Sustainability: The green economy

Philip Pearson

Before the 2010 election the Conservatives’ policy rebranding included ‘The low carbon economy – security, stability and green growth. It laid claim to “A vision of a different Britain…of a Britain which leads the world in new green technologies …a vision of a Britain in which our cars run on electricity.”

But despite this optimism, this government’s green credentials have since been shattered. Environmental issues have opened up some of the biggest tensions between Liberal Democrat and Conservative ministers. Now we hear that Downing Street is “getting rid of all the green crap” by cutting subsidies for our emerging solar industries. The Treasury has stopped the fledgling Green Investment Bank being given the borrowing powers it needs to make a real difference. The Green Deal that aimed to improve household energy efficiency is at a standstill.

So there is scope for a new government to deliver well beyond the current government’s green rhetoric and deliver on policies which have scope to achieve the step change in green growth that we urgently need.

Labour’s online home for policy ideas, Your Britain: Have your say, is certainly not short of bold and imaginative notions on energy and low carbon growth. But while many discussion papers reference the need for a new approach, a single unified strategy has not yet emerged. This means that work is still in progress on the current Labour offer– in particular on the Green Deal; energy intensive industries like steel, chemicals and ceramics; greening the workplace; and the jobs and skills potential in building supply chains for nuclear, renewables and carbon capture.

The Intergovernmental Panel on Climate Change (IPCC) recently reminded us how close we are to the threshold of dangerous climate change. A report from UCL’s green economy commission, ‘Greening the recovery’, argues that “the rationale for a green economy is a concern for the environment, recognising that a sustainable environment underpins our welfare and long term prosperity.” Labour shares this recognition of the importance of tackling climate change, and has recommited to the legally binding carbon reductions it first set out in its own Climate Change Act 2008, which entail the decarbonisation of the power sector by 2030.

In contrast, the government’s indecision over setting carbon budgets out to 2027 has been roundly criticised as undermining investor confidence by the TUC and 100 businesses, insurance, environment and faith groups. Similarly, consistent with appointing climates sceptics to the Cabinet, it has ignored calls from across industry to set a target to cut carbon emissions from energy supply in 2030.

Labour’s industrial decarbonisation policy is also a welcome development, recognising that “government must actively work with business, trade unions, communities and regions to set a clear strategic direction. It must play an active role in securing the skills, the finance and infrastructure that business needs to raise productivity across the economy, to support innovation and to take best advantage of sectors and technologies where Britain has a competitive edge.” But specific commitment are perhaps still a little short on the ground, although a commitment to strengthen the Green Investment Bank is welcome.

For the TUC, a strong Labour policy framework would develop a number of key themes. First, the important role of the state in securing the transition to a low carbon economy needs articulating. Speaking of an entrepreneurial state in a way that challenges the Chancellor’s vision of a “permanently smaller” state would signal a confident leadership role for a government-led low carbon energy and industry policy. A good case in point is the current £1bn of government funding for carbon capture technologies for the power sector, which could develop into ambitious CCS for strategy for power and industry.

What would Labour do to support and develop our energy intensive industries (EIIs), like steel, chemicals and ceramics? They form the core of our manufacturing base, yet the UK’s energy and climate change policies are imposing extraordinary extra costs not faced by our EU competitors. Faced with evidence of carbon leakage, with imports of bricks and tiles at unprecedented levels as UK house building picks up, all parties need to put policies in place to give these vital industries the support they need.

The TUC has developed a framework of industrial policies that is helpful in this regard. In ‘Building our low carbon industries’, trade unions have argued for “the creation of a common vision for all EIIs in the UK, shared by government, industry and other key stakeholders. Given their importance to the UK, we believe this vision should be to “develop and grow the world’s most energy efficient EIIs in the UK.” Key steps include boosting investment through an empowered Green Investment Bank; transitional support for energy costs; and a low carbon technology programme. A new TUC study, ‘Walking the carbon tightrope’, shows that regional carbon capture and storage infrastructure for power and industry would secure jobs, growth and investment in our industrial heartlands like the Aire Valley and North East.

Labour could also further develop its argument that green energy will drive industrial opportunity. If the UK needs to invest over £110bn in new energy infrastructure by 2020, and double that by 2030, and if Labour builds 200,000 new houses a year, what is the jobs and skills premium in the supply chain? Equally, as Labour develops a progressive alternative to the failing Green Deal, it has the opportunity to set out the jobs and apprentices opportunities involved, as well as its role in tackling fuel poverty.

Labour’s plans for low carbon energy supply include the game changing commitment to freeze energy bills to from 2015-2017 and in that period reform and open up energy markets. Labour’s imaginative idea of an independent Energy Security Board, discussed in ‘Powering Britain’, would be tasked with delivering a diverse energy mix of “renewables, nuclear and carbon capture and storage, which is vitally important for the future of coal”. On behalf of the government, the board could go so far as to commission the desired portfolio of energy investments to meet our 2030 decarbonisation target, a logical step since consumers will pay through their energy bills.

Gas, too, has a role to play in a future balanced energy mix, within carbon budgets. But as Labour points out, “gas fracking will not lead to the kind of impact on energy prices in Britain that the government has predicted. Shale gas is not a silver bullet, and there are important regulatory and environmental questions which must be answered if extraction is to begin.”

In the policy consultation, Labour argues that “good workplaces are not just beneficial for employees; they are good for business and our economy as a whole. Trade unions are an important voice for people at work and in wider society, and have a central role to play in boosting training, pay and conditions for their members and helping Britain win the race to the top.”

But there’s green economy opportunity here, too, and it would be welcome if Labour were to acknowledge the role of union-led greenworkplace projects. Green reps are working with their members and management in producing goods and services more sustainably. By providing new rights to environmental training and to carry out green audits with their management, Labour could also strengthen workers’ awareness and engagement in the green economy, stretching from the workplace to the highest levels of government.

Philip Pearson is senior policy officer in the TUC’s Economic & Social Affairs Department

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