The last government kicked too many crucial climate policy decisions into this parliament, now it is time for Amber Rudd to put the green economy back on track
Once again the warning lights are flashing on the dashboard of the green economy. In its diplomatic and courteous fashion, today's Committee on Climate Change (CCC) progress report tells the government what anyone with experience of the green economy has been telling them for about 18 months now: good progress has been made but it is now being jeopardised because too many crucial decisions that should have been made in the last parliament got kicked down the road. On a number of crucial fronts the low carbon sector is close to running on empty. Decisions cannot be deferred any longer if the UK is to meet its legally binding emissions targets and maximise the economic benefits from the green industrial base it has started to build.
As an independent body the CCC's tone is inevitably more balanced than that of a green NGO or renewables industry lobby group. For example, it is quick to note how "the energy intensity of the global economy fell by 2.3 per cent in 2014, more than double the average rate of reduction over the last decade" and highlights how UK emissions have fallen over the past seven years, and dropped a whopping, if weather affected, eight per cent last year. But in asserting how UK emissions reductions are not yet in line with what is required and setting out a series of ambitious policy recommendations, the CCC reaches precisely the same conclusion as many green NGOs. Namely that "action is needed in this Parliament to ensure the pace of emissions reduction accelerates whilst supporting economic growth". Or, to put it more bluntly, things need to get a lot better, fast.
The CCC's five main recommendations are eminently sensible and should be adopted by the government without delay. Setting carbon targets for the post 2020 period and extending the levy control framework through to 2025 gives the clean energy sector the long term policy certainty it desperately needs and partially solves the funding crisis that credible sources insist currently faces the next wave of clean energy developments. An energy efficiency and low carbon heat masterplan is desperately needed. Support for low carbon transport must continue. Climate resilience needs to be much nearer the top of the list of considerations for new infrastructure projects. And land and water management has to improve if the UK's natural capital is not to be permanently eroded.
The government will find it extremely hard not to agree with these recommendations in principle, not least because failure to do so without an extremely compelling justification would put it in breach of the Climate Change Act. The problem, as always, is how to practically move the pace of decarbonisation up a gear and ensure the relatively vague targets and action plans the CCC is calling for translate into action on the ground. There is a reason why so many of the decisions the government now needs to take with regards climate and clean energy policies have been delayed until the last possible moment. Funding and successfully delivering many of these policies remains a challenge.
The government in general, and the Department of Energy and Climate Change (DECC) in particular, now faces an extremely challenging 12 months. So much so that it is hard not to read some tacit criticism of the previous administration in the CCC's assertion that a host of crucial decisions need taking "as soon as possible". Many of the challenges faced by the low carbon economy could and should have been resolved six to 12 months ago.
Take the CCC's recommendation for the power sector: "As soon as possible, set the government's carbon objective for the power sector in the 2020s and extend funding under the Levy Control Framework to match project timelines (e.g. to 2025 with rolling annual updates)". Contained within that simple sentence is the requirement to negotiate a new LCF settlement with the Treasury, push the ridiculously long-running Hinkley Point and CCS competition sagas to a completion, agree a new carbon budget, deliver EU emissions trading scheme reforms, ensure the attack on onshore wind farms doesn't dent confidence in other forms of renewables, and work out where a punch-drunk UK fracking industry fits into this equation. The energy efficiency to-do list is equally daunting and requires ministers to work out what they are doing with both the ECO scheme and the Renewable Heat Incentive as a matter of urgency. Looming over each of these decisions is the crucial question of cost effectiveness? How can the government honour its manifesto commitment to cost effective decarbonisation and ensure these policies are delivered in a way that does not penalise bill payers and industry?
The good news for Amber Rudd and her team is that the answers are available. IPPR's recent report on the government's electricity market reform programme identified a number of areas where the cost of clean energy could be slashed, while Policy Exchange is also working on a number of ideas for tackling the LCF budget crisis. Labour's much-maligned manifesto contained some promising thinking on energy efficiency policy reforms designed to drastically increase the number of home upgrades without adding to green levies. Meanwhile, the Sustainable Energy Association is pushing a bill that aims to bolster the rate of green building improvements and the Energy Bill Revolution continues to show energy efficiency as an infrastructure priority delivers more bang for the buck than many of the projects unquestioningly waved through by the Treasury. On a related note, even some Times columnists think it is time to raise fuel duty.
The answers are there, the question is whether the government is willing to seize them. The signs from the first few months of Cameron's one nation government, it must be said, are not overly encouraging. We are pretty much half way through the crucial first 100 days of the Conservative administration, but rather than hitting the ground running in a bid to address the pressing issues the CCC highlights, the absence of a credible energy and climate section in the Tory manifesto has meant the government has hit the ground strolling - in the wrong direction. There have been some warm words on the importance of climate change and some encouraging appointments of modernisers to key green roles. But this has been more than offset by the fact the government's first two big energy and climate policy interventions have been a senseless and costly halt to onshore wind farm development and a continuation of the public opinion defying fracking love-in.
The hope is having pulled off a shock victory the Conservatives are now looking to rush through the one high profile energy policy they had in the manifesto (even if a fair few Tories accept halting onshore wind development is in complete contradiction to the commitment to cost effective emissions reductions) before developing a more ambitious and coherent climate strategy based on genuine cost effective decarbonisation through the summer and autumn. The government could then crank out a series of positive announcements on the LCF, carbon budget, CCS, electric cars, tidal energy, offshore wind, renewable heat, energy efficiency, and perhaps even Hinkley Point in the run up to the Paris Summit.
That is the hope, because as the CCC today makes clear, failure to deliver significant progress over the next six months would put the health of the UK's green economy, its international credibility, and its legally binding emissions reductions efforts in jeopardy. The warning lights are flashing. Amber Rudd needs to respond - and fast.
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