Ecological Enterprise Zones: A pain free solution to a high carbon economy or fool’s gold?

Philip Monaghan from Infrangilis examines the complex world of Ecological Enterprise Zones, highlighting some key areas where further consideration is needed.



Ecological Enterprise Zones: A pain free solution to a high carbon economy or fool’s gold?

Philip Monaghan, Infrangilis

As world leaders gather in Lima for the latest round of climate negotiations, one hot topic of conversation will surely centre around how the private sector can come to the world’s rescue through technological innovation. Some policymakers believe the dawn of a new wave of Enterprise Zone (EZ) is one big ticket solution.

The EZ is a policy of deploying spatially targeted fiscal and deregulatory incentives for development, such as tax relief, planning simplification, or removal of social rights. There are estimated to be over 3,500 EZs in 130 countries around the world, which account for more than $200 billion in exports, and directly employ at least 40 million workers. An examination of the history of EZ theory shows that the concept has been around for centuries and continues to thrive in different forms to the present day. More recently, in the 2000s, EZs have evolved to accelerate low-carbon growth in the guise of Ecological Enterprise Zones (EEZ). But what evidence is there that EZs deliver lasting benefits for local communities in the form of social mobility? Or that EZ policies will also help to tackle climate chaos?

There appears to be an inverse pyramid to support the case for the blanket application of EZs, whereby theory is stacked on top of little evidence. Yes, there is compelling evidence to suggest that different versions of EZs do contribute to growth or regeneration. Yet a distillation of various studies by Infrangilis finds the rationale for EZ policy over other types of economic instruments, such as education, place-making, or community enterprise, to be inconclusive, particularly given that there are many examples of failure too, on a number of fronts. The process of policy mobility is important in explaining why EZ remains politically popular: the spread of a neoliberal idea to remove the dead hand of the state and unleash market forces to tackle unemployment; and ill-conceived state implementation whereby a policy label is adopted without proper consideration for clear definition or special measures.

As an emergent phenomenon, there are sparse empirical studies on the impact of EEZs, compared to their high-carbon cousins. Despite this, a global mapping exercise by Infrangilis suggests that they are on the rise, with 52 EEZs in operation in over 23 countries around the world. Examples range from Sunderland’s A19 ultra low carbon vehicle corridor (UK) and New York’s solar empowerment zone (US) to Chittagong’s low-carbon garments export processing area (Bangladesh) and Cape Town’s Atlantis green manufacturing zone (South Africa).

It can be argued however that there may be inherent contradictions for an EEZ between unabated growth and abated emissions. In the case of Baoding, in China, the economic boom from its solar panel industry means its carbon intensity – the amount of emissions per unit of GDP – appears to be higher than peer city equivalents. That is, Baoding may not actually be a green EZ on the basis that, whilst it is manufacturing low carbon products, in the absence of a decarbonised national power grid it is doing so in a carbon-intensive way. It has also been suggested there may be limitations to what a city can do by itself when it comes to green growth, because without a national strategy for EEZs, they may be inappropriately selected, non-complimentary, fail to build trust and create unnecessary competition. For instance, in England, 15 of its 24 EZs have an explicit focus on exploiting some form of green technology, ranging from marine energy to electric vehicles; and in November 2014 the Communities Secretary, Eric Pickles, proposed plans for a second wave of EZs. But without clarity on an English vision for national green growth which dovetails with local development plans it is unclear whether this is gold dust or fool’s good.

These insights highlight the important need for a better understanding of the potentially significant contribution of EEZs to next generation industrial strategy around the world. This can help to make a big shift to inclusive and sustainable growth by promoting commerce that is socially mobile and ecologically restorative. Consequently, the next phase of Infrangilis’ work aims to: understand why and how the policy is being transferred in different contexts, identify good (and bad) practice examples from around the globe, and distil a set of practical recommendations for the benefit of the policy community.