Interview: Peter Matthews,chairman, Natural Resources Wales

“If you’re going to integrate the environment and the economy, you need a completely new attitude.”

Wales is open for green business. That was the message from Alun Davies, the Welsh Government’s minister for natural resources and food, when he launched the Green Growth Wales prospectus last week. In a nutshell, this is a grand vision to make Wales a world leader in the green economy, rooted in the sustainable and intelligent use of the country’s natural resources.

Says Davies: “Wales was at the forefront of the first industrial revolution and we are determined to be at the forefront of the next one. In the same way that the availability of our natural resources drove the growth of iron and coal and then steel and manufacturing, it is our abundant natural resources that can drive the growth of a new and different economy… can create a new economic model that will deliver wealth creation and economic growth both today and into the future.”

Davies insists this is “not a soft policy” and “not a rebranding exercise – we are recreating the way we do business”. It will be backed by forthcoming legislation (the Environment Bill and the Planning Bill) and delivered through a suite of initiatives including a committed government; creation of the right environment; funding; practical assistance; and research and innovation.

Crucial to the whole strategy is Natural Resources Wales (NRW). NRW was formed in April 2013, through a merger of the Environment Agency Wales, the Countryside Council for Wales, the Forestry Commission Wales and specific functions of the Welsh Government. According to chairman and utility sector veteran Peter Matthews, the organisation is a “world first” in the innovative and creative approach it takes to the management of natural resources and in its breadth of reach and integrated approach to managing, protecting and using those natural resources.

“The global USP for Natural Resources Wales is that we now have all of the functions of environmental administration and management in one body,” Matthews says. The organisation’s reach and scope is, in fact, enormous. In environmental regulation alone, it is responsible for, among other things, surface and groundwater discharges; water resources (abstraction, impoundment and drought); many major industries, SSSIs and fisheries. On top of that it is the main policy adviser to the Welsh Government on environmental issues; a responder to emergency situations such as floods; a major land and forestry manager (it manages 7 per cent of the land area of the country); a recreation provider; a licence issuer; responsible for protecting and maintaining the environment; the statutory responder to planning applications on environmental issues; and has a commercial arm. With more than 2,000 staff, it is the largest sponsored body in Wales.

Matthews bats away the suggestion that such a sprawling, hitherto untested model will be unwieldy. “Not at all,” he says. “I was recruited, the board was recruited, the directors were recruited on the basis of being able to manage large organisations. There are lots of organisations that are complex and there are people that are very good at running them and we are very good at running our organisation. I appointed people on the basis of their ability to deliver.”

The Welsh Government will no doubt be hoping the organisation does deliver, for NRW is integral to the green growth strategy, under which it is hoped the £8 billion the environment currently contributes to the country’s economy will expand significantly. The single point of contact on environmental regulation NRW provides, together with its brief to promote – responsibly – the sustainable use of Wales’ natural resources, is a key selling point in the country’s bid to attract businesses and investors to choose Wales over other feasible areas. Scotland, for instance, has a Hydro Nations strategy and a pro-renewables stance. Matthews notes NRW makes Wales one up: “We are different to Scotland because they still haven’t combined the principal environmental bodies in the way we have.”

But aside from its breadth and reach, Matthews says NRW has other success-inducing qualities. As an operating arm of the Welsh Government, it has a “team Wales ethic” and a can-do attitude. “Our board is committed [to green growth],” he explains. “It is our policy to say yes where we can. Where we can’t – and there will be cases where we can’t – we will be swift and clear.”

Interestingly, given the body is part-regulator, Matthews is also driving a service culture into NRW. He says: “It’s been a great honour to work in this role and it has enabled me to put into practice all the things I’ve learnt in my career in one go. In particular I have learned the impact on customers is very important, so that is very important to me and very important to us.

“The project I’m personally committed to is our customer care project. For us, the customer is anyone with whom we have a transaction: people who buy our products, people who apply to us for licences, those who come to us for advice and so on. What is the golden thread? The golden thread is treating all these people as our customers and understanding that we need to delight them. That’s a really important driver in terms of making our transformation.”

NRW also rejects the old wisdom that environment and economy have diametrically opposed interests and that a win for one means a loss for the other. It believes it can manage natural resources “wisely and efficiently” for the benefit of both parties and the people of Wales. Matthews is particularly keen to bring investors along with this ethos; interestingly, the Green Growth Wales prospectus launch last week was held in the City of London, not Cardiff, and was packed with attendees from the business and financial sectors.

Matthews comments: “[For the financial community] provided the regulation and the attitude to development is not too stringent – in other words, off the scale of reasonableness – the most important thing is predictability about how the organisation is going to behave. That’s the lesson I brought from Northern Ireland with me [Matthews chaired the province’s Utility Regulator before taking the NRW job in 2012]. So I said we’ve got to build relationships with the rating agencies; we’ve been talking to banks and so on. Many of these people are from my personal networks I built up when I was working in Northern Ireland. It’s really important for someone who deals with the environment to understand that if you’re going to integrate the environment and the economy, you need a completely new attitude.”

NRW has been around for just over a year. Matthews is clearly delighted with progress so far, despite some major unanticipated challenges. He says: “In the theory of management there are two streams: the first is transactional management; the second is transformational management. In the first year, we have focused on transactional management – that is to say, keeping the show on the road. And there was an awful lot of transactional management we didn’t expect – the winter storms, the disease affecting our larch trees and so on, as well as managing budgets and keeping track of the money. And we did very well with all that.

“Transformational management is about managing our long-term vision. So we went out to consultation and have developed our first corporate plan [for 2014-17]. Now things have settled down, we will continue to transform. We’ve already started to see the customer care programme taking a much more integrated approach to development.”

Part of the business case for the creation of NRW was to save £158 million over ten years. Matthews stresses this is not saving money for saving money’s sake. “That isn’t just about running a tighter organisation, it’s also about releasing money that’s going to be reinvested,” he says. “So going forward, we do things in very different ways. We will need to get different skills and resources. The old way of doing things will get slimmer.”

The final piece in the green growth jigsaw is work in progress and involves greater devolution from Westminster. The 2012 Silk Commission advised Wales should have greater financial accountability. The UK government finally responded in March this year with the Wales Bill, which will provide the country with new borrowing and tax-raising powers. There is also a bid to devolve full control over other policy areas, including water.

Wales is already looking like a force to be reckoned with as competition for green business heats up; it’s obvious that more control over its own destiny would strengthen its hand.

Welsh resources and developments

Existing: £12 billion Wylfa Newydd nuclear development; £6 billion ­Rhiannon offshore windfarm; Milford Haven LNG terminal; potential for lots of other low-carbon generation including wave/tidal, hydro, solar and wind; a secure, resilient water supply; seven ports; good road and rail links.

Planned: 96 per cent of premises to have superfast broadband by 2016; £3 billion investment by Western Power Distribution in the power network 2015-23; £1 billion investment by Wales and West Utilities in the gas network 2013-21; £2 billion water investment 2015-20; 15GW of new generation capacity in the pipeline; £750 million investment in waste infrastructure.

Water and energy in Wales

Because of the integrated nature of natural resources management in Wales, it is difficult to entirely tease out industry-specific issues. However, some observations of interest to utilities are:

Water: the Welsh Government is mid-consultation with its action-packed and long-awaited Water Strategy for Wales (see expert view, page 7). Actioning its proposals would support the country’s wider natural resources management policy.

Energy: Wales is abundant with resources for potential renewable energy generation. One key scheme currently in planning is the Swansea Bay tidal lagoon project, which its chief executive Mark Shorrock “hopes is a blueprint” for a series of similar schemes across the country. Speaking at the Green Growth Wales launch, Shorrock couldn’t have endorsed NRW more enthusiastically. He said it had been positive, had a thorough understanding of the significance and potential of his development, had assigned sufficient resources to deal with his proposal and had taken a partnering approach.

In addition to mainstream renewables, Wales is keen to encourage more distributed energy and heat systems, and more smart grids and buildings.

Ecosystem services: Wales is committed to developing markets for ecosystem services around carbon, water and biodiversity.