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Going green is important

Martha Stewart  9/1/2010

"Going green doesn't have to cost the earth," says George Osborne. He's right, but the problem is that the opposite is also true: not going green will cost the earth, taking the economy down with it.

The Chancellor's nods to the green economy in his latest mini-budget were characteristically hostile, nakedly politically-motivated, and, most of all, utterly intellectually incoherent.

The key line was the latest outing for Osborne's oft-repeated assertion that "going green doesn't have to cost the earth." It is possible to read this as evidence that the Chancellor has finally realised green technologies are increasingly affordable and will benefit rather than hamper the economy. It is possible to argue the Chancellor has finally realised the truth in the Stern Report's conclusion that deep cuts in carbon emissions will cost just a percentage point or two of GDP, while protecting the world against losses that will be an order of magnitude larger. It is possible to conclude that the Chancellor has finally realised that he should explicitly commit to managing the low carbon transition in the most cost effective way possible. Possible, but sadly inaccurate.

Green business leaders and campaigners do not have to indulge in conspiracy theories to interpret the Chancellor's phrasing as an attempt to imply the UK's previous approach to "going green" - an approach Osborne himself has signed off on during five years in opposition and three years in government - does "cost the earth".

As David Nussbaum of WWF observed, "claiming that ‘going green doesn't have to cost the earth' is simply putting a deliberately negative spin on green technologies, in a week when the Government has clearly recognised that this industry is growing and driving down costs".

The justification for this bleak interpretation of Osborne's comments is provided by the context in which they were delivered. If the Chancellor was serious about delivering decarbonisation in the most cost effective way possible he would not have just engineered a cut in energy efficiency schemes when every analysis shows energy saving is the lowest cost means of cutting emissions. He would not be actively trying to restrict onshore wind when it is the lowest cost form of renewable power. He would not be blocking a decarbonisation target that the Committee on Climate Change has highlighted as a mechanism for lowering the cost of decarbonisation. He would not have just opposed the closing of a loophole on coal emissions that represented one of the simplest ways of cutting emissions in the 2020s. And he would not be pointedly ignoring the huge climate and energy security costs that come with a failure to decarbonise rapidly enough - it is that which will really "cost the Earth".

More generally, the line that proceeded Osborne's green cost mantra only underlined the incoherence of his approach to the green economy. "My political philosophy is clear," the Chancellor declared, as if it had ever been in any doubt. "Instead of penalising people with more taxes and more regulation, give them incentives by reducing their taxes and their bills." But here's the problem, delivering decarbonisation by focusing solely on incentives and reduced taxes is likely to prove more expensive than a more balanced approach that actually adheres to centre right free market principles and uses taxes to correct the market failure that is climate change. It is not necessarily more taxes and more regulation that is "penalising people", but the wrong taxes and regulation.

For example, the most efficient means of decarbonising remains the introduction of an effective carbon tax that puts a price on polluting externalities coupled with the phasing out of explicit and implicit subsidies for fossil fuels. Similarly, one of the most efficient means of driving down the cost of clean tech is the use of appropriate regulations and standards to help create a market for new technologies that benefit consumers through lower running costs. Both of these approaches apparently run counter to the Chancellor's philosophy - a fact underlined by the way in which, when he does decide to dish out incentives to reduce taxes and bills, he hands them to the fossil fuel industry. There is a way to incentivise "going green" while lowering people's taxes and bills by shifting taxation from employment to pollution, delivering an explicit political commitment to decarbonisation, and prioritising energy efficiency and clean technologies that serve to lower bills. Sadly, this is not the Chancellor's vision. When he talks about cutting taxes and bills he means slashing efficiency schemes and ensuring fossil fuels get ever lower taxes.

The most depressing thing about Osborne's green philosophy is it doesn't have to be this way. He could and should have celebrated how yesterday's flurry of green infrastructure announcements demonstrate that the cost of clean energy technologies is already falling and will fall further as a stable policy environment supports a UK supply chain that will create jobs, bolster energy security, and drive economic growth. He could and should have prioritised energy efficiency as a cost saving means of decarbonising. He could and should have explained how the coalition is committed to a package of long term cost effective policies that will drive billions of dollars of investment and deliver decarbonisation over the coming decades, creating export opportunities and minimising climate change costs in the process.

He could also embrace the centre-right arguments for "going green" articulated by the likes of Greg Barker, Zac Goldsmith, and, on occasions, the Prime Minister himself, and explain how a coherent and consistent approach to decarbonisation that prioritises lowest cost measures, empowers communities, and drives innovation is entirely consistent with Conservative values.

But once again Osborne chose to do none of this, instead opting to contradict his own commitment to deliver cost-effective green progress with inconsistent and incoherent policies and rhetoric, and all in pursuit of a handful of votes. As yesterday proved, the coalition does have an expanding suite of ambitious policies that are likely to help ensure that the UK does "go green" over the coming decades. But for every two steps forward the government takes the Chancellor insists on taking one step back with his fixation on fossil fuels, his undermining of effective green policies, his mixed messages on decarbonisation, and his thinly veiled denigration of the green technologies of the future.

The Chancellor is right, "going green doesn't have to cost the Earth". The problem is he clearly hasn't the faintest clue how to deliver on his increasingly tired catchphrase.


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