Article date:21 October 2010
Written by:Tobias Parker
The signal is clear - the low carbon economy and dealing with
climate change is an aspirational theme that runs throughout the
Comprehensive Spending Review.
It is the one area that is targeted for significant growth both
through domestic and international policy and expenditure, albeit
from a relatively low base.
In the UK, the Feed in Tariff is largely maintained; Carbon
Reduction Commitment will be pragmatically overhauled allowing
businesses which are meant to participate to actually participate;
the Green Deal will work to deliver energy efficiency in homes; and
even the once-vulnerable Renewable Heat Incentive is in tact with
details to be announced.
The international development budget is linked to climate change
mitigation and adaptation in developing countries. It is labelled
as spending to promote long term, structural growth in the UK
economy.
It is interesting to note that so far government has not sought to
deflect attention from the drastic reduction in welfare spending
onto this issue. It's almost running in the background, but don't
expect that to last.
When finally the coalition government does start to point towards
it in order to demonstrate a social conscience, there is the risk
that political points will be sought by those championing the
welfare state. The government may come under pressure to roll back
this more strategic spending in order to deal with the here and now
of a rise in homelessness or reducing standards of living trumpeted
by the tabloid media. Fortunate, perhaps, that the current leader
of the opposition was once Secretary of State for the Department of
Energy and Climate Change.
It will take steely political nerves to hold this course,
particularly as success is far from guaranteed. Not to do so would
be to shirk the responsibility of the current generation in setting
a direction for future generations to enjoy a decent standard of
living not decimated by the effects of climate change. Sir
Nicholas Stern's warnings have not gone away. It will not be pretty
or pleasant for many now, and issues of equitability are real. Yet
it is necessary to avoid a far messier future.
And yet does it amount to a fundamental shift to the low carbon
economy? Does the review put us on course to avoid that darker
future? Growth of the wider economy is the goal, yet the wider
economy is currently polluting the atmosphere.
The capital injection into the nascent Green Investment Bank,
coming in at £1bn with more promised from the sale of government
assets, is far lower than the call by the Aldersgate Group for
£4-6bn over a four year period in order to unlock the hundreds of
billions of pounds of private sector investment required.
Carbon Capture and Storage (CCS) is there as a major capital
project, but E.ON, which were potential delivery partners, have
just walked away from the Kingsnorth CCS project. An ominous sign,
perhaps, of private sector engagement with government
expenditure.
While we may breathe a sigh of relief that the green shoots of
commitment that started in the dying days of the previous
government haven't been squashed, it's far from the fundamental
overhaul of an economy from one reliant on fossil fuels to
something far cleaner.
If this budget is about making tough choices now for the future,
maybe we should have been tougher. Or when the economy is in a less
fragile state, we would encourage whichever government is in power
to take as brave and radical a view of the tax system to ensure
that the costs associated with the use of fossil fuels is fully
accounted for and distributed fairly.
That, plus the spending review, would form a holistic approach to
tackling climate change through fiscal policy and truly create the
economic foundations upon which to shape a cleaner society.
