Green Agenda

Lord Grantchester Excerpts

Thursday 12th January 2012 Lords Chamber

[Lord Grantchester]

My Lords, this has been an excellent debate on one of the fundamental challenges we face at a transition to a low-carbon economy with environmentally sustainable new technologies. It is also an excellent time, as we draw near to the end of the first Session of the Conservative coalition, to assess the reality of actions against the prospectus of promises of the new Administration.

In her opening remarks my noble friend Lady Smith gave a telling assessment of the new Government’s commitment to be the greenest Government ever. She longed to be impressed by the coalition but remains unconvinced.

On inheriting the momentum set by the Labour Administration, the coalition agreement included more than twice as many green polices as any other area. In their first days in power, the Government signed up to, and subsequently met, the 10:10 pledge to reduce government emissions by 10 per cent in their first 12 months. On the international stage, the Government continued the leadership of Labour by working as part of an EU delegation in Durban to pave the way for a new, legally binding treaty by 2020.

At home, the Government signed up to the climate change committee’s fourth carbon budget to halve the UK’s carbon emissions by 2027, giving the UK one of the most ambitious emissions reduction plans in the world. However, the week of speculation and rumour of a Cabinet in deadlock that preceded the decision betrayed an increasingly stark divide on the environment at the heart of government. It is a divide between the fair-weather environmentalists, who still perceive environmental considerations as an afterthought—an expendable burden—and those who argue that a sustainable economic future and a sustainable environment are necessarily dependent.

The green agenda means nurturing change through growth options, encouraging entrepreneurship and innovation even through tough times, rather than restricting future options. We have heard how, in the Autumn Statement, the man setting the Government’s financial priorities is firmly in the “fair weather” camp. By painting environmental regulation as a ridiculous cost to business, the Chancellor has shown his true colours after his rhetoric of 2009 when, as shadow Chancellor, he described the choice between economic growth and the environment as “a stale argument”.

My noble friend Lady Worthington today extended criticism of the Treasury into the emissions trading scheme and the balance of revenue with its expenditure on green policies. My noble friend Lord Judd also asked searching questions of the Treasury. The Chancellor singling out the habitats directive in particular in his Autumn Statement is perhaps emblematic of an underlying attitude, and especially counterproductive as the Government, recognising the resonance of things such as “Hugh’s Fish Fight” with the public, have taken up the debate in Europe on the issue of progressive reform of the common fisheries policy, which has presided over the current overfishing of European waters by 73 per cent. The habitats directive is key to delivering an ecosystems-based management of our marine and coastal resources. Watering down—if I may use that expression—the habitats directive will undermine the key framework needed to deliver a sustainable future for our fisheries.

These sorts of confusing mixed messages towards the environment must serve as a harsh warning to the Government. I am grateful to the noble Baroness, Lady Miller, for placing her remarks on resources, agricultural impacts and the challenges faced with food in schools, on the record.

The various voices within government that create a false opposition between the environment and economic growth fail to recognise two important things. First, the biggest deterrent to the emerging high-tech innovations that our low-carbon economy needs to be built on is uncertainty: market uncertainty fostered by policy reversals, particularly the solar industry retrenchment that has landed the Government in court; investor uncertainty, fostered by ideological divisions, particularly the lack of clarity over the Green Investment Bank; and financial uncertainty fostered by a lack of vision, particularly delays on the first carbon capture and storage project.

Secondly, short-term budgetary belligerence can come at a high long-term cost: the high cost of ignoring that growth needs encouragement and a commitment to policy stability. My noble friend was particularly critical of the Government’s contradictions. Of concern are the proposals in the draft national policy framework which will allow developers to recoup legal costs from environmental agencies and other statutory bodies advising on future developments, which will serve as a significant deterrent to agencies already threatened by significant budget cuts to doing their job in critiquing plans for the future. I know that this may not be in the Minister’s portfolio, but do the Government believe that the draft national planning policy framework will lead to fewer challenges to planning applications on environmental and sustainability grounds? What areas of the habitats directive do the Government believe should be rolled back, and what impact does the Minister anticipate this will have on the delivery of ecosystem services? What steps are the Government taking to implement the proposals of the natural environment White Paper?

In the energy sector, the coalition recognised the direction of travel set by the previous Labour Administration. The transition to a low-carbon economy will require investment. By investing in more diverse energy sources, the UK will be less vulnerable to fossil-fuel-distorted price hikes. By investing in insulating buildings and homes better and creating more fuel-efficient cars and methods of transport, the UK demand for energy can be reduced. By investing in industries that suit our geography and skills, such as offshore wind and carbon capture and storage, the UK can develop competitively priced energy security.

All the contributors today recognised in some way the size of the challenge. In recognising the problem, the noble Lord, Lord Dixon-Smith, brought to our attention the question of whether there is an absolute to achieve in carbon reductions. The noble Lord, Lord Teverson, was happy with the achievement so far in recognising the core green agenda, but asked for far more emphasis on the Green Investment Bank and looked for more research to inform our decisions. The noble Baroness, Lady Worthington, took up the challenge with an interesting overview of the unintended consequences of government monetary levers, which my noble friend Lord Judd also drew attention to, and the contradictions between short-term finance and long-term objectives.

My noble friend Lord Prescott also drew attention to this global recognition, and asked for it to be translated into good regional and local action plans. He drew my attention, at least, to the problem that transfer pricing will require differing energy sources as it translates into energy pricing. The noble Lord, Lord Turnbull, was concerned about the lack of alternative scientific and views, and about how that may be constraining in our policy objectives.

The financial benefits of the various low-carbon support mechanisms accrue either to big utilities or to wealthy investors, and the cost is often borne by ordinary energy consumers. Perhaps the Government need to reflect on this and on how the impacts of their policies translate across the economy. The principal delivery mechanism has been the renewables obligation and the pledge that, by 2020, 20 per cent of our electricity should be generated from low-carbon sources. This transition investment has led to a fierce debate about the rising costs—I am sorry, I have been confused by the time; it says five minutes in front of me—and about who should shoulder the burden and in what percentages between industry, household and government.

Green energies to build a low-carbon economy could be no more expensive than other options. DECC’s Chief Scientific Adviser, David MacKay, has been reported in the media confirming similar findings by Mr Mackenzie in the EU 2050 roadmap and Ofgem’s Project Discovery. This concludes that the renewable/highly energy-efficient combination scenario comes out cheaper than the high-nuclear/less energy-efficient scenario. There is a strong economic case in favour of renewable technologies beyond climate change and energy security reasons.

The renewables industry still needs the coalition Government to develop a coherent industrial policy around the renewable energy target. Joined-up government is, as ever, hard to achieve, and schemes such as the electric vehicles show that BIS, DECC, the Department for Transport, CLG and the Treasury need to understand the important role that renewables can play in rebalancing the UK economy and supporting newer manufacture.

The call to transform the new economy needs to be met by all sectors. Labour’s leader has coined a new term to draw attention to the impact of this conservatism—the “squeezed middle”. In this debate we do not mean hard-pressed families, we mean mid-sized technologies between domestic and utility scale, which are being squeezed out as being unable to contribute. On the one hand, EMR is too complex for many important investors such as mid-sized companies, farmers, and public sector and community schemes—all could be catalysts for a new economy; on the other hand, the feed-in tariff has focused on the domestic and is now in chaos. Will the Minister say how these vital new investors can be encouraged and included within the wider policy framework?

The coalition Government are barely one Session into the new Parliament. There is still some way to go before half-time. Have not the Government to regroup quickly and urgently if they are to get the UK economy into a game-changing performance?