Green Economy

Diana Johnson Excerpts

Thursday 28th June 2012 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to follow someone who can be defined as the Don Quixote of this debate, both figuratively and literally tilting at windmills.

The answer to the speech we have just heard is that the green economy is about not just underwriting one form of energy out at sea, but putting the entire economy on a green footing in terms of resources, energy and demand, and including our homes and our vehicles. As the Government said a little while ago:

“A green economy is not a sub-set of the economy at large—our whole economy needs to be green. A green economy will maximise value and growth across the whole economy, while managing natural assets sustainably.”

That is what a green economy is about. Those are not my words, but the first paragraph of the Government document, “Enabling the Transition to a Green Economy”. There is precisely one paragraph in the document about what the fiscal incentives to move to that green economy might consist of, so this debate is timely. We must ask what fiscal incentives we should put in place to bring about those changes.

Our aim in the economic recovery should not be simply to return the UK economy to business as usual as it was before the crash; it should be consciously to use the opportunity provided by the need to reinvest and to re-engineer our economy to make decisive moves towards the green, sustainable, low-carbon economy that the first paragraph of that document suggests we should be aiming for. We need to be clear about what that entails in how we craft our fiscal policy.

The emergence of a green economy cannot be brought about just by changing the dials on a few economic levers; it is fundamentally asymmetric with what has gone before. Low-carbon sustainable energy, for example, does not have an investment or operational pattern that is anything like what we have been used to for the past 100 years. We cannot construct the next generation of low-carbon power plants and providers on the basis of what has gone before.

We can no longer rely on the assumption that we can generally predict what capacity will be needed and then work out how best to meet it. Future energy policy must be based on investing first in consciously reducing demand and then in decarbonising the remaining demand. In doing that, we have to move to a different paradigm of investment, because demand reduction is a process not an asset, and because low-carbon plants are capital intensive but mean on fuel. In other words, low-carbon plants take a lot of money to construct but, once constructed, use fuel that is either free or recovered from other processes. The model of low and basic construction costs and investment in sourcing, transporting and using fuel, and paying for it as we go, is no longer applicable.

We can no longer rely on the assumption that the purpose of investment in resourcing the economy lies in procuring material into the economy, using it and disposing of the consequences. A linear model of investment and expenditure no longer applies. We will need to move increasingly to a circular-resource economy, in which we do not throw things away—there will be nowhere to throw them. We still throw things away, however. Something like 520 million tonnes of material comes into our economy for domestic consumption, and 200 million tonnes leaves as waste. Only 20% of our material is sourced from secondary inputs.

The changes we need are about investing not just in the green economy, but in jobs. Contrary to what the right hon. Member for Hitchin and Harpenden (Mr Lilley) said, they are real jobs for the future. Moving our resource base to the 70% EU27 recycling target would create something like half a million jobs in the UK by the early 2020s.

[Diana Johnson (Kingston upon Hull North) (Lab)]

I am listening carefully to what my hon. Friend says about jobs. If Hull becomes a wind turbine manufacturing site, 700 jobs will be created directly and up to 10,000 jobs will be created in the supply chain. Those are real jobs for real people in my constituency.

--- Later in debate ---

[Diana Johnson (Kingston upon Hull North) (Lab)]

I, too, congratulate the hon. Member for South Thanet (Laura Sandys) on securing the debate. When the coalition came to power, it talked about rebalancing the economy, including moving from services to manufacturing, moving from London and the south-east to the regions and moving towards a more low-carbon economy. In my area of the world, the Humber region, the green economy is one way in which we can see growth brought back into the local economy.

I understand that three of the world’s largest offshore wind farms are around the UK and Hull is particularly well placed for the third round, as we have the Hornsea and Dogger Bank areas of the North sea. I want to talk about the benefits to my area of the green economy and about why it is important that the Government are clear in their approach.

At the moment, the Hull and Humber area is working up a proposal for a green port at east Hull. The proposal is for Siemens to come to the port and set up a wind turbine manufacturing site for turbines that could then be used out in the North sea. We are well placed because of the deep channels in the Humber estuary and the sailing time to the proposed Hornsea and Dogger Bank wind farm areas. At the moment, we are talking about a £250 million investment in Hull, with the further investment of £100 million through the supply chain that we hope will come to the city when Siemens arrives. I must say to the right hon. Member for Hitchin and Harpenden (Mr Lilley), who is no longer in his seat, that my understanding was that a financial package was available to support such investment in the city in recognition of how important the development was not just to my city but to the wider economic situation in the Humber and around the United Kingdom.

[Laura Sandys]

I think the regional growth fund has given support to many of those companies as they open up their investment, to secure investment in Hull as well as in Sheerness. Perhaps the hon. Lady could provide clarification on that point.

[Diana Johnson]

I am grateful to the hon. Lady for her intervention. I will talk about the regional growth fund, but under the previous Government funding was made available for ports so that they could develop projects such as the wind turbine manufacturing that I mentioned. We need to recognise that not only the previous Government but, to give them some credit, this Government have taken steps to support the green economy through wind turbine manufacturing. I think it is a combination of the two things. I do not think we can deny that the previous Government did a lot around the green economy, with the very important legislation in the Climate Change Act 2008, which was the first of its kind in the world. I will come to the regional growth fund in a moment.

The North sea has been called the “Saudi Arabia of renewables”. There is huge potential for growth in the economy. Work on Green Port Hull is going exceptionally well and we are moving steadily, I hope, towards Siemens actually signing on the dotted line later this year. I pay tribute to the Associated British Ports manager, Matt Jukes, as well as Lord Haskins, who has been the chair of our local enterprise partnership, Councillor Steve Brady at Hull city council and Ian Kelly at the chamber of commerce. This has been an example of the public sector and the private sector working successfully together on the green economy. There are potentially 300 construction jobs on the Siemens site building the manufacturing factory. There will be 700 permanent jobs at Siemens and up to 10,000 in the supply chain working alongside different companies around the Hull and Humber area.

Let me put that into context. My constituency has 43.6 people chasing every job vacancy, so jobs are the key issue for my city and people who live in north Hull. At the moment, more than one in 10 young people in the city are not in education, employment or training, so it is important to do something fairly dramatic to ensure the regeneration of what was once a great city. Hull has the potential, with the opportunities offered by renewables, to become a world centre of excellence. We need to recognise the investment that is going not only into the green economy and the manufacturing side of turbines but into the wider economic benefits for areas such as mine. That is so important during a double-dip recession, and the green economy is growing at a rate of about 4%. I am sure that all parties would recognise that we need to do everything we can to support job creation and this particular industry.

I want to give the Government their due regarding the regional growth fund, through which £25 million was made available to work on the supply chain infrastructure that needs to be put in place to support the work that Siemens will, we hope, bring to the city. We also have enterprise zones on both banks of the Humber. I am waiting to see exactly how they are going to work, but the Government have given us the largest area of enterprise zone in the country. So, we hope that we are set, with a fair wind, to move forward, with Siemens coming to the city and with that renewables hub being developed.

Let me make two points about the Government’s approach. First, I am very concerned that any decisions the Government make on energy policy should be evidence-based. The hon. Member for South Thanet made this point in her opening remarks. We need clarity and transparency in policy and I am for ever asking the Government, in relation to all sorts of areas, where the evidence is that what they propose will work. It would be very helpful if the Minister, in his response, set out a commitment to provide reassurances about energy policy being evidence-based. The industry is looking for that and is keen to know why certain decisions are made. We also need to consider that, with investment now, the costs will come down in future. We know that the costs of the offshore wind industry will come down over time—the supply chain will ensure that—and that subsidy will reduce over time.

My second point is about the Government’s announcements, which need to be very clear and quick. The drip-drip of different possible announcements is very unhelpful. I also think that procrastination is a problem. Things need to be got on with. These mixed messages are a problem and I have to say that the Treasury seems to be causing the biggest problem. The Chancellor seems to have indicated in the past that he will not allow economic growth to be held back by green considerations, but clearly most of us in the Chamber today would say that green issues could drive the economy.

Finally, I understand that the consultation on the banding for renewables obligation certificates has taken us up to only 2017. Even with a fair wind and a relatively quick start, the green port in Hull will not begin until 2015, which will only give the industry two years of certainty about its returns. We have to look much more to the long term when we are asking industry to make huge investments.

I hope there is cross-party support for the motion. Labour introduced the Climate Change Act. We are committed to a green economy, and I very much hope that the Conservatives will fulfil their promise to be the greenest Government ever.