Wherever you went at the Conservative party conference in Manchester, the government’s green energy agenda was prominent. The Prime Minister, who once suggested that wind farms ‘couldn’t pull the skin off a rice pudding’, wants environmental policy to be a defining issue of his legacy. But is there anything solid that lies behind the hype? Can the government’s policy really enrich the UK economy, as well as tackle climate change? That was the subject of a Spectator panel discussion in Manchester, sponsored by EY.
Hywel Ball, now UK chairman of EY, was, in the mid-2000s, head of its energy advisory business. Even then, he says, the signs were there that renewable energy was a good place to invest. ‘But in Britain we didn’t have the right social or political signals, and intellectual property began leaving the country.’
Now, of the ten largest producers of wind turbines in the world, six are in China. The challenge is to stop the same happening with other investments in green technology. The government’s forward-looking ban on petrol and diesel cars might give a clear sign to the market, but there are still big problems to solve. While 40 per cent of the public say they are looking for an electric vehicle, 55 per cent say that the charging network is a problem. By 2024, the cost of new electric vehicles should have reached parity with petrol and diesel ones. But if we are to phase out petrol and diesel cars in the next decade, 700 electric charging points will need to be added to the network every day to cope with demand. Get it right, and we could create 80,000 jobs in building the required charging infrastructure, said Ball.
Businesses want to invest in green technology, but what is the role of government in all this? It has set ambitious targets and standards, said Andrew Griffith, parliamentary private secretary to the Prime Minister and MP for Arundel and the South Downs. The government hosted COP26, which has drawn lots of attention on the world stage. ‘But when the flags are folded and the tents collapsed, this is a job for business,’ said Griffith. There are vast amounts of global capital looking to invest in technologies which, although they exist, have yet to be scaled up. Hut, he adds, it is not for the government to come up with all the answers, nor to back horses.
Yet there are some sectors of the economy which will need assistance, such as steel and aviation, according to Lee Rowley, whose ministerial responsibilities at the Department for Business, Energy and Industrial Stratedy include the latter. These are sectors which are difficult to decarbonise, and which will struggle to compete. While cars will go through several ‘replacement cycles’ between now and 2050, the steel industry will be able to replace a plant only once – so it must be done right.
For Tony Danker, director general of the CBI, hydrogen and carbon capture and storage are areas to watch: it is those sectors in which he thinks Britain has the competitive advantage to develop the technology, then sell it to the rest of the world. British business, he says, is not being pushed along by government policy. On the contrary, the CBI is even more optimistic than the Prime Minister that UK industry can prevail.
One comment keeps cropping up: many businesses say starting on the pathway to net zero now will cost a lot less than leaving it until later. But there is a problem in bringing along some small- and medium-sized enterprises. They can lack ‘bandwidth’, added Danker. It’s one thing for a large company with a dedicated sustainability officer to devise a transition to net zero; quite another for a small company where one executive might have several roles and less time to plan.
There are some regulatory issues which the government needs to address, added Danker. The current business rates regime penalises you if you make your business premises ‘greener’ – a huge disincentive for any business to become more environmentally friendly.
So much for the relationship between government and business. But what of the relationship between the government and the public? This is an especially poignant topic, thanks to this government’s reliance on former ‘red wall’ seats, where green issues are often be a little further down the list of priorities than in well-off metropolitan districts.
There are two ways we can approach the path to net zero, said Rowley: we can seek to transform the things we have always done, such as driving and flying, so that they become clean – or we can seek to ration them. His constituents in North East Derbyshire are keen for the transition to net zero, he said, but it is important to understand that they still want to drive. He added that the Conservative approach should be to harness consumer choice and ‘treat people as sovereign economic agents’.
One member of the audience, a student in Southampton, raised the issue of activists who try to wrap up zero carbon with other issues, such as feminism. One thing the government does deserve credit for, replied Danker, is that decarbonisation in Britain is no longer a left-right issue as it is in some countries. It will help Britain that both sides of the political divide are signed up to the cause.
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