James Murray welcomes the government's acceptance of the Fourth Carbon Budget, but wonders what it means for short-term policies
In one of those strange coincidences that so often litter the political landscape, news that the coalition is to sign the UK up to one of the world's most ambitious low carbon economic strategies has come within hours of the release of a major new report eviscerating the primary policy for delivering that very strategy.
First, the good news. It is hard to overstate the significance of David Cameron's reported decision to overrule the "dark forces" at the Treasury and approve the fourth carbon budget recommended by the Committee on Climate Change.
The proposed budget and accompanying report is genuinely world-leading in its breadth and ambition. It will impose legally binding targets requiring the UK to cut greenhouse gas emissions 50 per cent by 2050 and 60 per cent by 2030, in the process ensuring that the country's electricity infrastructure is all but decarbonised within 20 years.
If the plan is enacted fully, the UK will generate 40 per cent of its energy from renewables and 40 per cent from nuclear by 2030, the remaining 20 per cent coming from relatively clean fossil fuel power plants, many of which will feature carbon capture and storage technology.
Moreover, by 2025, 2.6 million homes will have highly energy efficient heat pumps, and almost a third of new cars will be electric. Every component of the economy will face similar levels of revolutionary change, ensuring that the UK will almost certainly become one of the world's premier low carbon economies, generating billions of pounds a year from exporting green technologies and expertise.
This is precisely the kind of ambition and clarity that green business leaders have been crying out for. Despite the dissenting voices in the Cabinet, and the reports that they have secured a get out clause if the EU fails to deliver on its own emissions targets, it is time to doff our caps to the coalition for rubber-stamping such a world-leading package of measures.
And yet there are dark clouds not so much on the horizon as directly overhead. Today's report from the Energy and Climate Change Committee of MPs delivers a brutal body blow to the government's flagship Electricity Market Reforms, accusing them of being over-complex, potentially over-expensive and lacking the necessary urgency.
The bulk of the media coverage and commentary from green groups has focused on the Committee's conclusion that the reforms have been designed to deliver covert subsidies to the nuclear sector. But, through their usual fixation on the nuclear question, green NGOs have missed the wider implications of the report.
The Committee has not just accused the government of being "deeply irresponsible" in its attempts to hide subsidies for nuclear, it has slammed the plans to ban unabated coal-fired power stations through an emissions performance standard as "half-baked"; questioned whether the proposed contract for difference subsidy mechanism will actual help or hinder the renewable industry; and criticised the Treasury for announcing its planned carbon floor price too early.
More broadly it accuses the whole package of reforms of being overly complex and offering few guarantees of success. I was aware there was some disquiet about the reforms in Westminster, but the scale of concern among MPs is still shocking.
The big problem for the government and the wider low carbon economy is that we now have an impressive long-term strategy, but, a year in to the new parliament, we are really struggling to drive the action that is necessary to meet these new emissions targets.
Offshore wind farm developers, marine energy firms, nuclear operators and electric car manufacturers know what is likely to happen in 18 years' time, but they have much less idea what will happen in 18 months' time. We have the plan, now we need action.
The other big problem is that the timelines are shockingly tight. 2025 and 2030 may sound like a long way off, but look at it this way. Even if you are about to retire, there is, all being well, a very good chance you will be alive to see whether the UK meets its target of cutting emissions 60 per cent by 2030.
If you are under 45 there is a very good chance that you will still be in the workforce by the time 2030 comes around. If you are under 35 you are, like it or not, going to spend the bulk of your career engaged to a greater or lesser extent in the fastest period of industrial and corporate change since the first industrial revolution.
Under usual circumstances, it takes time for economic reorganisations or disruptions of this scale to play out. For example, the internet emerged as a mainstream business phenomenon about 20 years ago, but - as the travails of the media industry amply demonstrate - many firms are still struggling to cope with it.
The low carbon economy needs to deliver a far greater and more significant reorganisation than that introduced by the internet, and it needs to do it far faster owing to the constraints imposed by climate change.
For the government, that means it has to resolve the issues surrounding the electricity market reforms within a matter of months in order to allow investment to begin flowing from next year. Similarly, proposed reforms to the feed-in tariff incentive scheme, changes to planning rules, the introduction of the Green Deal energy efficiency, the launch of the Renewable Heat Incentive, and clarification on upfront funding for emerging technologies such as marine energy, all need to be delivered as urgently as possible.
However, there are also implications for businesses. Regardless of the short-term policy uncertainty, businesses now know that the UK is on track to deliver deep cuts in greenhouse gas emissions by 2025. They also know that governments of different stripes have consistently accepted the recommendations of the Committee on Climate Change, despite fears that carbon intensive businesses could experience considerable short- to medium-term pain as a result.
As such, any business that does not have a clear strategy in place to deal with this new reality is guilty of considerable negligence. The adoption of the fourth carbon budget offers businesses the perfect opportunity to ask themselves the tough questions that it presents. Namely, how will your firm cut its own emissions in half, what opportunities does the transition to a low carbon economy present, and what threats will you face?
It also provides a stark reminder that, if you have not already started taking action to reduce your environmental impact and develop low carbon business models, it will soon be too late.
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