The statement from the Committee, headed by former Conservative environment minister Lord Deben, was an explicit rebuff to George Osborne, the Chancellor of the Exchequer, who believes that the UK is being too ambitious on climate change and should not be a world leader on the issue, despite his prime minister’s stated ambition to make this the UK’s “greenest government ever”.
Earlier this year, he told the UK’s Times newspaper: “I don’t want us to be the only people out there in front of the rest of the world. I certainly think we shouldn’t be further ahead of our partners in Europe. I want to provide for the country the cheapest energy possible … consistent with us playing our part in an international effort to tackle climate change.”
Osborne thinks the answer to the UK’s rising energy prices is to develop the UK’s shale gas resources. But to build a shale gas industry of any size would require the UK to exceed its self-imposed carbon budget, which is why the Chancellor has been making noises about lowering UK ambitions for emissions reductions.
Carbon budgets are an essential part of the Climate Change Act, the world’s first climate change law, which was voted through with a remarkable degree of cross-party consensus and remains a world-leading piece of legislation. The law commits the UK to reducing emissions by at least 80% in 2050 from 1990 levels and requires the government to set legally binding ‘carbon budgets’ – a cap on the amount of greenhouse gases emitted in the UK over a five-year period.
These budgets are set on the advice of the Committee on Climate Change and the first four, up to 2027, have been set. However,
it was agreed that the fourth budget, from 2023-2027 will be reviewed in 2014.
There are a number of problems with Osborne’s stance. Firstly, the need for strong action to cut emissions has been reinforced by the recent publication of the latest climate change report from the Intergovernmental Panel on Climate Change. The direction of travel is clear – and it is towards a low-carbon future, not one that continues to rely on fossil fuels.
The UK has, via its world-leading climate law and some of the best wind and marine energy resources in the world, the opportunity to get ahead of the game and build a world-leading clean technology sector. To exploit these advantages to the full, the government needs to fully commit to support the clean energy sector.
In addition, the UK has pushed for the EU to cut its emissions by 50% by 2030 in the event of a global climate deal, a more ambitious target than other member states have proposed. To have any credibility, this ambition must be matched by concerted efforts at home.
And these efforts are needed because, despite the headstart that the Climate Change Act gave it, the UK is far from “out in front”. The country still has one of the lowest rates of renewable energy capacity in the EU at 4.2%, better only than Malta and Luxembourg. This compares to 32.1% for Sweden and 10% for a comparable large economy such as Germany. Nor is it true to say the UK is acting in isolation. Far from it. Countries around the world, from China to Chile and from South Korea to South Africa, along with the US, India and Brazil, are ploughing billions of dollars into renewable energy.
The price of renewables – and therefore the cost of support schemes – is coming down all the time, while the price of nuclear power and fossil fuels –in particular gas – is going up.
The contrast between Osborne’s stance and the government policy that is implied by the carbon budgets is creating uncertainty and a lack of clarity that is holding back investment and increasing the cost of securing the UK’s energy future. Three offshore wind farms have been cancelled in the last month./>/>
Energy Secretary Ed Davey said this week: “Over the next decade we need tens of billions of pounds of investment in new energy generation and networks if we are to replace the old and dirty infrastructure set to close. If we are to persuade investors to invest here, they need to see that there is a political consensus on these issues that rises above the normal everyday party politicking.” Who could he have been referring to?
The irony is that businesses support the carbon budgets and efforts to create a low-carbon energy sector. They know that, as Davey said, “tackling climate change is an opportunity, not a burden”.
Lord Adair Turner, who as former head of the Committee on Climate Change, the Financial Services Authority and the Confederation of British Industry is uniquely placed to comment on the role business and investors will play in tackling climate change – and the role that tackling climate change can play in reviving the economy – added: “The majority of the business world is clear that ambitious and stable action to tackle climate change makes business sense. A stable policy environment is critical to attracting investment in the low-carbon sector, reducing the costs of new technologies like offshore wind and creating significant growth opportunities for the UK economy in areas where we currently lead the clean energy race. The time has come to give to the decarbonisation agenda the importance and stability it deserves.”
Business organisation the Aldersgate Group recently wrote to the Prime Minister urging him to get a grip on UK energy policy, saying: “The energy policy crisis is severely harming UK jobs, growth and competitive advantage, as well as the UKʼs grip on the lucrative global market for low carbon goods and services.”
The public wants more clean energy, too – despite claims from some in the government that there is a need to protect people from the “blight” of renewable energy projects, the government’s own surveys consistently show that more than 70% of people support clean energy.
And if not the UK, with its abundant renewable resources, its technological know-how and advanced infrastructure, then who? As James Cameron, vice-chairman of Climate Change Capital says: “We have the expertise, we have the brain power, the engineering, design and architecture skills along with the professional services to give us immense potential in building the solutions that the world craves.”