaire (comparative to the 2008 average of 2 hours 2

minutes). Companies with 250 or more employees took an average completion time of 2 hours 39

minutes.

The time taken to complete the questionnaire by company size (i.e. number of employees) can be

seen in Figure 4.3 below.

Figure 4.3. Completion time by company size: 2007 to 2009

0:00

0:30

1:00

1:30

2:00

2:30

3:00

3:30

4:00

4:30

5:00

<50 50-249 250-499 >500

Tim

e T

aken

(H

ou

rs a

nd

Min

ute

s)

2007

2008

2009



22

5 SURVEY RESULTS AND ANALYSIS

5.1 Total expenditure

An estimated total of £3.3 billion was spent by UK industry on environmental protection in 20093

In 2009, OPEX accounted for approximately 58% of the total, with CAPEX making up the remainder.

Spending on internal processes was 64% (34% in 2008). External operating costs accounted for 33%

of OPEX (60% in 2008). Spending on integrated processes accounted for 32% of CAPEX in 2009,

compared to 55% in 2008 for the comparable sectors.

A summary of total expenditure is presented in Figure 5.1 in conjunction with equivalent data from

the 2007 and 2008 surveys for comparison. Ranges indicating the 95% confidence intervals

associated with each value are provided in parenthesis where available. Detailed tables of the

expenditure can be found in Annex 5.

Direct comparisons between survey years should not be made because the estimates are subject to

wide confidence intervals; the sample size has changed considerably and because of changes made

over time to the questionnaire design and estimation procedures. In light of this, comparisons have

been shown as percentage shares of the total spending reported in each year, as well as absolute

figures.

Figure 5.1. Summary of total expenditure: 2007 to 2009

2009 2008 2007


% of gross


% of gross


% of gross

Capital expenditure

End of pipe 947

(92 – 1,802)

29 652

(11 – 1,294)

20 185

(33 – 337)

6

Integrated processes 443

(0 – 918)

13 790

(29 – 1,551)

24 522

(0 – 1,139)

16

Sub-Total 1,389

(259 – 2,519)

42 1,442

(420 – 2,465)

45 707

(59 – 1,356)

21

Operational expenditure

In-house 1,222

(318 – 2,126)

37 606

(237 – 974)

19 811

(105 – 1,518)

24

External 628

(212 – 1,044)

19 1,065

(217 – 1,913)

33 1,709

(804 – 2,614)

51

R&D 72

(0 – 177)

2 118

(0 – 275)

4 116

(0 – 301)

3

Sub-Total 1,922

(935 – 2,909)

58 1,788

(779 – 2,797)

55 2,636

(1416 – 3,857)

79

Gross expenditure

Total gross spend 3,311

(1,600 – 5,022)

100 3,231

(1,368 – 5,093)

100 3,344

(1,814 – 4,873)

100

3 The estimate for 2008 was £3.2 billion for comparable sectors.



23

By-products income 18

(0 – 42)

1 11

(0 - 22)

0 104

(0 – 275)

3

Total net

expenditure

3,293

(1,559 – 5,027)

- 3,220

(1,357 – 5,082)

- 3,239

(1,700 – 4,778))

-

Total cost savings 146 - 106 - 94 -

Note: Direct comparisons between survey years should be treated with extreme caution.

End-of-pipe Capex shows an increase, but a larger decrease for integrated processes has resulted in

an overall decrease for total Capex. An increase in end of pipe expenditure may have resulted due to

process operators focussing their budget and spend on emissions abatement as apposed to investing

in new or upgraded process / production plant and equipment due to economic uncertainty.

Total Opex has increased overall compared to 2008, with a shift in expenditure to in-house services

and away from external parties, but with a decrease in R&D spend. This shift may be attributed to

less outsourcing / buying in of services and more internal maintenance of equipment and an increase

in internal training or retraining, so having the in-house expertise as appose to needing to use a third

party; together with an increased focus on resource efficiency, including waste and water

minimisation resulting in a reduction in the disposal costs associated with solid and liquid waste and

wastewater. The decrease in research and development (R&D) spend and the shift to internal

resourcing may be linked to economic uncertainty.

Cost savings show an increase which can be associated with campaigns and efforts associated with

resource efficiency, including waste and water minimisation, product reworking / reuse. The increase

in by-product revenue may be associated with Environment Agency/WRAP quality protocols end of

waste criteria being developed and Environment Agency Regulatory Position Statements providing

regulatory clarification on, if and when, a waste ceases to be a waste.

Industrial symbiosis may also have contributed to the by-product revenue increase, bringing together




5.2 EXPENDITURE BY ENVIRONMENTAL MEDIA

This section summarises the amount of expenditure allocated to various environmental protection

categories. Responses are classified under operating expenditure and capital expenditure (refer to

Figures 5.2 - 5.5).

Figure 5.2. Environmental OPEX by Media in 2009

2009 2008 2007

Environmental

media Internal

(£M)

External

(£M) Total (£M) % of total % of total* % of total*

Water 621.7 222.6 844.3 46% 22% 12%

Air 165.4 1.6 166.9 9% 13% 7%

Solid waste 201.3 161.1 362.3 20% 27% 50%

Soil / groundwater 88.4 103.2 191.6 10% 3% 2%

Noise 6.2 0.7 6.8 0% 0% 0%



24

2009 2008 2007

Environmental media

Internal

(£M)

External (£M)

Total (£M) % of total % of total* % of total*

Nature protection 105.8 0.6 106.5 6% 2% 1%

Other* 33.6 137.9 171.5 9% 32% 28%

Total (£M) 1,222.3 627.6 1,849.9 100% 100% 100%

* Includes regulator charges

The greatest operating spend comprised water protection measures accounting for 46% of total

environmental OPEX, followed by solid waste at 20% of total operating cost (excluding research and

development); these were also the top two media in 2008. Water shows a large increase compared to

2008 and ‘Other’ a large decrease, which may be associated with definition interpretation, for

example associated with site infrastructure/maintenance.

Figure 5.3. Environmental OPEX by Media: 2007 to 2009

0

10

20

30

40

50

60

Water A ir Solid Waste So il/

Groundwater

No ise Nature Other

Media

Pro

po

rtio

n o

f T

ota

l S

pe

nd

(%

)

2007

2008

2009

Note: ‘Other’ includes external expenditure, e.g. regulatory charges.

Figure 5.4. Environmental CAPEX by environmental media: 2009.

Capital Expenditure (£M)

Integrated Expenditure

Environmental

media Integrated End-of-Pipe Total

% of total % of total Integrated

Water 259.3 693.2 952.5 69% 59%

Air 93.2 206.4 299.7 22% 21%

Solid waste 14.7 31.3 46 3% 3%

Soil /groundwater 30.6 2 32.7 2% 7%

Noise 2.8 0.3 3.1 0% 1%



25

Nature

protection 36.9 0.7 37.6 3% 8%

Other 5.1 12.6 17.7 1% 1%

Total (£M) 442.6 946.5 1,389.20 100% 100%

*Please note that the zero percentages stated in the figure above, may be less than 0.5% due to rounding effects.

Capital expenditure on water management/disposal accounted for over two-thirds of total CAPEX

(69%, £953 million). Followed by air protection measures, with a 22% share of total spend (£300

million).

Figure 5.5. Environmental CAPEX by environmental media: 2007 to 2009

0

10

20

30

40

50

60

70

80

Water A ir Solid Waste Soil/

Groundwater

Noise Nature Other

Media

Pro

po

rtio

n o

f T

ota

l S

pen

d (

%)

2007

2008

2009

Note: ‘Other’ includes external expenditure, e.g. regulatory charges.

Capex was the highest by media for water followed by air, which were also the highest for end of

pipe and integrated expenditure, end of pipe being the larger amounts for both media; suggesting

larger investments in wastewater/aqueous wastes treatment, possibly associated with meeting

compliance limits and water reuse and recycling in on site processes; and air emissions abatement to

meet compliance limits and possibly associated with continuous automated monitoring equipment.

The continuing increase of capital expenditure on water and air is likely to be driven by legislation -

primarily permitting regulations (e.g. the Water Framework Directive, and the Environmental

Permitting Regulations) - which imposed increasingly stringent environmental standards for emissions

to air, and water and wastewater treatment, and have also extended to the industry sectors that are

subject to process-related regulation.

Predictions for future changes are likely to be associated with further implications and drivers

associated with the Environmental Permitting Regulations; Registration, Evaluation, Authorisation and

Restriction of Chemicals (REACH); the Environmental Damage (Prevention and Remediation)

Regulations 2009; Water Framework Directive, and implementing the requirements of the revised



26

Waste Framework Directive. Other than legislative drivers the cost of fuel both directly and indirectly,

for example waste management logistic transport costs may also have an impact.

5.3 EXPENDITURE BY INDUSTRY SECTOR

Of the industry sectors covered in the 2009 survey, the primary spending sector was, by far, the



Figure 5.6. Total environmental expenditure by industry sector: 2007 to 2009

0

10

20

30

40

50

60

70

80

90

Min

ing a

nd

Quarr

yin

g

Food,

Bevera

ges

& T

obacco

Paper

Pro

ducts

Coke &

Refined

Petr

ole

um

Basic

&

Fabricate

d

Meta

ls

Chem

ical and

Pharm

aceuticals

Ele

ctr

city,

Gas

and W

ate

r

Pro

po

rtio

n o

f T

ota

l S

pen

d (

%)

2007

2008

2009

Note: The Basic and Fabricated Metals sector was not included in the 2007 survey.

5.4 COST SAVINGS AND INCOME

This section summarises the amount of income and savings generated by environmental measures.

Figure 5.7 and 5.8 show the cost savings in 2007, 2008 and 2009. As mentioned earlier,

comparisons between years should be treated with caution.



27

Figure 5.7. Cost savings: 2007 to 2009

0

10

20

30

40

50

60

70

80

Min

ing a

nd

Quarr

yin

g

Food,

Bevera

ges

& T

obacco

Pro

ducts

Pulp

& P

aper

Coke &

Refined

Petr

ole

um

Basic

&

Fabricate

d

Meta

ls

Chem

icals

&

Pharm

aceuticals

Ele

ctr

icity,

Gas

and W

ate

r

Co

st

Sa

vin

gs

(£

M's

)

2007

2008

2009

Note: The Basic and Fabricated Metals sector was not included in the 2007 survey.

Overall the total cost savings in 2009 were £146 million, significantly more than in 2007 and 2008.

Basic and Fabricated Metals sector recorded the highest level of savings at £69 million (47% of total

cost savings).

Annual cost savings are by environmental media are summarised in Figure 5.8 below.

Figure 5.8. Summary of cost savings: 2007 to 2009

2009 2008 2007

Environmental

Media Total cost

savings (£M) % of Total Total cost

Saving (£M) % of Total Total cost

Saving (£M) % of Total

Raw materials 15.2 10% 18.7 20% 13.1 14%

Water use 10.5 7% 9.4 10% 29.5 31%

Energy use 43.2 30% 26.1 28% 42.4 45%

Waste 72.6 50% 39.5 42% 8.9 10%

Other 4.5 3% 1.2 1% 0.1 0%

Total 145.9 - 95.1 - 94.0 -

The highest cost savings in 2009 were associated with waste management/disposal costs (50% of

total savings); similar to trends in 2008. This was, followed by improved energy usage (30%) and

improvements to the use or substitution of raw materials (10%); again, in line with 2008 trends.

Income received from the sale or redistribution of by-products between 2007 and 2009 is shown in

Figure 5.9 below.



28

Figure 5.9 Income from by-products (£M): 2007 to 2009.

10

25

40

55

70

85

100

2007

2008

2009

0

2

4

6

8

10

12

Min

ing

an

d

Qu

arr

yin

g

Fo

od

, B

eve

rag

es

& T

ob

acco

Pa

pe

r P

rod

ucts

Co

ke

& R

efin

ed

Pe

tro

leu

m

Ba

sic

&

Fa

bri

ca

ted

Me

tals

Ch

em

ica

l &

Ph

arm

ace

utica

ls

Ele

ctr

icity, G

as

an

d W

ate

r

Income and savings resulting from the sale of by-products in 2009 was £17.5 million, which is much

less than in previous years. The highest saving as a result of by-products was within the Basic and

Fabricated Metals sector (£7 million; 42% of total by-products sale).

Income from by-products (£M’s)



29

5.5 ENVIRONMENTAL PROTECTION EXPENDITURE BY INDIVIDUAL SECTOR

This section looks at each sector individually, identifies any notable features under the following

headings including a brief analysis discussing trends and drivers of environmental protection

expenditure in 2009:

• Key expenditure: Summary of key data by operating expenditure (OPEX) and capital

expenditure (CAPEX) categories along with the expenditure in 2007, 2008 and 2009.

• Environmental expenditure by media: Expenditure has been subdivided according to media

type (e.g. water, solid waste, noise etc). This is shown in graph form for external, in-house,

integrated and end-of-pipe expenditure.

• Income and savings: Summary of key data by cost savings and by-product sales in expenditure

for 2007, 2008 and 2009.

As mentioned earlier in this report, direct comparisons between survey years are not advisable, as

estimates are subject to wide confidence intervals, sample sizes have changed and modification have

been made to the questionnaire design and estimation procedures. In light of these discontinuities,

comparisons will still be shown but percentage shares of the total spending (e.g. as shown in Figure

E2) are preferable, but should also be treated with caution.

5.5.1 SIC 05 to 09: Mining and Quarrying

The Mining and Quarrying sector has a relatively small number of companies in the UK and there are

several large companies that have responded to the survey in one year and not in the others, which

increases the potential for skewed results.

Estimates of environmental protection expenditure, environmental expenditure by media and income

and savings are provided below for the Mining and Quarrying sector. For this sector, 18 companies

participated in the survey giving a response rate for the sector of 15%, which is equivalent to 11% of

the total survey response.

The most significant and recent regulatory drivers of change in the UK Mining and Quarrying industry

are the Mining Waste Directive, EU Landfill Directive, Integrated Pollution Prevention and Control

(IPPC) Directive and Water Framework Directive.

Key Expenditure

The Mining and Quarrying sector spent approximately £31 million in 2009 on environmental

protection measures, 1% of the total spend for 2009. Environmental expenditure for this sector is

shown in Figure 5.10 for the years 2007, 2008 and 2009. The data is presented separately for

capital and operational expenditure.

Figure 5.10. Expenditure: 2007 to 2009

OPEX (£M) CAPEX (£M) Survey year

In-house External R & D Total End of Pipe Integrated Total

2009 15.0 8.9 0.3 24.1 0.8 6.9 7.7

2008 7.6 25.1 0.8 33.5 31.7 108.0 139.7

2007 69.6 41.8 3.9 115.3 108.6 0.2 108.8

Note: Totals may not add due to the rounding effects. Comparisons between years should be treated with caution because of

the low response rate.



30

OPEX accounted for 76% of total environmental spending by the Mining and Quarrying sector in

2009. External expenditure in 2009 was higher than in-house costs, maintaining the unpredictability

within OPEX seen over recent years. OPEX reduced from the 2008 levels, maybe as companies

undertook the minimum to be in compliance with the law.

There was a significant reduction in the CAPEX spend in 2009, this could be due to the global

financial crisis

The main driver for environmental expenditure has been for companies to protect their balance

sheets, and so as and when the economy improves and confidence returns to the market the

investment in environment is expected to return.

It should also be noted that the change in survey design and the reduced number of companies

within the sample may be responsible for some variation within results from one survey to the next.

Environmental Expenditure by Media

Environmental expenditure by media for the Mining and Quarrying sector is shown below in Figure

5.11. In previous years, wastewater, solid waste and air quality management were areas where the

majority of spend occurred. The massive reduction in CAPEX means that investment in these areas

has reduced relative to the other areas, and it is considered that this is due to companies only

undertaking the minimum in all the media.

The Mining Waste Directive, currently being transposed into UK law, covers the management of

“extractive waste” resulting from the prospecting, extraction, treatment and storage of mineral

resources and the working of quarries. It may lead to the reduction in waste disposal costs observed

in future surveys as certain materials are no longer classified as waste.

Figure 5.11. Environmental expenditure by media

0

1

2

3

4

5

6

7

Water Air Solid Soil/ Ground

water

Noise Nature

protection

Other

£M

End of Pipe

Integrated

External

In-House

Income and Savings

In 2009, income and savings for the Mining and Quarrying sector was approximately £2.7 million.

This result is shown along with the 2008 and 2007 survey data in Figure 5.12. It should be noted

that the change in survey design and the reduced number of companies within the sample may be

responsible for the variation within results from one survey to the next.



31

Figure 5.12. Income (from by-products) and savings: 2007 to 2009

Cost savings (£000’s) Income

(£000’s) Survey

Year

Raw material

Water use

Energy use

Waste Other Total By- products

Total (£000’s)

2009 0.1 0.1 1.4 0.0 0.1 1.6 1.1 2.7

2008 0.2 0.3 0.0 0.1 0.1 0.7 0.5 1.2

2007 0.0 0.1 0.0 0.0 0.1 0.2 0.2 0.4

Note: Totals may not add due to the rounding effects. Comparisons between years should be treated with caution because of the low response rate.

Cost savings in the sector for 2009 were £1.6 million, of which the sale of by-products accounted for

approximately 41% of this saving. The magnitude increase in cost savings could be due to the

companies endeavouring to achieve a reduction driven by the economic climate

5.5.2 SIC 10 - 12: Food Products and Beverages, and Tobacco Products

The Food Products and Beverages, and Tobacco Products sector is the largest sector in terms of

response in the 2009 survey, and the sector is at least in part driven by its water intensive nature.


and savings are provided below for the Food Products and Beverages, and Tobacco Products sector.

For this sector, 49 companies participated in the survey giving a response rate of 15%, which is also

equivalent to 29% of the total survey response.

Key Expenditure

The Food Products and Beverages and Tobacco Products sector spent approximately £322 million in

2009 on environmental protection measures, 10% of the total spend for 2009. Environmental

expenditure for this sector is shown in Figure 5.13 for the years 2007, 2008 and 2009. The data is

presented separately for capital and operational expenditure.

Figure 5.13. Environmental expenditure: 2009



2009 99.2 182.4 1.7 283.4 13.4 25.0 38.4

2008 135.3 186.9 2.8 325.0 127.8 28.5 156.2

2007 131.2 208.0 4.2 343.4 42.4 71.6 114.0

Note: Totals may not add, due to the rounding effects. Comparisons between years should be treated with caution due to low response rate.

Operating expenditure accounted for approximately 88% of total environmental spending by the Food

Products and Beverages, and Tobacco Products sector in 2009.

With regards to operating expenditure, the external expenditure level observed in 2009 is consistent

with the levels observed in the two previous years. This reflects that, despite a down turn in the

economy, the industry has defined externally provided fixed operating costs such as effluent

treatment costs by third party trade effluent treatment service providers.



32

Of note is that the level of in-house operating expenditure has reduced. This is thought to be due to

optimisation of operations, due to the tight economic constraints in 2009, and also due to increased

regulator pressure under environmental legislation, e.g. the Environmental Permitting Regulations etc.

The level of capital expenditure for integrated activities, on areas such as process improvements or

manufacturing optimisation, has remained steady from 2008 into 2009. This indicates that there is a

constant baseline of internal process improvements that can be undertaken to streamline and

improve inherent manufacturing operations.

Of particular note is that the level of capital expenditure for end of pipe solutions has shrunk by 90%

from 2008 levels. This is in line with the worsening state of the economy and that the industry, with

low profit margins, was capital averse in 2009.

Owing to the poor economic situation, moving forward into 2010, it is highly likely that the low level

of capital expenditure will continue and that the level of in-house operating expenditure will fall

further.


Environmental expenditure by media for the Food Products and Beverages and Tobacco Products

sector is shown in Figure 5.14 below. This sector spent £151 million on water protection measures

and £99 million dealing with solid waste in 2009, of which most is accounted for by external operating

expenditure (£91 million). The distribution of expenditure by media in this sector is consistent with

previous years; water and solid waste remain the dominant environmental issues for the industry.

Figure 5.14 Environmental Spending by Media

0

20

40

60

80

100

120

140

160


water

Noise Nature

protection

Other

£M

End of Pipe

Integrated

External

In-House

The largest spending by media is water, which the sector uses in both the production phase and in

cleaning processes. Most was accounted for by external spending which includes wastewater/effluent

treatment plant equipment, maintenance and discharge costs. A similar result for this sector was

observed in 2007 and 2008.

Similarly, expenditure for solid waste is dominated by external expenditure, which is consistent with

the disposal of solid wastes off site by third party waste disposal providers. Again this result was

observed in the 2007 and 2008 survey.



33

It is likely that the dominance of spending in the water and solid waste areas will continue into 2010

and beyond, as these areas are an integral part of the manufacturing processes within the industry.

Income and Savings

In 2009, income and savings for the Food Products and Beverages, and Tobacco Products sector was

approximately £30 million in total. Income and savings for this sector are shown in Figure 5.15 for

the years 2007, 2008 and 2009.

Figure 5.15 Income (from by-products) and savings: 2007 to 2009

Cost savings (£000’s) Income (£000’s)

Survey Year

Raw material

Water use

Energy use


Total (£000’s)

2009 6.1 2.9 6.5 8.7 2.4 26.6 3.4 30.0

2008 2.2 1.8 2.0 3.8 0.1 9.9 1.0 11.0

2007 2.9 26.5 34.6 4.1 0.0 68.1 97.2 165.3


The greatest cost savings are identified in waste disposal costs at a value of approximately £8.7m.

This year’s survey indicates that there is an improvement in savings in each of the cost saving

categories. This may be attributed to improving manufacturing operations against a back-drop of low

profit margins for the industry and also relative to the poor economic position observed in 2009.

It is likely that a greater or similar level of cost savings will be observed in the coming years, owing to

the projected slow economic recovery, as manufacturers may try and consolidate savings through

environmental improvements and process optimisation.

5.5.3 SIC 17: Paper and Pulp

The UK has reduced its pulping capability and imports pulp for a significant proportion of its paper

manufacture. The range of paper products manufactured is extensive, ranging from specialty and

security papers through to bulk printing and writing grades, tissue and newsprint. Key issues for the

sector include energy efficiency, water use, sludge disposal, the quality and mix of waste papers used

for recycling, effluent quality and the trend towards more secondary effluent treatment.


and savings are provided below for the Pulp and Paper sector. For this sector, nine companies

participated in the survey giving a response rate for the sector of 18%, which is equivalent to

approximately 5% of the total survey response.

Key Expenditure

The Pulp and Paper sector spent approximately £48 million in 2009 on environmental protection

measures, slightly more than 1 per cent spent in 2009. Environmental expenditure for this sector is

shown in Figure 5.16 for the years 2007, 2008 and 2009. The data is presented separately for

capital and operational expenditure.



34




2009 16.5 24.4 0.0 40.9 3.1 3.7 6.8

2008 4.0 34.6 0.1 38.7 7.3 0.0 7.3

2007 15.7 30.2 0.9 46.8 0.0 2.1 2.1


OPEX accounted for approximately 86% of total environmental spending for the Pulp and Paper

sector in 2009; and showed a small increase on comparison with the 2008 expenditure. Expenditure

is primarily due to external processes, continuing the pattern seen in 2008 and 2007, but to a lesser

extent, as in-house OPEX increased four-fold on the expenditure in 2008, also showing a slight

increase to that in 2007. No expenditure was incurred for R&D, which is a slight reduction to that in

2008.

The sector continues to out source some of its environmental protection services and use third parties

for monitoring and managing their solid and liquid waste disposal. The significant increase in in-house

expenditure combined with the decrease in external Opex may be linked to undertaking more in-

house maintenance and monitoring; and the operation of directly associated activities to the main

production processes, associated with for example waste water treatment, water reuse and recycling

and water minimisation.

In 2009, CAPEX shows a slight reduction compared to the level in 2008, but is still approximately

three-times greater than in 2007. The focus has moved away from the 100% end of pipe expenditure

in 2008 to similar expenditure amounts for both integrated and end of pipe expenditure in 2009.

An increase in integrated expenditure and a reduction in end of pipe expenditure may be linked to

sector process operators focussing their expenditure on modified production facilities, for example

incorporating water reuse; having previously incurred expenditure on the treatment and reuse of

waste water, for example treatment plant and equipment.


Environmental expenditure by media for the Pulp and Paper sector is shown in Figure 5.17 below.

This sector spent in excess of £26 million on water, waste water and aqueous liquid waste, with the

focus of the expenditure on external OPEX costs. Approximately £12 million was spent dealing with

solid waste, which is the second largest media spend of which most again is accounted for by

external OPEX.

The sector continues to out source some of its environmental protection services and use third parties

for managing their solid and liquid waste disposal, as well as providing water as a process raw

material and for uses associated with utilities. External and in-house OPEX costs comprise the

majority of the expenditure in the two highest spending media, water and solid waste.



35


0

5

10

15

20

25

30


water

Noise Nature

protection

Other

£M

End of Pipe

Integrated

External

In-House

Income and Savings

In 2009, income and savings for the Pulp and Paper sector was approximately £24.7 million; this is

over a three fold increase to the total income and savings in 2008 and 2007. Income and savings for

this sector are shown in Figures 5.18 for the years 2007, 2008 and 2009.



(£000’s) Survey

Year

Raw material

Water use

Energy use


Total (£000’s)

2009 3.2 7.2 13.8 0.1 0.0 24.2 0.5 24.7

2008 6.6 0.0 0.0 0.2 0.0 6.8 0.8 7.6

2007 0.2 0.0 2.4 0.3 0.0 2.9 5.0 7.9


Raw material and waste cost savings have halved on comparison to those in 2008, but water use and

energy use have both increased significantly from zero savings in 2008, particularly from

improvements and efficiency gains related to energy use.

Sales of by-products have decreased generating an income of £0.5 million, compared to £0.8 million

in 2008. This may increase in the future as the Environment Agency is currently working on a quality

protocol for end of waste criteria for Paper Sludge Ash (PSA). UK paper mills generate approximately

125,000 tonnes of PSA annually. Currently approximately 70% (approximately 88,000 tonnes) goes to

end uses, such as brick and cement manufacturers, and the remainder is landfilled. Hence waste cost

savings could also increase.

Other than the quality protocol mentioned above predictions for future changes are likely to be linked

with further implications and drivers associated with the Environmental Permitting Regulations and

implementing the requirements of the revised Waste Framework Directive. The cost of fuel is likely to



36

have both a direct and indirect impact, for example energy use and waste management logistic

transport costs.

Future spend is likely to focus on the requirement to maintain compliance and to increase cost

savings, e.g. thorough resource efficiency and the application of end of waste criteria to waste, to

increase the use and sale of by-products and to increase waste cost savings.

Despite the current economic climate, the size of the UK paper market is growing. Expansion is

planned at existing mills and two new newsprint mills are or will soon be operating.

5.5.4 SIC 19: Coke & Refined Petroleum


and savings are provided below for the Coke and Refined Petroleum sector. For this sector, 13

companies participated in the survey giving a response rate of 2%, which is equivalent to

approximately 8% of the total survey response.

Key Expenditure

The Coke and Refined Petroleum sector spent approximately £23 million in 2009 on environmental

protection measures, slightly less than 1 per cent of the total spend for all of the sectors in 2009.

Environmental expenditure for this sector is shown in Figure 5.19 for 2007, 2008 and 2009. The

data is presented separately for capital and operational expenditure.




2009 9.7 11.5 0.8 22.0 0.8 0.1 0.8

2008 105.6 242.4 6.5 354.5 118.1 27.3 145.3

2007 84.6 32.2 0.3 117.1 4.5 0.0 4.5


Operating expenditure accounted for the vast majority of the environmental spending by the Coke

and Refined Petroleum sector in 2009 at £22 million (96.5%). This is believed to be associated with a

base load of operating costs associated with the disposal and treatment of solid wastes and liquid

effluents arising from manufacturing operations.

The large drop in operating expenditure from £354.5 million in 2008 to £22 million in 2009 is unclear,

although some of the reduction could have been a result of the capital expenditure in 2008. It is

more likely, however that the observed reduction is a consequence of the data presented from the

candidate companies within the sector, i.e. from thirteen companies covering coke manufacture,

petroleum refining, petroleum storage and distribution etc. The data will be strongly influenced and

biased by which companies responded to the survey, i.e. which sub-sector.

The level of capital expenditure fell steeply from £145.3 million in 2008, down to only £1 million in

2009. This is believed to be a combination of the poor state of the economy and the variability of the

data associated with the sample set of companies feeding back into the survey. It should be noted

that the capital expenditure seen in 2009 is of a similar scale to that observed in 2007 (at £4.5

million).

There is currently low investment in this sector which could account for operating expenditure being

larger than capital expenditure at this time.



37

Refining operations are regulated under the Environmental Permitting Regulations regime and it is

understood that future capital investment will be required at refining operations associated with

reducing emissions of acid gases (oxides of nitrogen and sulphur dioxide), improving water emissions

to controlled waters and improvements in bulk fuel storage requirements. The latter improvements

to bulk fuel storage come from the recommendations of the Buncefield Investigation and will also

apply to other fuel storage facilities. Consequently it is expected that significant capital expenditure

associated with environmental regulation will be observed in the coming years.

In addition to the above, the long term market is moving away from petroleum production, in favour

of alternative energy sources, such as ‘clean coal’ technology, coal gasification or investment in

nuclear facilities. Investment in Carbon Capture and Storage is also increasing with high capital

expenditure costs likely going forward. It is anticipated that Carbon Capture and Storage will show in

the ‘air protection’ measures section of future surveys.


Environmental expenditure by media for the Coke and Petroleum sector is shown in Figure 5.20

below.


0

1

2

3

4

5

6

7

8


water

Noise Nature

protection

Other

£M

End of Pipe

Integrated

External

In-House

Water protection measures and solid waste provisions each accounted for nominally £7 million in

2009. In addition they also had very similar profiles, in that most of the work was undertaken by

external processes. This suggests that most of the operating expenditure was apportioned to offset

waste disposal and effluent treatment practices.

Income and Savings

In 2009, income and savings for the Coke and Petroleum sector was £0.5 million. Income and

savings for this sector are shown in Figure 5.21 for the years 2007, 2008 and 2009.



38



(£000’s) Survey

Year

Raw material

Water use

Energy use


Total (£000’s)

2009 0.1 0.0 0.3 0.2 0.0 0.5 0.0 0.5

2008 6.2 5.3 10.7 32.8 0.9 55.9 5.3 61.3

2007 0.0 0.1 0.7 0.0 0.0 0.8 0.0 0.8


The level of income and cost savings has fallen from £61.3 million in 2008 down to £0.5 million in

2009. This is believed to be a combination of the poor state of the economy and the variability of the

data associated with the sample set of companies feeding back into the survey. It should be noted

that the income and savings seen in 2009 is of a similar scale to that observed in 2007 (at £0.8

million).

Refining operations are regulated under the Environmental Permitting Regulations regime and the

assets and infrastructure are mature. As a consequence they have, in the main, investigated and

exploited income and savings opportunities. The assets are therefore understood to be operating as

efficiency as is practicable. This is consistent with the 2009 income and savings figures.

Consequently, future improvements in cost savings and income are therefore likely to be linked to

major capital expenditure projects, which will be primarily business and fuel strategy driven. The

poor state of the economy, moving into 2010, and the anticipated slow economic recovery is likely to

limit capital expenditure and hence cost saving and income in the coming years.

5.5.5 SIC 24 -25 Basic & Fabricated Metals


and savings are provided below for the Basic and Fabricated Metals sectors. For this sector 28

companies participated in the survey giving a response rate of 18%, which is also equivalent to 16%

of the total survey response.

Key Expenditure

The Basic and Fabricated Metals sector spent approximately £102 million in 2009 on environmental

protection measures, 3% of the total spend for 2009. Environmental expenditure for this sector is

shown in Figure 5.22 for 2008 and 2009. The data is presented separately for capital and

operational expenditure.




2009 19.0 46.6 0.7 66.4 27.8 7.4 35.2

2008 105.6 242.4 6.5 354.4 118.1 27.3 145.3

Note: The Metals sector was not surveyed during 2007. Totals may not add, due to the rounding effects. Comparisons between years should be treated with caution due to low response rate.

The Basic and Fabricated Metals sector is a very low profitability sector and has struggled in 2009

with the poor state of the economy. This can be seen from the overall operating and capital

expenditure levels, which have dropped from £500 million in total for 2008, down to £101 million.



39

The sector is dominated by the level of solid waste that is generated and its disposal. Consequently

operating expenditure accounted for the majority of the environmental spend for the Basic and

Fabricated Metals sectors in 2009 (65%).

The level of capital investment in 2009 has shrunk by 76% from 2008.The capital averse nature of

the sector is in line with the worsening state of the economy and the very low profit margins (and

hence re-investment) of the sector.

Owing to the poor economic situation, moving forward into 2010, it is highly likely that the low level

of operating and capital expenditure will continue in the coming years.


Environmental expenditure by media for the Basic and Fabricated Metals sectors is shown in Figure

5.23 below.

The largest spend was over £60 million on solid waste, the majority of which was due to external

processes, e.g. the disposal of solid waste. The amount spent on water protection measures has

reduced since the last survey to an estimated £10 million. The remaining media groups of air,

soil/groundwater, noise, nature and other protection measures have remained consistently low and

make up the remaining £26 million.


0

10

20

30

40

50

60

70


water

Noise Nature

protection

Other

£M

End of Pipe

Integrated

External

In-House

Income and Savings

In 2009, the figure for income and savings for the Basic and Fabricated Metals sectors was £71

million. Levels of 68.5% were observed for 2008 indicating a steady baseline of savings. However it

should be recognised that there has been a shift in the origin of the savings, moving from energy

savings in favour of waste treatment/disposal savings and income.

Income and savings for this sector are shown in Figure 5.24 for the years 2006, 2008 and 2009.



40



(£000’s) Survey

Year

Raw material

Water use

Energy use


Total (£000’s)

2009 3.6 0.1 1.8 61.2 2.0 68.7 1.9 70.6

2008 6.2 5.3 10.6 32.7 0.9 55.7 5.3 61.1

Note: Totals may not add, due to the rounding effects. Comparisons between years should be treated with caution due to low response rate. The sector was not surveyed in 2007.

Whilst the level of income and savings has remained at a fairly constant level of between £61 million

and £71 million, the composition of the savings has changed markedly in the last four years.

Operators within the sector that are governed by Integrated Pollution Prevention and Control (IPPC)

legislation (now the Environmental Permitting Regulations or EPR) were required to review and

implement energy and water savings in the early years of regulation. Following the review and

implementation of water and energy efficiency improvements, the legislation has focused on waste

minimisation improvements, co-incident with the increasing level of savings through 2008 and 2009.

In addition to the above; energy and water efficiency improvements were targeted post 2006 for

readily achievable improvements, which could provide immediate costs savings to the low profit

margin industry. It can be seen from the low cost savings for raw material, water use and energy

use for 2009 that the readily achievable improvements have been achieved and possibly major capital

expenditure would be required to make future bigger cost savings.

The rising costs associated with disposal of solid waste have resulted in the trend of increasing

savings through minimising waste generation and disposal, between 2008 and 2009. Moving forward

it is likely that the low level of savings arising from raw material, water and energy use will continue

as potential significant investment would be needed to make more savings. It is likely that a similar

level of waste savings will be likely in 2010, to combat rising waste disposal costs.

Income from the sale of by-products has reduced from £5.3 million in 2008 to an estimated £1.9

million in 2009. It is expected that the sale of by-products will remain low as the industry aims to

prevent the occurrence of by-products though operational costs related to waste disposal and energy

use, which is expected to increase with ever more stringent legislation (e.g. landfill tax, climate

change levy). There is likely to be a drive in the market to develop alternative disposal routes or

even reuse options for by-products.

5.5.6 SIC 20 & 21: Chemicals and Pharmaceuticals

This sector comprises two sub-sectors and is fairly similar, in terms of its makeup, to the SIC 2003

classification used for analysis in the 2007 survey (Chemicals and Chemical Products). The basic

characteristics of these sub-sectors can be summarised as:

• Basic chemicals: high volume and low margin bulk chemicals; and

• Pharmaceuticals: high-margin products manufactured in stringent clean conditions, supported by

substantial research and development.

Generally this sector in the UK is struggling to remain competitive especially with competitors based

in China and to a lesser extent, Eastern Europe.



41


and savings are provided below for the Chemicals and Chemical Products sector. For this sector, 22

companies participated in the survey giving a response rate for the sector of 14%, which is similar to

13% for the total survey.

Key Expenditure

The Chemicals and Pharmaceuticals sector spent approximately £105 million in 2009 on

environmental protection measures, 3% of the total spend for 2009. Environmental expenditure for

this sector is shown in Figure 5.25 for the years 2007, 2008 and 2009. The data is presented

separately for capital and operational expenditure.




2009 34.6 51.7 2.1 88.4 10.7 5.6 16.3

2008 43.5 52.4 95.4 191.3 9.5 11.2 20.6

2007 410.9 106.1 105.0 622.0 25.0 7.0 32.0


OPEX accounted for 84% of the total environmental spending by the Chemicals and Pharmaceuticals

sector in 2009, although OPEX has reduced by more than 50% compared to that in 2008. External

expenditure, although as in 2008 is still the major contributor to OPEX, has continued to decrease

slightly from that in 2008 and by more than 50% in comparison to 2007.

In-house expenditure has also continued to decrease compared to expenditure in 2008 and has

significantly decreased since 2007. The most marked change in expenditure is for R&D which shows a

very big decrease compared to 2008 and 2007. The sector continues to out source some of its

environmental protection services and use third parties for monitoring and managing their waste

disposal. The big reduction in R&D expenditure may be linked to the economic climate and may

reflect some nervousness around future investments.

CAPEX has continued to decrease from that in 2008 and is approximately 50% of the expenditure in

2007. The focus has moved away from integrated expenditure in 2008 to end of pipe expenditure for

2009. The overall decrease in CAPEX to that in 2008 is associated with integrated expenditure, as end

of pipe expenditure slightly increased.

An increase in end of pipe expenditure may be linked to sector process operators focussing their

expenditure on emissions abatement as apposed to investing in new process / production plant and

equipment due to economic uncertainty.


Environmental expenditure by media for the Chemicals and Pharmaceuticals sector is shown in

Figure 5.26 below. This sector spent approximately £45 million on solid-waste, the majority of

which was due to external Opex costs. Water, waste water and aqueous liquid waste at just over £25

million is the second largest media spend with the focus of the expenditure again on external Opex

costs. The sector continues to out source some if its environmental protection services and use third

parties for managing their solid and liquid waste disposal, as well as providing water as a process raw

material and for uses associated with utilities. External and in-house Opex costs comprise the

majority of the expenditure in the 2 highest spending media, solid waste and water.



42


0

5

10

15

20

25

30

35

40

45

50


water

Noise Nature

protection

Other

£M

End of Pipe

Integrated

External

In-House

Income and Savings

In 2009, income and savings for the Chemicals sector was approximately £22 million. Income and

savings for this sector are shown in Figure 5.27 for the years 2007, 2008 and 2009.



Survey Year

Raw material

Water use

Energy use


Total (£000’s)

2009 0.0 0.2 12.9 1.2 0.1 14.3 7.4 21.7

2008 2.6 2.0 11.3 2.0 0.0 18.0 0.3 18.3

2007 9.4 2.8 4.0 4.4 0.0 20.7 0.3 20.9


Again as in 2008, the bulk of the cost savings are from improvements and efficiency gains related to

energy use. The total cost savings has fallen since 2007 Sales of by-products has significantly

increased and generated an income of £7.4 million, compared to £0.3 million in 2008 and 2007. The

increase in by-product revenue may be associated with industrial symbiosis, bringing together




Predictions for future changes are likely to be associated with further implications and drivers

associated with the Environmental Permitting Regulations; Registration, Evaluation, Authorisation and

Restriction of Chemicals (REACH); the Environmental Damage (Prevention and Remediation)

Regulations 2009; Water Framework Directive; and, implementing the requirements of the revised

Waste Framework Directive. Other than legislative drivers the cost of fuel both directly and indirectly,

for example energy use and waste management logistic transport costs may also have an impact.



43

Future spend is likely to focus on the requirement to maintain compliance and to save money, e.g.

resource efficiency, solid and liquid waste minimisation and water use efficiencies.

5.5.7 SIC 35 & 36: Electricity, Gas and Water

Electricity, Gas, and Water is a relatively large sector in the UK by spending and also comprises a

wide range of companies both in terms of size and activity focus. For instance, the electricity sector

comprises power generation, both in terms of traditional power plants to renewable forms, as well as

providers of services and innovative technologies. Similar ranges of activities are seen in the other

sub-sectors: this has an influence on the conclusions that can be drawn and in particular the

comparability year on year as different sample ranges within the sector may be important.


and savings are provided below for this sector. In total 32 companies participated in the survey

giving a response rate for the sector of approximately 20 per cent, which is equivalent to 19 per cent

of the total survey response.

Key Expenditure

The Electricity, Gas and Water sector spent £2,681 million in 2009 on environmental protection

measures, 81% of the total spend. It is, therefore, proportionally a very high environmental ‘spender’

potentially linked to high levels of environmental impact and associated regulatory requirements.

Environmental expenditure for this sector is shown in Figure 5.28 for the years 2007, 2008 and

2009. The data is presented separately for capital and operational expenditure.

Figure 5.28 Environmental expenditure: 2009



2009 1,028.2 302.1 66.9 1,397.2 890.0 394.0 1,284.0

2008 309.8 523.4 12.2 845.4 381.1 591.9 1,818.4

2007 99.2 1,290.5 1.6 1,391.3 4.7 441.4 446.1


Operating expenditure accounted for approximately 52% of total environmental spending for the

Electricity, Gas and Water sector in 2009; with the vast majority of operating expenditure being in-

house costs. There has been unpredictability within OPEX figures returned by the survey in the past

years, but generally there has been a greater level of spending on external sources for operational

issues; the 2009 figures therefore present a significant shift. However, given the range of size and

activities within the sector and the sampling nature of the survey, comparisons between years may

not be meaningful.

It has also been noted that individual companies have dominated the outputs in this sector; for

instance in the 2007 survey results, a single company dominated the spending and, in 2009 whilst

one individual company has not dominated, in each category a number of the larger entities have

influenced output data.

The level of CAPEX appears to have been maintained at a more consistent level than other sectors.

This may be in part due to the regulatory oversight on expenditure in some parts of the sector (e.g.

utilities). Furthermore, the general UK wide momentum for low carbon energy general developments

may have resulted in this sector being less exposed to the global economic recession than others.



44

It should also be noted that CAPEX projects in this sector can be very significant and the inclusion of

companies in the sample range with a particularly major project for the survey year may have

influenced the output data. This may also explain the shift in focus from integrated to end of pipe,

for example project types such as carbon capture storage pilots, major wastewater upgrades at

municipal treatment plants.


Environmental expenditure by media for the Electricity, Gas and Water sector is shown in Figure

5.29 below. The bulk of the spending was waste-water totalling £1,569 million, most of which was

due to end-of-pipe expenditure. Data reported by the water sub-sector are primarily associated with

spending on the water media and this is likely to have skewed the outputs for non water companies.

Given the small sample size and some of the problems noted from previous surveys, comparison

between years should be treated carefully.


0

200

400

600

800

1000

1200

1400

1600

1800


water

Noise Nature

protection

Other

£M

End of Pipe

Integrated

External

In-House

Income and Savings

In 2009, income and savings for the Electricity, Gas, and Water sector was approximately £13 million,

of which income from sale or redistribution of by-products accounted for £3.3 million (28%). Income

and savings for this sector are shown in Figure 5.30 for the years 2007, 2008 and 2009.



Survey Year

Raw material

Water use

Energy use


Total (£000’s)

2009 2.1 0.0 6.6 1.2 0.0 10.0 3.3 13.3

2008 0.9 0.0 2.1 0.6 0.0 3.7 2.9 6.5



45

2007 0.5 0.0 0.7 0.1 0.0 1.3 1.8 3.1


Cost savings in this sector continue to show significant growth with a generally similar pattern to

previous years. Although the nature of these is not clear, the sector is expected to have been

significantly exposed to both EU ETS and the Carbon Reduction Commitment which will have

increased focus on energy reduction resulting in cost savings.



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5.6 DRIVERS FOR CAPITAL EXPENDITURE

Approximately 57% of the surveyed companies listed at least one reason for their capital expenditure.

The most common drivers described were compliance with government regulation/legislation (51%,

and equipment upgrades (27%), both of which are comparable to 2008 CAPEX trends.

Other defined drivers for CAPEX in 2009 included compliance with the requirements of parent

companies (8%), as well as those of customers (6%). The remaining 10% of CAPEX related to taxes

(2%) and ‘other drivers’ (8%)

The Food Products & Beverages, Tobacco Products sector provided the greatest number of responses

for this section of the questionnaire, with 30 reasons identified from 49 companies.

While there are some differences between the sectors in terms of the drivers for CAPEX, it is not

possible to be sure any difference is not owing to random variation within the sample frame,

especially some of the sectors involving less than 20 companies.

5.7 ENVIRONMENTAL MANAGEMENT SYSTEMS

This section presents the findings in relation to environmental management systems (EMS), which

may be described as structured frameworks for managing an organisation's significant environmental

impacts. Related questions asked whether the business has an EMS, the type of EMS certification

(e.g. ISO14001) and costs associated with implementation and maintenance.

In 2009, 81% of surveyed companies had implemented an environmental management system

(EMS); this represents a 23% reduction from that identified in 2008. Of the EMS in place in 2009,

63% were ISO14001 certified, 37% were certified to another recognised standard (e.g. BRC Global,

BS8555), and the remaining 19% were not certified. These levels are relatively comparable to those

in 2008.

Figure 5.31 presents the types of environmental management systems used by different industries,

i.e. and where ISO14001-certified EMS, an EMS certified to another recognised standard, or an

uncertified (‘in-house’) EMS.



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Figure 5.31 Types of EMS by Industry Sector

20% 30% 40% 50% 60% 70% 80% 90% 100%

Mining & Quarrying

Food, Beverages & Tobacco

Paper & Pulp


Chemical & Pharmaceuticals

Basic & Fabricated Metals

Electricity, Gas & Water

EMS Percentage Uptake

ISO14001

non-ISO

Other

Companies in the Basic & Fabricated Metal and Electricity, Gas & Water sectors were most likely to

have an EMS in place (100%). The former were most likely to have their own in-house system, whilst

the latter were most likely to have a certified EMS (100%).

The sectors with the greatest proportion of ISO14001-certified EMS were those of Mining &

Quarrying, and Paper & Pulp (100% for both).

In 2009, the average estimated cost of a large company (more than 250 employees) maintaining an

existing EMS was £27,400 per business, comparable to a 2008 average spend of £29,200. The

average cost to businesses implementing a new system in 2009 was estimated at £10,500, again

close to the 2008 average cost of £10,350.

Due to the small base sample used in these estimations, EMS figures provided should be treated with

caution.



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6 RECOMMENDATIONS FOR FUTURE SURVEY

The following section provides general recommendations for the forthcoming 2010 survey based on

the experience of the URS team and feedback received during previous surveys.

6.1 GENERAL

• As the 2010 survey is based on a larger sample frame, we recommend that the process is

started earlier this year with the aim that all questionnaires have been sent out and

completed before Christmas.

• It has been agreed that the 2010 survey should align as closely as possible with the last large

survey performed in 2006, whilst at the same time all changes that have been made to the

sample frame, design of the questionnaire, mail out materials, validation process and analysis

should be carried through to 2010.

6.2 SAMPLE FRAME

• This year, as in previous surveys, the water (SIC 36) and electricity and gas (SIC 35) sectors

were grouped together, primarily due to the small number of companies. Due to the different

nature of companies in these groupings, the impact that this is expected to have on the

nature of environmental expenditure and the significance of these in the overall numbers, it is

recommended that the two sectors are treated separately for the 2010 survey if at all

possible.

6.3 VALIDATION

• Further review of the validation process should be carried out to ensure that more

information is obtained on one off expenditure. More clarity is needed on whether this

expenditure will lead to a direct impact on the environmental performance of the company

completing the questionnaire or whether the project has been conducted on behalf of an

another organisation (for example, as part of its core business, the participating company

may sell environmentally related products and services). This additional information will

enable better analysis.



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6.3 ANALYSIS

• The last full scale survey conducted in 2006 was based on SIC 2003, whereas the 2010

survey will use classification based on SIC 2007. This means that for a select number of

sectors, comparison and analysis will not be meaningful. It has been agreed that despite this

limitation, the 2006 survey will not be updated to reflect changes in the SIC codes, instead in-

depth analysis will only be conducted for those sectors which have remained unchanged

between SIC 2003 and 2007. Additional comparison will also be conducted for those sectors

included in the 2008 and 2009 surveys (both of which are based on SIC 2007).



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ABBREVIATIONS & ACCRONYMS

CAPEX Capital Expenditure

COMAH Control of Major Accidents and Hazards

Defra Department for Environment, Food and Rural Affairs

DETR Department of Environment Transport and the Regions

EC European Commission

EMS Environmental Management System

EU European Union

EUROSTAT European Statistical Office

FAQ Frequently Asked Questions

IDBR Inter Departmental Business Register

IPPC Integrated Pollution Prevention and Control

NACE Nomenclature Générale des Activités Economiques dans les Communautés

Européennes [General Industrial Classification of Economic Activities within the

European Communities].

ONS Office for National Statistics

OPEX Operating Expenditure

PPC Pollution Prevention and Control

QA Quality Assurance

SEPA Scottish Environment Protection Agency

SIC Standard Industrial Classification

SME Small- or Medium-sized Enterprise

TGN Technical Guidance Note

URS URS Corporation Ltd

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