Daniel Hannan: Is it worth decarbonising if the rest of the world won’t follow?

21 Jul

Lord Hannan of Kingsclere is a Conservative peer, writer and columnist. He was a Conservative MEP from 1999 to 2020, and is now President of the Initiative for Free Trade.

Is it worth it? The question kept nagging at me as I stood in a drizzly Derbyshire quarry, watching a miracle of British engineering. Is it worth pushing ahead with deep cuts in CO2 emissions if the rest of the world won’t follow?

The miracle in front of me was a digger powered by an internal combustion engine that ran on hydrogen – something that was, until a few months ago, thought to be impossible. Pundits and politicians like to hymn the praises of electric vehicles. But batteries have their limits. They are expensive, slow to charge and heavy. They can’t realistically power planes or trains or ships or heavy lorries – or, indeed, big diggers.

JCB (whose digger and whose quarry this was) had already produced a diesel engine that reduced air pollution by more than 99 per cent. It had come up with a small electric excavator, too. But a 20-ton machine, usually the first onto a building site, cannot run on batteries – even if it were somehow able to keep taking time off to recharge. Another solution was needed.

Full disclosure: over the years, I have occasionally worked as an adviser to JCB. For precisely that reason, I don’t normally write about the company. But, on this occasion, I reckon I’d be failing as a columnist if I didn’t tell you about the vastness of what it has just achieved.

Lord Bamford, who chairs the business, could simply have consolidated during the epidemic. He had already turned his family firm into a global leader. Another man, in his situation, might be easing his foot off the accelerator in his eighth decade.

But Bamford is, at heart, an engineer. He refines, he tinkers, he improves; he looks for what others have missed. Perhaps it is in the soil. JCB is headquartered pretty much at the epicentre of where the industrial revolution began – a revolution that was made by refiners and tinkerers and improvers, typically men who left school in their early teens, keen to get straight into the workshop.

JCB’s nearby engineering school occupies one of Arkwright’s first mills. The Bamfords themselves, if you go back far enough, were ironmongers and blacksmiths.

So when he told his engineers to find a way of creating a hydrogen engine, they swallowed their scepticism and set to work, grouping the supposedly insuperable objections under eleven headings. While the rest of the country grumbled its way through the second lockdown, they solved them one by one.

The implications are colossal. The country that invented the engine (Thomas Newcomen, who built the first practical fuel-burning engine in 1712, was another iron-monger and tinkerer) has found a way of saving the sector. Britain produces around 2.5 million internal combustion engines every year, nearly two thirds of them for export. Until a few weeks ago, the entire industry faced oblivion. Now, with a few adjustments, it can stay in business.

I tell you all this, not just to remind you that we remain a nation of innovators, but because my opening question is a serious one. If there is a global shift away from fossil fuels, then Britain is better placed than most countries to supply the new technology. It will still be more expensive than leaving things as they are, obviously. But there are ways to harness market forces, making the transition cheaper and smoother.

So let’s ask the question again. Britain, following drastic reductions, is now responsible for only one per cent of the world’s greenhouse gas emissions. If we acted in isolation, we could return to the Stone Age and it would barely make any difference.

Obviously, we won’t be acting wholly in isolation. The EU has committed itself to a measure of decarbonisation, as has Joe Biden’s America. Then again, as Donald Trump once put it, with characteristic bluntness: “Look at China, how filthy it is! Look at Russia, look at India: it’s filthy, the air is filthy!”

China is the world’s biggest polluter, responsible for 28 per cent of carbon emissions. India is third, at seven per cent. Both countries are reluctant to commit to binding targets. Is there much point in pushing ahead without them?

I suppose I ought to add, at this point, that I believe the world is heating, at least partly in response to human activity. If you disagree, fine. But there is then no point in arguing about targets and international deals. If you fundamentally don’t think there is any problem, we will just go round and round in circles.

If, on the other hand, you see a problem, the question becomes how to tackle it affordably and proportionately. Our aim should be to harness the genius of the private sector – to use inventions like that hydrogen motor – so as to minimise extra spending and extra bureaucracy.

It is fair enough to argue that someone needs to make the first move. It is fair enough, too, to point out that the whole world should not hang back simply because two or three states won’t join in. The question is one of proportionality.

It is here that my doubts arise. The commitments we have made go beyond most of our competitors’. The EU and the United States lag behind us, though not by much. Canada, Australia and Japan lag a bit further. China talks vaguely of peaking around 2030. A clutch of states – Russia, Turkey, Saudi Arabia – are barely bothering to go through the motions.

Leading by example is all well and good. Impoverishing yourself in order to make a point, not so much. The danger, as with all government initiatives, is that we reach a critical mass where, even if it becomes clear that the rest of the world isn’t following, a powerful lobby of rent-seekers and eco-corporatists continue to drive the policy for its own sake.

Don’t underestimate how painful the adjustment will be. “Energy is not just another sector of the economy,” the great Matt Ridley points out. “It is the thermodynamic lifeblood of prosperity.” Modern civilisation became possible when falling energy prices released human beings from back-breaking labour. In 1880 a minute’s work would buy four minutes of artificial light. In 1950 it was seven hours of light. By 2000 it was five days.

None of this is to say that we should give up. There will be more breakthroughs like the JCB engine. Batteries should, over time, become cheaper and lighter. New ways might be found to heat houses. We might even happen across a completely new, clean energy source – fission, say. The cost of climate mitigation, like the cost of adaptation, will fall as technology improves.

All I am asking for is perspective. We need constantly to weigh costs and benefits; to tackle the freeloader dilemma; to consider that innovation might lower prices, and so make calculated postponements rational; to ask whether there are other priorities (in 2020, for example, there was).

We should, in short, approach climate change in a transactional rather than a millenarian spirit, looking for maximum effectiveness rather than seeking to flaunt our piety. Conservatives, of all people, ought to understand that.

David Gauke: There are signs that the Treasury is winning. And that more tax rises are coming.

19 Jul

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the 2019 general election.

When asked about the proposal by Henry Dimbleby that a new Salt and Sugar Reformulation Tax should be introduced, the Prime Minister responded by saying that he is ‘not attracted to extra taxes on hard working people’.

At one level, this is what one might expect him to say, given his reluctance to be the bearer of bad news. But some have taken this to be not just a holding response to the publication of the National Food Strategy, but a firm determination to hold the line against tax rises. If so, there may be problems ahead.

It was only a few months ago that Rishi Sunak delivered a tax-raising Budget, with the freezing of allowances and thresholds in the personal tax system, plus a hefty increase in the rate of Corporation Tax (which, in the end, will be paid by people because all taxes are). These increases may well be sufficient to meet the Chancellor’s fiscal rules ,but only if he maintains the current spending plans.

This looks unlikely. To take just three examples, the cost of Covid catch-up, social care reform and net zero could easily cost £10 billion a year a piece. Add to that the cost of levelling up, plus the risks that debt interest payments could increase significantly, the Chancellor’s target of current expenditure being paid for by current revenue and debt falling as a proportion of GDP looks precarious.

It would be fair to say that the cause of spending control has been strengthened in recent days. The Government saw off attempts to block the cut in overseas aid more comfortably than expected, with Sunak very heavily involved in talking round potential rebels.

The temporary uplift in Universal Credit is looking like it will indeed be temporary (although this is likely to store up problems, I suspect) and the Chancellor has – to all intents and purposes – ruled out a huge increase in the state pension, which would happen if the triple lock was applied in the normal manner. On the latter point, this is entirely sensible and has been met with little opposition.

A month ago, there were complaints from the Treasury that the Prime Minister was going around making unfunded spending commitments but Boris Johnson appears to have been reined in. Big promises on climate change seem to have been deferred to the autumn, and a supposedly big speech on levelling up involved a spending commitment of just £50 milliom. Whereas most observers considered the Coventry address to be one of the least impressive set-piece Prime Ministerial speeches ever delivered, the Treasury would have considered it a triumph.

An announcement on social care reform is imminent, but this does look like it may be properly funded by additional taxes, suggesting that ‘not attracted to extra taxes’ does not mean ‘no extra taxes’ after all. It is reported that it is the Chancellor who is sceptical about the proposed policy, although I suspect this is driven by Treasury doubts about pursuing a Dilnot-style cap on social care costs (which benefits those with the largest estates most), rather than by an objection to the principle that new spending commitments have to be paid for.

For the first time in a while, the cause of fiscal conservatism – ensuring that public finances are sustainable – is gaining the upper hand. There are two reasons for this.

First, the Chesham & Amersham by-election has caused some nervousness. The fear within Government is that high spending is all very well, but a section of the Conservative voting electorate will draw the conclusion that they are the ones who will have to pay for it. It was striking that the Prime Minister spent much of his levelling-up speech saying that he does not want to make rich places poorer, which may come as a disappointment to parts of the Red Wall, but is clearly designed to reassure the South East.

The second reason why a more cautious approach to the public finances might be pursued is the apparent return of inflation. This may be transitory as we return to some kind of normality, and adjust to Brexit frictions and labour shortages, but it may not be. If it results in higher interest rates, the costs for the exchequer in funding our debt could rise very quickly – as the Office for Budget Responsibility has pointed out. An increase in interest rates of one per cent would add £21 billion to our debt interest bill. If our fiscal policy is considered to lack credibility, our problems could be worse.

There remains, however, the question of how the Conservative Party maintains the support of the new supporters it gained in 2019, whose views on tax and spend are much closer to those of the Labour Party than the traditional Conservatives. On spending on public services in general ,plus investment in their localities, they will want to see evidence of delivery.

Boris Johnson will be given the benefit of the doubt and, I suspect, be able to retain most of the Red Wall at the next general election but the pressure to spend money – not least from Red Wall MPs – will be considerable. The Treasury has won a few battles of late, but with a Prime Minister prone to change direction like a shopping trolley (as one prominent Westminster pundit likes to put it), he may be on the other side of the aisle before long.

There is also another reason for raising taxes, as well as funding public services. Tax can be used as a lever to change behaviour. The Prime Minister has declared that he is on a mission to reduce obesity, and it is hard to see how this could be done without using tax to change behaviour.

Ultimately, this may not mean consumers paying much of a price because producers reformulate their products (as happened with the Soft Drink Industry Levy) in order to prevent consumers facing higher prices. It was an effective way of using the price mechanism to achieve a Government objective, but it did mean legislating for a new tax.

A similar argument can be made for using taxes to help achieve net zero. If we want people to consume less carbon, the most efficient way to do this is to ensure that the cost of carbon is incorporated into the price of products by using a carbon tax. (By the way, those of us who value markets as a means of allocating resources should be instinctively more sympathetic to meeting environmental objectives by using the price mechanism where possible, rather than through regulation which can be cumbersome and ill-targeted.)

In both cases, tax increases, as a behavioural stick, may be required. They are also likely to be regressive, which may mean compensating mechanisms of some description which – in turn – will need to be paid for.

All of this means that extra taxes on hard working people may be necessary to deliver sound public finances and to meet other Government objectives, however unattractive the Prime Minister considers them to be.

Craig Mackinlay: The Government is fooling itself if it thinks it can go down the Net Zero path without electoral damage

16 Jul

Craig Mackinlay MP is the MP for South Thanet.

The Government has launched its “greenprint” Transport Decarbonisation plan and adds to what has been trailed before with an extension of the ICE ban to new heavy goods vehicles by 2040, the decarbonisation of public transport and the goal of net zero aviation by 2050.

The ambition to ban the sale of traditional petrol and diesel cars by 2030 remains but there’s no detail as to how the small matter of the £34 billion currently levied on ICE vehicle users will be filled. This is the biggest and most costly undertaking of the British state in history and a strange throwback to the command and control regimes of old – when producing a definitive figure for the annual number of tractors to be built and so many tonnes of grain was all the rage.

We’re yet to hear more as to how the banning of domestic gas boilers will be achieved. Make no mistake, this requires a radical transformation of every part of the economy and our freedoms. Yet no one questions the enormity or cost of the project, and there are no answers to the obvious question – who pays?

Surely we cannot simply be obliged to pay any cost, however high and however painful? Other ambitions in the document, particularly regarding heavy goods vehicles have already been derided by The Road Haulage Association “So this is blue-sky aspiration ahead of real-life reality”. Quite.

While there is no draft legislation on the table to enforce these bans, just warm words, ambitions and glossy documents, there’ll doubtless be more to come as the Government plays a game of Top Trumps with international partners at COP26 this October.

The only estimates available for the cost of Net Zero come from the Committee on Climate Change (CCC), which is supposed to provide rigorous, independent advice to parliament – and yet its output always recommends further and faster.

The CCC is a significant player in the political debate around Net Zero, often explicitly directing Government policy, while being totally unelected and unaccountable. Mainstream media regurgitates its words sagely with little space offered to those who question its assumptions.

More recently, it has come up with a new estimate for the cost of Net Zero that details £1.4 trillion of capital spending that will be required to meet it. The committee was keen not to publicise this mind-boggling number (over half of UK annual GDP or 35 times the annual defence budget for context), and so discounted it with a range of speculative benefits that may or may not materialise.

The £1.4 trillion figure has finally been brought to public attention after the Office for Budget Responsibility (OBR) recycled the CCC figures for its fiscal risks report. The revelation that households are each facing a £50,000 bill over the next 30 years has caused, rightly, an awakening in the press. I am worried that the true cost could be much higher still.

The shift to retro-fitted air source heat pumps, additional insulation and larger radiators to make up for their poor heat output brings with it huge cost and significant risks. An independent report put the cost of decarbonising the UK’s social housing sector alone at £103 billion, or £20,000 per household. If such costs are replicated across the entire housing stock, we are looking north of £500 billion just for residential decarbonisation.

There’s no obvious technology to elegantly replace the gas boiler and I’m yet to find a constituent who assented to pay out £20,000 just to be both colder and poorer.

The pain doesn’t stop there. The use of electric cars, which are much more expensive than their ICE equivalents and have obvious limitations of range and charging, are made more expensive if electricity prices rise to accommodate huge demand requirements and upscaling of additional offshore wind, or expanded reliance on interconnectors from the continent supplying coal produced electricity. The taxation black hole will doubtless be filled by new taxes or hairbrained road charging schemes.

There is little government planning to provide the millions of charging points, no thought as to the security or availability of supply of rare metals often mined under unspeakable conditions of human misery to make the batteries and even less thought as to the true CO2 cost of ore extraction, manufacture of the new cars, new batteries nor the nationwide upgrade to the electricity grid to supply them.

The batteries are largely unrecyclable without huge energy input and use of toxic solvents to break down the near impenetrable resins. The safety of these batteries, that can burn uncontrollably releasing a variety of noxious substances, has not been fully investigated and yet the prospect is for many square miles of grid level batteries to smooth notoriously unreliable renewable electricity supply.

This dash for electric cars has also perversely condemned the country, and particularly our congested cities, to more particulate pollution, not less. No engine manufacturer will invest further in the design and production of a better internal combustion engine offering enhanced power, better consumption, cleaner-burning and lower particulates.

The 2019 engine is as good as it’s ever going to get, which is a shame, as the 2030 engine would have been so much better across all measures. Natural market-driven technological improvements have been stopped for reasons that nobody can quantify, explain or justify.

As ever, it will be the poor who suffer most from these elite delusions. Fuel poverty, the reality of heat or eat”, is the dilemma we are going to put them in, and yet there is somehow an overwhelming Westminster consensus that this is the right thing to do. The lack of almost any interest in the cost of these policies to ordinary people is palpable.

The Government is fooling itself if it thinks we can go down the Net Zero path without electoral damage. We will look, quite rightly, like the privileged few taking the poor back to the lifestyles of the early 20th century. The optics of jetting from one international climate conference to the next to tell other people they should not be flying, driving and eating meat, is not one that will be sustainable when these policies really start to bite.

The growth economies of China, India and Indonesia alone have more coal powered plants planned over the next ten years than the entire output of the current US electrical grid. The current UK output of global CO2, no more than a rounding error in the scheme of things at a mere one per cent, will be reduced to ½ per cent as coal powered growth proliferates globally.

I was never Theresa May’s greatest fan politically, but I’ll conclude with a statement she made on January 11 2018: “In our election manifesto last year we made an important pledge: to make ours the first generation to leave the natural environment in a better state than we found it.”

I agree wholeheartedly with that statement. There is much to be done in protecting habitats and our oceans and weaning the planet off of the scourge of plastic waste. These ambitions are achievable and rooted in common sense while this path to Net Zero is muddled, costly and impractical.

We should pause for breath, inject some rational thinking and consider the alternatives before it’s too late. I am actively discussing these issues with colleagues as we simply cannot watch a financial, societal and political disaster unfold before us.

Laura Sandys: The six key shifts we need for a fairer society and greener future

15 Jul

Laura Sandys is a former Conservative MP, co-chair of the cross-party IPPR Environmental Justice Commission and chair of both the Energy Digitalisation Taskforce and the Food Foundation.

The UK has been at the forefront of most recent industrial and economic system changes from the spinning jenny through railways to a very vibrant tech sector. In climate policies under all governments we have continued this tradition of leading on the challenges and opportunities for a climate-safe and prosperous future. 

However, in the past, we have gone about “transforming” our economies without considering the long-term impacts and sustained damage for parts of our country – geographically, socially and to communities. For climate change transformation we can and must do things differently – and deliver on other goals also crucial to the success of the Conservative government. 

The IPPR Environmental Justice Commission, of which I am co-chair, today sets out a plan for a transition to a fairer, greener economy, that is full of opportunity – combining climate action and nature regeneration with fairness and levelling up – and in many instances “pushing on”. 

There are plenty of opportunities at the heart of the new climate-safe, nature-rich, future-fit economy and society that we propose. By moving fast we will mitigate some of the cost of extreme climate change that will impact our economy and community, with profound implications for life as we know it.

In addition, the economic gains should place the UK at the forefront of new business sectors, with SMEs delivering local and then exported technologies, new jobs across the country in future-facing companies and roles that will be sustainable for decades. Meanwhile, healthier diets, better air, clean travel, lower energy bills and greater self generation of energy will deliver tangible dividends to ordinary families.

However we all recognise that to transition to a more ecologically-balanced tomorrow, investment will be required; and, as with all change, there will be winners and losers. 

This challenge of maximising opportunities while supporting those most affected is the focus of our report. This cannot be a transformation that makes life worse for those already “left behind” – or create a new generation of discarded communities. Let us be very aware that citizens have a veto on Net Zero, so that “how” we implement the necessary measures is as important as “what” we develop.

So we asked communities that might lose out how to ensure we create the right “bridges” to where we all need to be tomorrow. We asked the people in Thurrock, with its large shipping and haulage economy; South Wales, dominated by intensive energy sectors and disconnected rural communities; Tees Valley and County Durham, with chemicals and gas industries; and Aberdeen, with its economy rooted in North Sea oil and gas: what did they think we need to do?  

As always, local people who see policy in terms of real life impacts not Whitehall spreadsheets had much to tell us. They were clear we needed to go faster and deeper – surprising, as their communities are among those most invested in the current fossil fuel economy.   

Their views are reflected in this report, and they proposed six key shifts in policy making. 

First, from a mindset of doom and gloom to one of optimism and opportunities. The benefits of ambitious action are substantial, from the creation of decent jobs to lower energy bills and public health benefits, to burgeoning wildlife and a healthier planet.  

The commission proposes a “people’s dividend”: direct green dividend payments to the public from revenue raised from carbon pricing. A similar scheme redirecting carbon taxation has been successful in Canada and elsewhere, building greater acceptance of carbon measures.

Second, fairness must be a foundation not an afterthought. The impact of the French “gilets jaunes” shows why delivering the transition fairly is crucial to securing it, by building enduring public support.

We have the capacity to mitigate changes and create bridges for those impacted. The commission proposes a “fairness lock” on every climate policy, to ensure this principle is at the heart of everything we do. 

Third, we heard clearly that the public must be part of this transition, not simply have it “done to” them. This matters most now we’re moving beyond decarbonising our energy grid – largely unnoticed by many – to a changes that will touch on people’s everyday lives. This stage will affect how we heat our homes and get around, what we eat and, for many, the jobs we do.

The commission proposes a people-first approach, providing “one stop shops” for support, information and guidance. We also call for the the public to have a clear role in creating plans – including through permanent, national and local citizens’ climate and nature assemblies.

Fourth, move away from “Whitehall knows best”, recognising that one size does not fit all. Our jurors proposed smart solutions, specific to their areas. Policies must be designed to be locally tailored, with government passing powers and money down to local authorities and communities, to achieve better and fairer outcomes. This will deliver more ambition, policy innovation and popular support.

Fifth, we need a coordinated whole-economy and all-society approach rejecting today’s silos. Government must work closely with great British businesses large and small, trade unions and workers, and civil society. New, overarching net-zero and nature-compliant rules must shape government spending and policy decisions – supported through tax incentives, small business loans and regulation.

Sixth, conserving nature has always been at the heart of my Conservatism. But even I was struck by the value our jurors placed on this as they proposed that nature be put on the same footing as climate.

We call for the creation of a Nature Recovery Committee, with legally binding targets for the environment, and a new National Nature Service – that some jurors suggested be called “The Attenborough Service”.

Our report has involved massive effort by many people, but that’s what is needed to deliver the huge systemic and societal change we need. An exciting change, an essential path but one that can deliver both deeper fairness and tackle the biggest challenges of our time – the climate crisis, and the need for restoration of our nature.

Sam Hall: How to help poorer people meet the costs of net zero

6 Jul

Sam Hall is the Director of the Conservative Environment Network.

Last week marked two years since MPs unanimously put into law a target to achieve net zero greenhouse gas emissions by 2050. Since then, the target has been reaffirmed in the Conservatives’ election-winning manifesto, a raft of carbon-cutting, job-creating policy measures have been implemented, and many other large economies have followed the UK’s lead in setting net zero targets.

Our main challenge now is not the overall cost of the target, which is both affordable and dwarfed by the many benefits, but ensuring fairness in how costs are allocated.

While it is certainly true that net zero will require significant new investment in clean infrastructure and technologies, these investments will bring wide economic benefits, notably a net increase in employment, and will cost less as a share of GDP than the damage caused by unchecked climate change.

As we accelerate emission cuts over the next few years to achieve the UK’s more stringent targets for 2030, this will trigger additional investment in building retrofits, renewable energy, and transport infrastructure, which will ease post-Covid unemployment.

Thanks to the ingenuity of British scientists, engineers, and entrepreneurs in developing new technologies and making existing technologies better and cheaper, the overall costs of net zero are being revised downwards all the time. And since clean technologies like electric cars and heat pumps are much more energy efficient than the fossil fuelled equivalents, there are likely to be significant fuel savings for consumers in the long term.

More important than the overall costs is how they will be distributed across society and the economy. Many of net zero’s critics highlight the impact of net zero on the poorest as one of their chief concerns. They are right to make this a priority, although fortunately so far negative distributional effects have been minimal. According to the Climate Change Committee, household energy bills have remained flat since the passage of the 2008 Climate Change Act. But we need to ensure that forthcoming technology changes aren’t regressive either.

This distributional analysis is one of the main focuses of the Treasury’s net zero review, which is currently being finalised on Whitehall. But as well as identifying potential regressive effects, the Treasury must also provide policy solutions. To do this, they can look to a number of excellent recent centre-right think tank proposals on how to drive forward net zero in a way that both enhances fairness, and boosts jobs and the economy.

Take critical clean technologies like carbon capture or low-carbon hydrogen, which due to a lack of scale remain expensive, yet are a promising source of green jobs. When commercialising these nascent industries, we should follow Onward’s recommendation and avoid subsidising them through energy bills, since low-income households spend a greater share of their income on energy.

The government was right recently to cut subsidies for more expensive electric vehicles (EVs), lowering the cap for the Plug-in Car Grant so that vehicles with a sticker price of more than £35,000 were ineligible. Ministers should also consider Bright Blue’s recent call to subsidise second-hand EVs, so that low-income people can benefit from this government funding pot too, and access these cheaper-to-run vehicles.

Similarly, as more people switch to EVs and need affordable overnight charging, we should protect people without private driveaways from paying extortionate prices to use on-street charge points. Policy Exchange has proposed a system of price caps for charge point operators in receipt of public funding.

Fairness is particularly important in the drive to retrofit Britain’s homes for net zero, given the scale of investment required. As Bim Afolami has advocated on this site and Simon Clarke more recently, the Treasury should offer vouchers for the most expensive types of insulation, such as solid wall insulation, and heat pumps. Even though a home’s running costs will be lower after it’s been retrofitted, the upfront costs are often a barrier to people installing these home energy improvements.

Finally, if the Treasury does extend carbon pricing to more of the economy, as is rumoured, it should consider giving some of the money back, in the form of a carbon dividend, to low-income households, as the Centre for Policy Studies has argued.

Once these investments have been made and these technologies adopted, our society will be fairer. People on lower incomes who typically live by busy roads will be less exposed to harmful air pollution. The fuel poor, who live in draughty homes, will spend less on their energy bills each month, while avoiding cold-related ill-health.

And if we replace Fuel Duty with dynamic, congestion-sensitive road pricing, driving will be cheaper for people living in rural areas and towns, who after all have few alternative transport options compared to city dwellers. But to realise these benefits, the government needs to help people make the necessary investments.

If we were to pursue the alternative approach of not mitigating climate change, unfairnesses in society would be exacerbated. Low-income households, for example, are disproportionately exposed to flood risk and to the health impacts of heatwaves, according to the CCC, and due to a lack of savings, they are more financially vulnerable to climate-related hazards. Similarly workers in traditional fossil fuelled industries – concentrated in ‘red wall’ constituencies – would have less opportunity to transition into new green industries and could end up in ‘stranded jobs’ as other countries switch to clean energy.

Some will argue that, in the face of these challenges, we should just abandon net zero, but that would be economically foolish, diplomatically isolating, electorally damaging, and much more besides. Others will argue that it’s not the government’s job to intervene to tackle inequality. But since the government isn’t a passive observer of this technological change, it can and should make sure it doesn’t adversely affect the least well-off and instead reduces their cost of living and makes their lives more convenient.

Now that our climate targets are becoming embedded, net zero politics is entering a new phase. Now is the time to put fairness at the heart of our net zero strategy.

Paula Higgins: British homeowners are vital to reaching net zero. But we must ensure climate targets are achievable for them.

2 Jul

Paula Higgins is the CEO and founder of HomeOwners Alliance.

As focus moves from setting to delivering the UK’s world-beating climate targets, our homes have moved to the centre of the debate.

Insulating millions of houses and replacing polluting gas boilers with cleaner alternatives is essential to reaching net zero and will require the buy in of the vast majority of the British homeowners. As such, it is essential that there is a practical, consumer-friendly, and affordable means of cutting carbon from domestic life.

It has been suggested that homeowners should be required to upgrade the energy efficiency of their home before putting it on the market. This is a complete non-starter for a number of reasons. For many sellers, they will not have the cash, time or energy to upgrade their home before moving on. This is especially true for downsizers.

But this doesn’t mean that there isn’t a route to net zero for our homes.

Instead of punitive regulations, which will more than likely lead to shoddy work and disgruntled homeowners, there are dozens of policies, tax changes and other levers that government can pull to climate proof our homes.

First place to look is the recent Green Homes Grant, which despite many flaws, showed that there is huge public appetite for upgrading homes. At HomeOwners Alliance we were overwhelmed with questions and requests for more information about the scheme. It’s nonsense for the Government to use the excuse as a lack of take up to axe the scheme.

Hopefully this should give ministers confidence to deliver a big and improved demand-led scheme, allowing Brits to make upgrades to their homes at a time that suits, instead of being forced into it when looking to move. A drop-in replacement for this popular scheme is a no-brainer.

The tax regime is also weighed against home improvements that will decarbonise our homes. Home improvements are expensive. Add on VAT at 20 per cent and you can see why our research reveals one third of homeowners are deterred from doing home improvements at all, or forced to pay cash to afford the work. The zero VAT rate for new homes should be extended to homeowners undertaking major refurbishment works and efficiency upgrades.

Changing council tax and stamp duty to free up cash for greening our homes, either through rebates, reduced rates or cashback schemes could also be a vital step towards net zero.

There is precedent to changing stamp duty to achieve wider goals, as seen in the pandemic recovery. With net zero as one of the government’s core tenets, there is surely scope for doing it again, especially with such enthusiasm from Brits about cutting carbon footprints.

Another option is interest free loans, comparable to those issued more than two million times in Germany and on offer in Scotland, are yet to be made available across the UK.

For it to be worth its salt, the Government’s upcoming strategy to decarbonise our homes need to utilise every option on the table.

Replacing a broken-down boiler with a heat pump currently costs more, but the Government can get involved here too. Energy supplier Octopus is aiming to slash costs for heat pumps by half by the end of next year, but a targeted innovation scheme to cut costs would spur it on with some competition.

We already have a “buildings mission” which aims to halve the cost of efficiency retrofits, why not the same for heat pumps? By setting a challenging goal, not only will costs for homeowners fall, but we can be sure that the UK’s clean heat industry will flourish.

Until prices plummet, following trajectories set by renewable energy sources and electric cars, boiler scrappage schemes can also help with up-front costs, as can schemes such as the £4,000 Clean Heat Grant which should make clean heating more affordable.

Virgin Money and Nationwide are starting to offer green mortgages, offering lower rates for more climate-friendly homes yet crucially not increasing APR for those yet to be upgraded. Greener homes are cheaper to run, so green mortgages can also be flexed to offer additional funds for efficiency upgrades when loans are taken out.

There also will be, as the Climate Change Committee warned this month, a growing number of homes that overheat as our climate warms. Heatwaves this year and last stress the need for new policies and action from government to protect families living in the quarter of English homes that are at risk of becoming too hot in years to come.

Ensuring that Britain’s homes are upgraded for summer warmth, winter cold and clean heat at the same time is vital for keeping homeowners on board. Carrying out upgrades once and ensuring they are done well, ensuring that the numerous benefits are clearly explained and making sure that government support is accessible, easy to understand and effective are all vital for the impending strategy to decarbonise heat and buildings.

There is no doubt that Brits want to take part in the net zero transition, with public enthusiasm for climate action higher than ever. What is needed now is the policies and pledges that make upgrading our homes easy and effective.

Claire Courtino: A Wild Belt designation can help Britain lead the world in restoring nature

24 Jun

Claire Coutinho is MP for East Surrey.

Britain has seen a 41 per cent decline in our species since 1970. In England, one in eight species are currently threatened with extinction. Simply put, wildlife habitats in this country are fewer, smaller and more distant than ever before.

This is not only a problem for biodiversity, it is also a problem in our efforts to fight climate change. When nature is working as it should, it can capture carbon, act as flood defences, and improve our air and water quality. But when nature is broken, it cannot protect us.

The Government is taking action, pledging to create a new Nature Recovery Network stretching across Britain. This will mean the creation of 500,000 hectares of wildlife-rich habitats by 2042 and a commitment to protect 30 per cent of our land overall for nature recovery by 2030.

And we are backing up our pledges with investment, investing £640 million into a Nature for Climate Fund to restore our wetlands, peatlands and woodlands.

Our historic Environment Bill also introduces a new biodiversity net gain requirement for development, creating a new sustainable funding stream for environmental improvements and making sure when homes for people are built then habitats for wildlife must be improved alongside them.

But, as things stand, while we have numerous land designations in England, none of them exist to strategically connect nature in recovery.

The Site of Special Scientific Interest (SSSI) designation is critical for preserving individual sites which have been identified as wildlife hotspots. The National Park, Areas of Outstanding Beauty (AONB) and Green Belt designations protect landscape and amenity value but do not directly protect biodiversity value. And although we very much like to spend time in beautiful green fields, they can often be quite poor in terms of wildlife habitat.

That is why I am proposing a new designation, a Wild Belt, to plug this legal gap. A Wild Belt designation would provide long-term protection for land that is being managed for nature’s recovery, and it would help us to create connected corridors across land – making sure that wildlife and the natural environment had the space and time it needs to flourish.

The brainchild of Craig Bennett, Chief Executive of the Wildlife Trust, a Wild Belt would protect areas of land that are being managed for nature’s recovery, providing long-term protection from future development and densification.

Across the country, we can see signs of progress. Take the return of the beaver – one of the best natural flood defenders, flow regulators and flora supporters. Once native to England, we are now seeing their return after four centuries of British extinction. Stork!

And I am hopeful this year we will see a return of sand martins nesting in Surrey for the first time in 25 years thanks to the hard work of the Surrey Wildlife Trust.

Bringing back species will be a key part of helping our ecosystems function. But these examples are in a minority. Across Britain, we have seen declines in hedgehog and bees as they struggle to navigate increasingly fragmented habitats. A Wild Belt designation could put a stop to this, by creating green stepping stones for our hedgehogs and pollinator pitstops for our bees.

The benefits of a Wild Belt would also extend to our own health and wellbeing. A survey carried out at the peak of the first lockdown found that 87 per cent agreed that being in nature makes them happy. And the science is clear – having good access to nature can reduce our risk of developing obesity, diabetes and heart disease.

It makes socioeconomic sense too. Poorer households are 3.6 times less likely to live close to green spaces than richer households. By stretching round, through and between England’s town and cities, a Wild Belt would knock down barriers and level up green access.

And while making sure we can build the right homes is our moral duty to the next generation and an important part of maintaining our edge in an increasingly competitive world, a Wild Belt would help to address very real concerns across our communities about species loss and would help us to live in harmony alongside nature.

Schemes like the Trumpington Meadows development in Cambridge have synchronised both housing and biodiversity ambitions. It was once degraded agricultural land, when the housing developer and Wildlife Trust came together to build in an ecological way. It is now home to a 1,200 strong community, where 80 per cent of the land remains biodiverse space and 40 per cent of the properties are affordable housing.

And although a Wild Belt might encompass some green fields, it could also make use of forgotten land – river valleys, roadside verges, railway lines, scraps of golf courses. All of these could be rewilded, creating a network of green continuous corridors from the countryside all the way through our towns and cities.

Just as Britain has led the world in renewable energy and reducing carbon emissions, with the introduction of a Wild Belt designation we can plug a legal gap, safeguard our investments, and lead the world in restoring nature.

Bim Afolami: The politics of Net Zero are more perilous than we think

14 Jun

Bim Afolami is MP for Hitchen & Harpenden.

I was in the chamber of the House of Commons when Theresa May’s government legislated for a legally binding target for the UK to reach Net Zero by 2050.

It felt momentous at the time, and it was a big moment. Strangely, though, during the debate in the chamber, the remarks were uniformly positive, from all sides.

Now let me be clear: I strongly support the Net Zero target and did at that time – it is the right thing to do. But in politics when you see something as momentous as this go through without a dissenting voice, an alarm bell should ring that says: “have we thought through all the implications of this?”

There are two areas where we may be politically vulnerable in the coming years on the environment, and on reaching Net Zero by 2050 in particular.

First, the need to significantly limit, and preferably nullify, any direct economic cost on working people, or else risk a considerable political backlash. With the threat of inflation rising, the cost of living agenda is likely to return to the front and centre of British politics very soon. This will be politically resonant for the sort of middle income, Red Wall voters who have been increasingly supporting the Conservatives in recent elections.

Second, there is the twin threat from the other side of our political coalition. For many liberal-minded, Remain-leaning Tory voters in the south, our strong support for the environment is one of the key reasons for their support. If there is any hint that we are rowing back, their loyalty will be severely tested – especially if Labour and other opposition parties can effectively make the case that we are failing to reach our own carbon emission targets.

Our record on reducing UK carbon emissions whilst growing our economy is the best in the G7, and one of the best in Europe. Yet the vast majority of actions we have taken are about decarbonising power generation. Aggressively moving towards renewable energy since 2010 has been remarkably successful, but we have barely begun to tackle many of the aspects that affect people’s day to day lives – for example, the need to retrofit homes in order to make them more fuel efficient, ensuring traditional boilers are replaced, or ensuring electric vehicles are affordable to the ordinary family.

To be frank, these actions will require a lot of money, up front, from the Treasury. We cannot think it will be sufficient to cover the costs just for the lowest income voters – most voters will need environmentally sustainable options to be heavily subsided and affordable. Most middle income or even wealthier voters are not remotely prepared or willing to pay significantly more tax on fuel, or on flights, or to rip out their existing heating systems, or many other invasive things that academics and policy experts suggest will soon be required to reach Net Zero.

The Committee on Climate Change envisage phasing out oil and coal heating by 2028, gas boilers in homes by 2033 at latest, and by 2030 in public buildings. Lots of change is coming. The new upcoming Heat and Buildings Strategy and broader Net Zero strategy (both expected this summer) will be scrutinised heavily on the twin axes of both policy effectiveness and additional costs.

The cost of living used to be a major issue in our politics. It was a dominant issue during the 1960s, 1970s, and 1980s. The 1990s and 2000s saw benign economic circumstances until the financial crisis.

After it, something strange happened to our economic debates. We stopped talking about economic policy in relation to ordinary people – real incomes, prices of goods and taxes, and focused our political capital on getting public support for measures to reduce the deficit. Although May’s government started to home in on cost of living as a potential issue for the “JAMs” (voters “just about managing”), this issue was soon subsumed within the Brexit fog.

I believe that that the politics of cost of living is about to return, and it presents a real political danger for the Government and the Conservative Party.

Andy Haldane, the hugely respected former Chief Economist of the Bank of England, has openly talked about the “tiger” of inflation stalking the land. The economy is recovering quickly, and the immediate consequence is that too much money (from extremely cheap debt and accumulated savings built up over Covid) is chasing too few goods and services.

There are also labour shortages and supply chain difficulties in many sectors, which is constraining supply. A resurgence of inflation is the central scenario for growing numbers of businesses he says. By way of comparison, inflation in the USA is already at 4.7 per cent, up from 4.2 per cent for April, reflecting the overheating US economy. And the recovery, in both the USA or the UK, is nowhere near complete.

You can see where I’m going with this. Increased costs from Net Zero policy, combined with general inflationary pressures, looks like significant cost of living increases for ordinary people. Even with a growing economy, that will present real challenges to our well-earned reputation for economic management.

From a Net Zero perspective, then, how do we do the right thing and insulate ourselves against political attack at the same time? There should be three principles underlying our approach.

First, we need aggressively to embrace the long-term economic opportunities of getting to Net Zero by 2050, and we need to communicate that clearly so that people understand what this means for their day to day lives. Households living in energy poverty typically spend a higher proportion of their income on their energy bills. Improving the energy efficiency of dwellings by installing insulation, more efficient heating and cooling systems and more efficient building fabrics can decrease energy costs, and enable higher levels of disposable income.

Energy poverty also has a negative impact on the NHS, with more avoidable hospital admissions and use of non-primary health care services. Living in energy poverty increases the risk of acute respiratory, cardiovascular, and musculoskeletal problems, which often result in lengthy hospital admissions, particularly in winter. The Treasury is going to have to be brave and invest a lot of money up front.

Second, the cost impacts on the vast majority of voters must be minimal. If we try and force voters to retrofit their homes with new insulation, or install new low carbon boilers, at the personal cost of thousands of pounds, this will be a political disaster. Even for the voters who can afford significant expenditures, this will be seen as unfair and heavy-handed, and large numbers of them will either refuse (or be unable) to comply.

The third principle is this. We need to face down those who are starting to say that the costs of Net Zero are too much, or it is too difficult. In a world where countries are becoming more and not less committed to the need to limit global temperature rises, the UK cannot afford to hold back. The macro economic opportunities for reindustrialising huge parts of the North and Midlands – creating hundreds of thousands of jobs, whilst using the traditional strengths of the service economy in the South – is too great to ignore. We can not only be international leaders, but help the domestic economy go through a job rich transformation.

The debate how we reach Net Zero by 2050  will define our politics over the coming decades. We must ensure that we have an ambitious, world-leading approach that builds on our strengths. But we must also ensure that we don’t alienate voters along the way.

Henry Smith: Why marine protection can’t wait

8 Jun

Henry Smith is MP for Crawley. This is a sponsored post by Greenpeace.

Our environment is being degraded at an concerning rate, both on land and at sea. In the waters around our islands, destructive industrial fishing vessels spend thousands of hours each year operating in protected areas, damaging habitats, decimating fish populations and polluting our marine environment.

This is having a devastating, cumulative effect. Vital marine habitats like seagrass meadows, kelp forests and coral reefs are being damaged by bottom trawlers, while supertrawlers regularly descend onto UK waters to scoop up unimaginably vast quantities of marine life, harming the target fish populations, and undermining the entire marine ecosystem.

All of this is not only harming our oceans, it’s also harming our coastal communities and worsening the climate emergency facing all of us.

When bottom trawlers rip up patches of protected seabed, they aren’t only destroying important habitats, they’re also disturbing vast amounts of carbon which would otherwise be safely stored away in the seabed.

A recent landmark study in the journal Nature found that globally, carbon emissions from bottom trawling are equivalent to the carbon emissions of the entire global aviation industry. That’s a staggering statistic which gives you an idea of just how much carbon is potentially being released by bottom trawling. Estimated emissions from bottom trawling in UK waters are the fourth highest globally.

By delaying ocean protection, the UK government is jeopardising climate protection, but it’s not too late to change course. If we can properly protect our oceans from industrial fishing practices which are disturbing the vast carbon sinks that surround our islands, the oceans could become our best ally in the battle against climate change.

By properly protecting the waters around our islands, we can ensure that tens of millions of tonnes of carbon remain stored away safely in the seabed, and we can protect the natural processes which mean the oceans absorb excess carbon from the atmosphere remain intact and healthy, long into the future.

That’s why marine protection can’t wait. Every day that we delay, industrial fishing vessels continue to damage habitats and our “blue” carbon sinks.

Thankfully, our government has recognised that there is a problem, and has made a start towards remedying it. Plans are in motion to completely ban bottom trawling in two important protected areas, including the Dogger Bank, and partially ban bottom trawling in two further protected areas.

This is a good start, but the process has moved at too slow a pace. It’s been more than six months since the Government announced that it was considering new restrictions on bottom trawling in these protected areas, and still nothing has become a reality.

If the Government decides to follow this model across the entire network of protected areas, it could quite literally take years, if not decades, before all of the UK’s protected areas have adequate levels of protection from industrial fishing vessels. This would be fundamentally incompatible with the UK government’s own commitment to 30×30, 30 per cent of the world’s oceans being fully protected by 2030.

We simply cannot afford to wait that long.

However, there is a solution at hand, and one which this government has already used, but now seems to be ignoring – vessel licensing restrictions.

This power, provided for by the new post-Brexit Fisheries Act 2020, would allow us to outlaw the most destructive fishing vessels from our protected areas, by placing licence restrictions on them so they cannot operate in parts of UK waters that are supposed to be protected. This could also be used to ban fishing boats over a certain size, or over a certain capacity, from operating in protected areas, meaning it could also apply to supertrawlers.

This would speed up action significantly, and avoid the painfully slow process which the Dogger Bank bottom trawling restrictions are currently undergoing.

The scale of the problem is vast, almost all of our protected areas in offshore waters have no fishing restrictions in place, when they all should.

The good news is the Government is finally starting to recognise the problem. The next, and perhaps most important, step is to act with a sense of urgency that reflects the nature and climate emergencies now facing all of us, before it’s too late.

Clive Moffatt: The Government should come clean – and explain that reaching the net zero target by 2050 may not be possible

4 Jun

Clive Moffatt is an energy market analyst and former chairman of the UK Economic Security Group.

Back in April, the Government set the world’s most ambitious climate change target to reduce carbon emissions by 78 per cent by 2035 (compared to 1990 levels) with emissions targeted to fall to net-zero by 2050.

Cutting out coal from the electricity generation mix was the main reason why in 2020 the UK was able to slash emissions to a level 51 per cent below 1990 levels, but this had little economic impact and was only made possible by the existence of plentiful and cheap natural gas. The next stage will be far more difficult and costly.

Realising the targets will require nothing less than a complete overhaul of the energy network, the removal of natural gas from the energy mix – not to mention the plans to change dramatically how we move about and what we eat.

Looking at the energy sector alone, there are so many technological uncertainties that estimates of the costs of transition to zero vary considerably, with capital cost estimates alone ranging from £50 billion per annum for the next 30 years (Climate Change Committee) to £100 billion per annum (National Grid). Furthermore, the bulk of the costs in terms of consumer levies and/or taxation is likely to fall on those less able to pay.

What has been sadly missing from the debate so far is a clear and agreed set of policy guidelines and criteria to evaluate policy options and replace advocacy at any cost.

For a start, the UK cannot afford to go it alone and what we do should be based on what others do to meet the global challenge.

Second, there is no point transitioning to net zero if there is an increased risk of energy shortfalls – heat and light – and so the security of affordable supplies must be considered.

Third, the Government’s does not have a good record at picking technology winners and so the market must be allowed to deliver least-cost solutions.

Finally, natural gas supplies the bulk of our domestic heating and power requirements and will continue to have a critical role to play in the energy mix up to and beyond 2050.

On this basis, a slower but more secure and affordable route to net zero is possible and the following 10 action points could form the basis of a detailed policy framework to be announced in a white paper ahead of the next General Election in 2024 or earlier.

  1. A longer and more gradual rising CO2 price to underpin new investment in “green” energy and allow time for industry to become more energy efficient.
  2. Incentives eg tax rebates and/or subsidies to allow heavy industry to cut emissions – based on agreement at a sector or company level.
  3. Carbon equalisation tax on imports – to offset unfair competition to UK industry from imports from countries with less onerous emissions restrictions.
  4. No more nuclear fission after Hinkley C – the costs of large scale nuclear far outweigh the economic benefits in terms of both additional baseload capacity and emissions reduction.
  5. Cut wind capacity target from 40GW to 20 GW by 2040 to avoid incurring massive transmission constraints and system balancing costs associated with intermittency.
  6. To underpin baseload power security of supply, use capacity payments to support the construction of efficient CCGT capacity with potential for carbon capture but not imposed at the outset.
  7. Gas (without CCS), Demand Side Reduction (DSR) and batteries to compete in open cost/reliability based auction to deliver peak flexible supply at key points in the local distribution network.
  8. Evidence to date suggests that Carbon Capture and Storage (CCS) would increase power prices sharply, The Government should support prototypes pending a more detailed impact assessment.
  9. We will be reliant on imported natural gas for heat and power up to and beyond 2050. So we need to underpin new investment in flexible gas storage – currently less than two per cent of annual gas demand.
  10. Date for outlawing new gas domestic boilers to be no earlier than 2035 and dependent on a detailed welfare assessment of the reliable options available to replace natural gas.

Looking ahead to COP26 later this year, the UK and a very hesitant EU are the only ones among the world’s 18 largest greenhouse gas emitters to have submitted detail emission reduction plans.

So now would be good time for the Government to come clean and “tell it how it is”, namely that for very good reasons – such as technological constraints, security of supply, industrial competitiveness and especially affordability – reaching the net zero target by 2050 might not be possible.

Boris Johnson would be criticised for being a COP26 “party pooper”, but industry and consumers would probably breathe a sigh of relief.