New Labour has always talked a good fight when it came to climate change and the need for dramatic CO2 reduction, but delivered little. Last autumn though, in the reshuffle following the trauma of the Lehman Brothers collapse, it looked as though the government might have started to get the message on the environment, writes Sean Thompson.
On 3 October, Ed Miliband, was named to lead a newly created department of energy and climate in a move that appeared to signal a major rethink of the government's environment policy, reflecting the rise of climate change to the top of the national and international environment agendas.
Within a fortnight, Miliband announced a government commitment to increase Britain's target to cut carbon emissions from 60% to 80% by 2050. He accepted the recommendations of the government-appointed Climate Change Committee, which had said the previous week that the UK ought to commit to an 80% reduction from 1990 levels for all greenhouse gases and covering all sectors. He also pledged to amend the energy bill to create "feed-in tariffs", allowing small-scale energy producers – such as homes with wind turbines or solar panels – to sell electricity at a guaranteed price.
In February, Lord Stern, a former World Bank chief economist and not generally regarded as dangerous leftist, issued a report calling for a global fiscal stimulus in response to the world recession, and for at least 20% of the national economic recovery stimulus packages to be investment in the development of green infrastructural projects and green technology. He reported that a number of the developed capitalist states have reached or got near to that target figure; 69% of South Korea’s $38.1bn stimulus package has been allocated to ‘green investments’, along with 34% of China’s $581.2bn and 19% of Germany’s $63.4bn. Of the USA’s huge $825bn recovery package 16% has been allocated to green investment, while only 14% of the aggregated EU total of $253.6bn has. However, despite all the rhetoric, Britain had put together a stimulus package of just $29.9bn (£20bn), of which only 7% was committed to “green” investment. In comparison, in the wake of the banking crisis nearly 20% of GDP has been committed to support the financial sector.
A commitment from our Darling
Then, in April, Darling and the government seemed to have jumped back onto the green bandwagon when he announced a whole raft of ‘green’ measures in the Budget. These included £375 million to support energy and resources efficiency for businesses and households; £70 million for small-scale, decentralised low carbon energy and £405 million to support low carbon industries and ‘advanced green manufacturing’. Darling announced a “commitment” to spend £525 million over two years to building off-shore wind farms and that combined heat and power technology projects will be exempted from the Climate Change Levy from 2013. He promised £10 million in new grants for anaerobic digestion to turn organic waste into green energy and that up to £4bn of finance for new renewable energy projects in the UK will be provided by the European Investment Bank.
However, when looked at in detail, it became clear that while the Budget contained a number of welcome, if not epoch changing, measures, as a whole it fell way short of delivering the initiatives needed to deliver a low-carbon economy in order to defend and create jobs and prevent catastrophic climate change. Set against the scale of what is needed to tackle climate change and the recession it squandered an historic opportunity to kick start a green industrial revolution and slash UK CO2 emissions. The Bank of England’s central forecast for 2009 is of a decline in GDP of 2%. This corresponds to a fall in nominal GDP of £28 billion: 2 % of the estimate of GDP in 2007 of £1.4 trillion. So a fiscal injection of similar magnitude is needed to preserve the present level of real GDP, and – to some extent – reverse the ongoing fall in employment, as multiplier effects should mean that the aggregate impact is larger than the original injection.
The government's establishment of the world's first legally binding carbon budgets is, of course, to be welcomed. However, the target – 34% cuts in emissions by 2020 – is well below what scientists tell us must be done if we are to avoid catastrophic climate change. And although the Government has said no offset-credits can be used in the non-traded sector of the economy in the first budget period, the UK can still purchase credits from the EUETS (European Union Greenhouse Gas Emission Trading System), which is itself awash with offsets of very dubious quality.
Governments are cheating
Western governments, with the British Government at their head, are cheating us all. Carbon offsetting is doing nothing to combat climate change, is putting the lives and livelihoods of millions of people in the global south at risk and is entrenching inequality between rich and developing countries' levels of emissions. And offsetting is cheating working people in the countries of the global north out of the new jobs and industries which investing in green technologies at home would bring.
Offsets and a low CO2 reduction target mean that in practice the Government need do very little new to meet its new carbon budget obligations. Given that the Climate Change Committee state that the UK electricity generation must be radically decarbonised by 2030, the weak and loose carbon budgets announced in the Budget are not going to create anything like the framework required to make this happen. Even worse, several of the government’s measures are in conflict with the environmental stimulus.
The most obvious is its inclusion of new nuclear power capacity in its programme and the trumpeting of its investment in the development of “clean coal” technology (a desirable area for research, but on the basis that it is currently proposed it will create a gaping loophole through which new coal burning capacity will be built long before effective CO2 scrubbing and sequestration technologies are available at an industrial scale). The government's proposed jobs in nuclear and coal power won't be delivered for 10-15 years and it's well known that renewables create several times as many jobs per megawatt than either nuclear or coal. So the Government’s commitment to nuclear means we're looking at far too few jobs, far too late – and the promised emissions reductions won't happen in time to meet meaningful targets either. And we will still have to sort out all the unresolved and potentially disastrous problems of nuclear and clean coal technology.
By comparison with the very limited new and additional spending of the Budget’s green stimulus, £2.3bn has been put aside to “assist” the car industry. If spent on energy-efficiency measures, including re-directing the productive capacity of the automotive industry into more useful directions, this would save about 3 million tonnes of CO2 annually – as well as tens of thousands of manufacturing jobs.
The car scrappage scheme, which will provide a £2000 subsidy for a new car if a car over ten years old is scrapped, is one of a number of measures that rather than being inadequate actually take us in the wrong direction. Not only doesn’t it help the environment, since much of the carbon cost of a car is embodied in its manufacture, it will save relatively few jobs, as so many new cars are likely to be imported rather than manufactured here. A far cheaper and more effective way to cut carbon and create jobs would be to invest in public transport.
Tax incentives for oil companies
Much worse, the Government has introduced tax incentives to encourage the oil companies to extract a further two billion barrels of oil and gas “that would otherwise stay in the ground” from the North Sea fields. Two billion barrels of oil will produce 800 million tonnes of CO2 - emissions greater than the entire planned reductions in the first three ‘carbon budget’ periods from 2008-2022.
The low priority that green infrastructural investment has with the government in reality is starting to cost jobs rather than create them, just when we really need them, as well as the CO2 reductions. At the beginning of the year, the government boasted that Britain had now overtaken Denmark as a producer of offshore wind energy (yes, Denmark, a country one-tenth of our size). However, since then the UK wind energy industry has said it expects to contract in the coming year, for lack of investment, and England's only wind turbine factory is closing down and its Danish owners moving its production to China and the US. Similarly, the roll out of photovoltaic microgeneration has been slowed almost to a standstill by the government’s ridiculous grant regime that makes funding unavailable for all but a few days each quarter.
Social democratic neo - Keynesian critics of government policy, such as the Green New Deal group, which includes Caroline Lucas, Larry Elliot and Ann Pettifor, (and, indeed, the Green Party), are arguing that rather than the £1.4bn the Government has committed to ‘green investment’, there should be a programme costing around £35bn in the current year, made up of a combination of infrastructural investment and increased social benefits. The main elements of such a programme would be: investment in insulating buildings, solar energy and other renewables, upgrading the electricity grid, public transport and new skills training, an increased state pension, free social care for the elderly and investment in new and refurbished social rented housing. The Sustainable Development Commission has estimated that such a programme over three years would create 800,000 jobs.
Desirable and worthwhile though such a programme would be, it is flawed in two serious ways. First, its proponents fail to recognise the fundamentally unstable nature of capitalism and the speculative drive that is at the heart of the financial system. As a result they imagine that it is going to be possible to tame capitalism; that fine tuning regulatory systems would enable us to take – and keep – control of the system.
Second, while they recognise the need to reduce inequality in the interests of both justice and economic good sense, they do not see the organic and indissoluble link between wealth and power within a class society. In order to affect any significant change in the balance of wealth, from corporate profits to wages and income it will be necessary to succeed in shifting the balance of political power away from big business and its political agencies towards working people and their organisations. So, just as in the seventies in Britain there was a conscious and coordinated campaign by the state against trade unions in order to facilitate the move of wealth towards corporate profits, we now need a determined redistribution of power towards organised labour. Unless working people are powerfully organised and prepared to use their strength, they will inevitably find themselves in thrall to the drive for profit by the multinationals and asset bubbles generated by banks and other financial speculators.
Clearly, New Labour’s Damascene conversion to Green Keynesianism has been somewhat limited. While the Government has poured eye watering sums into shoring up the bad assets of the financial sector it has been parsimonious about defending the real economy by stimulating demand through infrastructural investment and increasing the social wage. Despite the rhetoric, Ministers still largely just lip service to the severity of the environmental crisis. The policy measures that have been most fulsomely advocated in the budget and elsewhere over the past few months are either wrong-headed or half-hearted. Radical action might be advocated by Miliband (and, indeed by ‘Green Establishment’ figures such as Stern and Porritt) but its end is the preservation of the status quo.
The scale of the crises facing us, both economic and environmental are such that simply attempting to return to business as usual, plus some additional regulation of capital and some attractive (yet to be developed) green technofix – like electric cars, hydrogen fuel cells, safe nuclear or clean coal - is just a chimera. Capitalism will continue to look for ways to square the circle in order to return to and maintain business as usual. But any solutions will be short term and will be paid for – at great cost – by the great mass of working people and by the very planet we all rely on itself. We have to build a new system and a new world.
Sean Thompson is author of Green Left’s pamphlet Confronting the Crisis, an ecosocialist response to the global recession and the threat of climate change. It is available for £3 including postage from Green Left, 42 St Albans Road, NW5 1RH.