Lib Dems stiffen the sinews for green economy scrap

Were it not for a little party in East London this weekend, the papers would be full of news of the first serious rift between Alexander and Osborne

13 Aug 2012, 14:50

Well, that didn't last long. Last week, deputy prime minister Nick Clegg attempted to portray the widening rift within the coalition over environmental policy as nothing more than a fevered media construction, insisting the well-documented rows between the Lib Dems and chancellor George Osborne over almost every aspect of energy policy were just a standard series of inter-governmental "debates", and that the "entire government" remains committed to meeting the UK's carbon targets.

But with the row over Lords reform and boundary changes escalating and a difficult party conference season looming, this conciliatory tone was never going to last long. And so, within a few short days of the Lib Dem leader's speech, it came to pass that one of Clegg's most loyal deputies, chief secretary to the Treasury Danny Alexander, was tabling a conference motion slamming the Tories' opposition to green growth.

Were it not for the hugely enjoyable distraction emanating from a former wasteland in East London over the weekend, the Sunday papers would have been full of talk of a major coalition rift on green policies.

Almost every aspect of the debate confirmed by the publication of the Lib Dem Party Conference agenda is instructive. The fact it will be tabled by Alexander (rather than Ed Davey or Chris Huhne) highlights how serious this rift is becoming. The chief secretary to the Treasury works day-in, day-out with Osborne, he is a member of the government's guiding 'quad' of senior figures, and is widely regarded as an arch coalition loyalist. This will be arguably the first time Alexander has publicly and categorically disagreed with Osborne on a significant aspect of economic policy.

Then there is the wording of the agenda and its explicit statement that the Lib Dems are "concerned by the refusal of the Conservatives to acknowledge that investing in carbon-reducing technologies has the potential to make an important contribution to long-term growth". Even bearing in mind the motion is designed to appeal to a partisan party conference crowd this is a pretty clear attack on the Conservatives' environmental record, not to mention a marked departure from Clegg's increasingly incredible attempts to insist both sides of the coalition are fully signed up to a green growth agenda.

Finally, and perhaps most significantly, there are the specific recommendations put forward by Alexander, which support the government's decision to delay giving the Green Investment Bank full borrowing powers, but diametrically oppose Osborne's call for the UK not to adopt a decarbonisation target for the power sector that would have to be met by 2030.

Assuming Alexander's proposals are endorsed by the conference (and they almost certainly will be, the entire motion is cat-nip to the Lib Dem faithful) the party's leadership will have no choice but to fight long and loud for both the all-important decarbonisation target and a more progressive green policy stance throughout the second half of the parliament.

The Lib Dems have taken a fearful kicking over the past couple of years for caving in to Conservative demands too readily, and as such they deserve all the plaudits they are getting from the green community for standing up for environmental policies that they (and plenty of modernising Conservatives) believe in.

They have faced absurd levels of willful obstruction and poorly argued opposition from Osborne in recent months, over green policies that had been agreed and strategies that are simply designed to comply with the coalition agreement and the UK's legally binding carbon targets. As I have argued here before, Osborne is attempting to seriously undermine the UK's Climate Change Act, its low-carbon investment climate, and the international credibility of efforts to build a green economy through his vision to turn the UK into a "gas hub" (a vision, by the way, that he still has not had the decency to properly justify in public). The Lib Dems have been left with no choice but to fight the chancellor or risk losing one of their most significant remaining electoral assets – their support for green growth.

In the short term, all eyes will now be on energy and climate change secretary Ed Davey as he decides whether or not the up-coming Energy Bill should contain the 2030 decarbonisation target recommended by the independent Committee on Climate Change. If he decides against it he is going to need a water-tight evidence-based case as to why the target is not required and a genuinely significant green concession from chancellor. Do not believe the Treasury spin, as far as the Lib Dems are concerned the continuation of viable levels of support for onshore wind farms rubberstamped last month by Osborne was not a quid pro quo for the dropping of the decarbonisation target – Alexander's intervention only confirms what Lib Dem sources have been saying since the agreement with the Treasury was announced: the decarbonisation target is still up for grabs. If Davey instead does as the committee recommends and moves forward with the target then the Lib Dems will have to marshal all their political nous to get the amended Energy Bill past the chancellor and his backbench supporters.

And it is here that the Lib Dem's admirable decision to draw some red lines on green policies and commit to a political fight carries with it significant risks for both the two coalition parties and the future of the UK's low-carbon economy.

According to the Whitehall rumour mill, it took a lot of arm twisting to convince Osborne to include some mildly conciliatory comments on the green economy in his budget speech in the spring. With a party conference audience in front of him and Alexander's attack ringing in his ears what are the chances of him offering a positive, evidence-based critique of the green economic success story this autumn? He will be sorely tempted to revive his attacks on environmental policies that went down so well with the Conservative base last year, completely ignoring the immense damage he did to investor confidence in the process.

Up until now the Lib Dems have attempted to strike a conciliatory tone on green issues because it allowed them to avoid just this scenario, giving them more time to appeal to those Conservatives who support the concept of green growth. Hopes remain that with a number of very senior Conservatives, including foreign secretary William Hague and prime minister David Cameron, known to be privately supportive of the green agenda, Osborne can still be either convinced (or perhaps ordered) to provide a fuller endorsement of green growth.

Green businesses will be desperately hoping this strategy can still work, carrying with it as it does the promise of a more stable, largely depoliticised green policy environment, which in turn should help drive billions of pounds of new low-carbon investment.

But Osborne's posturing over support for fossil fuels, his disregard for the committee on climate change, his disrespectful interfering with energy policy and the economically damaging policy delays and confusion he has created has forced the Lib Dems to up the ante and take their disagreement with the chancellor public.

On balance Alexander and co have taken the right option, but it is little short of a tragedy that they are being forced to fight tooth and nail with ideologically infatuated opponents for an agenda that is not only delivering rapid economic growth, but was also central to both the Conservative's manifesto and the prime minister's vision for modern Britain.

For reasons that are difficult to explain, but almost certainly have their root in the depressing climate scepticism of an American right wing that far too many Conservatives continue to idealise, a band of increasingly influential Tory MPs have decided to turn green policies into a political football. It shouldn't be this way, but it is, leaving the Lib Dems with no choice but to strap on a pair of shin pads and start playing. Until, that is, the prime minister stops loitering on the touch-line and makes it explicitly clear which side of the green growth debate he is on.

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Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray

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