Nuclear reactors: is big beautiful?

Nuclear power has long been a controversial source of energy. Detractors point to high infrastructure costs and difficulties associated with storing nuclear waste, amongst other concerns. Advocates, however, view it as a clean and reliable alternative, which the grid requires as the country steadily shifts away from coal and other fossil fuels which we have relied upon for decades.

But last week, the car giant Rolls-Royce released a report on small modular nuclear reactors (SMRs), outlining how they think the technology – first developed several decades ago to power submarines – could foreseeably bridge some of the differences in opinion between pro- and anti-nuclear voices, and usher in a “once in a lifetime opportunity” for Britain to be at the forefront of nuclear technology. Such bold claims, however, require scrutiny – given Rolls-Royce’s commercial interest in the technology’s adoption, and also the relatively untested nature of SMRs as part of the energy system.

Typically defined as nuclear reactors which can generate up to 300 megawatts of electrical power, and can be produced in a single factory on a repeated basis – i.e., ‘modularly’ – SMRs have been touted by their supporters as a way for the UK to tap a reliable source of energy, able to ensure the lights stay on when the sun isn’t shining or the wind isn’t blowing.

One of the main selling points of energy generated by SMRs – at least compared to conventional large-scale nuclear projects such as Hinkley Point C in Somerset – is cost. An economic fact true of most goods and services is that increased and repeated production has a tendency towards falling average unit costs – what economists would call economies of scale. For larger nuclear projects, which are effectively produced as ‘one offs’ every few decades or so, designers have been unable to exploit the potentially lucrative economies of scale because the actual technology involved typically changes to such a significant extent with each project. However, for SMRs, the opportunity to do so is theoretically much greater. Owing to the fact that a factory may fabricate many several SMRs, financial savings in materials and alike allow for a lower cost per reactor to be achieved, ultimately manifesting itself as a lower cost per unit of usable energy generated.

Others have highlighted the fact that financing SMRs could be more attractive to investors, relative to large-scale nuclear plants. Reasons for this are broadly twofold: on the one hand, capital expenditure costs will be lower given that the reactors will be much smaller – allowing a more diverse pool of investors to consider financing a project; on the other, the asset will begin generating dividends far sooner, because it can be built and operationalised more quickly, again, due to its smaller size. This could therefore mean that investors might agree to a lower strike price for their energy generated, given the fact they will not have to factor in more of a guarantee on their return on investment.

SMRs may not just make financial sense, but they could also play a vitally important role in expanding our nation’s ‘energy flexibility’, through helping to decentralise energy production. Decentralisation of energy can be advantageous for the environment because when energy is consumed close to where it is produced, transmission losses are minimised. Developments in other energy sources have already been heading in this decentralising direction for some time now – consider, for instance, solar photovoltaic panels atop people’s houses. Some have also suggested that because SMRs require less water for cooling than their larger cousins, they are more environmentally friendly in this respect, and could also help in bringing energy security to remote areas which may not be located close to seas or large rivers.

Nevertheless, questions do remain about SMRs. In this very blog, much of the financial case for them is based upon the theoretical assumption that economies of scale will be realised – and realised in sufficiently large proportions to warrant a revolution in the energy sector. Because the technology is so untested as a commercial source of electricity generation, estimates about how far costs will fall are difficult to accurately make at this stage.

Environmental NGOs have also criticised SMRs, largely on the basis that they are not strictly speaking a renewable form of energy generation – certainly, SMRs will still inevitably call for the intermittent disposal of spent nuclear fuel. Even if one is not inherently opposed to nuclear energy, it has been pointed out that nuclear waste is an area where large-scale plants have the upper hand over SMRs, because the latter would face a challenging coordination problem stemming from several nuclear sites all needing to dispose of individually lesser, but cumulatively equal, amounts of nuclear waste.  

Yet perhaps the foremost factor which could jeopardise the roll out of SMRs is the remarkable fall in the cost of certain forms of renewable energy, such as solar and wind power. Incidentally, these are technologies which have already very much felt the virtuous cycle of economies of scale themselves, as the costs of their parts have tumbled as they have become more and more widespread. Coupled with ongoing learning about how best to deploy renewables, and a fine tuning of the technology they utilise, wind and solar farms are now more efficient, and more cost-effective, than ever.

Indeed, in the aforementioned Rolls-Royce report, it is somewhat ambiguously claimed that they are “working towards” the medium-term target of £60 per megawatt hour of energy generated through SMRs. Initially, Rolls-Royce even concede that a figure of around £75 per megawatt hour is more likely. This would be noticeably more expensive than the £57.50 per megawatt hour of wind generated power, recently agreed to by two companies in the most recent Contracts for Difference auctions.

In 2015, the then Chancellor, George Osborne, signalled the Government’s ambition to explore new nuclear technologies – pledging £250 million into a nuclear research and development programme. Since then, it has launched a competition to invite engineers to submit their plans for the best value SMR design for the UK. As the nation continues its transition away from dirty and polluting fossil fuels, there is an ongoing debate about which technologies will power the UK forward. In theory, SMRs could have a number of potential benefits, relative to large-scale nuclear. But they also come with certain disadvantages, not least of which is their relatively untested nature.

Eamonn Ives is a Researcher at Bright Blue

Fishing for subsidies

Fish the world over are being removed from the oceans at an alarming and unsustainable rate. One estimate from a recent WWF report suggests that the populations of fish species which are caught by humans for food have halved in recent decades, with selected species witnessing even more pronounced declines in numbers. Approximately a quarter of all elasmobranchs – that is, sharks, rays and skates – for instance, verge upon extinction, primarily due to unsustainable levels of fishing. Strong and increasing world demand for fish and seafood derivatives look set to place an additional pressure on an already burdened resource.

The consequences of such relentless and unrestrained extraction can be catastrophic for ecosystems. The removal of apex predators from certain waters, for instance sharks and tuna, may trigger a mushrooming of species lower down the food chain, which can go unchecked in the absence of a natural control mechanism. Conversely, the overexploitation of herbivorous fish which arrest algal succession can spell disaster for marine environments, such as corals and coastlines, because the algae toxify waters and impinge upon the ability of reefs to take hold and flourish. Tackling overfishing, therefore, will be vital to preserve not only some of the most precious fish species, but also the wider environment at large.

Solutions to overfishing

An earlier blog post explored the possible introduction of ‘individual transferable quota’ (ITQ) systems into areas which are not currently subject to them, as a solution to the problem of overfishing. Quotas like these permit fishers to catch an allotted quantity of a species of fish over a certain period of time. Indeed, ITQs have proven to be at worst better than unregulated arrangements, and at best a genuine method of ensuring sustainable fishing. Yet, given the complex and politicised nature of ITQs, they have often proved challenging to implement in practice.

Even so, other, more moderate, solutions to the problem of unsustainable fishing are available. One particular impediment of efforts to move towards a more sustainable system of fishing, for instance, is the copious subsidies which enable an uneconomically large fishing fleet to exist. Whilst challenging to definitively calculate, aggregated fishing subsidies across the globe total an estimated $35 billion.  

First of all, it must be said that not all subsidies associated with the fishing industry are necessarily deleterious for sustainability. There are examples of desirable behaviour being encouraged through subsidies, such as incentivising fishers to trade in old, environmentally harmful fishing gear – like drift nets – for cash payments, which they can put towards newer, safer equipment. On some analyses, approximately $15 billion of subsidies worldwide are directed into broadly socially beneficial programmes – including funding for the rehabilitation of ecosystems, fisheries management schemes, and environmentally-oriented research and development.

The harmful effect of subsidies

Sadly, however, the majority of state-administered aid to fishers is not so ecologically ameliorating. The conservation group Oceana have calculated that as little as 1% of all subsidies granted by EU member states to their native fishing industries had beneficial consequences for the environment. Taking the UK in isolation, over €17.5 million of subsidy payments were classed as detrimental, over €160 million as ‘ambiguous’, and none at all were regarded as environmentally beneficial. 

Particularly perverse are so-called ‘capacity enhancing’ subsidies, which pay for the operational costs associated with fishing, such as fuel expenditure or port construction, thereby permitting a greater number of vessels to take to the seas than would be the case otherwise. Indeed, amongst developed and developing nations, an estimated 22% of all fishing subsidies are directed towards reducing the cost of fuel. In addition, research has found that 90% of capacity enhancing subsidies are granted to large-scale, industrialised fishers, as opposed to artisanal, subsistence fishers, which have less of an impact upon marine environments.   

Policies such as capacity enhancing subsidies are increasingly recognised as damaging to our seas, and hinder efforts to achieve sustainability in fish stocks. But not all subsidies are necessarily bad. Those which are tailored to encourage environmentally friendly practices will assist fishers to adapt how they operate for the better. The industry will also require some level of subsidy to pay for monitoring and data collection, each of which help to ensure the rebuilding of fish stocks and their maintenance thereafter.

Much in the same way as has been touted for land agriculture, when the UK withdraws from the EU, the chance arises for greater consideration to be given to how fishing subsidies are allocated. It is doubtless that reducing payments which are capacity enhancing will force some fishers out of the market. But if the government chose to do this, one option could be to reinvest the savings from curtailing capacity enhancing subsidies into measures which help our marine ecosystems to thrive. Further, for those fishers efficient enough to remain, they will do so within an environment which they can be sure will be economically productive for years and decades to come.

Eamonn Ives is a researcher at Bright Blue

How the illegal wildlife trade contributes to security concerns

Poaching and the illegal wildlife trade are, by definition, security threats to some of the Earth’s most endangered animals and least-common plants. The WWF estimate that as many as 20,000 elephants are killed each year, and that wild tiger populations have been decimated to just 5% of what their total strength was at the beginning of the 20th Century. Forests are being plundered at extraordinarily fast rates for their valuable and rare woods, which is in turn destroying entire ecosystems. Yet, as much as such illicit activities are threatening to the world’s natural environment, they are increasingly being recognised by security experts and politicians alike as safety concerns for humans, too.

Believed to be worth up to $23 billion per annum, the illegal wildlife trade – which includes dealing in ivory and animal skins, as well as rare plants and woods – is a multifaceted problem which involves nations both rich and poor. Naturally, therefore, criminal gangs stand to make a good deal of money by participating in what is one of the world’s most valuable black markets, along with drugs, human trafficking, and counterfeiting.

A multi-consequential issue…

The trade in illegal wildlife can spawn insecurity in a number of different ways. Most obviously, organised criminals and terrorist cells can directly partake in the trade, and plough the immense profits they make into wreaking havoc amidst human civilian populations. A report published by the Elephant Action League, for instance, claims that ivory trafficking in East Africa alone could be supplying up to 40% of the funds necessary for maintaining the international terrorist group al-Shabaab’s fighters. Criminals and terrorists are believed to view poaching as an attractive method of raising money because wildlife crime offers high rewards with lower risks, relative to other felonies.

Yet, it is not only intrastate actors who have exploited wildlife to bankroll their destabilising activities. A report from the International Fund for Animal Welfare highlights how rogue states – a most obvious source of insecurity for civilians – have historically financed themselves in part through the illegal wildlife trade, often turning their military might on megafauna like elephants and rhinos in order to harvest their valuable tusks and horns.

Another, more nuanced, perspective on how the illegal wildlife trade threatens human populations can be seen in the way that when natural capital is unsustainably extracted from an ecosystem, that ecosystem duly degrades. This creates insecurity on two fronts. Intrinsically, as the environment deteriorates, it becomes less able to sustain its inhabitants – jeopardising their very survival. But instrumentally, too, this in turn may drive the forced migration of so-called environmental refugees, potentially creating “inter-human conflicts” when the aforementioned refugees settle amongst other civilians, and resources become scarce or more contested.

Similarly, another thought-provoking yet all too often underappreciated source of insecurity posed by the illegal wildlife trade is the way in which it contributes to the prevalence of zoonotic diseases. The importation of live animals, or unsanitary bushmeat, serves as a serious hazard to countries one may not initially associate with contributing to poaching. Indeed, it is believed that the illegal wildlife trade has played a role in the proliferation of certain high-profile diseases, such as Ebola and SARS.

… requiring multi-dimensional solution

One can see from the above that efforts to quell the illegal wildlife trade need not exclusively be bound up in the conservation paradigm. Poaching can be inextricably linked to human security in terms of how it can fund terrorism and support rogue states, as well as creating environmental refugees and spreading diseases. Accordingly, some have argued that the trade in illegal wildlife ought to be conceptualised as a focus not only for conservation groups, but also Government departments such as the Ministry of Defence, the Foreign and Commonwealth Office, and the Department of Health.

Solving the problem of poaching will need to be a concerted and coordinated endeavour, best done through joined up Government and international collaboration where practicable. It will depend also on limiting both the supply and demand of illegal wildlife produce. On the former, this may be achieved through measures such as increasing funding for park rangers, and equipping customs officials with the latest technology to scan for would-be smuggled exports of illegal wildlife produce. Closer to home, wildlife groups have called on the Government to explore extending the trade in ivory prohibition to include pre-1947 ivory, as it is claimed that the loophole acts as a cover for the trading of that which was harvested post-1947 (i.e. possibly ‘fresh’ ivory), which can be difficult to age accurately.

On the latter point – lowering demand – it may appear to be an insurmountable challenge, given just how intimately products such as ivory or shark fins are linked to certain cultures. Yet, it would be premature to be overly pessimistic. Japan, for example, was once one of the world’s biggest importers of rhino ivory, but following stringent regulation and changing social attitudes, it now only imports a fraction of the total ivory it once did. In China, too, one advertisement campaign alone was found to lower respondents’ proclivity to purchase ivory from 54% to 26%.

When up against powerful and ruthless criminal organisations, conservationists may feel they are fighting a losing battle. Recently, however, there has been a trickle of good news – from wild tiger numbers increasing for the first time in over a century, to Nepal successfully ensuring that no rhino poaching took place for two whole years. But there is still much more that can be done. Raising the awareness amongst Governments of the ways in which poaching can threaten not only the world’s most endangered plants and animals, but also their citizens, could be a prudential place to begin. 

Eamonn Ives is a Researcher at 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

Three ways product design can reduce poverty overseas

One day, your smartphone will probably be recycled by a teenager on a rubbish tip; perhaps in Ghana or Nigeria. Months before that, it will likely have been repaired and sold on by an entrepreneur in the same country.  The health and livelihoods of these women and men depend on the way we design our products in the EU – the toxic chemicals we permit and the ease of repair that we require. 

Most of the electronic goods we dispose of eventually end up in developing countries (for computers, the figure is 90%). Most of this equipment is repaired and sold on; creating jobs and allowing access to cheap IT for those who would otherwise not benefit from it. In Accra, Ghana, for example, the refurb sector provides more than 30,000 jobs, and 80% of devices are either secondhand, repaired or refurbished.

However, there is also a dark side to this story. Your mobile phone contains arsenic, lead and a host of other toxic materials that pose a threat to life when it is no longer (re)useable. If the phone is sent to landfill, these chemicals can leach into soil and groundwater. Under appropriate conditions, recycling is safe. But if the recycling is conducted by a child with no safety gear on a Ghanian rubbish tip, the consequences can be brutal. Unfortunately, the latter is common. The biggest e-waste dump in the world is just outside Accra.

This newly released Tearfund paper examines how product design standards (and in particular the EU’s Ecodesign legislation) could be used to enhance the livelihoods of those engaged in repair and recycling in poor nations, rather than endangering them. This perspective is entirely absent from the debate about these standards at present.

The paper represents our first investigation of this important issue, but we can already draw three conclusions:

1. Ambitious, open design standards could improve the livelihoods of repair and remanufacturing entrepreneurs in the Global South;
2. Restrictive standards that allow manufacturers to exert a monopoly over repair and upgrade could damage these livelihoods;
3. Restricting the use of hazardous chemicals (like those on the list of ‘Substances of Very High Concern’) could improve the health of huge numbers of children and adults currently involved in the informal recycling of electronics.

At present, design standards such as the EU’s Ecodesign measures are intended to improve the resource efficiency of products sold in Europe, which is a worthy aim. With a bit more thought, they could also be used to improve the lives of some of the poorest people in the world.

Richard Gower is the Senior Associate for Economics and Policy at Tearfund, an international development NGO. This blog also appeared on Tearfund’s JustPolicy platform

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

Cracking a nut with a sledgehammer: how killing diesel risks taking local clean energy with it

Diesel engines don’t have a good rep these days. But while most public attention has been focused on those with wheels choking our streets, it’s a different bunch that the Government has actually been cracking down on.

Every year the Government runs a reverse auction for electricity generators (and some storage and ‘demand shifting’ projects) called the capacity market. Winners are granted public subsidy to be available during the winter to provide power if supplies become tight. What the Government really wants this to do is to incentivise new, large gas plants. But it turns out it’s cheaper to build small diesel plants. Few gas plants can compete - and thus few get built. Instead, we now have up to 2GW of diesel generators installed locally. This is not good press for the Government: diesel has high carbon emissions and local air quality impacts. We shouldn’t be subsidising them (nor should we be subsidising coal plants, by the same token). So the Government set out to cut them out of the picture.

So far, so good. But what happened next risks undermining not just diesel, but the shift to local, clean, flexible energy too. What went wrong?

A quick rewind. The power sector has seen radical changes in the last decade. The major story has, of course, been renewables. Much renewables capacity in the UK is locally installed, which ushers in a fascinating new paradigm in which power doesn’t just flow from the beating hearts of vast coal, gas and nuclear plants out to the veins and capillaries of towns and villages. Now our homes, businesses and fields are themselves centres of energy; either used onsite or transmitted to local consumers.

This actually makes a lot of sense. You cannot transmit power without losing some of it. The further it travels, the more you lose. The UK wastes 8% of the electricity it generates in moving it from A to B (and over 50% overall if you include thermal power station inefficiency). But generating wasted electricity still costs money - and still incurs wear and tear of infrastructure used to transport it - all of which costs bill payers. If electricity is generated closer to demand, lower losses should entail a more efficient system, and thus lower costs overall. 

The rules governing the use of wires and pylons by generators and suppliers of electricity were not designed to support local generators, but they do end up reflecting the fact they do not use as much of the total network. There are 14 regional electricity networks, each of which connects into the larger national grid. Suppliers with customers in those regional networks pay charges based on the amount of electricity they buy into them at peak times. If local generators produce electricity during those periods less electricity needs to be imported from the national grid. This saves the suppliers money in reduced charges, part of which is then passed onto those local generators as a reward. This is called an ‘embedded benefit’, and it helps incentivise building generation closer to where electricity is consumed.

At least it did.

Connected locally, diesel plants can do what big, central gas plants cannot - access these embedded benefits. Take this revenue stream away, the Government thought, and perhaps gas will be able to compete again. Ever since, there has been pressure on Ofgem to do just that. And three weeks ago they announced a cut of up to 93% - almost entirely removing it. 

So much for diesels. But this also deals a blow to renewables and storage projects (such as batteries or pumped hydro) connected locally, of which there is several times more capacity than there is diesel. Worse, unlike subsidy cuts which only affect future projects, this hits existing projects too - punishing them for a problem they didn’t cause. Reduced projected revenue, and increased uncertainty, is expected to cool investment in local, clean, flexible electricity infrastructure. Storage - that oft-touted key to a renewable future - could be hit particularly hard. With access to few public support levers, projects often rely on being able to deliver power at times when rewards are available to build a business case. 

But was this simply an unintended consequence?

Actual rule change is undertaken by industry panels, which are dominated by sector incumbents including the ‘Big Six’. Only they have the personnel and capacity to resource such involved work. The panel that presented proposals to Ofgem in this case did not have a single renewable energy or community energy representative on it. In the consultation that preceded the final decision seven out of nine of the big commercial players were opposed to the benefit. The two in favour either have no large central generation assets of their own, or their own interest in renewables.

Whether the product of genuine manipulation, or simply the inertial imbalance of representation on Ofgem’s panels, it is the incumbent generators who won. They are, theoretically at least, now more likely to be able to build new gas stations - as diesel competitiveness is reduced - capturing public funds in the process. And the renewable and storage projects causing such havoc for their business models just lost revenue. 

So it’s the transition to a local, clean, smart - and ultimately cheap - energy system that is losing out.

Which raises several questions. Should Ofgem’s remit formally incorporate the UK’s 2050 climate target, given its pivotal role in shaping the systems that must get us there? Should incumbents be allowed to continue dominating the processes that evolve regulations? And should the Government ensure that Ofgem is driving our energy system to one that is lower cost, more local and lower carbon?

Our answers would be: yes, no and yes. The rapid (and urgent) transition in the design and operation of our energy systems for a liveable planet simply demands it.

Max Wakefield is lead campaigner at 10:10, a charity that focuses on practical, participatory and positive solutions to climate change. 10:10 work with everyone, from policy makers and politicians to community energy groups and schools, to create the practical and cultural change necessary for a rapid transition to a low carbon UK. You can join 10:10’s campaign to challenge Ofgem’s decision here

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

Gove’s green guarantee: reforming the Common Agricultural Policy

On the Andrew Marr Show last weekend, the new Environment Secretary, the Rt Hon Michael Gove MP, offered some succinct and unambiguous answers on the outline of agricultural subsidies post-Brexit. Of particular note, he confirmed that wealthy landowners could expect to receive less money in the form of subsidies after the current Parliament.

The Common Agricultural Policy and its problems

At present, the regulatory and funding systems which govern the British countryside are dominated by the EU’s Common Agricultural Policy (CAP). This regime sees the UK receive over £3 billion per annum, which is allocated to farmers and landowners alike. Underpinning the CAP are two ‘pillars’, which dictate as to where public money is directed. Pillar I funding consists of measures such as income support (money awarded per hectare of land owned), and receives three quarters of the total CAP budget. Pillar II funding, which is paid out through each EU member state’s Rural Development Programme, is supposed to encourage environmentally sustainable farming practices in return for cash payments.

Unfortunately, this system has a number of perverse unintentional environmental implications. Firstly, the strict requirements for Pillar I payments mean that farmers have a fiscal incentive to avoid agri-environment practices. One instance of this playing out in reality is reports of some farmers felling trees under the justification that it will increase the amount of land on which they can farm, and thus claim subsidies for.

Secondly, by subsidising inefficient farming operations, the CAP has allowed agriculture to take place in areas it otherwise would not. Hill farming, for instance, is rarely economic, as the market price received for produce cultivated on hillsides would not cover the costs of production – it is only thanks to subsidies that the practice persists. Without subsidies, therefore, this land would go unfarmed, potentially allowing more afforestation in the uplands, and increased biodiversity as a result.

The future of agricultural subsidies after Brexit

With woodland coverage in the UK having shrunk to just 13% of the total land area, society is missing out on a wide range of benefits that trees offer. A report from the Forestry Commission cites how trees purify the air, serve as natural flood defences, and are even associated with improving mental health amongst individuals. It is for exactly these reasons that Bright Blue launched its campaign earlier this year for the Government to improve tree planting incentives for farmers after Brexit.

But what other funding priorities should the new post-Brexit agricultural policy have? The National Trust has called for taxpayer money to be paid out to farmers only where clear public benefits are delivered. They have also pointed out the fact that there are certain aspects to agriculture which degrade the natural environment, such as through the excessive use of harmful fertilisers, and which currently are actively rewarded by the CAP. Thus, a more targeted system of granting funds to farmers would allow the Government to remove or reduce payments from those who engage in such detrimental practices.

Echoing this perspective is Professor Dieter Helm of the University of Oxford, who argues that the problem is not that farmers receive public money per se, but rather the ends to which it supports. Further, he argues that farmers should be regulated to maintain the land to a certain level in a way that avoids harming the wider environment and that public funds should be earmarked to directly purchase public goods from farmers.

The consequences of Brexit on the agricultural community will be pronounced, perhaps more so than for any other sector of the economy. Many farmers are anxious that the end to subsidy payments could imperil their businesses and livelihoods. Yet such fears may be premature and unwarranted. In 1973, New Zealand’s farmers faced a comparable situation when Britain – one of its then major trading partners for foodstuffs like lamb and dairy – joined the European Economic Community and thereby adopted its external tariffs.

New Zealand responded by removing all of its agricultural subsidies in 1984 for food production and fertiliser use. These subsidies had been blamed for environmental degradation, low productivity, and inducing a lack of innovation within the sector. Once withdrawn, some smaller farmers who lacked the requisite economies of scale went out of business. But many others successfully embraced innovations in science and technology as the means to realise increasing yields, and began to utilise the differing types of land more effectively and more efficiently. Accordingly, New Zealand’s agricultural sector enjoyed average real terms growth of 4% for the next 15 years and has since established itself as a key component of the global food supply network.

In terms of the environment, the results have been mixed. With the lucrative subsidies scrapped, farmers found it less affordable to purchase artificial fertilisers and pesticides, and their use declined accordingly. Moreover, rates of afforestation increased, and the total number of hectares of land dedicated to pasture fell. However, critics of New Zealand’s approach have cited concerns about how the rate of conversion of indigenous grassland to exotic pasture increased in the South Island by 67% between the period 1990-2001 and 2001-2008. In addition, by excessively focusing on its comparative advantage in livestock production – a highly greenhouse gas-intensive activity – New Zealand has become the largest emitter of livestock emissions per capita.

Conclusion

In leaving the EU, and by extension the constraints of the CAP, Britain has presented itself with an historic opportunity to review the relationship between the Government and the agricultural sector. The substantial sums of money which are currently sent to subsidise inefficient, and at times environmentally injurious, farming operations can be redirected to finance projects and farming practices that improve the environment.

During the debates which took place in the run up to the 23rd June 2016, there were only cursory mentions of the implications of Brexit for the environment, with the Remain side highlighting the potential loss of environmental regulation, and the Leave side promoting the opportunity to relinquish the EU’s unwieldly CAP. We now have a Government re-committed to “being the first generation to leave the environment in a better condition” than it inherited. Certainly, Gove’s comments this weekend indicate his desire to use Brexit and the UK’s departure from the CAP to further that ambition.

Eamonn Ives is a researcher at Bright Blue

A manifesto for green conservatism

The Conservative Party manifesto for the upcoming General Election should feature a bold, positive offer on the environment. Importantly, protecting and improving the environment is popular with the Conservatives’ base: recent polling for Bright Blue found that many environmental policies are supported by a majority of 2015 Conservative voters, including those that voted to remain in the EU and those that voted to leave.

At the last General Election in 2015, the Conservatives were anxious about losing voters on the Right to UKIP, while the Liberal Democrats’ unpopularity meant that the threat from the centre ground was weaker. But in this election, the dynamic is reversed. UKIP is now weak, and its voters’ desire to have Brexit implemented is seeing many already switch their allegiance to the Conservatives.

The greatest electoral challenge for the Conservative Party at the upcoming General Election comes from their left flank, not the right: the Liberal Democrats in Southern England, Labour in the North and Midlands, and the SNP in Scotland. To win a big majority, Theresa May must reassure Remain voters that she has a liberal, outward-looking vision for Britain as it leaves the EU. The 2017 Conservative manifesto, therefore, must look to the Centre, not to the Right. It must reassure Remain voters that Theresa May has a liberal, outward-looking vision for Britain as it leaves the EU. The environment should be an important part of this proposition to the voters of liberal Britain.

Our polling found that concern about the environment was particularly strong among Remain-voting Conservatives. For instance, 81% of Remain-voting Conservatives are concerned about the impacts of climate change, compared to 70% of all Conservatives. Similarly, 80% of Remain-voting Conservatives are proud of the UK being the first country in the world to set legally binding emission reduction targets, compared to 71% of all Conservatives.

Drawing on the findings in our recent report, Green conservatives?, we propose several environmental policies that are supported in general by the mainstream of Conservative voters, but also particularly by Remain-voting Conservatives. Together, they form Bright Blue’s 2017 manifesto for green conservatism.

High-level ambitions

• The UK should continue to reduce its greenhouse gas emissions to tackle climate change. 
  Seventy percent of Conservatives are concerned about the impacts of climate change.
   
• This generation should be the first to leave the natural environment in a better state than it inherited it.
  A big majority of Conservatives (71%) are concerned about the state of the UK’s natural environment (such as wildlife, landscapes, waterways, and forests). This level of concern is consistent across the different kinds of Conservatives, including Remain- and Leave-voting Conservatives. Eighty-nine percent of Conservatives think that policies to mitigate climate change like tree planting also benefit the natural environment.

Energy and climate

• Further deployment of renewable energy in the power sector should be encouraged.
  The most popular environmental issue Conservatives want to see the Government deliver is increasing renewable energy generation, which 53% put in their top three. The most popular energy sources among Conservatives are all renewable, ahead of nuclear and fossil fuels: first, solar power; second, tidal; third, offshore wind; fourth, biomass; and fifth, onshore wind.
   
• Further development of onshore wind should be permitted, provided local people have the final say and there is no subsidy.
  A majority of Conservatives (59%) support the further development of onshore wind farms, provided they receive no subsidies. Bright Blue’s policy is to enable new onshore wind farms to be awarded zero-subsidy fixed-price contracts, which are now required to help the financing of all new capital-intensive energy infrastructure.
   
• Britain’s remaining coal-fired power stations should be phased out, by 2023 at the latest.
  Phasing out the remaining coal-fired power stations in Britain by the mid-2020s is supported by two-thirds of Conservatives. Bright Blue-commissioned analysis has found that there is more than sufficient time to build enough new gas and renewables capacity to guarantee security of supply as coal is phased out, in a range of scenarios.
   
• Air pollution should be tackled through an expansion of low emission zones and a targeted diesel scrappage scheme for the oldest cars in polluted areas.
  Bright Blue’s campaign to establish more low emission zones in pollution hotspots is supported by 57% of Conservatives. Sixty-seven percent of Conservatives support a diesel scrappage scheme, under which motorists would receive a cash payment from the government in return for trading in an old diesel vehicle. The second most popular environmental issue Conservatives want to see the Government deliver is improving air quality, which 30% put in their top three. Thirty-seven percent of Conservatives are concerned about local air pollution, rising to a majority (65%) of Conservatives in London.
   
• Private investment in domestic energy efficiency and decentralised renewables like solar photovoltaics and heat pumps should be incentivised by providing government loan guarantees.
  Sixty-six percent of Conservatives support Bright Blue’s policy to introduce government loan guarantees for households to reduce the interest rate for Green Deal loans. The loans would fund the upfront cost of home energy improvement measures, which is then paid back through energy bills. Our polling finds that many Conservatives were interested in installing energy improvements in their homes, but a high upfront cost was the main barrier.
   
• All homes that are sold should have to meet a basic minimum energy performance standard.
  Seventy percent of Conservatives support a new rule, proposed by Bright Blue, that all homes being sold must first meet a minimum energy performance rating (EPC), with some exemptions, such as for listed buildings or fuel poor households. Just 12% are opposed.
   
• The UK should continue to lead internationally on tackling climate change.
  A clear majority of Conservatives (71%) are proud of the UK passing the world-leading Climate Change Act in 2008 to reduce greenhouse gas emissions by 80% relative to 1990.

Natural environment

• Current environmental protections that derive from the EU should at least be maintained after Brexit.
  Large majorities of Conservatives want to at least maintain, and in some cases strengthen, existing EU environmental regulations after Brexit: 96% of Conservatives want to maintain or strengthen water quality and beach cleanliness standards; 93% protections for habitats and wildlife; 92% air pollution reduction targets; 91% household waste recycling targets; 85% renewable energy generation targets; 85% regulations to increase energy efficiency of household appliances; 85% restrictions on use of pesticides and fertilisers in agriculture; and 64% fishing quotas. Large majorities of Conservative Leave voters also want to at least maintain all these EU environmental regulations after Brexit.
   
• Farming payments should continue after Brexit once the UK has withdrawn from the Common Agricultural Policy.
  Most Conservatives (61%) want to see payments to farmers, which currently support food production and farming practices that improve the environment, continue after Brexit.
   
• After Brexit, improved grants for farmers for tree planting should be a priority in a future domestic agricultural policy.
  Of those Conservatives who want farm payments to continue, 41% think they should be targeted on farming practices that improve the environment such as tree planting or natural flood management, as recommended in Bright Blue’s campaign. Half of Conservative voters think that the government should give forests priority when awarding new funding and planning protections, making them the most popular natural space.
   
• After Brexit, the UK should assume an international leadership role on environmental issues, such as reversing deforestation and increasing ambition to tackle climate change.
  Reversing deforestation is the most popular global environmental issue that most Conservatives want the UK Government to prioritise, with 67% putting it among the top three. Fifty-one percent of Conservatives want increasing ambition to tackle climate change to be prioritised.

More green homes: building houses and improving the environment

The UK has a housing crisis. The Conservative Party’s manifesto for the 2015 General Election pledged to build one million homes over the course of the parliament, or 200,000 new houses a year. But many believe this is insufficient. For instance, an independent report by KPMG found that, owing to demographic change, 250,000 new homes a year are required. But current building rates lag well behind even the Government’s modest target, with just 140,000 new build homes completed last year.

The Prime Minister wants to rectify this. On the steps of Downing Street after becoming Prime Minister, she included in her list of burning injustices facing modern Britain the fact that young people now find it harder than ever to own a home. In her speech to the 2016 Conservative Party Conference, she named housing as a dysfunctional market that government needs to step up to correct.

But, as it is responsible for around 11% of land use in England, housing’s relation to the environment must also be considered. The most recent State of Nature report, published by RSPB and a range of conservation organisations, finds that in the UK 56% of the species they studied have declined over recent decades, with more than one in ten of all the species assessed are under threat of disappearing from our shores altogether. The Government has committed to turning this around, with its pledge to be the first generation to leave the environment in a better state than we found it. But it needs specific policies if it is to realise this vision.

This was the context for this month’s housing white paper. And, while many of the measures contained within it are welcome, it is a missed opportunity for both housebuilding and the environment.

Positives from the housing white paper

Let’s start with the positives. First, the Government strategy places greater emphasis on the quality of design of new developments. Under the proposals, local and neighbourhood plans must contain expectations about design standards. Local residents will be able to object to new developments on aesthetic grounds. According to government polling, 73% of people say that they would be more likely to support new homes if they look nice and are in keeping with other properties in the area. This measure will both boost numbers of homes and improve the appearance of the built environment.

Second, the Government plan supports high-density housing. The National Planning Policy Framework will be amended to advise against low-density developments in areas of high housing demand, increase scope for high-density developments in urban areas by redeveloping low-rise warehouses or extending buildings upwards, and increase flexibility over planning restrictions, such as daylight requirements. Greater density of buildings could increase the volume of new homes and improve the environment, as it frees up more land for nature and enables more sustainable transport solutions to be utilised. But this must not mean sacrificing access to urban green spaces, nor must it mean sacrificing high-quality design standards.

The negative: the Green Belt

But the white paper’s greatest shortcoming was that it maintained a very rigid approach to the Green Belt, with councils told not to allow any development except in very special circumstances. The Green Belt was first established around London in 1938, and in 1955 was extended to other cities. Its purpose was to prevent urban sprawl. The Green Belt has largely failed on its own terms.

Cities like London are characterised by low-density housing, a fact that government acknowledges in the housing white paper. For instance, Paris has a population density of 213 people per hectare, while Islington’s (London’s densest borough) is 128 people per hectare. This is because, instead of living in more densely-built homes in central London, London’s workers have just leapfrogged the Green Belt and bought homes in commuter towns throughout the South East of England. This has led to a proliferation of low-density housing developments across a much broader area, and an increase in carbon-intensive commuter journeys to work each day.

The Green Belt shouldn’t be abolished altogether. Its benefits include reducing air pollution, mitigating the impact of flooding, and providing urban residents with access to green space, which can bring positive effects on mental health. But if homes are to be built where people want to live, then some of the Green Belt will need to be built on. Many have proposed limiting these sites to ones within a certain proximity of a train station.

But there is an upside for the environment in allowing building on the Green Belt, beyond merely reducing the number and distance of journeys travelled by commuters. At the moment, much Green Belt land is of poor environmental value. Just over 7% of London’s Green Belt consists of golf courses, for instance. While this isn’t an excuse in itself for scrapping the Green Belt, it demonstrates the urgent need to improve its natural capital. Therefore, in return for being allowed to build on these highly valuable plots of land, developers should have an obligation to improve the stock of natural capital elsewhere in a local authority area, for instance by planting more trees or creating nature trails. This investment should more than reverse the loss of natural capital entailed by the new development. This would deliver more homes and improve the stock of natural capital in England.

Conclusion

Building more homes and improving the environment are not in opposition. More homes, more densely built, should be accompanied by major investment in natural capital in the outskirts of our major cities. As it considers the consultation responses to its white paper, the Government should be bold.

Sam Hall is a researcher at Bright Blue

Could a diesel scrappage scheme solve the air quality issue?

Last week, it was reported that the Department for Transport is considering introducing a diesel scrappage scheme. Under this policy, the government would give cashback to motorists who trade in their old polluting diesel vehicle. A diesel scrappage scheme would help to accelerate the shift away from diesel vehicles, removing one of the biggest sources of harmful air pollution from the roads for good.

What’s the problem?

Readers of this blog will be familiar with the issue: each year around 40,000 premature deaths in the UK are linked to poor air quality. A recent EU report found that in the UK six million workdays were lost each year to air pollution and that the health-related externalities totalled €28 billion. Air pollution is damaging people’s health, and adding costs to public services and businesses in the process. The source of the problem in pollution hotspots is road transport, which produces over 95% of the toxic fumes in these areas. And diesel vehicles in particular are responsible, as they emit many times more nitrogen dioxide than petrol alternatives.

The Government urgently needs to find a solution to this problem, following their latest defeat in the High Court last year. The judge ruled the Government’s air quality plan was inadequate. The Government now has until April 2017 to produce a new draft plan to bring the UK into full legal compliance by 2019 at the latest. This strategy must be confirmed by July 2017. Air pollution is also being driven up the agenda by the Government’s decision to allow a third runway at Heathrow. Local campaigners say they are planning to use the air quality concerns to block the project in the courts.

Context for the scrappage scheme

The UK had a vehicle scrappage scheme in 2009, introduced in response to the financial crisis. Rather than an environmental measure, it was a stimulus for the domestic car industry, which had seen new vehicle registrations fall by 30% between the first quarter of 2008 and the same time in 2009. Under the scheme, vehicles over 10 years old could be scrapped in return for a £2,000 discount off a new vehicle. The Government allocated a £400 million budget for the scheme.

The idea of a scrappage scheme for polluting diesel vehicles has been around for a while. But, until now, the Government has always been dismissive on the grounds of cost. In April last year, a source from the Department for Environment, Food and Rural Affairs was quoted saying that there was "no proportionate way to appropriately target such a measure to the areas where it would be most needed and it would be prohibitively expensive, as well as an ineffective use of resource to offer a scheme indiscriminately".

Factors to consider when designing the scheme

The effectiveness of a diesel scrappage scheme will depend on its precise configuration. There are three issues in particular that the Government has to consider: first, how it is going to pay for it; second, how it is going to target it geographically to ensure the scheme eases pollution in hotspots; third, what types of vehicle trade will be eligible for a grant.

First, a diesel scrappage scheme has the potential to be very expensive, unless it is part of a suite of policies that is revenue neutral. One suggestion is to increase Vehicle Excise Duty (VED) on new diesel vehicles to fund the scrappage scheme. This would also serve to disincentivise purchases of new diesels, most of which continue to fail to achieve EU air pollution limits when tested under real-world conditions. Another approach could be to levy a “toxicity charge” on motorists entering pollution hotspots in old, polluting vehicles, like the Mayor of London is introducing in the capital later this year. This levy would ensure motorists pay the full social costs of their pollution, as well as providing a revenue to fund charges.

Second, a diesel scrappage scheme must be targeted to remove dirty vehicles from where pollution is illegal. If an old diesel car that only ever drives around rural English villages is taken off the road, then it won’t help bring cities like London and Birmingham into compliance with the law. One approach could be to restrict eligibility for the scheme to vehicles registered to properties in or near a pollution hotspot. However, there would be no guarantee that these will be the only vehicles travelling into hotspots. The Government could also explore ways of linking the scheme to its new Clean Air Zone network so that the cashback is available to those who are affected by their introduction.  

Third, the Government must carefully consider which vehicle trades are eligible for cashback. One condition could be that the old diesel must be exchanged for an ultra-low emission vehicle, such as a pure electric car. But some drivers of old diesel cars may want to scrap their car altogether and switch to just cycling or using public transport. Others may still need a vehicle with an internal combustion engine because of the long distances they are driving. But while a petrol car would reduce air pollution relative to a diesel, it would not help cut carbon emissions, another important government policy objective. The less flexible the scheme is, the fewer old diesels it will successfully take off the road.

Conclusion

If implemented correctly, this policy could form a big part of the Government’s response to the air pollution problem. It should complement smart regulation, such as an increase in the number of low emission zones. Bright Blue has campaigned for central government to devolve more powers and funding to English cities to enable them to set up low emission zones in pollution hotspots.

Replacing diesels in the vehicle pool is a major challenge: there are over 11 million diesel cars on the roads in the UK, or 38% of the whole car fleet. In terms of new vehicles, sales of diesels have started to decrease, with the most recent data showing a 4% drop relative to the same month in 2016. This is gradually unwinding efforts by policymakers since the 1990s that encouraged diesel over petrol, because of perceived lower carbon emissions. For instance, the then Chancellor of the Exchequer Gordon Brown cut vehicles taxes for diesels in the 2001 Budget.

The benefits of this shift away from diesel are broader than the purely environmental. As the industrial strategy confirmed last month, ultra-low emission vehicles are a priority sector for the Government, and crucial to the UK’s long-term economic prosperity. Now is the time for the Government to be ambitious with its domestic policy framework, so that it can establish a leading position in these new technologies.

Sam Hall is a researcher at Bright Blue