Cameron's "green crap" confusion is yet another blow to UK investment

21 Nov 2013

The front door of 10 Downing Street

Four days ago, I asked a number of green industry insiders to comment on David Cameron's welcome assertion that the "sensible thing" to do was to take "preventative and mitigating steps" to tackle climate risks. This morning, I found myself asking green execs to comment on reports the Prime Minister regards many of his flagship climate change policies as "green crap". It is easy to see why The Sun, which has done more than most to push for an end to any policy with the faintest whiff of greenery, ran its splash under the headline "Cameleon" and couldn't stop itself from observing that "voters want leaders, not chameleons".

Whether Cameron really "raged" at aides instructing them to "get rid of all this green crap" on energy bills is irrelevant (although the carefully worded non-denial from Downing Street suggests The Sun's scoop is broadly accurate); what matters is the staggering mess the Conservative leadership has now managed to get itself into over "green levies" and the wider low-carbon agenda.

As I argued when Cameron first made his ill-judged commitment to "roll back" some green levies, the prime minister has backed himself into a corner from which he will simply end up disappointing everyone. The ongoing question for Number 10 is which bit of "green crap" do they want to get rid of? The warm home grants and ECO efficiency schemes that even The Sun acknowledges go to "vulnerable people"? The renewable energy support mechanisms or smart meter levies that Cameron has previously hymned to the rooftops and which are at the heart of a coalition agreement underpinning an Energy Bill that is urgently needed to stop the lights going out? Or the carbon taxes that the Treasury is banking on as a much-needed source of revenue?

The answer, of course, is none of them. For what it is worth, my instinct is that Cameron still accepts the urgent need to tackle climate change, as he elucidated only last week, and still gets the economic case for investment in clean technologies, as he quietly made clear earlier this year with his declaration that the countries that will succeed in the global race "are those that are the greenest and the most energy efficient". It is just that he wants to square the circle and find a way of delivering a low-carbon transition that costs nothing and that nobody notices. And in the meantime, he is content to merrily follow the advice of his notorious Australian election advisors and torch everything he previously stood for on the off-chance it might win him an election.

Cameron's reported "green crap" outburst is a function of the realisation that he has forced himself into a trap of his own making (with a little help from Ed Miliband's price freeze wheeze). Scrap or water down any of the renewable energy levies and he is open to charges of hypocrisy and undermining investor confidence. Target the ECO and he is guilty of undermining the kind of energy efficiency scheme that offers the only means of tackling fuel poverty in the long run – less Vote Blue, Go Green, more Vote Blue, Go Cold. Do either and you risk alienating the Lib Dems to such a degree that the last 18 months of the coalition become virtually unmanageable. There had been hopes that a compromise could be reached that would move some of the cost of these schemes onto general taxation, but that simply raises the question where does the new money come from? Cutting green levies by £50 only to raise taxes by £50 might be more progressive, but it is unlikely to impress Cameron's critics.

And then there is the real kicker. Even if Cameron did choose to get rid of all the "green crap" and take his chances with the damage to coalition unity, the loss of tens of thousands of jobs and billions of pounds of investment – and the grievous blow to his credibility that would result – the net impact for your average household would be a saving of just over £2 a week. Yes, a lot of people would be technically moved out of fuel poverty, but millions more would barely notice the difference. Moreover, the savings would be almost entirely eaten up by the next near-inevitable gas price spike – a gas price spike that the UK would be more exposed to because it would have stopped investing in homegrown renewables and energy efficiency.

You can see why Cameron might be getting a tad angry: he is in a no-win position, and he is the one who put himself there.

The problem is that while Cameron's thinking on energy and climate change policy has descended fully down the rabbit hole, those businesses and policymakers operating in the real world still have to deal with the implications of his green meltdown, and none of them are pretty.

Politically, the Tory brains trust evidently thinks green policy is a wedge issue that can help them carve out a majority in 2015. Maybe they know something the rest of us don't, but there is plenty of polling out there that suggests the public are strongly in favour of green policies, with the centrist swing voters Cameron has to appeal to among those most likely to back ambitious action on energy efficiency and renewables.

The current strategy looks increasingly like Cameron weakly caving into the right of his party and leaving himself open to justified accusations about the retoxification of the Conservative brand. It is noticeable how The Sun's story repeatedly refers to Cameron's remarkable inconsitency on a part of his agenda that was previously central to his political identity, even if it favours an end to "green levies". If they have any political nous, Labour and the Lib Dems should have a field day painting Cameron as flip-flopping on an issue he still claims to care deeply about.

However, as numerous commentators have already noted, the emergence of environmental policy as a politically partisan issue represents a major threat to the green economy, as previously stable and successful policies become largely dependent on the result of the next election.

Economically, the implications of Cameron's failure to put the national interest ahead of short-term political concerns are of even greater concern. I have lost count of the number of senior sustainability executives and green investors who have told me that regardless of how attractive a clean technology is or how attractive a green policy looks, every time political rows end up on the front pages it makes it harder for them to convince colleagues to green light capital spending. "The shifting sands and uncertainty are extremely disturbing," one industry insider told me this morning. "That kind of [green crap] statement really doesn't help anyone move forward with investment, even in organisations that are really committed to decarbonisation." Every time the Conservative leadership attempts to secure a few more votes in marginal seats by promising to scrap green policies it pushes up the price of capital and makes investment in everything from wind turbines to gas plants harder to deliver.

What, if anything, can be done? Progressive green businesses, campaigners and politicians have no choice but to continue to make the case for green investment, arguing that despite the political rhetoric numerous clean technologies and policies still represent an attractive proposition for corporations, investors and households. As I argued earlier this week there are now plenty of competitive clean technologies out there, as well as some largely successful green policies from the government, such as the Green Investment Bank and feed-in tariffs, that actively support the green economy.

Business leaders and campaigners also need to do everything in their power to explain to Cameron and his colleagues that regardless of the fixation on "green levies", the only long-term way to tackle high energy bills is through effective and ambitious energy efficiency measures. And more generally there has to be a renewed push by supporters of the green economy to force politicians to accept they cannot decarbonise by stealth. They need to get out there and make the positive case for low-carbon technologies – do so and they will quickly find that the majority of the public are more receptive than they think to green growth.

Most importantly, they need to try and help the prime minister rediscover his green backbone. Cameron's complete confusion on whether or not he wants to support the kind of measures he knows are necessary to tackle climate change is both a dereliction of duty and a prime example of the very worst kind of short-termist political cynicism. He can argue against green levies if he wants, but in that case he owes it to voters and investors to clearly spell out how he plans to decarbonise instead. Every week of uncertainty means more jobs lost, more investment forgone. The problem is that he doesn't seem to know what he wants, and that uncertainty, that failure of leadership, is at the root of the escalating crisis of investor confidence that Cameron has done so much to stoke.

The prime minister needs to recognise the wisdom of those modernising voices, such as Nick Boles, who warn the retreat to the Tory comfort zone is one of the main reasons Labour continues to lead in the polls. He needs to reject the siren voices in the right wing commentariat arguing that action on climate change can wait indefinitely in the hope that a technological silver bullet emerges. He needs to rediscover the leadership that defined his early years and explain clearly how he plans to ensure decarbonisation is delivered at the lowest possible cost, while also explaining that he is not willing to compromise on an over-arching green economic strategy that was then, and is now, in the national interest.

Until he does that, his dismissal of flagship policies that he used to support as "green crap" will only serve as ammunition for those critics who regard Cameron's default setting as one of U-turning hypocrisy. The prime minister's crass rejection of crucial environmental and social policies is undignified, but worse than that, it is bad politics, bad policy, bad economics and, most of all, it is bad for business.

There is no need to wait for competitive clean tech, it is already here

20 Nov 2013

recurrent

The many millions of words and thousands of hours of talks that have been devoted to combating the climate crisis have always boiled down to one critical question: How do we make clean technologies more competitive than the dirty technologies they have to replace?

Seasoned observers of the UN's long-running climate change talks, including former head of the UN climate secretariat Yvo de Boer, have long argued the failure of the negotiations to make sufficient progress is a result of the failure to convince all the key parties that genuinely clean technologies will soon become a more attractive default option for businesses and investors, making it possible to slash emissions and continue along the development path. Even those climate sceptic voices who argue we don't need to act to curb emissions, insist the main reason we shouldn't embrace green investments is because they are not competitive with fossil fuel based technologies and business models. It would take a particularly perverse defender of the status quo to argue we should stick with dirty technologies that are demonstrably worse than more attractive clean alternatives.

So central is this question to any attempt to build a green economy that numerous policies and techniques have been developed to try and make clean technologies more competitive: carbon pricing to correct the externality allowing fossil fuels to pollute for free; subsidies to help emerging renewable energy technologies compete with established fossil fuels; natural capital accounting techniques to highlight the undervalued economic benefits generated by sustainable business models and better acknowledge the health and well-being costs associated with dirty technologies; and calls for companies to relax return on investment requirements and embrace long termism to recognise how clean technologies deliver greater benefits in the long run than incumbent polluting technologies. All of these admirable and justifiable measures are designed to make clean technologies more competitive than the technologies they have to replace and in so doing correct the market failure that means long term climate change and environmental damage is not factored into short term investment decisions.

However, in focusing on the urgent and over-arching need to embrace the clean technologies that can deliver steep cuts in greenhouse gas emissions the debates surrounding these various policies are often guilty of missing the reality that is staring them in the face - in many areas clean technologies are already more competitive than dirty technologies.

This simple truth is evident everywhere you look, in the rapid shift towards LED lighting, the emergence of electric cars, and the evidence from countries such as Germany and Brazil that renewables are undercutting fossil fuels on costs. It was hammered home again for me this week during a conversation with Len Sauers, vice president for global sustainability at Procter & Gamble (P&G), about the company's latest sustainability report. Now, like any large multinational, P&G is far from perfect and I don't doubt a half decent investigative journalist could find examples of it failing to embrace environmental best practices in relatively short order. However, like many large companies P&G does have ambitious long term commitments to slash its carbon emissions, achieve zero waste status, and source all its energy from renewables, as well as some specific and stretching goals that it wants to meet by 2020. As such, the company has made some impressive progress in recent years, particularly on embracing zero waste principles at over 50 of its facilities and steadily curbing its emissions and energy use while upping its reliance on renewables.

As any climate hawk will tell you, when we require deep and immediate cuts in emissions P&G and many of its multinational peers with ambitious sustainability strategies are not moving fast enough as they transition towards greener business models. The company's emission reduction goal of a 20 per cent cut per unit of production by 2020 against a 2010 base line is short of what many climate scientists believe is required from industrialised nations and as such an industrialised company should be aiming higher. Its target of generating 30 per cent of its energy from renewables by 2020 could and should be more ambitious. But what is particularly encouraging about P&G's recent performance is Sauers' revelation that it has been achieved without any special allowances being made for clean tech investments. "We hold the investment in sustainability measures to the same standard as any capital investment we make," he says. "We are doing this because it helps the bottom line and top line."

It is a remarkable admission and one that means the company's development of a more sustainable business model is being built on the firmest of foundations. Think about what that simple commitment to comply with the company's capital investment requirements means. It means that without any recourse to internal carbon prices or an acceptance of longer return on investment periods, P&G has been able to decouple revenue and emissions growth, source 7.5 per cent of its energy from renewables, and make over a third of its facilities globally zero waste. It means the company will continue to invest in waste reduction, biomass and solar power, and energy efficiency measures, because for many locations these are the most attractive investments available. Improved waste management efforts alone have delivered $1bn in new revenues and cost savings, even for a company of P&G's size that is not to be sniffed at.

And P&G is not alone. IKEA and Google have not started buying up renewable energy projects because they want to save the world or because they need the PR boost, they are making multi-billion dollar investments because the business case is sound and because they firmly believe sourcing energy in this way will make them more competitive in the long run. The likes of DHL and UPS are not making the transition towards electric and alternative fuel fleets because they want to cut air pollution (although they no doubt welcome the air quality improvements they are helping to deliver), but because these highly competitive new technologies allow them to slash running costs that have remained stubbornly high along with the oil price. Astute utilities in emerging economies are not investing in wind and solar because of climate change obligations, they are doing it because they know that in the right location these new technologies offer the cheapest means of providing much needed power.

Yes, the adoption of many of these technologies have been aided by various favourable policies and subsidies (albeit still not as big as the subsidies handed out globally to fossil fuel industries), but support for many clean technologies is now falling and in some jurisdictions is non-existent. And yet many of the world's leading corporations are continuing to deploy cleaner and more efficient technologies, because, quite simply, they are more competitive than the technologies they replace.

The implications of this ongoing technological transition are potentially game-changing. The trend obviously needs to be accelerated, it needs to be accompanied by continued research and development efforts to bolster those clean technologies that are not yet a compelling alternative for fossil fuels (most notably we need progress in the field of energy storage in order to make intermittent renewables truly competitive with thermal power), and it needs to be supported with policies to help overcome the cultural inertia that means the most competitive technologies do not necessarily become the default choice for all businesses. But if policymakers and business leaders can manage the emergence of these technologies effectively we might find that, with or without a global climate change deal, encouraging recent indications that the world can decouple emissions and economic growth can herald the rapid transition to a low carbon economy.

Crucially, this trend is also emerging at a time when the slightly more coherent wing of the global "climate sceptic" community has found itself a new argument courtesy of Bjorn Lomborg and his insistence that shelving climate policies and instead focusing on the R&D efforts that will make clean technologies truly competitive represents the most cost effective means of tackling climate change. There are many reasons why this argument is, in my view, deeply flawed: it underplays climate risks and uncertainties; it fails to account for how industrial transitions are based on research, development and deployment, which commonly needs to be encouraged through policy interventions; it is based on the assumption R&D funding can successfully pick a winning silver bullet that will be delivered in time, which is a bit strange when you consider how many of the commentators supporting this course of action abhor "picking winners" in other policy contexts; and it ignores the way in which market failures mean that even when you develop a low cost and competitive technology it is not always adopted at sufficient scale and at sufficient pace - anyone doubting this needs to look at our continued inability to embrace basic energy efficiency measures, or envisage the lengths certain politicians will go to in order to protect the oil and coal industries even once they are undercut by solar power.

But most of all, Lomborg's latest argument for delaying concerted and multi-faceted action on climate change ignores the fact that many of the clean technologies we need are already competitive and are being adopted by leading corporations today. We do not have to wait 20 years for these clean technologies to become competitive, thanks in no small part to the kinds of climate policies Lomborg wants to axe many of these technologies are here and many more are in the pipeline.

The question for political and business leaders now is not how do we make technologies more competitive than the dirty technologies they have to replace, but how do we make people realise that many clean technologies are already more competitive than the dirty technologies they have to replace? How do we overcome the market failures and cultural barriers that make it harder than it should be for people to switch to energy efficient buildings or fuel efficient vehicles? How do we accelerate the transition to the clean technologies that make sense now and give ourselves the time we need to develop the clean technologies, like energy storage and even lower cost wind, solar and nuclear power, that we will need to complete the development of a genuinely green economy?

For business leaders, the answers have to lie in an ambitious and vocal communications and marketing effort to demonstrate once and for all that clean tech investments are not being made out of charity, they are being made because these technologies make compelling business, financial, and economic sense.

For political leaders and the diplomats gathered in Warsaw this week, there has to be a realisation that while many clean technologies are maturing fast their adoption still needs to be accelerated given the escalating scale of the climate change threat. Moreover, that acceleration can only be achieved if a stable and coherent policy framework helps give companies the confidence they need to build on their early investments. That does not mean endless subsidies, as critics claim, but rather a well-managed gradual withdrawal of support mechanisms as the compelling rationale for clean technologies becomes ever more obvious. This is already happening in many of the key high emissions economies that will ultimately determine whether we are able to tackle the climate crisis. But deployment can only be accelerated to the level that is so urgently required if those policies that can correct the underlying market failure - the carbon pricing, the focus on long termism, the acknowledgement of natural capital - are still pursued. The good news is that, unlike five or 10 years ago, many of the technologies we need to make these policies cost effective and politically palatable now exist, we only have to recognise that their mass deployment is both viable and desirable.

Couple progress on these policies with the increasingly encouraging investment decisions that are being made in progressive boardrooms and the breakthroughs that are emerging from labs around the world and we can make the appeal of competitive clean technologies even more obvious than it already is. And then, perhaps, we can move on to wrestling with a new question.

The Conservative chairman, the decarbonisation target and the zombie estimate

13 Nov 2013

grant-shapps

BuzzFeed has famously built a very successful brand through a carefully calibrated combination of seriousness and nonsense, so perhaps that can explain why Conservative Party chairman Grant Shapps used his debut on the site to combine some intelligent points about the complexity of the energy policy landscape with some laughable estimates about the cost of decarbonising the power network. Then again, senior Conservatives' repeated use of dubious cost projections to argue that delivering decarbonised power by 2030 will cost each household £125 a year has now become so egregious that I suspect there was a different motivation at work.

Shapps allegation that Labour "still cares more about green taxes than people who are struggling to stay warm", rests on "independent research" that suggests meeting a decarbonisation target would cost an extra £7.5bn a year by 2030, adding "around £125 to your household bills". It is a repeat of similar allegations made by prime minister David Cameron, justice secretary Chris Grayling and the @ToryEnergy Twitter account. The problem is that the cost estimate is six times higher than that produced by the government's official advisor, the Committee on Climate Change (CCC), and the Conservatives have repeatedly failed to convincingly defend their projection, even when challenged to do so by Tory peer and chair of the CCC Lord Deben.

The Carbon Brief website has done a fine job of explaining how the Conservatives can estimate the cost of the decarbonisation target would reach £125, while the CCC can predict the cost will be £20 per household and argue that a decarbonisation target represents the most cost-effective means of ensuring the UK meets its over-arching emission targets. As with any energy cost projection, it is complicated but in a nutshell the Conservative calculation takes a high-end assumption for the cost of investment in low-carbon energy through the 2020s from a report by consultancy Poyry and simply adds that to energy bills, while ignoring the fact that if we are massively more reliant on renewables and nuclear by 2030 then this would apply downward pressure on wholesale electricity prices. In contrast, the CCC looks at a range of scenarios and concludes the impact of a decarbonisation target on the wholesale price and the effective rollout of energy efficiency measures means the impact on total energy bills will be negligible, even if various "green levies" increase to help mobilise necessary investment.

However, the entirely legitimate questions about the credibility of the £125 figure raised by the CCC and others have not stopped senior Conservatives using it – in fact, they have simply doubled down and started exploiting every opportunity to allege that Labour (and by extension the Lib Dems who also support the target as a party) are plotting a major increase in energy bills. The figure is fast becoming a zombie estimate, blundering on regardless of how many times people with more credible projections try to kill it.

Of course, predicting the precise amount an average household pays for electricity in 17 years' time is a pretty ridiculous exercise when you think about it – there are simply too many variables, ranging from the stability of the Iranian regime to the technical feasibility of new solar cell designs, for estimates to be made with any confidence. But if we are to use cost projections to shape policy and score political points, then there has to be some transparency about how estimates have been calculated and which assumptions they have been based on. Currently, the justification for the £125 projection is opaque in the extreme.

It is time for Shapps, Grayling, Cameron or @ToryEnergy to explain clearly why the £125 prediction is justified – we'll more than happily provide a platform at BusinessGreen for such an explanation if Conservative Central Office deems the topic a bit too policy wonkish for an op ed in The Sun.

Inevitably, in explaining why a decarbonisation target would add so much to energy bills, any defence of the estimate would also have to explain why the CCC's more optimistic projections are wrong. Plus, it would be good to know whether or not a victorious Conservative Party at the next general election would reject the introduction of a decarbonisation target when the topic is up for review again in 2016. And, most importantly, given the Conservative Party is still technically in favour of the UK's Climate Change Act, it would be great to clear up how it proposes to meet legally binding carbon targets during the 2020s in a manner that is more cost effective than the adoption of a decarbonisation target. If ministers really think power decarbonisation by 2030 is too costly, how do they plan to cut emissions instead? Are they planning a revolution in renewable heat? Do they envisage that everyone will ditch their cars in favour of cycling? Or are they privately preparing to breach the UK's carbon budgets and ditch any plans to become a 21st Century clean tech hub?

If the Conservative Party is going to keep using this figure as one of its primary attack lines then surely it has a responsibility to explain clearly why the prediction is credible and detail what it would do instead to ensure decarbonisation is delivered without a target. Not least because energy companies and investors right across the industry, from gas to marine power, remain unable to invest in new infrastructure with any confidence as long as the outlook for policies post-2020 remains so confused. It is perfectly legitimate for the coalition parties to point out that Ed Miliband has done investors – and by extension the UK's energy security – no favours with his "energy price freeze" introducing yet more uncertainty into a sector already dogged by political and policy risk. But in bandying around dubious cost estimates for decarbonisation that raise serious questions about the Conservatives' long-term commitment to low-carbon energy and the Climate Change Act, Shapps' BuzzFeed intervention serves to further damage the investment climate for company's planning to develop anything from wind farms to gas plants.

Shapps owes it to voters to be open and honest about precisely why he thinks a decarbonisation target will push up bills by so much more than official estimates. But he also owes it to the business community to make it clear whether Conservative criticism of a target signals nonsensical opposition to the Climate Change Act and decarbonisation itself, or whether the party has a serious alternative strategy for delivering emissions cuts at a lower cost.

Clegg's green dividing lines are helpful, but where are his red lines?

08 Nov 2013

Nick Clegg and Ed Davey

With the Paxman-Brand accusation that modern political leaders are inter-changeable facsimiles of one another who are not even worthy of a cross in a box once every five years still ringing in his ears, Deputy Prime Minister Nick Clegg yesterday attempted to convince an audience of business executives and NGO campaigners that on at least one of the great issues of the age there are important and existential divisions between the three main parties. What is more. it is an issue that is of great import to The Sun's one-time "shagger of the year" (that's Brand, not Paxman), who recently argued that the failure of the political elite to properly engage with this looming crisis was one of the reasons he was so disenchanted by the whole Westminster carry-on. That issue, of course, is the environment.

I don't doubt Clegg could point to plenty of other areas where he feels the Liberal Democrats offer a distinctive and superior proposition to the two other main parties, but yesterday's clear goal was to reinforce the Liberal Democrat's claim to being the greenest of the three main parties at a time when the government's commitment to virtually every aspect of the environmental agenda is facing intense and largely justified questioning. Did he succeed? Only in part.

There is no doubt much of Clegg's speech will have been warmly welcomed by green business leaders, investors, and campaigners. At a time when his Conservative coalition partners continue to leak stories signalling their hostility to much of the green agenda on an almost daily basis it was refreshing to hear the Deputy Prime Minister state unequivocally that "my commitment to the green agenda is as strong as it ever was". It was even more refreshing to hear him tell his audience that no government of which he is a part will "turn its back on the environment". The signal to his coalition partners that the Lib Dem's can only be pushed so far when it comes to green policies was both loud and clear. Anyone doubting that green issues could one day break the coalition could yet be forced to revise their expectations.

Clegg also enjoyed some success in reinforcing the political dividing lines with which he hopes to fight the next election. The combination of collective cabinet responsibility and a generally collegiate nature meant Clegg refrained from referring to those Conservative colleagues who oppose more ambitious green policies by name, but his frustration was palpable when he recounted how the cabinet had been briefed by chief scientist Sir Mark Walport on the recent IPCC report - "how much more hard science is needed to convince the climate change deniers they've got it wrong?" he asked, as the image of Owen Paterson loomed in his audience's minds. He gave similarly short shrift to the Conservative argument that we should slow the pace of decarbonisation and lower our green ambition for short term economic gain. "Whenever someone tells you that we can't afford to go green, correct them: we can't afford not to," he advised. "If you are for the environment, you are for cutting bills, growing our economy and creating jobs."

The question of whether the Lib Dem's offer a greener alternative to Labour when both support a decarbonisation target for the power sector and higher levels of clean tech investment is one for another day. But with Clegg slamming Ed Miliband's price freeze policy as a "con" and dismissing the Tory right's short termist and climate sceptic arguments the positioning of the Lib Dem's as the "mainstream political party - a governing party - for whom the environment is a priority" was anything but subtle, and none the less effective for that.

Last but not least, green business leaders would have been encouraged by Clegg's broader reading of the challenges the green economy currently faces and the steps that are needed to deliver genuinely sustainable business models. He lamented the passing of the political consensus on the importance of green action, acknowledged the need for policy stability and clear political signals for investors, understood the importance of highlighting to the public the compelling economic, commercial, and quality of life benefits associated with green investment, and reiterated the fact that the climate and environmental challenges we face require a still more ambitious response if we are to do right by future generations.

He also backed up this analysis by highlighting the often under-reported progress the coalition has made with support for clean energy through the Energy Bill, the establishment of the Green Investment Bank, and the commitment to ambitious EU environmental targets, to name just a few of the successes Clegg wants the Lib Dems to get their fair share of credit for.

And yet, despite this encouraging rhetoric, the speech still managed to leave many of the green business executives and industry trade representatives I spoke to afterwards somewhat underwhelmed. Because for all the astute analysis and the statements of green ambition the speech lacked the policy detail or political attacks that might serve to move the current environmental debate forward.

This is in many ways understandable. There is still 18 months to go until the next election and neither of the coalition parties want to engineer a divorce while Labour is leading in the polls. Clegg has to go to work every day alongside his Conservative cabinet colleagues and is therefore reluctant to launch a fully-fledged attack on the Tory Tea Party tendency, even if it is actively seeking to undermine the very policies he regards as his party's proudest achievement. Equally, he does not want to reveal a negotiating red line on issues such as funding for green levy schemes or the fourth carbon budget review that could end up with him having to either U-turn or break the coalition over environmental policy.

But at the same time, can you credibly argue you are part of "a radical and reforming green government" and stand by silently as some cabinet members wilfully block effective green policies? Can you promise "ambitious" emissions targets and refuse to rule out a potential watering down of the UK's flagship carbon budgets? Can you hymn the importance of green policy stability and the vital role of energy efficiency and carefully leave the door ajar for signing off on a reduction in the budget for energy efficiency schemes?

There are good reasons why Clegg is reluctant to be more critical of Ministers such as Owen Paterson and Eric Pickles who have repeatedly blocked more ambitious green policies, just as there are good reasons why he won't reveal negotiating red lines on the fourth carbon budget and the future of the ECO scheme while those private coalition negotiations are ongoing.

But there are equally good reasons why green businesses and NGOs want to see the Deputy Prime Minister provide more detailed commitments on these issues. The Lib Dem's have secured several important green successes, but they compromised on a decarbonisation target, they compromised on the Green Investment Bank being able to borrow, they compromised on a review of the fourth carbon budget, and there have been countless other smaller compromises on policies that would have boosted the UK's decarbonisation efforts. Yes, compromise is a necessity of coalition, but until Clegg makes an explicit commitment to protect the fourth carbon budget green campaigners will justifiably ask themselves whether further climb downs that damage the green economy are about to be made.

There is nothing for the Lib Dem's to lose by being more assertive and aggressive in their condemnation of the Tory right's attempts to torpedo the green economy. If Clegg and other cabinet ministers can't do it and look their colleagues in the eye across the cabinet table, then Lib Dem backbenchers (and Labour MPs for that matter) should be instructed to make the case against David Cameron's recent flip-flopping on green issues much more vocally. The Conservatives have proved remarkably adept at using backbench outriders to shape the debate against green action, it is time the two other main parties launched a more effective counter-attack. If many Tories can make their hostility towards the Lib Dem-controlled DECC blindingly obvious, then the Lib Dem's should stop pulling their punches about Pickles' anti-renewables planning reforms or Paterson's various science-lite, ideology-heavy crusades. For the Lib Dems, there are no votes to be lost and plenty to be won through a more full-throated condemnation of the Conservative inconsistency and U-turns that have created such a disorientating green investment climate.

Meanwhile, Clegg similarly has much to gain in speaking out more frequently on the huge economic benefits associated with clean technologies and the green agenda. Admittedly, this is easier said than done when the first two questions he faced from the BBC and ITV after a speech on the critical need for action on the environment were about Ian Duncan Smith's blundering Universal Credit reforms (it was a metaphor for the political and media class' short termism acted out right in front of our eyes). But if Clegg is serious when he says that those making the case for the green economy need to get on the front foot, then as a political leader who is committed to the environment he needs to be seen to lead. That means more time and energy invested in promoting green investment, highlighting green policy successes, and calling out green opponents.

The Lib Dem's commitment to the green economy is heart-felt and deep-rooted. Clegg is to be believed when he says any government that contains the Lib Dem's will push for ambitious green policies, not least because his party will always demand it. But sadly, for as long as the political consensus on the urgent need for green action continues to recede he will struggle to deliver sufficiently ambitious policies, just as he will struggle to convince investors to bring forward the low carbon projects that are urgently needed in sufficient scale.

If Clegg really wants to cement the coalition's, and by extension the Lib Dem's, green reputation then the big compromise on the delay to a decarbonisation target cannot be repeated. Coalition life is difficult, but you cannot declare that climate change is one of the great challenges of the age one moment and then fail to back necessary climate change policies that you and your party clearly believe in the next. Clegg may not wish to make his negotiating red lines public as yet, but as a bare minimum he needs to protect the fourth carbon budget, deliver an explicitly improved settlement for "green levy" schemes, and re-think the loophole that would allow coal power to continue to be used deep into the 2020s. He also needs to set out a much more ambitious set of environmental commitments that would prove that any post-2015 coalition containing the Lib Dem's would lead a further acceleration of green progress.

He is unlikely to win over Russell Brand or Jeremy Paxman, but if he can back up his encouraging rhetoric with an equally strong and successful defence of important environmental policies in the coming months then he might yet secure the respect of green business leaders and NGOs. He would also help to deliver some of the policy certainty that he acknowledges is desperately needed, and in so doing help to drive additional investment ahead of an election that increasingly looks like it will represent a defining battle for the future of the green economy.

Fail to deliver on these policies, and for all the progress on the Energy Bill and the Green Investment Bank, for all the fact that it is the Conservatives that are actively seeking to undermine green progress, for all the party's historic commitment to the green economy, the Lib Dem's coalition days will be remembered for a failure to live up to their early green promise.

Good news for the green economy

31 Oct 2013

Masdar solar farm

It is time, I think we can all agree, for some good news. So thanks to the Netherlands Environmental Assessment Agency and its report today suggesting the global growth in carbon emissions faced a dramatic slowdown last year. Total emissions grew by 1.1 per cent, or 1.4 per cent when you account for the fact it was a leap year, less than half the 2.9 per cent average seen over the past decade. Maybe, just maybe, a peak in global emissions is still within our reach.

Obviously, these figures need to come with a whole bucket load of salt. It is just one report, emissions are notoriously difficult to track accurately, we've had slowdowns before that have not lasted, emissions are still rising and new records are being set each year, plus global atmospheric concentrations of greenhouse gas emissions are at their highest level in five million years. We are still on track to breach the 2C temperature goal during the second half of this century and the worst case scenarios for 2100 increasingly paint a picture that only Mad Max would be comfortable with.

But there is still plenty of cause for optimism to be found in these figures, primarily because unlike previous emissions slowdowns there is no immediate socio-economic crisis to provide an explanation. There has been no economic crash, no World War, no oil price shock, and yet the seemingly never-ending upward emissions trend has slowed, even as global GDP ticked upwards. It is easy to see why the Dutch researchers were left with no choice but to conclude that "a shift towards less fossil-fuel-intensive activities, more use of renewable energy and increased energy saving" provides the root cause of the slowdown. If that is indeed the case, they could well be proven right when they suggest "the small increase in emissions of 1.1 per cent in 2012... may be the first sign of a more permanent slowdown in the increase in global CO2 emissions, and ultimately of declining global emissions".

This is no time for complacency. An emissions peak can only be achieved if China continues to accelerate its energy efficiency and clean energy programmes, the US continues its historic shift away from coal and towards gas and renewables, the EU sorts out its emissions trading scheme and stays the course with its commitment to deep emissions reductions. Moreover, progress from these three superpowers will need to be matched by continuing improvements in the cost of clean energy, urgent and co-ordinated action on global deforestation, progress on carbon capture and storage technology, and ever tighter climate and air quality regulations.

But even as the climate sceptics and defenders of the carbon intensive status quo attempt to belittle and block this progress, evidence is mounting that these trends can accelerate. I was speaking to a senior executive at a leading institutional investor this morning and he casually declared that the coal industry was "falling apart" in response to low cost gas, air pollution rules, and "just the faintest edges of climate policy". This is no longer a fringe view, more and more investors are looking at the prospects for coal and the wider "carbon bubble" argument and concluding that cleaner investments are a better long term bet. Analysts are also looking at the policy signals coming out of the Chinese politburo and concluding that they are deadly serious about taking bold action on air pollution and carbon emissions, so much so that some are predicting a clean tech explosion could see emissions peak during the 2020s. Such action from China makes it easier for the EU to follow through with its plan for a strengthening of low carbon ambition through the 2020s, while similarly bolstering US efforts at a state and regional level.

The implications of this trend for businesses are enormous, both in terms of risks and opportunities. Most obviously, the risks faced by carbon intensive companies are only going to become more pronounced - throw a proper carbon price into the mix or a single technological breakthrough in low cost solar and stranded assets could rapidly become a very costly reality. Equally, those providing the clean technologies that will enable a global emissions peak are potentially on the brink of remarkable expansion. All business leaders need to be aware of this macro-trend and its implications.

The climate risks we face remain grave and it is clear that they can only be managed through a genuine step change in the way the global economy is powered. But the evidence that such a step change can be engineered in a way that does not jeopardise living standards is becoming more compelling by the day. That the response to this trend from some quarters is to demand the scrapping of the very technologies and policies that have brought a peak in emissions within sight just at the point when they are starting to work at scale is as bemusing as it is depressingly predictable.

ABOUT JAMES' BLOG

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

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