Showing posts from December 2012
As someone who knew a thing or two about festive stories once wrote, "it was the best of times, it was the worst of times".
The full quote from the start of Charles Dickens' Tale of Two Cities is actually even more apposite for BusinessGreen readers: "It was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us."
Green business leaders the world over can no doubt relate. If, as that other great man of letters F Scott Fitzgerald once wrote, "the test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function," then green executives can expect to receive their Mensa membership cards any day now. They are simultaneously operating in markets that display remarkable health and long term opportunities, and grave challenges and short term problems. Their success or failure often rests on their ability to navigate these conflicting realities.
The past 12 months has been characterised by a dramatic mix of ups and downs for the green economy. As Michael Jacobs argued in a recent article, the global energy industry is currently rushing headlong in two different directions, delivering record levels of low carbon investment at the same time as ploughing cash into Canadian tar sands and Arctic oil exploration.
This tension between the competing visions of a low- and high-carbon future (or to put it another way, the fight between green growth and environmental catastrophe) was ratcheted up throughout 2012, the coalition government's high-profile internal battle over environmental issues providing a neat encapsulation of the debate going on in cabinets and boardrooms the world over.
It is a debate that in the UK has given us a policy landscape that promises a surge in low-carbon energy investment and then a few days later sets out a gas strategy that by its own admission could result in the breach of binding emissions targets; pledges to raise the share of green taxes and then hands out tax breaks to the fossil fuel industry; commits to being the "greenest government ever" and then appoints an Environment Secretary who regards climate change with a hearty scepticism. The contradictions and U-turns started last spring with scrapped forest sell-offs and farcical cuts to solar incentives that the industry is still yet to recover from. They are now still going strong as the shortest day approaches with yet another row brewing over the content of the Energy Bill.
The best of times
Thankfully, these endless contradictions – both in the UK and further afield – have failed to derail what has still been a very good year for the green economy.
Policy uncertainty has undoubtedly driven up the cost of capital for low-carbon projects, but I would be amazed if official figures for 2012 do not confirm that the green economy is continuing to grow strongly, outstripping the performance of the wider economy. Barely a week has passed without a clean tech or renewable energy record being broken or a major multinational committing to significant sustainability investments. As energy costs rise and the cost of low-carbon and energy efficient technologies fall, the commercial case for green investment and business models becomes ever more compelling. One of the most interesting events I attended this year was a debate hosted by PwC, where senior partners revealed that following the work the company undertook with Puma to develop the world's first environmental profit and loss accounts, plenty of other unnamed firms are carrying out similar work. Sustainability's march into the corporate mainstream has continued, despite the many obstacles placed in its way.
Again, taking the UK as a case study, we can see David Cameron is right to argue that we are entering a mobilisation phase for the green economy. The Energy Bill should drive billions of pounds of investment in renewables, nuclear and CCS, the Green Deal promises to revolutionise the energy efficiency of our building stock, the Renewable Heat Incentive and feed-in tariff are gaining momentum as small-scale clean energy technologies become ever more attractive, rising fuel prices make low-carbon vehicles compelling, and mandatory carbon reporting rules are making laggard businesses take sustainability more seriously. All of these policies have their flaws, but the direction of travel remains clear, regardless of how many Tory backbenchers take to the pages of the Telegraph to proselytise about fracking or bemoan the cost of decarbonisation. Looking back at the countless green business developments we have reported on over the past 12 months, it is increasingly apparent that genuine action to curb emissions, environmental impacts, and running costs is now completely normal for many high-profile firms.
The worst of times
This good news has undoubtedly been diluted by the decision by many on the right of British life to declare all-out war on the green economy, shattering the political consensus that enabled the passage of the Climate Change Act and helped underpin recent green growth. The coalition in-fighting has done significant damage, both through the short-term increase in political risk and associated increase in the cost of capital and through the long-term fear that some within the Conservative Party are trying to turn opposition to the green economy into part of its DNA. It is a damaging scenario that has been allowed to fester by a prime minister who appears to instinctively want to address climate change, but is too weak to challenge his Tea Party-lite backbenchers.
It has also been aided and abetted by the heads-in-the-sand incompetence of those carbon intensive businesses who accept change has to come to their unsustainable business models, but insist these changes should not come just yet. As the admirable Carbon Tracker initiative has argued throughout this year they risk driving the entire global economy off a cliff through their reckless over-valuation of carbon assets that simply can not be burnt.
However, there has been a substantial silver lining to this kick back against the green economy that has become apparent during the second half of the year. In breaking the political consensus on climate change, right wing politicians and commentators have actually forced the issue back up the corporate and public agenda. The recklessness and weakness of the arguments put forward by those opposing green action have finally become painfully clear, and in calling for a "debate" on environmental policy they have simply invited an argument they cannot win.
The CBI and many other big businesses have taken to the barricades to make the case that the only form of sustainable economic growth is green growth. Green NGOs, for all their flaws, have become relevant again, mobilising public support for the green economy. Poll after poll has shown significant and stable majorities of people like wind farms and solar panels, want to see the UK weaned off fossil fuels, and do not accept the old canard that green policies are the main cause of rising energy prices. Meanwhile, Labour and the Lib Dems have become ever more vocal in their support for the green economy, and while Cameron has remained frustratingly silent he has, as yet, failed to cave in to the anti-greens' demands.
The past year may have been dominated by a row over the future of the green economy, but only one side is winning the argument, and it is not the anti-green dinosaurs. Meanwhile, green businesses the world over have continued to normalise the deployment and use of clean technologies, as they rush to prove that a genuinely green economy is both feasible and attractive before it is too late.
For green business leaders, 2012 has been a remarkably busy, dramatic and at times infuriating year. But despite plenty of setbacks they remain representatives of the greatest under-reported success story in the world. They can look forward to 2013 with great expectations.
As mentioned it has been an eventful year – ask anyone working in the green economy about how the past 12 months have been and they tend to puff their cheeks out and offer a single word: "busy".
Things have been no different here at BusinessGreen, so we're going to have a few days out of the office from now until the New Year. We'll keep you posted on the top stories over the festive period, but normal service will resume in January, when we'll also launch the BusinessGreen Leaders Awards 2013, bring you a new collection of essays on New Environmentalism from leading experts in the field, and start work on an exciting new development for the site.
In the meantime, have a great holiday season and a happy New Year.
Yesterday, the prime minister gave a redoubtable, effusive, and not entirely unconvincing defence of his government's green record.
Faced with the Liaison Committee of MPs, David Cameron gave a timely demonstration of how he remains arguably one of the best political communicators in British politics, effortlessly articulating the arguments he wanted to get across and ducking the inquiries he wanted to avoid – aided and abetted throughout by some generally unfocused questioning.
The prime minister argued, not unreasonably, that his government's green policies and investments stood comparison with that of any of his predecessors, declaring himself "immensely proud" of the coalition's green achievements – although, he was not pushed on why the government's actions on climate change are not commensurate with the scale of the threat.
Cameron argued the stability provided by the newly published Energy Bill will unleash a surge in low carbon investment and help drive a wave of green growth – although, he was not pushed on why his own ministers have spent months undermining the very green investor confidence he says he wants to nurture and now show little sign of ending the turf war that has driven up the cost of low carbon capital.
He argued that planning reforms and development on greenfield land remains necessary to drive economic growth and address the UK's housing crisis – although, when pushed on how planning reforms that promise to push through new projects are compatible with the government's localism agenda, he effortless evaded the question.
He argued there was no need for the Green Investment Bank to borrow at this stage, because it already has £3bn of capital and green infrastructure projects apparently do not need capital investment at this stage – although, when pushed as to whether this is indeed the case he simply re-stated his argument and made an unconvincing promise to look at whether there was a need for more green capital investment.
It was a rhetorical masterclass and the prime minister offered a highly effective articulation of the coalition's argument that it is quietly making far more progress on the green agenda than it is given credit for – although, the prime minister singularly failed to answer a question on why, given he is so proud of his green achievements, he does not try and claim some of this credit by speaking more frequently on environmental issues.
But despite the many strengths contained in the prime minster's performance he could not stop himself from revealing the fundamental flaw, the gaping hole, at the heart of the government's environmental and energy policy.
In trying to square the circle of the two competing energy policies set out by the Department of Energy and Climate Change (DECC) and the Treasury, Cameron argued that support for low carbon energy generation had to be set alongside a gas strategy, new fracking projects, and a deferral of the decision to introduce a decarbonisation target for the power sector. The prime minister claimed this approach was necessary in order to leave the "door open" for a potential "gas revolution" that would deliver near limitless cheap power for the UK.
This is all entirely reasonable and is not a million miles from the DECC plan to deliver a "balanced" energy mix that gives a range of different low carbon technologies the opportunity to demonstrate they represent the most cost-effective means of decarbonising the UK's energy infrastructure through the 2020s.
But as Cameron was forced to admit, the only way significant investment in gas is compatible with the UK's carbon targets is if Carbon Capture and Storage (CCS) technologies work. And, as the prime minister again admitted, we do not yet know if carbon capture technologies can prove cost effective and technically effective at scale.
Again, this approach might be hugely high risk, but it is not entirely unreasonable – gas and CCS certainly will have a role to play in the UK's energy mix through to 2030 and beyond. But it immediately falls apart when you consider the current turmoil of the government's CCS strategy.
The "gas revolution" plan that has been adopted by the chancellor, and now evidently the prime minister, is dependent on the success of a technology that is still yet to receive the £1bn in funding promised by the government over two years ago and has just been hit by the failure of the Treasury to offer a handful of projects the financial guarantees that would have allowed them to access EU funding. The coalition's CCS strategy is moving forward at a glacial pace, and even if it was steaming ahead, it remains financially underpowered. Even the sector's most optimistic cheerleaders do not foresee CCS plants becoming cost competitive with other forms of low carbon power any time in the near future.
There is an argument for stepping up investment in gas (although it has to be noted that yesterday the climate scientist Kevin Anderson gave a bravura performance in front of the Energy and Climate Change Select Committee, in which he argued that extracting shale gas in the UK can only lead to a net increase in emissions, as gas that is not imported here is burnt elsewhere). But without a decarbonisation target to guarantee that a new dash for gas does not breach the UK's carbon targets, and substantial, urgent and (most importantly) successful investment in CCS, Cameron is running a huge risk that his decarbonisation efforts will fail.
Under the coalition, the Lib Dems will not countenance a full-blown dash for gas and, as such, Cameron's flawed strategy will only be fully enacted if he manages to secure a majority at the next election. But we now know that under the Conservative leadership's energy plans, decarbonisation rests to a massive extent on the development of hugely costly CCS projects that are still a long way from getting off the drawing board. In failing to deliver a decarbonisation target, Cameron and Osborne have revealed they either do not care about the UK's carbon targets or have not properly thought through how any major new gas investment has to be accompanied by an effective CCS strategy.
The prime minister wants to put all the government's clean energy eggs in one basket, but he is not even willing to pay for the basket.
10 Dec 2012
"Loss and Damage", has there ever been a more resonant phrase to describe the potentially catastrophic impact of the climate crisis?
The loss of the benevolent and predictable climate that enabled the millennia-long development of our civilisation and the damage that will be wrought by disruption to that climate should dominate every waking thought of the diplomats and ministers tasked with delivering an international climate change deal. And yet last week's Doha Climate Summit only managed to deliver progress so negligible that even the UN's most ardent cheerleaders were forced to admit it amounted to no more than a "modest" shuffle forward. Forget climate loss and damage for a second, we deserve compensation for the loss and damage to the standing of international diplomats that these negotiations continue to inflict.
With the ink drying on the so-called Doha Gateway agreement, it is tempting to assess what exactly has changed. The answer is not very much. The Kyoto Protocol was extended, largely as expected without an increase in ambition, but with a fudged agreement to try to deal with the problem of surplus carbon allowances; a handful of new funding pledges were made, but they fell well short of what is being demanded by developing countries, meaning the row over the level of current funding and the operation of the new Green Climate Fund will continue; there was some important progress on rationalising the talks onto one negotiating track, providing a pathway towards the promised 2015 international treaty, but all the key issues that will shape any 2015 deal were kicked into the long grass; and we saw a tangible shift in the debate around climate aid towards the new concept of "loss and damage".
It really is not much to show for two weeks of late nights and diplomatic manoeuvring, particularly given the extension of Kyoto, the commitments on funding, and the roadmap to a 2015 deal were basically agreed last year. If you had asked a journalist or analyst covering the long-running negotiations to write a story a month ago on what the final agreement would look like, they almost certainly would have come up with a report that looked exactly like those filed over the weekend.
So what have we learnt from the two weeks the world's climate diplomats spent in a country with one of the highest per capita carbon emissions in the world?
First, if you set expectations for climate summits too low ministers will do their upmost to ensure they are not exceeded. If the Cancun Summit did a good job at repairing confidence in the wake of the perceived failure of the Copenhagen Summit, and last year's Durban talks made important progress in getting the negotiations moving in the right direction, Doha was hamstrung by lowly expectations from the moment the Durban Platform was signed.
As many commentators feared, the setting of a 2015 deadline for reaching a new climate agreement has simply enabled four years of delays as officials push conversations marked "too difficult" along the road to the 2015 showdown. With the Durban Platform agreeing any 2015 agreement will not actually be enacted until 2020, there must also be very real concerns the talks could be stretched into the later half of the decade.
Secondly, while the sleep-depriving format for the annual UN Summits remains as dysfunctional as ever it is equally clear that ambitious action is impossible without a fully committed and competent host.
The Qatari hosts should not shoulder all of the blame for the failure of the Doha Summit to deliver more progress. After all, the world's most talented diplomats have spent years largely failing to wring more progressive positions out of the US and Chinese governments. But the complaints from participants and observers at the talks about the poor organisation and failure to generate a sufficient sense of urgency were too widespread to be ignored. Qatar and other Gulf States had an historic opportunity to back up their recent investments in clean energy with the kind of emission reduction commitments and climate funding pledges befitting of the world's richest nations – they fumbled the chance and with it the perfect opportunity to be seen as part of the solution rather than part of the problem when it comes to climate change. Green businesses and NGOs will be forgiven for feeling nervous at the prospect of climate laggard Poland hosting next year's summit.
Thirdly, a new front in the ongoing battle between rich and poor nations has been opened up with the commitment to address "loss and damage". It has the potential to make or break the talks.
In many ways the new clause is simply a cosmetic makeover of the ongoing negotiations about climate funding and the extent to which rich nations should pay to help developing countries reduce carbon emissions and adapt to climate change. But the emotive phrase and the clear implication that losses should be compensated threatens to open up an entire Pandora's Box of claim and counter-claim.
Poorer nations, many of which are seeing their long term viability as nation states threatened by climatic changes they are in no way responsible for, have a powerful and compelling case for reparations. But the US (and other industrialised nations who will be happy for the Americans to adopt the position of bad guy on their behalf) will never submit to an agreement that opens the way for compensation payments. Unless negotiators can quickly find a way to deliver a significant increase in climate funding pledges and ambitious new emission reduction commitments from large economies then we could be in for years of increasingly intense recriminations over "loss and damage".
Finally, the lack of progress in Doha confirms once again that the UN negotiations are a side-show to the serious business of delivering the low carbon economy that will give politicians the confidence they need to deliver a global deal.
This morning I looked back at the blog post I wrote in the wake of last year's Durban Summit. I could have today simply substituted Durban for Doha and republished it:
"It is tempting to measure the success of the successive Copenhagen, Cancun and Durban Agreements against the ambition displayed in their pledges to cut greenhouse gas emissions. But this is overly simplistic. Any eventual international treaty that contains commitments, legally binding or otherwise, to deliver deep cuts in emissions will only represent a statement of intention...
The real measure of success for international climate talks in general, and the Durban Summit in particular, is whether they drive the response to climate change in terms of increased investment in emission reduction and adaptation measures, and whether they address the 'carbon leakage' that could see carbon intensive businesses from low carbon economies relocate to those regions not taking action to curb emissions.
The aim of the COP summits should not be to simply set emission reduction targets that the international community would then struggle to enforce, but to provide the policy direction and certainty necessary to drive global corporate investment in the technology and infrastructure necessary to cut emissions."
Against this crucial measure, Doha delivered some extremely modest progress in the continuation of the Kyoto Protocol and the ongoing commitment towards a 2015 deal.
Across the political, corporate and civil society attention must now turn to that 2015 deadline and ensuring the conditions are in place to deliver a meaningful treaty.
The former head of the UN climate change secretariat, Yvo de Boer, once told me the reason the 2009 summit fell short of its goal was that there was not quite enough confidence among world leaders that the low carbon economy could deliver without compromising development efforts and living standards.
The job of progressive businesses the world over is to spend the next three years demonstrating once and for all that the transition to a low carbon economy is not just possible, but desirable. Because without that breakthrough we will all have to resign ourselves to a lot more loss and damage.
10 Dec 2012
Tomorrow at 4pm, the Liaison Committee of MPs will quiz the prime minister on just two topics: the future direction of policing and the criminal justice system, and "Green Government".
Given David Cameron consents to meaningful questioning about his views on environmental issues about as often as Manchester United changes its managers, this is a rare opportunity that our elected representatives should try and take full advantage of.
But what should they ask? The temptation will be there to launch an all-out attack on the prime minister's, let's say patchy, environmental record. But such an approach always produces more heat than light, and risks a repeat of the infuriatingly partisan free-for-all that is Prime Minister's Questions.
More useful to both businesses and the public would be a series of questions that try and clarify precisely where the prime minister stands on a host of green issues where political risk has become a major problem. It would also be nice to think that some well-aimed questions might convince the prime minister that allowing green issues to be hijacked by the right of his party is a mistake he cannot afford to make, but that would be asking for a lot.
Here are the 10 questions I would ask if I had the opportunity. There are actually far more than 10 questions (I'm a journalist, I couldn't resist) and they are far from perfect. But they do attempt to get to the bottom of why Cameron has failed to respond to the hostility expressed towards a green agenda that he used to publicly cherish. I'd also be keen to hear what you would ask if the opportunity arose, but here are my questions:
1. Why did you block David Kennedy's appointment as permanent secretary at the Department of Energy and Climate Change (DECC), after both the interview panel and the energy and climate change secretary deemed him the best man for the job?
2. Can you explain the thinking behind the appointments of John Hayes and Owen Paterson to DECC and Defra respectively? Are you concerned that their stated views on wind farms will undermine investor confidence and could open the government up to legal challenges? Are you concerned Defra's work on climate change science and adaptation will be undermined by a secretary of state who has made it clear he does not regard climate change as a serious issue?
3. Why are you ignoring the advice of the independent Committee on Climate Change (CCC) with regards to the adoption of a decarbonisation target for the power sector for 2030? Why are you proposing to review the fourth carbon budget before the end of the Parliament when the CCC has made plain the current target remains the least cost path towards decarbonisation?
4. Can you explain what the UK has to gain from following the chancellor's plans to establish a gas hub? What do you think will happen to gas prices over the next 10-20 years and what do you base these assumptions on? Do you believe shale gas can transform the UK's energy system? What guarantees can you give that an increase in gas capacity will remain compatible with the UK's carbon emission goals?
5. Do you still accept the manmade climate change presents a grave threat to the UK and the world as a whole? If so, why do you think the UK and Europe's response to climate change is not commensurate to the scale of the threat? Why, after pledging to be the fifth minister at DECC, have you failed to make one significant speech on the topic in two and a half years?
6. Are you concerned that the political consensus on climate change has shattered? How do you plan to convince those members of your government and your party who do not regard climate change as an important issue that more ambitious action is needed?
7. You have often touted the Green Investment Bank and the Green Deal as evidence of your government's progress on green issues, but why can't the Green Investment Bank borrow and why can't it underwrite Green Deal financing to lower the cost of capital?
8. You have in the past made the case for carbon pricing as a market-led mechanism for tackling emissions, but the EU carbon market is not working as planned and UK firms face numerous over-lapping carbon pricing schemes. Do you remain committed to delivering a workable carbon pricing mechanism for the UK?
9. Given media reports over the past 12 months of coalition in-fighting, your own chancellor's hostility to the green economy, and the repeated changes to clean energy policies, why should green firms invest in the UK? Do you accept, as business leaders allege, that the actions of your government have driven up the price of capital and increased political risk?
10. As a father of young children and a man who has undoubtedly seen frequent updates on climate change projections for the coming decades from the government's chief scientific advisor, how optimistic are you that the world can avoid the worst effects of climate change? What technologies, innovations and policies give you hope that potentially catastrophic impacts can be avoided?
06 Dec 2012
The gas strategy, unveiled yesterday to much fanfare from the Chancellor, was in fact no such thing - it was two gas strategies.
The decision to model two such divergent scenarios for the future of gas in the UK - one based on plans deemed acceptable by the Committee on Climate Change to deliver 26GW of gas capacity in 2030 and one based on plans for an historic surge in gas investment that would deliver 37GW of capacity and almost inevitably breach the UK's carbon budgets - invites onlookers to interpret them for what they are: a strategy developed by DECC and endorsed by Ed Davey and a strategy developed for the Treasury and designed to appease Osborne. Forget Plan A and Plan B, here we have a Plan D for Davey and a Plan O for Osborne.
The implications of this dual energy strategy are as fascinating for political junkies as they are frustrating for both environmental campaigners and gas developers.
On one side we have Davey and the Lib Dems (quietly backed by green-minded Tories and Labour) insisting the 26GW plan, while still too reliant on fossil fuels for green groups tastes, is an entirely sensible means of cutting emissions, enhancing energy security, and reducing long term energy costs.
On the other side we have Osborne and his acolytes on the Tory backbenches who are insistent that while 26GW would guarantee a substantial role for gas in the energy mix a new fleet of just 30 gas-fired power stations is for wimps - "we need more gas, much more, and we need it now", they cry, insistent it will usher in an era of endless cheap energy.
Thankfully, we did finally get a bit more of an insight into why the Chancellor wants to follow a plan that by his own scenario's admission would require a relaxation (translation: ditching) of the fourth carbon budget. He argued that by handing out shale gas tax breaks the UK can emulate the recent history of the US and deliver significant reductions in gas prices that will translate into lower energy costs for households and businesses. We did not get any further information on what makes the Chancellor think the encouraging projections he is seeing for the impact of shale gas on energy prices are more accurate than the projections from Bloomberg, the EU, the CBI and the IEA, which suggest no substantial drop in prices. But at least we do now have an on the record rationale from the Chancellor for his half of the gas strategy.
The problem with running two parallel energy strategies is that businesses and investors have to choose which one they should base multi-billion pound investment decisions on. A recipe for policy certainty it is not.
Davey was as bullish as he has been in months yesterday with a blunt assertion that the Gas Strategy remains a DECC document and he is committed to delivering the 26GW scenario (although it is worth noting that Greenpeace are warning today that even this strategy is far in excess of previous plans for new gas and will put the UK's binding carbon targets under intense pressure by the late 2020s). Osborne's rhetoric and Treasury briefings have made it equally clear the Chancellor will continue to fight for the 37GW scenario and the watering down of carbon targets in the 2020s.
The net result is that while renewable and nuclear energy developers have secured a greater degree of policy certainty through last week's Energy Bill, gas investors and developers face continued uncertainty. Some new gas investment will probably move forward in the next few years. But without the prospect of remarkably generous capacity mechanism payments, which Davey and the Lib Dems won't countenance, and with the prospect that a decarbonisation target for 2030 could yet be introduced for the power sector after the next election there will be no "dash for gas" just yet - it will be more like a determined saunter.
In clinging to his desire for an environmentally and economically reckless level of reliance on new gas infrastructure, all Osborne has managed to achieve is a delay of at least two years in some of the gas investment he wants to see delivered. He may have set up the foundations for a post-2015 surge in new gas, but he can only deliver on it if the Conservatives command a majority at the next election - a scenario that becomes ever more unlikely the more he clings to anti-green positions that a majority of the public dislike, not to mention an economic strategy that is faltering badly.
The tragedy for the UK's energy industry, including the gas sector, is that an effective and ambitious course of action is now clearly available if the Chancellor could just ditch his fixation with a gas boom and settle for a mini-boom instead, a boomlet if you will. This course of action, it will surprise no one to hear, looks a lot like the plan DECC would enact if the Treasury would only let it.
Under this plan, the Energy Bill would enable investment in a mix of low carbon generation technologies and grid upgrades, as well as significant improvements in energy efficiency, while the gas strategy would provide a still substantial 26GW of capacity by 2030. Meanwhile, tax breaks for shale gas developments and an effective regulatory and licensing regime would allow the industry to finally demonstrate whether its predictions of a relatively clean and cost effective domestic energy source are accurate.
Most importantly, this balanced approach would provide a considerable degree of flexibility. If wind or solar energy costs fall as some optimists predict, while energy storage technologies and smart grids start to come online, then we could scale up investment in renewables in the 2020s. If, in contrast, shale gas projects overcome local objections and deliver the cheap gas Osborne promises, we could instead crank up investment in gas, assuming CCS has by that point made gas plants compatible with our carbon targets. We will almost certainly need this post-2020 flexibility, because as Greenpeace argues today even the more modest gas plan means there is a significant chance of the Climate Change Act being breached without either a technology breakthrough or a shift in strategy.
This is an approach that would have remarkably wide business backing and while many environmentalists would continue to oppose nuclear power plants, gas development, and shale gas projects, others, myself included, would acknowledge that they represent a necessary part of the transition to a truly decarbonised economy.
It is also an approach that would provide each sector of the energy industry with a massive incentive to deliver low cost clean energy, in the knowledge that living up to promises on long term cost reductions would allow them to become the dominant energy source for the next phase of decarbonisation during the 2020s and 2030s.
This mature, responsible, predictable, and yet flexible strategy could be adopted tomorrow by the entire government, providing an immediate boost to investment in renewables, nuclear, CCS, and, yes gas and shale gas. But instead the Chancellor and the gas lobbyists who evidently have his ear have got greedy, and delivered a rival strategy that promises at least two more years of coalition in-fighting and policy uncertainty, all in return for the distant hope that a Conservative victory at the next election will give them their gas boom.
Quite why the Chancellor has so unquestioningly bought the argument for cheap gas from shale gas reserves that have yet to be tapped anywhere in the UK and face significant barriers to their successful and large scale exploitation will probably never be explained.
But what is certain is that by delivering two gas strategies, the government has in fact delivered none.
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Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray