Clean Growth Strategy: A peaceful revolution, but victory is not yet assured

James Murray
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Climate change minister Claire Perry launching the new Clean Growth Strategy in London
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Climate change minister Claire Perry launching the new Clean Growth Strategy in London

The government's Clean Growth Strategy is very encouraging for the green economy; the context in which it has to be delivered is much less so

There is an old Fleet Street story, quite possibly apocryphal, about the day in 1974 when word came through to the newsroom that a revolution was underway in Portugal. Reporters were quickly assigned to get to the bottom of it all and commentators were commissioned to explain how a military coup and peaceful uprising had occurred in one of our European neighbours. It was at this point that one of the older columnists tentatively asked if it might be possible to just wait a few days to give everyone time to work out what had happened and what it meant.

The tale was presented as a joke back then and it sounds even more ridiculous now in an age of molten hot takes and insta-tweet reaction. However, like all the best stories, it contains a certain wisdom. Sometimes there is a case for taking time to think about the implications of an event, especially if it has the potential to shape the future direction of a society.

All of which brings me to the release last week - to considerably less fanfare than it deserved - of the government's Clean Energy Strategy. A full seven days on, and having actually read (as opposed to swiftly scanned) the thing, were the first impressions justified?

The short answer is yes. It is an ambitious, important, and exciting strategy that has the potential to revolutionise the British economy over the next decade. It is also, as many commentators have noted, badly under-powered in crucial places and guilty of marrying a sense of urgency with a contradictory willingness to defer tough decisions. As one government source put it, "it doesn't solve all the problems, but it is a big step forward". That feels about right.

The many positives contained in the strategy's 164 pages are worth noting once again.

There's the prospect of 10GW of offshore wind capacity and subsidy free renewables. There's the hugely welcome promise of a renewed focus on both domestic and industrial energy efficiency. There's the plan to revive carbon capture technology in the UK with a welcome push to capture and use CO2. There's the $2.5bn of clean tech innovation funding with its accompanying awareness that urgent progress is required on those 'hard to reach' parts of the UK's carbon footprint. There's the continued multi-billion pound support for low emission transport. And there's long overdue moves to streamline carbon pricing, reintroduce tougher building standards, launch green mortgages, deliver a new waste strategy, and explore how to curb emissions from land use.

Crucially, these various policies, which together will mobilise billions of pounds of investment and support hundreds of thousands of jobs, are woven into a hugely encouraging clean growth narrative. It is hard to imagine the Prime Minister would have embraced this rhetoric six months ago, but here she is now declaring "clean growth is not an option, but a duty we owe to the next generation", and stressing that "protecting the environment for the next generation also benefits our wider economic prosperity".

This is a marked and important change from the last government. George Osborne used to make a habit of praising clean technology before then immediately raising cost concerns or talking up fracking. David Cameron never slapped down the source who put the words 'green crap' in his mouth.

In contrast, and admittedly with a fair wind provided by the plummeting cost of clean energy, May has been unequivocal with her backing for deep decarbonisation and has fully endorsed the idea this is the best growth path available for the UK.

This positive narrative (and it is nice to see it presented using the BusinessGreen colour scheme) runs through the entire strategy. It's there in the lengthy explanation of how the UK came to lead the G7 at cutting its carbon intensity while growing its economy, as well as in the fixation on innovation. It's there in the strategic focus on industries where the UK already leads such as green finance and offshore wind. And it is there in the plan for a Green Growth Week to purposefully take this upbeat message to the wider public.

Crucially, it is also evident in three quietly brutal rejections of those in the government's ranks who would happily ditch decarbonisation plans faster than you can say 'Hard Brexit'.

Under the heading a 'High Growth Low Carbon Economy' the strategy argues falling clean tech costs have left economic arguments against climate action with nowhere to go. "Progress has altered the way that we see many of the trade-offs between investing in low carbon technologies that help secure our future but that might incur costs today," it states. "Actions to cut our emissions can be a win-win: cutting consumer bills, driving economic growth, creating high value jobs and helping to improve our quality of life." That's Lord Lawson told.

Then there's the two fingers stuck up to The Sun and Telegraph campaigns to axe EU product standards and make it more expensive for you to dry your hair or boil your kettle. "We continue to support [EU product] policy measures, which cut energy bills, increase energy security, reduce emissions and help customers make informed choices, and we will keep step with equivalent standards wherever possible and appropriate, or even exceed them where it is in the UK's interest to do so," the strategy states. That's Rupert Murdoch told.

Finally, there is an endorsement of a theory of innovation that is a complete departure from the small state rhetoric beloved by some government ministers. "Innovation involves incremental improvements, cross-sector knowledge sharing, and "breakthroughs"," the strategy states. "It results from competition within the private sector and from collaboration between the private sector and Government, as well as other organisations; each has a role in producing, spreading and adopting novel technologies and approaches. The government is often more active at earlier stages of innovation, through investment in research, education and skills." That's the Ayn Rand fanboys told.

Taken together large parts of the strategy can be read as an almost complete endorsement of much of the latest environmental economic thinking. Much of it could have been written by Lord Stern or Mariana Mazzucato. None of this may be particularly new to those progressive businesses that have been making the case for clean growth for the best part of a decade, but to see it so forcefully embraced by the government sends hugely helpful signals to boardrooms and investors around the world.

It is this overarching narrative that instils hope in those areas of the strategy where the government's strategy, by its own admission, falls short.

As has been widely reported the plan as it stands would leave the UK six per cent short of meeting the fourth carbon budget and 10 per cent short of the fifth. This is disappointing, but there are some important caveats. Government and industry alike are notoriously conservative in their predictions for clean tech deployment - the opportunity is clearly there to over-achieve and meet the targets. Moreover, as the government stresses there is time for additional policies to come forward to close the emissions gap.

Crucially, the strategy reinstates the system of annual reporting that should ensure the pressure on the government to deliver new emissions reduction measures remains intense.

Overall the BEIS team can be proud of a strategy that is probably as good as it could have been given the context in which it was produced.

And therein lies the problem. The strategy is good, the constraints placed on it by Treasury orthodoxy and short termism, not to mention Brexit distractions and Conservative Party dysfunction are much less so.

There is no rational explanation for denying onshore wind and solar farms the chance to compete for clean power contracts that would all but match current wholesale prices. It is an open secret that plenty of sensible ministers would like to give the lowest cost form of clean energy a route to market and let the planning system do its job of blocking unacceptable landscape impacts. And yet, with the exception of the Scottish Islands, the strategy ducks the issue in an attempt to appease those Tory MPs who regard opposition to wind farms as a virility test.

Similarly, study after study has shown energy efficiency represents the most cost effective mechanism for cutting carbon emissions and one of the most economically effective forms of infrastructure investment. We also know what works from the last time the government tried to address the problem only to scrap or weaken its key policies - serious funding, attractive incentives, and tough regulations. There is no secret to this. And yet, in order to satisfy a Treasury that is still defined by austerity thinking, we get a continuation of inadequate levels of energy efficiency and renewable heat funding and another call for evidence to prosecute the same old arguments.

The wider budget assigned by Treasury, welcome as it is, similarly dilutes the strategy's grand vision and sense of priority. If clean growth and decarbonisation is as important as the government states, how have we gone from £1bn to just £100m for CCS? Over £2.5bn of innovation funding is fantastic, but it remains a fraction of the resources available to the government and still leaves the UK lagging far behind its competitors in terms of R&D spend. There would be plenty more funding available if the government made the simple decision to stop funding high carbon projects that run counter to its stated goals.

Which brings us to the great unsaids that loom over the strategy: the fracking wells, runways, and North Sea tax breaks that make everything the government is trying to do to meet its long term carbon targets harder to achieve.

Finally, the strategy poses serious questions about the government's capacity to deliver deep decarbonisation alongside Brexit. The document contains so many reviews and consultations and promises to look again at certain issues that it amounts to an enormous body of work for the civil service. In fairness to the government it has set deadlines for many of these projects, but you would get long odds on them all being met given the full spectrum dominance of the increasingly chaotic Brexit talks. Obviously, a Hard Brexit and the economic hit that would result remains the simplest way of ensuring the UK's carbon targets are met, but let's just say delivering emissions cuts via this route would be decidedly sub-optimal.

However, despite these caveats, this remains a good strategy. You get the sense that those within government who understand the importance, opportunity and scale of the decarbonisation challenge have secured an important victory. But through the various consultations, industrial decarbonisation roadmaps, and the public admission the plan in its current guise falls short they have also kicked off the next round in the on-going battle over the UK's low carbon future.

We will get an early indication as to how the battle is faring next month, when the Treasury must finally come forward with its plan for carbon pricing and clean power support through the 2020s. The talk is of a 'radical' budget and Philip Hammond now has the opportunity to either reinforce or badly dent this crucial new strategy just a matter of weeks after it was published.

The government's green wing has presented the narrative that can help win their colleagues over, highlighted the areas where urgent progress is still needed, and effectively invited green businesses and campaigners to pile in and help them make the case for a new wave of climate action. It is an invitation they should accept. Although, unfortunately, we are going to have to wait a bit longer to find out what it all means.

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