Cameron, Clegg and Miliband's joint climate pledge provides yet more evidence that decarbonisation will continue apace - business has to respond
It is the Valentine's Day gift many within the green economy had been hoping for. After several weeks of kicking chunks out of each other in what promises to be a brutal election battle, the three main party leaders have today risen above their narrow partisan interests and demonstrated some genuine statesmanship.
In delivering a joint commitment to "work together" to set new emissions goals for the UK, seek an international treaty in Paris, and accelerate the transition to a low carbon economy David Cameron, Nick Clegg, and Ed Miliband have shown real leadership.
My understanding is that each man's personal commitment to tackling climate change played a role in this agreement coming about. There is little doubt the Prime Minister would have received advice not to antagonise UKIP and his climate sceptic backbenchers, just as Clegg and Miliband would have been fully aware that signing a joint letter may help neutralise election campaign attacks on Cameron over his at times mixed record on climate change. And yet all three leaders signed on the dotted line, acknowledging there are some issues where rising above the political fray to seek genuine progress is more important than honing the next attack line.
As Unilever's Paul Polman observed, "the importance of this pledge cannot be overstated". It effectively commits the UK to seeking an ambitious and legally-binding climate treaty in Paris and it massively increases the chances of a stretching fifth carbon budget being agreed in 2016.
However, the two really significant developments are found in the third of the three pledges the leaders have made. In stating they will work to "accelerate the transition to a competitive, energy efficient low carbon economy and to end the use of unabated coal for power generation", Cameron, Clegg and Miliband have sent two important signals to investors, one specific and one general.
The specific signal is that unabated coal's days are numbered. The letter may deliberately avoid setting a date for when unabated coal-fired power stations become a thing of the past, but it makes clear that day will come and the reality is it is likely to come pretty soon. Coal businesses and investors will be aghast at what this letter does to their medium and long-term prospects.
The general signal is the latest in a long line of messages to investors and business leaders that the UK is going to decarbonise and they should prepare accordingly. The joint nature of the statement is particularly significant, as it means whoever walks into Number 10 in May has a mandate to deliver on these pledges. Whether it is Cameron or Miliband who forms the next government they will face immediate pressure to honour these commitments and anyone who tries to water them down (we're looking at you Eric Pickles) will have to acknowledge the Prime Minister was elected having declared their intention to accelerate action on climate change.
The UK is now signed up to EU carbon targets for 2020 and 2030, national carbon budgets that will continue into the 2030s, an over-arching target to cut emissions 80 per cent by 2050, an international effort to deliver a legally-binding global emission reduction treaty, and an EU effort to reform the bloc's carbon market in a way that will push up carbon prices. And now the political leaders most likely to be lead the next government have said categorically they are fully committed to continued decarbonisation.
One could ask how much more certainty do green business leaders and investors want? The direction of travel in favour of decarbonisation is as clear as it has ever been. Anyone investing in fossil fuel projects does so knowing full well the policy environment is likely to get more hostile. Anyone investing in energy efficiency, low carbon infrastructure or greener business models does so knowing the UK's main political leaders wish to "accelerate the transition to a competitive, energy efficient low carbon economy". It's not like we have not been told what is planned.
The problem, of course, is whether we believe Cameron, Miliband and Clegg can deliver on the pledges they have made. Valentine's Day is not a time for cynicism, but it has to be noted that parts of the letter smack of a guilty husband promising he'll be better next time around.
Miliband has a relatively strong record on climate change, and the coalition does not get the credit deserves for the numerous ambitious green policies it has adopted.
But if the Prime Minister and Deputy Prime Minister can sign a letter committing to "end the use of unabated coal for power generation" why did they pass up the opportunity to close the loopholes that would allow unabated coal to continue to prosper well into the 2020s? Why have they just introduced a capacity market that is handing subsidies to coal plants?
Can Cameron credibly square his heart-felt commitment to build a low carbon economy with his politically convenient opposition to onshore wind farms and solar farms, faltering progress on carbon capture and storage (CCS), watering down of energy efficiency policies, and unwillingness to challenge climate sceptic voices in his party? This letter provides green investors with significantly more political certainty, but it will not help onshore wind farm developers one iota as they wait to see if their industry is about to be devastated.
Miliband may have helped deliver the Climate Change Act, but why has he not used is stint as leader of the opposition to publicly pressurise the government into delivering more ambitious policies?
All of the three main parties have been good at signing up to climate change targets and delivering encouraging speeches, only to struggle when it comes to facing down vested interests and delivering the policies and investment that will ensure emissions targets are actually met. Those businesses and entrepreneurs who have been burned in the past by government u-turns on environmental policies will greet this letter with a healthy dose of scepticism. Once bitten, twice shy works just as well in business as it does in relationships.
Had this letter been signed by George Osborne and Ed Balls, then high carbon business leaders will have really sat up and taken notice. Without a clearer commitment in favour of decarbonisation from the men who would be Chancellor, polluting firms know there are conciliatory ears to be found amongst Treasury officials who remain firmly wedded to a narrow and unsustainable growth model.
However, those legitmate concerns are for another day. There are plenty more political battles to come that the green economy has to win, but this Valentine's Day pledge massively increases the chances of victory. When it comes to the green economy, the love is there from the men at the top.
The letter shows that for all the short term political temptations that have attempted to turn their heads our political leaders are still capable of focused leadership on climate change. It confirms decarbonisation will remain on the agenda no matter who forms the next government. It underlines how climate sceptic arguments have been thoroughly rejected by Westminster's most powerful figures. And it reveals that unabated coal is about to get dumped. Happy Valentine's Day.
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