Green economy sacrificed as Osborne plays up climate ambivalence

James S Murray

He may be playing to the gallery, but the Chancellor's anti-green rhetoric is still a blow to the low carbon economy

There has long been an understanding in diplomatic circles that the best response to the vast majority of rhetorical sabre rattling indulged in by tin pot dictators is to remind politicians that such provocations are usually intended for local consumption.

Green businesses and NGOs would be wise to keep this old adage in mind as they digest the implications of Chancellor George Osborne's latest attempt to hammer the nail into the coffin of the government's "greenest ever" pledge.

His commitment to water down the UK's carbon targets if they move out of step with the rest of the EU was delivered to a Conservative Party conference that each year provides a handy illustration of the work David Cameron still has to do if he is ever to fully shed the "nasty party" image he has now spent over five years waging war against.

Despite some admirable exceptions, the rump of the Conservative Party faithful remains deeply ambivalent about the government's climate change agenda, sceptical about the need for many green policies, and convinced that environmental taxes and targets are damaging the economy and driving up energy bills.

Osborne is hugely popular with this audience (in many ways more popular than his boss at Number 10) and he knows how to press their buttons. Hence the fact that he dedicated just 129 words of a 4,000 word speech to the environment, and most of those were carefully constructed attempts to row back on current green policies.

Thankfully, he stuck to the party line on climate science and insisted that climate change is "a man made disaster" that needs urgent international action.

But he also criticised environmental rules for "piling costs on the energy bills of households and companies", and downplayed the UK's contribution to climate change, ignoring the impact of imports to note that we account for just two per cent of global emissions.

Osborne further argued that we should not pursue green policies that put our country "out of business", and most significantly highlighted the fact that the UK's post-2020 carbon targets are subject to review and pledged that "at the very least ... we're going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe".

Green NGOs tried to downplay the significance of Osborne's thinly veiled threat to the UK's position as a global leader on climate change policy, arguing that, with David Cameron having personally signed off on the ambitious target that requires the UK to halve emissions against 1990 levels by 2025, it would be extremely difficult for the Conservatives to undertake a u-turn while he remains prime minister.

They have a point. It is inconceivable to imagine the Lib Dems agreeing to any watering down of carbon targets as long as they remain in the coalition, just as it is hard to imagine Cameron countenancing a change in policy that would leave his hard-won green credentials in tatters. Moreover, the rest of the government's low carbon agenda is continuing apace, including plans that have the direct involvement of Osborne's Treasury in the form of the Green Investment Bank and the carbon floor price.

Green business leaders should remember that Osborne's ambivalence on climate leadership was intended more for the conference hall than the country.

But the unequivocal nature of his commitment to ensure the UK cuts emissions "no faster" will do little to bolster green investor certainty, particularly given that, barring a major change of heart from eastern and southern European governments, there is very little chance the EU will match the UK's pledge to halve emissions by 2025.

It remains possible to envisage a situation where a full Conservative victory at the next election heralds a review of the UK's carbon budgets that results in the country's targets being pulled back into line with the least ambitious of eastern European states.

Moreover, the tone of Osborne's comments will serve only to highlight the fact that the coalition is as divided as ever on the extent to which it should prioritise the low carbon economy, a fact further underlined by the carbon intensive proposals to raise the speed limit and revert to weekly bin collections.

Osborne is right that the government has to address the potential threat posed by so-called carbon leakage. Green businesses and campaigners fully accept that there is no point in forcing through environmental regulations that are so restrictive they simply result in carbon intensive industries migrating to jurisdictions where they can continue to pollute.

But there is still little evidence of this actually happening, and it must be possible to develop sophisticated green policies that drive deep emissions reductions at home while keeping carbon leakage to a minimum.

Osborne may have been playing to the gallery, but in doing so he has dealt a blow to green investor certainty and issued a direct challenge to colleagues, including the Prime Minister, who want to establish the UK as a low carbon leader rather than a follower.

It would be nice to be able to simply dismiss his comments as party political posturing, but worryingly they are part of a pattern of behaviour from the Chancellor and his supporters on the right of the party that appear purposely designed to water down the UK's green business ambitions.

It now remains to be seen whether the Prime Minister has the authority and the confidence to slap down his Chancellor and forcefully reassert his government's commitment to building one of the world's premier low carbon economies.

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