Does the green money match the green rhetoric?
Critics argue that much of the £12bn in state cash announced by Boris Johnson as part of his “10-point plan” to decarbonise the UK economy by 2050 is not new – and that even the headline pledges are grossly insufficient.
Are they right? Or do the sums actually add up?
Broadly the critics are correct that the numbers being talked about on Wednesday to replace domestic gas boilers, instal new wind power capacity and create new zero-carbon public transport systems and so on fall well short of what will ultimately be needed.
The government’s own watchdog, the independent Climate Change Committee (CCC), reckons around £30bn of investment in these kind of areas will be needed every year for 30 years to meet the official net zero emissions commitment by 2050.
It hardly needs to be said that £12bn in this context barely scratches the surface.
However, it’s worth noting that the CCC, which had been increasingly critical about the government’s lassitude on the decarbonisation agenda in recent months, has warmly welcomed the new plan and the “breadth of the commitment”.
It’s also important to recognise that it’s not only state investment spending which counts. Regulation too is a vital piece of the puzzle because that stimulates private sector investment.
And the decision to bring forward the date at which the sale of new fossil fuel-only powered cars is prohibited from 2040 to 2030 really is a big deal, which will greatly stimulate both the demand and supply of electric vehicles.
Some have argued that other countries are spending more and note that the European Union’s “green new deal” pledges €1 trillion of investment over the next decade.
Yet analysts reckon around €300bn a year of green investment will be required in the EU to hit the commission’s 2030 emission-reduction targets, meaning the investment target should be closer to €3 trillion.
This week’s announcement from Downing Street, as many have noted, is as much about politics as the green economy – an attempt to reset impressions of the government in the wake of the departure of Dominic Cummings.
But, in the end, money talks.
The hope must be that the government’s spending review on 25 November – when the chancellor is due to allocate money to specific investment projects – will start to fill in many of the big funding gaps that analysts and campaigners have highlighted.
The Conservatives’ fiscal plans certainly give them room to deliver the kind of public sector green investment push that is required. Public sector net investment is pencilled in to rise from £42bn in 2019 to £70bn in 2022. This would be an increase from around 2 per cent to 3 per cent of GDP.
Moreover, those investment levels are, we’re told, to be held until the middle of the decade. This would be the highest sustained level of public investment as a share of the economy since the 1970s.
The time to call foul will be if green infrastructure projects lose out to polluting ones when that money is allocated, or if ministers start to downsize that investment spending envelope, perhaps (quite spuriously) citing new constraints on the public finances created by the response to the pandemic.
On climate change, ministerial rhetoric does matter, as anyone who recalls the damage done by David Cameron’s “green crap” outburst will know.
But it’s the delivery that really counts. And the time for delivery has arrived.
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