The Financial Times provided a very good editorial this week about the Conservative government’s path from environmental trailblazers to considering it a faddish agenda. It will be curious to see the stance that the British government takes at the global climate summit later this year in Paris.
A positive plan is needed to decarbonise Britain
Amber Rudd, the new secretary of state at the Department of Energy and Climate change (DECC), has one of the more vexatious jobs in UK politics. DECC occupies ground contested by bickering special interests. Households and business demand cheap and secure energy. The sector tasked with this squabbles over how to supply it. All face pressure from the environmental lobby, clamouring about the threat of catastrophic climate change.
Ms Rudd’s job is not helped by a capricious steer from her political overlords. David Cameron, the prime minister, began his leadership with a slew of green gestures, even redrawing the Conservatives’ logo with a squiggly tree. The plan to portray Tories as environmental trailblazers shattered upon contact with two enemies: the public, largely indifferent to green matters when the going gets hard, and the party itself, which lacks patience for what it sees as a faddish agenda.
In Mr Cameron’s first term the Conservatives stayed on a greenish path thanks to their coalition partners the Liberal Democrats. An outright majority at the general election now gives them a chance to show their true colours, which turn out to be of a rather different hue. Ms Rudd has therefore overseen cuts to onshore wind subsidies, looser standards for house building and the end of the Green Deal, a scheme for insulating homes.
For the motivation look no further than the Treasury. The title of her recent speech — “Climate change: the financial implications” — is something of a giveaway. Her Conservative approach is ably summarised in her pledge that climate change action should be pro-growth, pro-business.
There is nothing objectionable to lowering costs per se; without this the public’s pallid support for green causes soon fades. More home insulation may be a cost-effective route to less energy use, but the Green Deal was a hopeless policy for delivering it, being premised on too rosy a view of how households respond to financial incentives. But the assault on building standards is harder to understand. UK housing is expensive, but because of the price of land, not bricks.
The decision to axe onshore wind farms subsidies is also hard to justify, given how cheap they are. It reflects the hostility wind farms inspire among rural Tory voters more than anything cost-related. Indeed, a plan motivated by lowering energy bills would focus more upon the contract to build a nuclear reactor at Hinckley, which could cost households £10 each a year.
Ms Rudd is on shaky ground when she warns green technologies not to expect permanent subsidy. Decarbonising energy is the economic equivalent of pushing water uphill. Carbon-intense methods of driving a turbine or car may always outperform new technologies. Coal, oil and gas are widespread, densely packed with kilojoules and easily stored. Wind, solar and nuclear energy lag well behind. Only a high and rising price for carbon can level the field. Requiring government action to enforce, this is subsidy by another name.
Sweeping away much of what the prime minister allegedly called “green crap” is not on its own an energy policy. In February, the fickle Mr Cameron reaffirmed his commitment to the fight against global warming. This includes respecting the Climate Change Act, which imposes on the UK ever stricter carbon budgets. No country has decarbonised without sustained government intervention. Ms Rudd has started out by explaining what she will not do. Soon she will need to set out a positive plan. It should make for less pleasant relations with the Treasury.