Whether the Prime Minister described environmental policies as "green crap" is irrelevant, the confused signals from Number 10 are damaging both the economy and Cameron's credibility
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.
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