Green Economy

Caroline Lucas Excerpts

Thursday 28th June 2012 Commons Chamber

[Laura Sandys]

I do not think that the Foreign Secretary has needed much persuasion or that there is any lack of will or determination in the Government. As I will continue to iterate, it is absolutely crucial that the policies we have put in place are sustained consistently into the future to attract the significant investment we need in the energy sector and the green economy.

If we look internationally, we will see that the so-called tiger economies are combining economic policies, subsidies, industrial focus and energy efficiency solutions to build their stronger economies. It is that co-ordinated model that I propose to the Minister today. Globally, there will be a race for resources, including energy, water and food. Energy consumption will grow by 33% over the next 20 years, with 50% of that growth coming from China and India. Even the Governor of the Bank of England has acknowledged that we must be cautious about our exposure to fossil fuels and that they could be considered a risk to financial security. Any country that is serious about future economic competitiveness, not least this one, will ensure that it limits its reliance on fluctuating and politicised energy inputs. Energy security, domestic production and low-input process re-engineering are not, in my view, things that it would be nice to have; they are a total necessity.

In many ways that creates a challenge for politicians. We need to come clean with the public and the private sector. We cannot con them that energy prices will come down today, tomorrow or even any time soon. The increase in global consumption is so marked that even the great shale gas discoveries in the US will not have a long-term impact on global costs. From the domestic perspective, Ofgem has calculated that domestic energy prices will rise by 60% by 2016.

It is the Government who will need to take an important role in the development of a long-term, secure and resilient energy supply. Frankly, there are some of us in the Energy and Climate Change Committee who believe that, whatever energy solution we adopt in the next few years, the Government will have to stump up a lot more money than they thought to keep the lights on, but that is a debate for another day. We need to deliver a strong and sustainable energy sector that delivers as much value as possible to the energy consumer and jobs and economic growth at the same time. To do that, we must look at energies in similar terms, whether tax incentives on fossil fuels or subsidies for the renewables sector.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the hon. Lady agree that the £3 billion earmarked in the Budget to support the fossil fuel industry—oil and gas drilling—undermines precisely the green agenda she is setting out?

--- Later in debate ---

[Laura Sandys]

I know that my hon. Friend the Member Sittingbourne and Sheppey (Gordon Henderson), whose main port is Sheerness, is very keen to ensure that in the south-east we secure an important manufacturer of wind turbines.

I know that Treasury officials are totally committed, as they were to the oil and gas sector in the ’70s and ’80s, to attracting the new jobs and growth that are emerging from the fastest-growing business sector in the UK; and I am sure that all in government are focused on securing the £200 billion of funds to rebuild our energy sector in a highly competitive capital investment market, where policy certainty is fundamental to investment decision making.

All that the Government need to do to unlock those industrial opportunities is to sustain and reiterate their consistent and constant policies, with subsidies based only on proper evidence and with investment messages that resonate among the largest industrial companies in the world, such as Siemens and GE, and the large energy generators.

[Caroline Lucas]

I am grateful to the hon. Lady for giving way to me for a second time, but I cannot let pass what she has just said about the Government’s “consistent and constant” green energy policies, because they have been the exact opposite. Whether on solar or on wind, they have chopped and changed, and that is exactly why so many solar companies and wind companies are so furious—because they cannot plan for the future.

[Laura Sandys]

I totally disagree. On solar power and feed-in tariffs, in particular, we inherited a totally unsustainable policy and system, which needed to be addressed, and unfortunately we have spent the past couple of years recalibrating in order to ensure that we have in place sustainable, consistent and long-term policies that will provide investment certainty to such companies.

The UK is a great place to invest, and it has a strong vision for a modern, green and forward-looking economy. On the impact of our fiscal measures and support, we have a choice: to build that modern economy and compete with the forward-looking, future-proofing countries, such as South Korea, China and Japan; or to hold on to an outdated energy model that will not cost us any less but will leave us and our businesses stranded in the past.

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

I congratulate the hon. Member for South Thanet (Laura Sandys) on securing this important debate.

I am genuinely pleased to observe a fight-back from many Tory Back Benchers who are now trying to make the Government see the huge economic and employment benefits of a green economy, as well as the obvious environmental benefits. The scale of the challenge that they face was amply demonstrated by the speech of the right hon. Member for Hitchin and Harpenden (Mr Lilley), who sounded as though he was still living in the dark ages.

I do not know where the right hon. Gentleman has been for the past few decades, but when I last looked, Germany did not seem to be an economy that was struggling. Germany is doing incredibly well, and it is being built on an economy that is light years ahead of ours in terms of the use of the green economy. Let me remind the right hon. Gentleman that we ended the stone age not because we ran out of stones, but because we found a cleaner, more efficient way of behaving. In the same way, we will leave the fossil fuel economy behind because we now see cleaner, more efficient ways of behaving.

As for subsidies, there is a world of difference between subsidies that are time-bound until new technologies reach, in this instance, grid parity, and subsidies that have been going on for decades—as they have in the case of nuclear and fossil fuels—and are driving us ever closer to climate catastrophe.

Much of the debate has rightly focused on fiscal measures. Three years ago, the green fiscal commission revealed that a “polluter pays” tax shift would provide a significant boost for UK low-carbon jobs, as well as increasing competitiveness. It suggested that such a measure would reduce emissions by more than 30% by 2020, that it would create about 455,000 jobs, and that it would receive a great deal of public support.

It is important to bear in mind how widespread that support potentially is. Let me quote these words:

“I don’t underestimate how difficult it will be to rebuild public confidence that green taxes are genuine environmental policy… not just stealth taxes… I am… determined to rebuild this trust… As leading green… Professor Paul Ekins has rightly pointed out, this type of green tax switch might be termed a ‘win-win-win’ outcome… The time for action is now. Future generations will not forgive us if we fail.”

Those are all words with which I agree, but if a week in politics is a long time, four years is evidently an eternity. Those words were spoken by the present Chancellor to a Green Alliance conference back in 2008. I agree with all his words from 2008, but unfortunately they have not been matched by any real action since he has been in a position to put them into action.

I hope that today’s debate will enable us to remind the Chancellor of his words of four years ago, and help to convince him that he should throw his weight behind the UK’s aim of becoming a world leader in low-carbon industries. If he does not believe in the environmental reasons for such action, he certainly ought to believe in the economic and employment benefits. I also hope that we shall be able to persuade him to convince the Treasury that its flagship “green bank” ought to be given the power to borrow as soon as possible.

More broadly, I should like the Chancellor to consider measures such as “green quantitative easing”. I was interested to note that even the former Government chief scientist Sir David King has echoed my calls for green conditions to be attached to the billions of pounds that are currently being poured into our banks. I think that the money should be going directly into the economy rather than into private banks, but wherever it is going, the Government should at the very least ensure that green conditionality is involved, so that we can ensure that it goes into low-carbon infrastructure. Crucially, they should also recognise that the low-carbon economy is far more labour-intensive than the fossil fuel economy that it will replace, so it makes good employment sense to invest the funds in green rather than fossil fuel measures.

The one thing businesses are united in calling for is certainty. The CBI says about low-carbon investment:

“Businesses need, above all else, policy certainty, consistency and clarity over the long-term”,

yet that has been conspicuous by its absence under this Government—demonstrating a failure of leadership by them. The sad news about Vestas reversing its previous decision to invest in the wind turbine manufacturing plant at Sheerness is just the latest casualty of the Government’s failure to provide that most basic condition.

[Nigel Adams (Selby and Ainsty) (Con)]

Is the hon. Lady aware that in the last three days Vestas has also decided to close a manufacturing plant in China?

[Caroline Lucas]

It does not make me feel any better to know it is also closing plants in other parts of the world. It has clearly said one of the reasons why it did not go ahead in Sheerness was that it did not have enough orders for turbines on the order book. If that is a problem here in the UK, we should be addressing that, rather than worrying about what is happening in China.

One measure that would provide huge and tangible benefits both in my constituency and the rest of the UK is a massive investment in making the UK housing stock super-energy efficient. As others have said, that would not only be good in terms of getting our emissions down and creating lots of jobs; crucially, it would help tackle fuel poverty as well. This measure should be funded not through more levies on energy bills—as the Government plan, and which is inherently regressive—but from using funds such as the revenue from the carbon price floor and auctions of carbon emissions permits through the EU emissions trading scheme. That would have benefits in job creation, tackling high energy bills and achieving rapid emissions cuts. Some 118 Members have now signed the early-day motion on the Energy Bill Revolution campaign, which calls for precisely this step.

Members support that EDM because they know that, sadly, as it is currently designed, the green deal policy instrument is extraordinarily weak and the energy company obligation part of it—the bit that is supposed to be tackling fuel poverty—looks set to fail miserably both against the Government’s own objectives and in terms of doing what is needed to cut carbon emissions and end fuel poverty. The truth is that the final shape of that fuel poverty package could result in a 50% drop in the funding targeted at low-income and financially deprived households. There will be far less money in the ECO than there is in the measures that are being phased out—the carbon emissions reduction target, the community energy saving programme and Warm Front.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I think the hon. Lady is being disingenuous, to say the very least, in respect of this Government. It is because of the policies of this Government that we are seeing investment in increasing numbers of offshore wind farms, not only off the Kent coast, but, as I am sure my hon. Friend the Member for Waveney (Peter Aldous) will point out in his speech, off our coast in Suffolk. Will the hon. Lady at least accept that there have been many good advances in green energy—some of which are being delivered right now in Suffolk?

[Caroline Lucas]

That has probably happened in spite of Government policy, not because of Government policy. [Interruption.] I hear the muttering on the Government Benches, but what I say is true. The measures of investment figures show that under this Government investment in green technologies has decreased.

[Dr Poulter]

rose—

[Caroline Lucas]

I apologise, but I will not give way again, as I do not have much time left.

For many low-income households the green deal financial mechanism simply does not stack up. [Interruption.] The mechanism is based on loans with interest rates of between 6% and 7%. That creates the risk that these loans will be taken up by middle-class and well-off households, which might be able to afford to take them up without needing any support, rather than by less-affluent families with next-to-nothing in their pockets. Although there are limitations in respect of this market mechanism, if we are going to use it, we will at least need support to bring interest rates down to a more realistic level—as Germany has done through the development bank, KfW.

Renewable energy enjoys massive public support. That is true even of wind—although judging by the outcry from some Tory Back Benchers, we would be forgiven for assuming otherwise. In November, a YouGov survey found strong support for renewables, with 60% of people supporting wind power subsidies. The Prime Minister said in his half-speech at the clean energy ministerial meeting in April that he passionately believed that the rapid growth of renewable energy was vital to the UK’s future, but, sadly, his Government’s policies do not reflect those warm words. Instead, we hear rumours that he and his Chancellor are seeking backroom deals for a 25% cut in subsidies to onshore wind. Any reduction beyond the proposed 10% cut to wind subsidies would fly in the face of environmental and economic common sense, jeopardising the future of both onshore wind and investment in other renewables across the country, as well as the thousands of jobs they could bring.

The solar feed-in tariff fiasco provides another example of coalition Ministers creating harmful uncertainty. As one solar company in my constituency described it, the industry has had to endure a series of “unsettling knee-jerk changes” that have undermined not only investor confidence, but public confidence in the solar industry. Solar energy has huge potential in the UK and it is a tragedy that we are not supporting it more.

Marine energy also has massive potential. With the right support the UK industry could seize almost a quarter of the world’s potential market, according to the Carbon Trust. That would be worth an estimated £29 billion per annum to the UK economy by 2050 and would support more than 68,000 jobs. Sadly, that potential looks hugely unlikely to be realised, given that we have a Government Budget with a £3 billion tax break for more offshore oil and gas drilling—

[Mr Lilley]

rose—

[Caroline Lucas]

I will not give way, because I am running out of time. I am sorry. I was going to say that we also have a draft Energy Bill that threatens to usher in a new dash for gas.

Finally, in my last 40 seconds, I wish to pick up on the way in which “accelerate green growth” is being used in the motion, as we need to be a little clearer about that. Of course we need faster growth in some sectors of our economy, including in renewable energy and energy efficiency, but we must stop pretending that we can have infinite growth on a planet of finite resources. The current economic crisis gives us the opportunity to change direction and get on the path to a very different kind of economy, one that it is not measured solely by GDP. The problem with GDP is that it measures everything in cash terms; it does not measure what is growing, and it does not give us any sense of the quality of the economy and whether it is delivering true well-being.

[Several hon. Members]

rose—