After a long awaited UK general election, the Liberal-Conservative coalition agreement has unveiled a list of initiatives aimed at delivering a low carbon economy (see below). For those following the climate policy debate, how much does this represent a fundamental change in direction? How might the drive for a green industrial sector in the UK - as outlined in recent government strategies, such as the
Low Carbon Transition Plan - succeed in the wake of the appetite for cuts to public spending? Strategic funding of the UK based motor industry, in the West Midlands or North East, or suppliers to energy infrastructure sector, may be up for review.
At a more fundamental level, how will the shift from a Labour ('big government') paradigm to a Conservative ('minimal state') paradigm result in structural changes in finance that will change the nature of delivery? Or how will the new emerging paradigm of decentralisation have an impact? The welcome statements made by the new Prime Minister David Cameron, and Secretary of State for Climate Change, Chris Huhne, on the
DECC website, shows a huge enthusiasm for the issue. The publication of
the more detailed agreement document (today) and the
initial list of proposed funding cuts (due May 24th) will provide vital clues to help answer these questions. Ultimately, whether the previous trajectory will continue, or shift to a subtly or profoundly different course?
Update: 24th May 2010
Buried in the detail of today's Treasury announcement, the immediate closure of programmes such as The Carbon Trust's Low Carbon Building Programme Fund and Environmental Transformation Fund, indicate the first changes in mindset as to how to promote a low carbon transition. Yet, this is not surprising given the vast impact that the Carbon Reduction Commitment scheme and the Feed-in Tarrif will likely have in the coming months and years.
The CRC obliges all organisations with energy bills of more than £500k per year to account for their energy, and after a period of grace be required to enter into an emissions trading scheme that will financially reward pioneers and punish laggards. The Feed-in Tarrif levies the profit of large energy companies by forcing them to effectively subsidise the installation of micro-renewables (wind, solar, heat pumps and so forth) by paying installers above market prices for the energy they generate. These installers may include housing developers, retailers and so forth, and the scheme has proven effective in Germany for accellerating the install rate for renewable energy.
Several million pounds of investment in the LCBP agreed to date will go ahead, but from today the old era of funding must adapt to austerity measures. The Carbon Trust and its investment programmes to help business achieve a low carbon transformation will continue, until reform can be considered in line with manifesto pledges.
Going forward the big change to drive the delivery of a low carbon future will be the planned Green Infrastructure Bank. What kind of organisation will this be? A return to the publicly owned corporation? An opportunity for individuals and commercial organisations to contribute to investment opportunities in a low carbon economy? Are the Carbon Trust one of the leading organisations creating it, or will international organisations like The Climate Group be involved? News will be keenly awaited - and any comments or insights from readers of this blog gratefully received.
UK Liberal-Conservative Government Coalition Agreement, May 12th 2010. (excerpt)
Environment
The parties agree to implement a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy, including:
• The establishment of a smart grid and the roll-out of smart meters;
• The full establishment of feed-in tariff systems in electricity – as well as the maintenance of banded ROCs;
• Measures to promote a huge increase in energy from waste through anaerobic digestion;
• The creation of a green investment bank;
• The provision of home energy improvement paid for by the savings from lower energy bills;
• Retention of energy performance certificates while scrapping HIPs;
• Measures to encourage marine energy;
• The establishment of an emissions performance standard that will prevent coal-fired power stations being built unless they are equipped with sufficient CCS to meet the emissions performance standard;
• The establishment of a high-speed rail network;
• The cancellation of the third runway at Heathrow;
• The refusal of additional runways at Gatwick and Stansted;
• The replacement of the air passenger duty with a per-flight duty;
• The provision of a floor price for carbon, as well as efforts to persuade the EU to move towards full auctioning of ETS permits;
• Measures to make the import or possession of illegal timber a criminal offence;
• Measures to promote green spaces and wildlife corridors in order to halt the loss of habitats and restore biodiversity;
• Mandating a national recharging network for electric and plug-in hybrid vehicles;
• Continuation of the present government's proposals for public sector investment in CCS technology for four coal-fired power stations; and a specific commitment to reduce central government carbon emissions by 10% within 12 months.
•We are agreed that we would seek to increase the target for energy from renewable sources, subject to the advice of the climate change committee.
•Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided they are subject to the normal planning process for major projects (under a new national planning statement) and provided also that they receive no public subsidy.
We have agreed a process that will allow Liberal Democrats to maintain their opposition to nuclear power while permitting the government to bring forward the national planning statement for ratification by parliament so that new nuclear construction becomes possible.