One step forwards, two steps back? The strange case of Tory solar policy

The Conservative Party has had an on-off love affair with the solar industry ever since the heady days of David Cameron’s Quality of Life Commission. Professionally, I was happy to serve on the Commission. It helped to create the right political conditions for the launch of the feed-in tariff in 2010 and cemented Conservative support for it – something that had seemed impossible when we started debating the policy. In the intervening period, there have been a series of policy highs and lows. Too often it’s been a case of one step forwards, two steps back.

Right now, the real danger is that solar will be overlooked in the forthcoming Clean Growth Plan. There appears to be a mood afoot in Government that the job is done, that a so-called (actually non-existent) solar ‘target’ of 12 gigawatts by 2020 has already been met, and that there is little industrial value in UK solar. News this week that one solar farm has been developed ’subsidy-free’ for the first time in the UK has also led inevitably to a rather complacent response from Ministers. Yes, a solar and storage scheme developed on an existing solar farm site does offer a tantalising glimpse of a sustainable subsidy-free solar future into the 2020s and beyond. But one swallow does not make a summer, and it’s clear that very few such pathfinder projects can be developed subsidy-free in the foreseeable future.

In the context of what has happened to our sector since the 2015 general election, the Government would be unwise therefore to draw conclusions prematurely about the current health of the UK industry. Since 2015, employment in the sector has fallen by at least two thirds from a high point of well over 30,000. Large-scale solar deployment has stalled (notwithstanding isolated exceptions that nevertheless prove this rule), and the revised feed-in tariff has seen a dramatic year-on-year drop in rooftop installations. In 2015, there were 155,000 new domestic installations that year receiving the feed-in tariff. In the first six months of this year, the number was less than 5,000. It is undeniable that the sector suffered unnecessarily as a result of knee-jerk policy making in the aftermath of the 2015 election where solar was wrongly and public blamed for the LCF overspend. 

Ministers are keen to describe UK solar as a success story, and so it is. But what we need now from the Government is certainty and partnership for the future, rather than basking in past successes. The fact is, as the recent REN21 report showed, positive policies are still vital to the solar industry internationally. It is ironic that Solarcentury, a stalwart of the UK sector since the late 1990s, is now exporting successfully our UK solar expertise literally all around the world, while the UK domestic market remains in downturn.  

We need Ministers to build on the successes of the past, not assume that it is ‘job done’. Part of that will involve a change in mind-set in Whitehall – a previous Minister confirmed there are no solar champions in the Department of Business, Energy and Industrial Strategy (BEIS), which is quite extraordinary given the importance of this technology. In a recent Parliamentary written answer to a question about solar redundancies, BEIS Minister Richard Harrington MP said that: “many of those who work in solar are also skilled in other building trades, and will move between these with changes in demand.” It’s hard to imagine such a dismissive answer to questions about employment levels in other low-carbon economy technology success stories.  

For at least two years, the industry trade body the Solar Trade Association (STA) has been calling for a package of measures to ensure that solar can access a level regulatory and policy playing field. This includes action to reduce the burden of business rates on solar rooftop installations and to reduce the rate of VAT on solar storage. Charging people 20% VAT for batteries retrofitted to existing solar installations runs completely counter to the Government’s narrative about the importance of storage and the leading role that the UK can play in that emerging market. We are hopeful for action on this front in the forthcoming Budget.

The lack of a level playing field can also be seen in other policy areas. In particular, it is a nonsense that one of the cheapest renewable technologies, and the most popular, remains locked out of the Government’s competitive auction process for Contracts for Difference (CfDs). This is the mechanism that has seen a halving of the support level required for deploying new offshore wind from 2022. Quite rightly, this has been hailed as a potential game changer in the context of the eye-watering £92.50 strike price at 2012 prices needed for new nuclear. But solar inexplicably has been caught up in the fallout from the Conservative Party’s opposition to, and manifesto commitment to end support for, onshore wind. The reality is that solar could also deploy today at prices approaching half those required for Hinkley Point C. Yet we remain locked out of the scheme in a bizarre rejection of market forces. Including cheaper solar again in the CfD process would help to re-energise the UK market and help to put further downward pressure on solar and other technology costs and benefit bill-payers. It’s such an obvious policy move that it’s hard to understand what is holding Ministers back.

Finally, and inevitably, Brexit remains a destabilising factor in terms of solar industry investment in the UK. For our own part, Solarcentury is active all over continental Europe where markets are recovering nicely and we will have to make a decision in early 2018 on key issues such as headquartering and other contingency planning. In the meantime, Brexit does actually open up the prospect of helpful policy changes, including the possibility of scrapping VAT altogether for solar and other energy efficiency measures, and an end to the red tape of the EU’s unwelcome minimum import price for solar modules. Both issues add unnecessarily to solar costs in the UK. 

After a damaging two years of policy changes, there is now an opportunity for positive action leading to a renewed period of stability and certainty for investment in our industry. The solar industry success story deserves better than another policy round of one step forwards, two steps back.

Seb Berry is the Director of Corporate Communication at Solarcentury and Vice Chair of the Solar Trade Association

The views expressed in the article are those of the author, not necessarily those of Bright Blue

Net losses: solving fishing’s sustainability crisis

With respect to the UK’s fisheries, the Rt Hon Michael Gove MP spared no time at all in flexing his muscles as the new Environment Secretary. Just weeks into his brief, Britain’s withdrawal from the London Fisheries Convention had been triggered, in a move which Gove argued would lead to a “more competitive, profitable and sustainable industry”. Specifically, it paves the way for the UK to manage its own fishing quotas, as well as deciding who gets to access British waters. Done properly, this could result in huge gains for the natural environment.

Fisheries are an example of a common pool resource – whereby access to a resource is open to all. Coupled with rational individual actors, common pool resources rarely experience sustainability. In the absence of regulation, such resources will be perpetually exploited, until, eventually, they collapse entirely. This fact has long been understood, from economists-come-ecologists such as William Forster Lloyd, Elinor Ostrom, and perhaps most famously of all, Garrett Hardin, with his eminent 1968 paper The Tragedy of the Commons.

Scale of the problem

According to a report from the UN Food and Agriculture Organisation, approximately 58% of fisheries are classified as ‘fully fished’ (i.e. operating at, or close to, optimal yield levels), and a further 31% are overexploited, whereby they are fished at a biologically unsustainable level. WWF estimate that the global fishing fleet is between two to three times larger than what the oceans can realistically support. Closer to home, favourite fish species such as haddock and cod have been removed from the Good Fish Guide, a website run by the Marine Conservation Society which informs British consumers about the sustainability of various seafood species which they can expect to find at their local supermarket or fishmonger.

The problem of overfishing extends far beyond the specific species in question. Given just how intricately enmeshed marine ecosystems can be, an unnaturally rapid depletion of one species can have serious implications for many others. For instance, the unsustainable extraction of herbivorous fish from oceans can lead to elevated levels of algal growth, which in sufficient quantities can become toxic for other species which remain. Further, when essential keystone predators such as sharks and tuna are overfished, there tends to be a swelling in the numbers of fish species lower down the food chain, which can similarly knock ecosystems out of kilter.

As well as being environmentally troubling, overfishing poses obvious economic difficulties, too. Within the EU alone, it is thought that unsustainable fishing results in €3 billion of lost productivity per annum, taking an estimated 100,000 jobs along with it. Globally, the burden of declining fish stocks has fallen most heavily on the world’s poor, with estimates from the World Bank and the UN Food and Agriculture Organisation claiming that between 90% and 97% of those employed in the fishing industry – whose income is patently dependent upon reliable and plentiful fish stocks – come from developing nations.

Answers from the Arctic

Given the capricious and ever fluctuating nature of fish shoals, it may appear difficult to know where Governments can even begin to act, should they wish to implement policies to ensure that fisheries remain, or once again become, sustainable. However, that is not to say there are no antecedents whatsoever.

Perhaps the best-known example amongst environmental economists of a policy which has enjoyed success, at least relative to that of other schemes, is Iceland’s system of ‘individual transferable quotas’ (ITQs). Such quotas grant individual fishers the privilege to land a certain quantity of fish, typically by weight, within a given time frame. ITQs can also be traded, meaning that if a fisher wishes to relinquish all or part of their allowance, they can sell it to other, perhaps more efficient, players in the industry. Importantly, the amount of fish which can be extracted from the ocean will, or ought to, be set at a level which is ecologically sustainable – i.e. allows fish numbers to replenish at a rate equal to or quicker than that at which they are removed.

ITQs are seen to be better than the more rudimentary system of ‘total allowable catch’ (TAC), which simply states the amount of fish which can be extracted from the ocean by all involved, collectively. This has led to perverse and often dangerous consequences, such as ‘fishing derbies’, whereby competing fishers are effectively encouraged to recklessly race against each other to harvest as much fish as they possibly can until the TAC is exhausted.

It is true that ITQs do not offer a perfect solution to the problem of overfishing. They require strong (i.e. expensive) governmental oversight and enforcement to function properly, and the task of setting the quota still falls on fallible bureaucrats, susceptible to regulatory capture and Hayekian knowledge problems. In this respect, the tragedy of the commons could quickly become the tragedy of government failure. Indeed, there is widespread anxiety amongst the environmental and scientific community that the existing EU quotas are worryingly generous, and do little to effectively engender sustainability in fishing. 

There are also questions about how quotas ought to be allocated to fishers. Generally, they are either based on historical catch, or through an auction. The former can be contentious in the sense that it may unfairly entrench incumbent players who already enjoy a privileged place in the market. Whereas with the latter, fishers are critical of the added cost they have to bear. Nevertheless, when appropriately administered, ITQs do appear to be an intuitive way to circumvent the problem of overfishing.  

Conclusion

Fishing has long been an intimate part of many countries’ history. Particularly for island nations like the UK, it has often been the only genuine source of income for entire communities. It is not surprising, therefore, that many feel an innate desire to shelter fishers from what some may regard as the vicious and unfeeling realities of global market competition.

However much one may wish to help fishers, though, it is increasingly apparent that the unsustainable nature of the current system does not do so. As scientific knowledge twinned with economic understanding has advanced, it is clear that to continue as we currently are would only store up problems in the long run. ITQs have been shown to bolster fish stocks, and are certainly one possible avenue to explore on the voyage to sustainable fishing.

Eamonn Ives is a researcher at Bright Blue

A post-liberal approach to the natural environment

As Brexit approaches, too many public figures seem determined to stress what divides rather than what unites us; yet the great majority of people outside Westminster simply want to get on with building a country we can be proud of, with a fairer economy and healthier environment. 

Luckily, the further away from SW1 you travel, the more possible it is to imagine a politics that could make this happen.  From Brixham to Birmingham, Sutherland to Stoke, people tell us that they value relationships and the bonds within communities, as much as individual rights and freedoms.  They are sceptical about allowing the state to dominate their lives, but recognise its role in making things better.  They don’t think of people or nature as commodities; but embrace the role of businesses in building economies that flourish.

Theresa May seems instinctively to understand this politics, which has loosely been called post-liberalism. If she were to put it to work to restore Britain’s natural environment, she could begin a project of remarkable national renewal. 

Our wildlife has suffered horribly since the war; our soils are in poor health; and we are facing the impacts of climate change without the resilience we need.  The last Government showed what can be done, by securing wide-reaching reforms to European fisheries policies, and creating a magnificent over-seas network of marine nature reserves; but we need more of that ambition, if we are to turn Brexit into a moment of opportunity for the natural world.

The first step will be to re-think the role of the state in protecting and restoring our environment.

As the Government has already shown through its welcome ban on microbeads, emphatic state action is sometimes simply the right thing to do. But truly effective regulation should act as a spur to innovation, creating dividends for those able to produce cleaner, more efficient and safer products.  At its best, regulation is dynamic. Its job is specifically to render itself redundant.

A similar story can be told about public funding.  State support can help drive down the costs of new products or practices, and in doing so, become an agent for change.  Governments around the world have helped reduce the costs of solar power, for example. The trick is to taper such support in a way that works for consumers and builds markets, rather than demanding an open ended commitment to subsidy.

In an ideal world, the active state would be an environmental problem-solver, not a nanny.  But in many cases the best solutions don’t come from the centre, but from local people working to improve the places where they live.  Their ‘ask’ from Government is to be given more power to do better. 

This is certainly the case for many farmers trying to do the right thing for their businesses and for nature.  A staggering proportion of today’s farmers say they aren’t profitable without the under-pinning support of the single farm payment.  Yet many also acknowledge that this payment, and the rules that come with it, have done little to incentivise innovation; and that they feel trapped in unsustainable patterns of business that demoralise them and their families. 

The remarkable thing is that in many cases, the route to a more profitable farm is also the route to a better environment. I recently met a farm owner and his young manager in Devon who have dedicated years to developing a machine to turn sea-food waste into high-grade fertiliser. Outside Banbury, I met a young business man who is turning his farm around by matching inputs to outputs with passion and precision.  Producers of the highest quality food tell me that they could sell at prices lower than those of the supermarkets, if they could build shorter supply chains. 

The best food needn’t cost the earth – for nature or customers.  But we desperately need an agricultural policy that supports positive change, rather than underpinning the status quo – through capital grants, advice, and backing for smaller farms (the core of our rural communities and our biggest pool of innovators); rather than static payments and moribund rules.

Once we have this foundation, we can encourage farmers to form partnerships locally to deliver more ambitious projects of environmental renewal.  This might include restoring endangered species and habitats, reducing flood risk or cutting the cost of clean drinking water.  It might even see rural communities offering new ways for children from towns and cities to spend time in the countryside – making a real difference to their development and mental health.

Let us imagine that by the end of this parliament, the Government had committed itself to making the UK a world leader in environmental recovery, with bold plans for restoring nature, reducing pollution, and rebuilding sustainable farm and fishing businesses up and down the country.  And let us imagine too, that the engines for this project were local communities and thriving businesses committed to making great places - with the support of an active but enabling state.  Who would care then, which of us (or them) had voted leave or remain?

Ruth Davis is a senior associate at E3G

The views expressed in this article are those of the author, not necessarily those of Bright Blue.

Future farming policy: putting all our asks in one Brexit?

Politics is finally emerging from the shock and awe of the Brexit decision and frameworks for policy development for a new post-EU future are beginning to emerge. An abiding question is whether the political and economic realities of our impending separation will mean damage limitation is required or whether Brexit presents opportunities, not least for innovation and dynamism in business and in policy.

The risks of damage are perhaps nowhere clearer than for farming. The Common Agricultural Policy (CAP) has taken the lion’s share of the EU budget for decades. Though it has fallen recently, it’s doubtful HM Treasury will want to continue funding farming in the way the CAP has done. George Freeman MP, chair of the PM’s policy board, has recently suggested as much.

Not least the Brexit debate set many hares running about where our ‘repatriated’ EU contributions could or should go and farming wasn’t at the top of the list. If we add in the risk that the trade deals finally settled upon are likely to meet the needs of the most influential industries – perhaps financial services or engineering – then farming could face both cuts to a stable source of funding and more intense competition from often cheaper imports.   

These challenges are faced by an industry that is already in a precarious economic position. Despite turnover of nearly £24 billion in 2015, little short of half of the ‘income’ from farming came from public funding, not farmers producing food. In 2014-2015, farms in the cereals and grazing livestock sectors upland and lowland were on CAP life-support: they made losses. Overall, the farming industry is struggling from a combination of interrelated economic pressures despite public funding: long-term falls in farm gate prices, volatility on world markets, a de facto cheap food policy in the UK and supermarkets driving food prices down as they compete for customer loyalty and market share.  

Brexit hasn’t changed all these factors but it offers the chance, unparalleled in 40 years, to reshape farming policy to better address them and other pressing needs. Within the new frameworks of its 25 year plans for farming and the environment, the Government has a signal opportunity to be progressive. It’s also a moment for all those who care about the countryside and the future of farming to support an ambitious agenda.   

A first goal must be to agree on how to create a resilient, financially stable and dynamic farming industry for the long term. Without it food production will be less secure and the rural economy weakened.

A second and equal goal must be to agree on how farming can be made to work for the wider community and the environment. We should take it as understood that a farmer’s vocation is to produce food. Although food production depends on environmental assets, we can’t rely on farmers’ benevolence and voluntary action on the environment when they face tough markets and a fight to survive in the short term. But equally, if substantial amounts of public money are to keep going into farming, we can’t rely either on public benevolence to fund farmers for business as usual.

This means farming fit for the future has to engage with a wider set of issues as a norm: it must address unsustainable use of natural resources and the damage caused to wildlife, water quality, soils and landscapes. So a central goal for future policy post-Brexit – which the Government’s new plans for farming and the environment must help achieve - should be to recognise its multipurpose role: we need to farm for food and beyond food too.

In a country with a relatively small land area and growing population we don’t have the space or freedom for farming to do otherwise: farming must continue to feed us and provide cherished landscapes, clean water and effective flood management, healthy soils that soak up carbon, thriving ecosystems that support abundant wildlife, all of which benefit the public in myriad ways. These are benefits that the market poorly rewards, if at all.

These are benefits that, if farming is oriented towards them by policy with proper levels of funding, should bring greater efficiencies – for example, by ensuring fewer nitrates enter water bodies, that pesticides are targeted precisely - and cost savings to farmers. They will avoid costs to the public too: for the clean-up of water polluted by run-off, for the dredging of eroded soils, insurance bills for flood repair and the unpredictable fall out costs of global warming.

The case to fund multipurpose farming should and can be based on strong principles: demonstrable public benefits for public funding, accountability to those who pay, a holistic approach to link farming with nature across the landscape and fewer costs, more efficiency and better value for money.  Framed this way there is a strong case to be made to Government to win the first battle in the post-Brexit debate: to maintain public funding into farming at the high levels we will need to create the resilient farming sector that can do what we need for food, for communities and for the natural environment.

Graeme Willis is senior rural policy campaigner at the Campaign to Protect to Rural England. You can read more about these ideas in their new report, New Model Farming: resilience through diversity

The views expressed in this article are those of the author, not necessarily those of Bright Blue.

Powering ahead: the case for a new green industrial strategy

If a week is a long time in politics, as Labour’s Harold Wilson famously said, this last month has felt like an eternity. It is scarcely more than a month since the UK took its most important collective decision in post-war history and voted to leave the European Union. Twenty days later, Theresa May became the UK’s second female Prime Minister.

Given the complexity of leaving the European Union, Mrs May’s time in No. 10 may be dominated almost completely by Brexit, yet all other policy issues – health, education, security, the environment and much more besides – are still there to be addressed.

From a trade union perspective, it has been a welcome surprise to see the new Prime Minister address a number of issues that have long been of great interest to us. These include corporate governance and the importance – or otherwise – of British companies remaining British. Particularly important has been Theresa May’s early commitment to an industrial strategy, even reorganising a government department to take that forward.

Yet some have expressed concern that climate change, a central part of the government’s agenda under both the last Labour administration and the Coalition, has been downgraded. Early action to dispel that fear would be welcome.

The Trades Union Congress (TUC) believes that on this issue, we could kill two birds with one stone. Our new publication, ‘Powering Ahead’, puts the case for a sustainable industrial strategy. By sustainable, we mean it must take account of social, economic and environmental concerns. It is natural that industries are born, grow and ultimately die as technology moves on, but the upheaval involved cannot always be left to the whims of the market. In recent decades, deindustrialisation has caused serious disturbances, to put it mildly, in the lives of families and communities. That is why trade unions call for a just or fair transition as we move to more green jobs and away from more polluting ones.

Based on new research from Germany and Denmark, ‘Powering Ahead’ calls for a target of 50 per cent of UK energy coming from renewable sources by 2050. The market, by itself, will not deliver this objective. In Germany and Denmark, two countries that have made great strides towards environmental technology, the enabling role of government has been harnessed in a mission to break into those industries.

The UK government needs to step up to this challenge, with its potential for significant economic and industrial rewards. The economist Lord Stern has predicted a future annual global market of $500bn in environmental goods and services, so investment in these sectors today could reap very real economic benefits tomorrow.

We also believe that government should steer new green tech jobs towards the UK’s former industrial heartlands, which lost their livelihoods with the demise of heavy industry and too often have not seen new opportunities moving in to take the place of jobs lost. The referendum campaign showed that too many people do not believe globalisation has worked for them.

‘Powering Ahead’ explores a range of policy options the government could adopt. It calls for funds to support companies and universities, working together, to tackle the problem of storing renewable energy. It also calls for the development of a proper strategy, based on the building of a political consensus and using a social partnership approach. As readers might expect, the TUC looks enviously at the role of Danish and German trade unionists, utilising their countries’ models of social partnership to influence company decisions from an employee perspective. Politicians of the centre-right, such as Angela Merkel in Germany, seem most comfortable with this approach. Germany’s continued success as the strongest economy in Europe bears witness to its value. Collaboration must also be international; for example the report argues for cross-country effort to develop Carbon Capture and Storage technology, if this is too expensive for the UK government to fund by itself.

What is undoubtedly true is that pollution and environmental degradation know no borders and affect all of us, young and old, rich and poor, supporters of all political parties and of none. We all have an interest in the future of the planet and none of us have a monopoly of wisdom in how to safeguard it.

Outside of the EU, the TUC believes that challenge has become even harder. It was Lord Deben, described by Friends of the Earth as “the best Environment Secretary we’ve ever had”, who said he first became interested in environmental issues in the 1990s when the UK was described as the “dirty man of Europe” due to its poor recycling rates. Brexit may mean Brexit, but there is no mandate to return to those dark days and the Conservative Government needs to demonstrate how the UK’s environmental standards will be maintained and enhanced outside of the EU. The Green Conservatism project of Bright Blue has an important role to play on this issue and the TUC stands ready to support its work. 

Tim Page is senior policy officer at the TUC

The views expressed in this article are those of the author, not necessarily those of Bright Blue.