UK Coalition Must Display Leadership

The UK coalition Government of Liberal Democrats and Conservatives, led by David Cameron, boasted of their green credentials when they came to power.  About to introduce an energy bill into Parliament in the next few weeks, it is essential that the Coalition shows its political leadership and its grasp of economic analysis and listen to what is being said by people who know and understand!

Two influential groups of businesses have called upon the Government to adopt a 2030 target to decarbonise the power sector.   George Osborne  had a pro-gas, anti-green approach which he dressed up with a fig-leaf of a sound bite: “We’re not going to save the planet by putting our country out of business.” 

One of the letters to Ed Davey, Secretary of State for Energy and Climate Change, calling for the 2030 decarbonisation target was signed by Asda, Aviva, Alliance Boots, BT, British American Tobacco, Cisco, EDF, Eurostar, Marks & Spencer, Microsoft, PepsiCo, Philips, Reed Elsevier, Sky, The Co-operative and Tridos Bank among others. It said:

“The government’s perceived commitment to the low carbon transition is being undermined by recent statements calling for unabated gas in the power sector beyond 2030 and the absence of a specific carbon intensity target.”

A second letter (which was leaked to the Times newspaper) was signed by Siemens, Alstom UK, Mitsubishi Power Systems, Areva, Doosan, Gamesa and Vestas. It said

“Historically the UK has benefited from being known as a country with low political risk for energy investments. Undermining that reputation would have damaging consequences for the scale of future investments in the UK energy sector. It is important to protect that reputation carefully…

“We consider that a binding 2030 target for power sector decarbonisation would help to reduce the political risk currently associated with long term UK industrial investment.”

These aren’t fly-by-night eco-warriors, but hard-headed business that recognise that the vacillation and hand-wringing of the Coalition Government in trying to be all things to all people, is harming investment prospects in renewable energy and threatening all the good progress made so far. It seems that Scotland casts an impressive green shadow over its larger southern neighbour.

The big market failure that needs urgent correction is in the price of products and services that involve emissions of greenhouse gases. If the price does not reflect the costs of damage caused by climate change, then it is a blinkered and false economy.

A strong and stable carbon price will correct this market failure and helps to produce a level playing field on which new low-carbon technologies, such as wind, solar and carbon capture and storage, can compete fairly against fossil fuels.

Sadly, through misinformation, or rather the absence of clearly stated facts, most consumers and many companies do not yet fully understand the technological opportunities that are available and would flourish were long-term investment to be secured. The tax system should be changed to disincentivise high-carbon activities or regulate against them. But that means standing up to the fossil fuel and “NIMBY”  (Not In My Back Yard) lobbies.

Because there is not a strong and stable carbon tax/price,  new and developing wind and other law or zero carbon activities and technologies need government assistance through direct subsidies. These please no-one, but can be reduced and eventually eliminated as we get the economic and green pay-off for investing in renewable technology.

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Ed Davey’s response appears encouraging; he said he is not dashing for gas, as claimed.  He says

“Gas can have a long term role with carbon capture and technology and increasingly be back up (if unabated) for intermittent renewables and nuclear in the 2030s and 2040s. At the same time, our market reforms will incentivise a diversification of the energy mix, increasing the share of energy produced at home and keeping us on track to meet our binding carbon targets,”

He also says that he will make the case in Government;

“for a new, interim target to limit carbon emissions from the electricity sector by 2030 to give investors certainty about the Government’s commitment to cleaning up the grid.” 

That is very encouraging.  However it’s not all resting on Ed Davey. We should require our politicians to act like statesmen, with long-term visions for the country and our future. The forthcoming debates in Parliament will be telling in showing which of them rise to the occasion and which of them scuttle into corners and cover their eyes and ears.