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| news > Green ideas for the Chancellor's red box 11/03/08 | |
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As Alistair Darling puts the finishing touches to his Budget statement, writing for the BBC's Green Room, nef policy director, Andrew Simms says that the UK's chancellor should be thinking in terms of an envrionmental war economy. "The government is committed to balancing its books over the course of the economic cycle, but the economic cycle has a flat tyre. Worse than that, there’s what several observers have called a ‘perfect storm’ coming. We face a credit crunch exacerbated by high and rising prices for oil and gas which, in the medium to long term, can only head in one direction – up. The gap between demand and ultimately-limited supply, can only grow. Then there’s the wild card, the real storm – climate change. It introduces domestic costs of abatement and mitigation that are large but hard to predict and big new global responsibilities. Already Sir Nicolas Stern is saying that he seriously underestimated the costs of climate change in his government review. How, for instance, should the Chancellor, Alastair Darling plan for the impact of more extreme weather events, shifting patterns of climate borne diseases, and international upheaval such as widespread environmental migration? And, what about our new and growing obligations toward innocent, low-polluting countries seriously affected by the fall-out from global warming which has been driven by our own greenhouse gas emissions? Although the Chancellor believes that the domestic economy is resilient in the face of broader international volatility, that is to ignore a number of deeper underlying trends which are likely to increase the UK’s insecurity. Dependence on imported food and energy, for example, is going up. Once the factors affecting both trends begin to interact, the consequence could be an era-defining economic shock. However you look at it, to improve our ‘resilience,’ means we will need to insure against the slowing of the oil that flows through the arteries of the global economy. In turn, that suggest the need to plan for a higher degree of self-sufficiency. Let’s set a frame around what the budget should deliver in a fundamental environmental sense. Analysis by the Tyndall Centre for Climate Change Research at Manchester University suggests that for the UK to play its part over the coming decades, we need to reduce the carbon intensity of our economy by between 9 per cent and 13 per cent year after year. Any delay in hitting those targets, which already go far, far beyond anything achieved in recent history, simply raises the bar further for what needs to be achieved in later years. Put simply, that is what the budget must put us on a course to. What would that look like in practice? To get a feel for the scale of the transition required, Darling should be thinking in terms of an environmental war budget. When dealing with the biosphere, its worth remembering that you cannot even negotiate with the weather. In this sense the hand of history might usefully tap him on the shoulder as he stands up to give the budget speech, and a voice from the past, whisper in his ear Winston Churchill’s advice to a nation under siege, that it is not enough to do one’s best, that you have to do what is necessary. The cost of carbon clearly has to go up. But taxes to change behaviour are a blunt tool that cannot guarantee that a particular emissions reduction target it met. Emissions trading, too, is meaningless unless it is part of an inclusive global system whose emissions budget is set in accordance with science-based targets for avoiding runaway warming. It would be better to force fossil fuel companies like BP and Shell to introduce a new category for their reserves of ‘unburnable.’ Currently reserves are labeled either as proven or probable. The new category would reveal what should be left in the ground to prevent dangerous climate change. Taxes also can have unintended consequences and people in poverty need protecting from regressive effects. In this case the Chancellor and the regulator Energywatch were right to highlight the scandalous way that energy companies have made the poor pay more by overcharging for the use of pre-pay meters. To win public sympathy for any new or raised taxes that are branded ‘environmental’ the Treasury needs to break the habit of a lifetime. It must concede that proceeds be earmarked for measures to solve the problems that the taxes are ostensibly addressing. Otherwise they will be met with cynicism and be hard to implement. Obvious examples would include major investment in public transport, renewable energy and tackling fuel poverty. Boldness is needed. Fossil fuels are an unrepeatable windfall from nature. But instead of prudently managing their income to prepare for the future, to date the UK has squandered it. Now that prices are high and before North Sea oil is exhausted, a windfall tax is the logical, not to say, poetic solution. Norway, by contrast to the UK, did look ahead. Its oil surpluses have woven a safety net for future generations that is today worth around Euros 260 billion, or Euros 75,000 for every man, woman and child in the country. In this light, the UK could learn from Norway’s experience, and set up an Oil Legacy Fund, paid for primarily by a Windfall Tax on oil and gas company profits. Darling could then re-commit to the fuel duty escalator which would help progressively change behaviour, whilst having the resources to invest in a range of measure to smooth the transition. These might include everything from: expanding the use of school buses to tackle both congestion and energy-inefficient private-vehicle use on the school run, lowering the age for free public transport, and allowing adults with children to go free on public transport, to help for local authorities with the complexities of managing new, decentralised renewable energy services and technologies, and the rapid roll-out of micro, small and medium-scale renewable energy technologies that would create countless thousands of ‘green collar’ jobs. Such a new fund, coupled with a new Demand Reduction Obligation, placed on the energy utilities to manage better what is left, could help achieve the needed shift of policy gear. As important, Darling should use his power as Chancellor to ensure that any positive new environmental measures in the Budget are not neutralised or reversed by conflicting government action elsewhere. For example, he wont be taken seriously on green issues if severe funding cuts hang over the environment department Defra, and bodies like Natural England, whose job it is to oversee our increasingly fragile life-supporting ecosystems. The other iconic decision will be whether the go ahead is given to proposed new coal fired power station at Kingsnorth to be built by reportedly Britain’s biggest greenhouse gas emitter, the energy firm E.on. But perhaps the biggest shift we need is not in the details of plans to tax and spend, but in breaking the mental manacles that clink all along the Treasury’s corridors. These have locked in the notion that economic growth is more important than anything else. But the evidence for the UK is to the contrary. While our economy has grown continuously over the last few decades, study after study shows that our sense of satisfaction with life has flat-lined. The economy should be there to help deliver long, satisfied lives, and it must do so within environmental limits. The greatest mark of a conversion to new environmental realities in the Treasury would be the national adoption of a measure that showed the resource efficiency with which we help achieve good lives. Such measures exist and the so-called Happy Planet Index devised by nef is one. The other message to take away is that there could be an upside to the downturn. The financial crisis is driven by debt that has allowed us to live beyond our means. The climate crisis is connected because it is driven by the resulting over-consumption. The problems and solutions appear linked. Because high levels of life satisfaction can be achieved at low levels of consumption, a new system of incentives to encourage thrift could help tackle the debt and climate crisis simultaneously. As a nation, the best thing we could do for the environment is to reduce our overall consumption. Taken together, these measures might re-inflate the environmental wheel on the economic cycle and we could get moving toward a more promising future. |
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