A low-carbon modern industrial strategy

It is often claimed that to tackle climate change we must sacrifice some economic prosperity. The raw statistics clearly disprove this, and show that you can in fact have both. Between 1990 and 2014, the UK’s greenhouse gas emissions fell by 35%. In the same period, the UK’s gross domestic product increased by 62%. So strong growth can go hand in hand with climate change mitigation.

But we should go further than this defensive position. We should instead argue that decarbonisation is an economic opportunity. This claim has two parts. First, cheap, efficient, clean energy reduces costs for business and households. Second, our leadership in the clean technologies of the future is vital for securing the UK’s long-term economic prosperity. And this was the narrative that is resoundingly endorsed in this week’s green paper on the modern industrial strategy.

Reducing energy costs for business

Energy is at the heart of the industrial strategy, and was one of the ten pillars under the heading “delivering affordable energy and clean growth”. The first half of the chapter focuses on reducing the cost of energy for businesses. It is true that UK energy costs are higher than many industrial competitors: in 2015, average UK industrial electricity prices including taxes were the third highest in the EU, behind Italy and Germany. A 2016 PwC report found that this is primarily due to higher ‘commodity prices’, such as gas and coal. So in other words climate policies are not the main driver.

However, it is true that levies to fund climate change policies, like Contracts for Difference or Feed-in Tariffs, are a component of energy bills. To ensure these are minimised, the Government is now committed to carry out a review on the cost of decarbonisation.

It is essential that we cut emissions in the cheapest way possible to keep businesses competitive and households’ utility bills affordable. Current policy already reflects this principle: a fundamental provision of the Climate Change Act 2008 is that the Committee on Climate Change advises the government on how to cut emissions in the most cost-effective way.

What should the new government review focus on? One of the simplest ways for the Government to reduce energy costs would be to encourage homes and businesses to use less energy in the first place. To do this, government must leverage more private investment into energy efficiency and decentralised renewables. Bright Blue has called for the government to issue 'Help to Improve' loan guarantees. This would reduce the cost of financing loans below the rate offered by the private sector.

But as well as reducing demand, we need to decarbonise the supply and replace ageing power stations. As argued elsewhere on this blog, Ministers could reduce the cost of this new energy infrastructure by enabling mature technologies such as onshore wind and solar to compete for zero-subsidy, fixed-price contracts. The Conservatives’ 2015 General Election manifesto commitment to stop subsidised onshore wind developments can be respected if fixed-price contracts are awarded on a competitive basis to whichever energy is cheapest.

Supporting the industries of the future

Many conservatives are instinctively hesitant about government choosing which industries are likely to be successful in the future. The Government’s modern industrial strategy sought to address these concerns by focusing on providing favourable conditions for growth to emerging sectors, rather than offer direct financial support to incumbents. Instead of subsidies, the Government’s preferred policy levers are skills, institutions, infrastructure, research, and regulatory reform. Three low-carbon sectors get particular mention in the plan: battery storage, ultra-low emission vehicles, and nuclear.

First, Ministers have commissioned a review into a new research institution to enable the UK to become a global leader in battery storage. Bright Blue strongly welcomes this; in our 2015 report Green and responsible conservatism, we called on the Government to initiate a major research programme on storage. Batteries will be key for guaranteeing security of supply with a higher proportion of our electricity coming from variable renewables. There is also mounting evidence that storage will save consumers money on their bills, with a recent Carbon Trust report estimating a £2.4 billion benefit by 2030.

Second, the Government appointed Richard Parry-Jones, former chair of Network Rail, to conduct a sectoral review for ultra-low emission vehicles. The review will propose changes to regulation, tax, infrastructure, and other policies, which will form the basis of a ‘sector deal’. One of the regulatory changes government should consider is enabling all English cities to set up low emission zones in pollution hotspots. This would provide a nudge to urban motorists to swap their diesel car for a cleaner, electric alternative. Infrastructure improvements are needed too, which means, above all, increasing the number of rapid charging points. Bright Blue has recommended that the Government issue loan guarantees to private providers to reduce their cost of capital and encourage them to invest in new charging points.

Finally, a sector review for the nuclear industry to be carried out by Lord Hutton, chair of the Nuclear Industry Association, was announced. Tackling the shortage in STEM skills and technical education should be a priority for any nuclear sector deal. Bright Blue has argued that a lifetime tuition fee loan account, to enable anyone at any point in their lives to have the upfront funding to pay for any type of higher education, whether vocational or academic. The loans should be paid back through the PAYE system above a certain salary threshold.

The modern industrial strategy has set out a strong framework on which supportive policies to drive British industrial success can hang. That three of the five early sector deals announced were directly in the low carbon economy shows the industrial opportunity the government sees from emission reduction. Conservative peer Lord Deben has said that “economic self-harm would be to not have the Climate Change Act.” He’s right, and this week’s modern industrial strategy shows that the Government is in agreement too.

Sam Hall is a researcher at Bright Blue

Can the elephant be saved for future generations?

We are facing the prospect of elephants becoming extinct in a few generations. The consigning of these beautiful and magnificent creatures to history would be a tragic loss to wildlife and to our planet.

So the announcement that China will introduce a total ban on domestic ivory trading was a welcome Christmas present for many conservationists. By the end of 2017, it will be illegal to process or sell ivory in China. This will mean the current 34 licensed ivory processing shops and 130 retail outlets will be closed.

However, China is the destination for an estimated 70% of illegal ivory, making it by far the world’s largest market. The Chinese government had already taken steps to ban ivory imports for products manufactured before 1975. The online ivory trade had also been banned, although it has proven ineffective, with the total number of ivory items auctioned online more than doubling between 2010 and 2011.

But what are the trends in elephant numbers and the ivory market worldwide, and what other policies are in place or being discussed to protect this invaluable part of our natural heritage?

The ivory trade’s link to conservation

Researchers carrying out the ‘Great elephant census’ have found that, between 2007 and 2014, 144,000 elephants across the world have been lost. This represents a fall of around 30% over just seven years. The population decrease in recent decades has been stark. Before Europe colonised Africa, elephants were thought to number 20 million. But from a population size of over one million in the 1970s, the current figure is now estimated to be 352,271. The authors warn that, without action to conserve this species, whole elephant populations will be wiped out.

The UN Environment Programme (UNEP) has attributed this fall in numbers largely to poaching, which they believe has surged since 2007. This has partly been driven by the growth of better-organised criminal networks able to smuggle wildlife products across borders and through poorly regulated African markets. The increased prosperity of Asian countries like China and Thailand is also fuelling demand for illegal ivory products, and making the prize for poachers that much bigger. In China, for instance, the price of raw ivory tripled between 2010 and 2014. The size of the illegal wildlife market globally, of which ivory is a major part, is estimated to be between $15 billion and $20 billion each year.

The situation in the UK

Currently there is a UK ban on raw tusks, or unworked ivory, of any age. In September 2016, the Government announced its intention to ban all ivory products made after 1947. Ministers will consult on proposals later this year. But many would like the Government to go further, including Conservatives.

At the 2015 general election, the Conservative Party called for a total ban on ivory sales in their manifesto. Former Foreign Secretary Lord Hague and former Environment Secretary Owen Paterson have both argued for the manifesto pledge to be implemented in full. Jeremy Lefroy MP called a backbench business debate on the issue late last year. They argue that modern ivory can be made to look antique and that, while there are legitimate channels through which to launder illegal ivory, this demand will continue to make poaching a worthwhile risk.

The UK also plays an important role in the international trade. Between 2009 and 2014, 40% of all customs seizures of wildlife products in the UK were ivory. Last year about 110kg of ivory was stopped at Heathrow alone. This material was discovered by the UK Border Force, which has a special unit that focuses on tackling the illegal wildlife trade.

In 2014, the UK Government announced a £13 million fund to tackle the illegal wildlife trade at source. In 2016, the Environment Secretary Andrea Leadsom MP announced a further £13 million of funding. This supports a range of projects, such as strengthening the judicial system in countries like Tanzania and Kenya, educating consumers about the dangers of wildlife products, and training anti-poaching rangers.

The global context

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) banned the international ivory trade in 1989. There are 183 countries that are signatories to the overall convention, which first came into force in 1975 and which now protects a total of 35,000 species. However, even though international ivory trade has been banned, some domestic markets remain open, for instance, in Japan.

Last year, to the applause of conservationists, the US tightened its restriction on ivory sales, so that only items over a hundred years old or those containing very small quantities of ivory will be legal to sell. Domestic bans can help to effectively stigmatise ivory, reducing the desirability of the product and therefore the price. Although bans can only outlaw legitimate trade of ivory, the stigma can also help to push down demand from the black market. A full ivory ban also simplifies the enforcement procedures, removing any potential loopholes for smugglers to exploit.

Conclusion

Elephants are majestic animals, and there are increasingly few of them left. One of the fundamental conservative insights is that each generation has a duty to pass on a preserved inheritance to the next. The Duke of Cambridge, a patron of the wildlife conservation charity Tusk, has spoken powerfully of the danger of extinction: “Let us not tell our children the sad tale of how we watched as the last elephants, rhinos and tigers died out, but the inspiring story of how we turned the tide and preserved them for all humanity.”

If elephants are to survive for future generations to marvel at and enjoy, then concerted international action is urgently required. Conservatives, who, intuitively understand the importance of nature conservation, should be in the vanguard of this movement.

Sam Hall is a researcher at Bright Blue

Heating up the energy efficiency market

Winter is the time of year when outdoor temperatures plunge and thermostats in homes get turned up. But the image of cosy homes, protecting people from the cold, is too rarely a reality in the UK. We have some of the most draughty and inefficient housing stock in Europe. The most recent government statistics show that 31% of homes with cavity walls have no wall insulation; 33% of homes with lofts have no loft insulation; and 92% of homes with solid walls have no wall insulation.

Yet, since the ending of public funding for the Green Deal and the scaling back of the Energy Company Obligation (ECO), there has been a policy vacuum for incentivising non-fuel poor households to invest in energy efficiency measures. The withdrawal of a supportive policy framework is starting to have an economic impact. Figures published by the Office for National Statistics (ONS) last month revealed that the number of people employed in the energy efficiency sector had fallen from 155,000 in 2014 to 143,000 in 2015.

In the past month, however, there have been some positive signs that the energy efficiency policy log-jam could be about to end.

EU 2030 energy strategy

In the EU’s 2030 energy strategy, published late last year, the EU Commission proposes a binding target of a 30% reduction in energy use relative to a business-as-usual scenario. They endorse the concept of ‘efficiency first’, which prioritises cheap efficiency upgrades over building expensive, new generation capacity. Jan Rosenow, a senior associate at the Regulatory Assistance Project (RAP), has described this principle in an essay for our Green conservatism project.

The strategy includes a set of policies to drive ‘eco-design’ (amending product regulations so that they are more energy efficient), retrofit of existing buildings with insulation, better energy performance labelling, and access to finance for energy efficiency measures. But, following the UK’s vote to leave the EU, it is unclear whether these measures will be transposed into UK law prior to our formal departure in 2019. While it seems likely that the UK will be able to miss this target with impunity if it wishes, it may begin implementing the EU legislation before Brexit is completed or choose voluntarily to continue with the target.

Bonfield review

After many months of delay, the government-commissioned Bonfield review was published last month. When Amber Rudd, the then Energy Secretary, announced the end of the Green Deal in 2015, she appointed Dr Peter Bonfield, CEO of the BRE group, to lead an industry review of consumer protection and standards in the energy efficiency industry. This followed reports that some Green Deal installations had been poor quality, undermining consumer trust in the industry. Our recent report on the Green Deal, Better homes, cited evidence that around 11% of Green Deal assessors and 14% of Green Deal installers were suspended from the scheme because of poor workmanship.

The Bonfield review makes a number of recommendations: a new information hub to explain the different measures to consumers and help them navigate the complexities of the supply chain, which was something we called for in our Better homes report; a new ‘quality mark’ so that companies installing energy efficiency and renewable measures conform to a framework of robust standards; and a new ‘data warehouse’ so that information about how individual properties consume energy can be better utilised by installers.

Emissions Reduction Plan

Detailed work is now underway on the government’s Emissions Reduction Plan, which is expected to be published in the first few months of 2017. This will set out the policies to enable the UK to meet the fourth and fifth carbon budgets. The fifth carbon budget was passed into law in July 2016, and requires a 57% reduction in greenhouse gas emissions by 2028-2032, from a 1990 baseline.

A recent report by the Association for the Conservation of Energy has assessed whether the current energy efficiency policies will be sufficient to achieve the emission reduction pathway recommended by the Committee on Climate Change (CCC) as being the most cost-effective. They find that there is a 12% gap between the reductions that current policies will deliver and the cost-effective CCC scenario.

The authors call for new policies in the forthcoming Emissions Reduction Plan to close this gap: in particular, they propose new regulation to ensure homes that are sold meet minimum energy performance standards, which we called for in our Better homes report last year. In a recent speech, Baroness Neville Rolfe, the former Energy Minister, hinted that the Government was considering such a policy: “We should ask whether we can do more to encourage home owners to improve their properties when they buy or when they move.”

Conclusion

Energy bills are likely to start rising again soon, as a result of higher wholesale costs. The Government’s response to this must not be to scale back energy efficiency programmes, as happened in 2014, but to scale up ambition. Energy efficiency measures will cut bills in the long-term, giving people permanently warmer and more comfortable homes for less money each month.

Following the EU 2030 energy strategy and the Bonfield Review, Ministers should use the opportunity of their forthcoming Emissions Reduction Plan to drive a major uptake of domestic energy efficiency measures. The prize is warm, comfortable homes that actually keep people warm in winter.

Sam Hall is a researcher at Bright Blue

Wind keeps powering on

Wind power reached a significant milestone last week. For the first time ever, onshore and offshore wind together generated 10 GW of electricity in the UK, three times the power expected from Hinkley Point C nuclear power station, and around 23% of the country’s demand at the time. Of course this was a particularly windy day: the usual figure is just over 9% of the mix. But it demonstrates that the grid can successfully integrate large amounts of wind power.

Offshore wind continues to grow in strength

Last week also saw Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, travel up to Hull to open the new Siemens factory. Siemens has invested £310 million in a new plant that will manufacture the blades for offshore wind turbines. Almost 800 new jobs have been created, with the majority filled by local Hull residents. This kind of investment in the domestic supply chain for renewables is what the forthcoming industrial strategy will seek to encourage.

The offshore wind sector is set to continue its expansion: last month, the Government released further details of the next two auctions for new offshore wind in the early 2020s. Although the Government has set ambitious cost-reduction targets, projects commissioned in other European countries, such as the Netherlands and Denmark, have had impressively low prices. So there is every reason to be confident the UK industry can meet the challenge.

Onshore wind faces turbulence

The situation for onshore wind is much less optimistic. The Conservative Party manifesto for the 2015 general election contained a pledge “to halt the spread of subsidised onshore wind farms”, by ending “any new public subsidy for them” and ensuring “local people have the final say on windfarm applications”. These commitments were swiftly met following the election through the Energy Act 2016 and revised planning guidance to local authorities.

Yet this technology has potential to contribute to meeting the UK’s energy needs. Earlier this month, the Department for Business, Energy and Industrial Strategy (BEIS) published updated cost estimates for the different generation technologies. For projects commissioning in 2020, onshore wind is forecast to be the cheapest way to make electricity. Their models predict that, including the carbon price, onshore wind projects will generate electricity for £63 per MWh, while highly efficient combined cycle gas turbines (CCGTs) – the next cheapest technology – will produce power for £66 per MWh.

Currently, long-term contracts (Contracts for Difference), which guarantee a fixed revenue stream for developers of new energy infrastructure, are only being awarded to nuclear and offshore wind. Onshore wind, despite being much cheaper, is not eligible to bid. Consumers’ energy bills are starting to rise again, largely due to rising wholesale costs from a weaker pound. But the annual cost of supporting renewables, which is added to consumer bills, is forecast to increase significantly in this parliament, from £5.2 billion this year to £8.4 billion by 2020/21. Excluding onshore wind will cause the subsidy bill to increase more than is necessary, as contracts for new capacity will instead be awarded to more expensive technologies.

The future for onshore wind

Given the political discourse around them, it is surprising that polling shows broad public support for onshore wind farms, even in rural areas. ComRes data from October 2016 shows 73% of the British public support onshore wind. In rural areas, where people are more likely to directly experience turbines, they enjoy 65% approval. Further research is required into what Conservatives in particular think about onshore wind, and whether they object more to the subsidy element or their own potential proximity to turbines. Bright Blue will shortly be publishing new polling, conducted by Populus, to try to answers these questions.

Some have proposed ‘community energy’ schemes to overcome local opposition to new developments. These involve local residents either receiving some payment from the developers in return for their consent, or taking a stake in the project themselves. Renewables company Good Energy has proposed building a new onshore wind farm in Cornwall, which would be co-financed by local residents. This would be the first onshore wind farm constructed without government subsidy. They hope the community financing for the project will demonstrate to the planning committee that it enjoys local support.

Technological innovations could also improve onshore wind’s prospects. For instance, Shell, EON, and Schlumberger have recently invested in a new high-altitude kite technology that generates electricity from the wind. The firm developing this idea is based in Essex. The technology is expected to have much lower capital costs by dispensing with the expensive towers and blades used by conventional wind farms. Two kites pull in opposite directions to create a rotating motion while tethered to a turbine on the ground to produce electricity.

Conclusion

There is a strong case that onshore wind should no longer receive subsidy: it is a mature technology that has had an opportunity to become cost-competitive. However, as we argued in Green and responsible conservatism, it is important to distinguish between a subsidy and a long-term contract. A project is only subsidised when the total lifetime payments it receives under the long-term contract exceed those received by other conventional generators.

No new, capital-intensive energy infrastructure can be built in the UK without a long-term, government-backed contract. Even new gas plants will only be built if they can secure a 15-year contract through the Capacity Market mechanism, which is the Government’s policy for guaranteeing security of supply. Allowing onshore wind to compete for fixed contracts against other technologies could help keep down consumer bills. And this could be done without subsidy and without removing control over planning decisions from local communities.

Sam Hall is a researcher at Bright Blue

Drowning in plastic waste

We have now had over a year of the plastic bag charge. Since October 2015, shoppers in England have had to pay 5p for plastic bags at retailers with over 250 employees. Many people can now be seen juggling grocery items on their way home from the shops in a desperate attempt to avoid the levy. But have these super-human feats of contortion been worth the effort? Have they together had an impact on the environment?

We now have the data to answer this question, and the answer is a firm yes. The Marine Conservation Society has already reported a 40% drop between 2015 and 2016 in the number of plastic bags they collected from UK beaches. Official figures suggest a total of six billion single-use plastic bags were avoided in the first six months of the charge. Ministers also announced the charge had already raised £29 million for good causes, with many chains opting to support environmental charities.

The harm of plastic pollution

Plastic bags are, however, just a subset of plastic pollution, which is a major environmental challenge, particularly in marine ecosystems. Bigger pieces of plastic can entrap fish, causing injuries, suffocation, or strangulation. Smaller plastics can be ingested. This harms the creature themselves. Scientists have found evidence of plastic making fish larvae less active, more likely to be eaten by predators, and less likely to thrive. This also has implications further down the food chain: For instance, by eating six oysters you are likely to ingest around 50 microplastic particles.

The scale of the problem is immense: Eight billion tons of plastic waste ends up in the oceans every year. A Greenpeace report for the United Nations Environment Programme (UNEP) found evidence of 267 different marine species affected by plastic pollution. Another study has estimated that around half of marine mammals has either been entangled by or ingested plastic. There is growing evidence that plastic pollution affects freshwater rivers too. Researchers found 8,490 pieces of plastic in the River Thames during a three-month-long observation.

The process of plastic manufacturing contributes to climate change. The Committee on Climate Change reports that the industrial sector in general produces 32% of the UK’s greenhouse gas emissions (including both direct emissions and its share of electricity emissions). The plastics industry makes up 2% of this total. Plastics provide another market for oil, and so help to support global fossil fuel supply chains. Incineration of plastic waste releases carbon dioxide into the atmosphere.

Policies to cut down plastic pollution

In the spirit of Edmund Burke’s “little platoons”, litter-picking groups which collect plastic debris from beaches and coastline can ameliorate the problem. The Marine Conservation Society frequently runs such events. While the impact on the total mass of plastic in the ocean is minimal, the activity gives people a tangible connection to their local environment. This can also help raise awareness of plastic pollution, and in turn change behaviour to encourage people to use less disposable plastic.

Increased recycling rates could also help clean up plastic pollution. Single-use plastic bags have been dramatically reduced. But single-use plastic bottles, for instance, remain a major challenge: The average household recycles just 44% of the 480 plastic bottles it uses each year. Fiscal nudges like landfill taxes can encourage recycling, by ensuring businesses to pay for the effects of plastic waste. Improved and more frequent council recycling services could also cut down on such waste.  

Plastic pollution has become a major focus of circular economy studies, which seek to increase resource productivity. As well as harming the environment, single-use plastic is an inefficient use of resources. The Ellen MacArthur Foundation has found that 95% of the economic value of plastic is lost after its first use. This is worth between $80 and $120 billion annually. They call for a rapid scaling up of the global supply chain for reused and recycled plastics, with improved infrastructure for collection, sorting and reprocessing to expand the current market.

Microbeads used in cosmetic products are another area where the Government has acted to cut plastic pollution. Next year, a consultation will be launched on how to ban these entirely. This could have a significant impact: A single shower can release up to 100,000 tiny particles of plastic into the sea, according to the Environmental Audit Committee. Up to 4.1% of all microplastics in the ocean are estimated to derive from microbeads in cosmetics. Some are calling for the ban to be extended to other products containing microbeads, such as washing detergents.

Many of these different levers may be needed if the tide is to be turned on plastic pollution. Scientists found earlier this year that since the Second World War we have manufactured enough plastic to cover the entire earth in cling film. The oceans are some of our most precious environments, which host most of our diverse species and flora. We cannot afford to keep damaging them.

Sam Hall is a researcher at Bright Blue

The lights are going out on coal

November has been a very significant month for the coal industry. Perhaps the most high-profile news was the election of Donald Trump as President of the United States, who promised during his campaign to end ‘the war on coal’ by repealing President Obama’s environmental regulations. Supporters at his rallies carried placards saying ‘Trump digs coal’. Trump’s victory caused shares in major coal producer Peabody to rocket by 45% in one day. His advocacy of coal encapsulated his appeal to disaffected working class voters in America’s de-industrialised ‘rust belt’ states.

Economics of coal

But this event, while significant, is an aberration from the general trend. Coal is now firmly in retreat around the world. Stopping burning coal to generate electricity as soon as possible is essential for avoiding catastrophic climate change. Per unit of electricity, coal emits more than twice as much carbon as natural gas. In 2013, coal alone contributed 42% of global greenhouse gas emissions from fuel combustion – easily more than any other fossil fuel.

Figures from the International Energy Agency (IEA) show coal consumption fell by 2.6% last year. Crucially, the two biggest coal users, China and the US, have both seen their demand for coal power fall in recent years. Much of this is happening because of changing energy economics. Take the example of the US. The shale gas revolution and technology cost reductions for renewables have successfully outcompeted coal. Michael Liebreich, a member of the advisory board of our Green conservatism project, recently wrote in the Guardian that these rival fuel sources were more responsible for coal’s demise than government regulation.

UK coal phase-out

But government intervention can certainly speed the process up. And in this area, November 2016 has contained a lot of good news. Exactly a year ago, in November 2015, the Rt Hon Amber Rudd MP made the UK the first country to commit to a date for phasing out coal from electricity generation, something which Bright Blue had been calling for. On the same day as Trump’s victory was confirmed, the UK Government recommitted to the coal phase-out by publishing its plans for consultation.

Ministers are proposing to introduce an ‘Emissions Performance Standard’ by 2025, which will mandate coal-fired power stations to close unless their emissions can be reduced to below those of a gas-fired power station. The UK’s remaining plants are on average 47 years old, and so would be in line for retirement soon in any case. In 2012, there were 17 remaining coal plants, with a capacity of 23GW. That’s now fallen to just 7, with 14 GW of capacity. Analysis has revealed that this year, for the first time, there have been periods when coal has been wholly absent from the UK’s energy mix, and entire days when solar generation has surpassed coal.

In our report earlier this year, Keeping the lights on, we found that phasing out coal would not harm the UK’s energy security. Moreover, encouraging more renewables, energy efficiency, energy storage, and DSR, alongside phasing out coal, would have benefits for consumer bills, energy security, and carbon intensity, relative to scenarios with more gas. We also called for the coal phase-out date to be brought forward to 2023. An earlier date would give investors in gas more certainty and help bring the new capacity online sooner.

Global coal phase-out

The UK’s announcement was not the only one this month. In fact, several other countries have decided to follow the British example on coal. France has announced it will close its remaining 3GW of coal-fired capacity by 2023. Canada is now set to phase out the rest of its coal fleet, which has a total capacity of 10GW, by 2030. Finally, the Finnish government has also committed to shutting its 2GW of electricity generation from coal by 2030.

Bright Blue has in the past called for the UK Government to assume a leadership role in advocating an international coal phase-out. It is highly symbolic that the UK has become the first country to use coal for electricity generation and the first industrialised country to commit to phasing it out altogether. Strengthened by this achievement, the UK could utilise its moral and political leadership to push for an ambitious global deal on phasing out coal.

As our associate fellow Ben Caldecott argued in Green and responsible conservatism, sectoral deals, such as on the use of coal, could be a more effective approach to tackling climate change than broad UN agreements. This would require developed countries to take the lead and phase out their coal fleets first. It would also require some international aid funding to support developing countries undergoing the transition to cleaner technologies. But the result for the environment could be significant.

November 2016 has been an excellent month for the global environmental campaign to end coal-powered electricity. But the scale of the challenge is still immense: in 2014, coal still generated 41% of the world’s electricity. The UK Government should build on this month’s progress and lead the international campaign for more countries to make the coal phase-out commitment.

Sam Hall is a researcher at the Bright Blue

A turbo-charge statement for electric vehicles

This week’s Autumn Statement brought some good news for proponents of electric vehicles. With lower than expected tax receipts and a worsening economic outlook due to Brexit, the Chancellor did not have much cash to give out. The new spending that he did announce was focused on infrastructure, a long-term approach that he hoped would be rewarded by increased tax revenues in the future.

This is intended to tackle one of the fundamental weaknesses of the UK economy that the Chancellor rightly identified in his speech: Poor productivity growth. ‘Productivity’ measures how much economic value is created from a fixed period of labour. Strong productivity growth signals long-term wage rises and economic growth. Concerningly, under this crucial metric, the UK lags well behind Germany and the US by some 30 percentage points. Infrastructure investment helps to improve productivity. For instance, investment in transport can reduce workers’ journey times, freeing up space in the day for more economically productive activity.

The Autumn Statement measures

This is where electric vehicles come in. As part of the £23 billion National Productivity Investment Fund, £390 million of funding over the next four years will be spent on developing future transport technologies. This includes £80 million for electric vehicle charging infrastructure and £150 million of support for low emission buses and taxis.

In addition to this new spending, there were several tax changes to incentivise uptake of electric vehicles. Companies will be given 100% first-year capital allowances for investments in new charging infrastructure until 2019, allowing businesses to deduct the cost of new charge points from their corporate tax bill. And although the Chancellor heavily pruned back salary sacrifice schemes in his statement, the perk was retained for schemes supporting electric vehicles. There were also changes to company car tax, creating lower bands for electric vehicles.

What should come next?

Bright Blue has two further policy recommendations that would drive uptake of electric vehicles, at little additional cost to the Treasury. First, the current plans for five Clean Air Zones in Derby, Nottingham, Birmingham, Leeds, and Southampton should be expanded. Earlier this week, the Government was told by the High Court it had until April 2017 to draw up a new draft air quality plan, as the previous one took too long to bring the UK into compliance with the legal limits.

We recommend devolving more funding and powers to city councils to enable all of them to set up Clean Air Zones where pollution is a problem. As well as charging the most polluting vehicles, Clean Air Zones will give preferential access to city centres to electric vehicles, such as priority at traffic lights and designated parking spaces. Academics have found that, in Germany, where there is a national network of over 70 low emission zones, owners of older, polluting vehicles have traded them in for cleaner ones. So a network of Clean Air Zones could stimulate the electric vehicle market in the UK too.

Second, this week’s Autumn Statement extended the lifetime of the UK Guarantees Scheme until at least 2026. Under this policy, the Treasury guarantees loans to private sector investors, giving them access to capital to fund new infrastructure. Since it was launched under the Coalition Government, it has given out £1.8 billion of guarantees, supporting over £4 billion of investment. We believe these loan guarantees could also be offered to drive investment in a network of charging points for electric vehicles.

Why is this important?

Accelerating the electric vehicle revolution offers many potential benefits, in addition to improving air quality. The Government is currently drafting its Emission Reduction Plan, which will set out how the legally-binding carbon budgets will be met. Transport now has the highest carbon emissions of any sector in the economy. What’s more, these emissions have actually risen for the past two years. Electrifying the car fleet would help the government make progress in decarbonising this stubbornly high-emitting sector.

Boosting electric vehicle uptake is also likely to be a key plank of the Government’s forthcoming industrial strategy. The UK is already the largest market for electric vehicles in Europe. Nissan, for instance, has invested over £420 million in the UK to build its electric vehicle, the Leaf. In 2015, the number of electric cars on the roads globally surpassed a million, more than doubling the total in 2014. This was also the year when electric vehicles’ market share of new purchases in the UK rose above 1%. Electric vehicles are a major economic opportunity for the UK to seize.

Electric cars are still near the start of their journey. But, as a result of the Chancellor’s measures this week, they have moved a few miles further towards the destination.

Sam Hall is a researcher at Bright Blue

We’ll always have Paris

This week, delegates from almost 200 countries are gathering in Marrakech for the next round of UN climate talks. There are many reasons for climate diplomats to be cheerful. Last year’s Paris Climate Agreement, signed by all those countries, has come into legal force over a year earlier than planned. All the major emitters, including the US, China, India, and the EU, have now completed domestic ratification of the treaty. The global economy seems firmly set on a trajectory towards net zero emissions by the end of this century.

But despite these successes, there are several major challenges facing attendees in Marrakesh: how to increase individual emission pledges, how to raise sufficient climate finance, and how to respond to President-elect Trump.

Ratcheting up the ambition

Signatories to the Paris Agreement pledged to limit average global temperature rises to well below two degrees and to aim for a rise of just 1.5 degrees. Yet the Intended Nationally Defined Contributions (INDCs), voluntary pledges by individual countries of how much they would cut their emissions, are not sufficient to achieve these high-level goals.

Ahead of the summit in Marrakesh, the United Nation’s Environment Programme released a report on the ‘emission gap’, which is the deficit between the INDCs and the long-term goals. They find that current pledges will lead to an average warming of around 3.2 degrees above pre-industrial levels. They also calculate that, under current INDCs, both the 1.5 and 2 degrees ‘carbon budget’, the total amount of carbon that can be emitted before temperatures rise above a certain level, would be easily exceeded by 2030.

In the text of the agreement, there is a resolution to begin a dialogue in 2018 on progress towards the 1.5 and 2 degree targets. Another key feature of the Paris deal is that signatories must reassess and increase their individual contributions every five years to help ensure the high-level goals are met. The first occasion this will happen is in 2020. So there are mechanisms for scaling up pledges, but urgent progress is required.

Securing climate finance

The support of developing countries for the Paris Agreement was contingent on securing sufficient funding to help them mitigate and adapt to climate change. A total of $100 billion per annum by 2020 must be raised by developed countries. The UK Government this week released a statement showing that funding currently stands at $62 billion per annum, up from $53 billion in 2013. The UK’s own contribution is set to rise to £1.76 billion by 2020.

Donald Trump has said he will cancel the United States’ payments to this fund. President Obama had pledged to give a total of $3 billion by 2020. Assuming Trump follows through with this election pledge, replacement finance will now be required, as well as the outstanding amount.

Managing President-elect Donald Trump

During his election campaign, Donald Trump pledged to withdraw the US from the Paris Agreement. But as the ratification process was so swift, he is unable to cancel the treaty altogether. In fact, reports have suggested the possibility of Trump as President helped instil the urgency to bring the treaty into force. In theory, the US would have to wait four years before it could leave, but in reality, there is little to stop him disregarding the emission reduction pledges made by President Obama. In addition, Trump has promised to “end the war on coal”, and review the current regulations helping to drive coal off the system.

Nevertheless, strong economic forces, as much as political will, are now helping to drive decarbonisation. The rapidly-falling costs of low-carbon technologies have made renewables as cheap as, if not cheaper than, traditional fossil fuels. The International Energy Agency (IEA) reported that costs of onshore wind have fallen by 30% between 2010 and 2015, and those of solar by two-thirds. Independent analysis for the UK Government this week show that onshore wind and solar will both outcompete gas on price by 2025. This may help keep the US, and indeed the rest of the world, on a low-carbon trajectory in the absence of presidential leadership.

Conclusion

Even before the election of Donald Trump, the challenges of matching action with ambition and raising sufficient climate finance were significant. When President Obama hands over to President Trump, an important galvanising force for international climate action will be lost. But other major climate leaders are now emerging. China actually castigated candidate Trump in November 2016 for his intention to withdraw from the Paris Agreement.

Countries like India and China are clear that they are pursuing their own self-interest by championing climate action. Decarbonising helps India to cut its air pollution, with pollution in parts of New Delhi currently five times the level considered safe by the US’s Environment Protection Agency. Similarly, China sees a major economic opportunity both from increased low-carbon infrastructure spending and from becoming a leading exporter of low-carbon technologies.

Post-Paris there is both a political framework for scaling up ambition and an economic imperative to be at the forefront of the low-carbon transition. Despite Trump, the delegates in Marrakech can be optimistic.

Sam Hall is a researcher at Bright Blue

Going round in circles: the benefits of cycling

It’s seemingly rare for a political speech to be made in Westminster nowadays without a joke about Boris Johnson’s new cycle superhighways in London. George Osborne at this week’s Spectator Parliamentarian of the Year ceremony was the latest example. But sometimes, instead of light-hearted cynicism, cycling receives outright opposition. The Daily Mail recently launched a campaign to halt the spread of cycle lanes in the UK, claiming they are underused, polluting, and add to congestion.

Of course, cars are very popular. More than four in five people travel by car as a driver or passenger at least once or twice a week in the UK. Car traffic increased by 1.1% last year, to the highest level on record. So it is important that measures to incentivise cycling are complementary to policies to support motorists. It should not be a zero-sum game.

What policies are driving the increase in cycle lanes?

The Government recently finished consulting on its draft Cycling and Walking Investment Strategy - intended to help deliver by 2040 their aim to “make cycling and walking the natural choice for shorter journeys, or as part of a longer journey”. There are also sub-targets to double the number of cycling journeys and reduce cycling fatalities and injuries.

The largest scheme is ‘Cycle Ambition Cities’. Launched in 2013, this gives £10 per resident to eight cities to spend on cycling (Birmingham, Bristol, Cambridge, Leeds, Manchester, Newcastle, Norwich, and Oxford). Funding will be spent on segregated cycle ways, improved lighting and parking facilities for cyclists, and better cycle links to key services.

Although the Government is investing over £300 million throughout this Parliament to support cycling, some campaigners have criticised them for not giving it sufficient funding. Cycling UK claim that funding amounts to just £1.38 per person (excluding London) – far short of the £10-20 per head that many were calling for to deliver a cultural shift in favour of cycling.

The Government’s plans to mandate five cities to establish Clean Air Zones is an important nudge to get people out of their cars and onto bikes. By charging older, polluting vehicles that enter the city centre, cycling becomes a more attractive option for local residents who may not wish to upgrade their vehicle. The High Court’s recent ruling on the Government’s air quality plan makes further Clean Air Zones more likely.  

Cycling already plays a central role in London’s transport system. The new Mayor is planning to introduce an ultra-low emission zone from 2019, which will restrict access to central London for older vehicles. The most polluting vehicles will also be made to pay a £10 emissions surcharge from 2017. These two measures should help to nudge Londoners towards taking up cycling.

Sadiq Khan is continuing his predecessor’s work to improve cycling infrastructure in the capital. In 2013, Boris Johnson launched a cycling strategy to reflect the fact cycling had tripled on London’s roads over the previous ten years. He allocated up to £400 million to invest in new cycle superhighways as part of securing the Olympic legacy for London. And of course he set up the ‘Boris bike’ hire scheme, which recently celebrated its sixth anniversary.

The benefits of cycling

Health: Promoting cycling creates significant benefits for public health by encouraging more people to exercise. There is strong medical evidence linking physical inactivity with cardiovascular disease, strokes, obesity, cancer (colon and breast), type 2 diabetes, osteoporosis and depression. For this reason, the Government made cycling a component of its recent childhood obesity strategy. Bikeability, a government-funded scheme, will provide £50 million in funding over the next four years to give free cycle training to schoolchildren.

Wealth: Cycling yields fiscal benefits, many of which come from savings to the NHS. A government study in 2014 found that the direct cost to the health service of physical inactivity is £1 billion, with an indirect cost of £8.2 billion. The cycling industry also generates significant value to the economy, estimated at £2.9 billion a year according to 2011 research by the London School of Economics. Cycling charity Sustrans also found that every pound of public investment in cycling in the UK yields a £19 return.

Cleaner air: Air pollution is significantly reduced by shifting from cars to cycling. Road traffic is responsible for around 95% of pollution hotspots in the UK. So encouraging more people to switch from cars to bikes can help reduce the number of places affected by poor air quality. Cycling can also help to reduce carbon emissions in the transport sector, which have in fact increased in both 2014 and 2015.

Less congested roads:  Increasing cycling reduces congestion on roads as more people get out of their cars. Research by British Cycling finds that cycling saves a third of road space relative to cars, because it is more space efficient. Moreover, building new cycle lanes does not preclude expansion of road capacity. The Government is in fact investing huge amounts of money into building new or upgraded roads, in tandem with its plans for cycling. In 2014, a £15 billion programme was announced out to 2021 to add new road capacity, dwarfing spending on new cycling infrastructure.

Conclusion

Despite the clear benefits of cycling and the policies which support it, levels of cycling have stayed relatively stable in recent years. Just 15% of the English population cycle at least once a month, according to government figures.

This summer saw Team GB’s cyclists enjoy incredible success at the Olympic velodrome in Rio. The Tour de Yorkshire has become a fixture in the county’s sporting calendar, providing a permanent legacy of the enthusiasm created by hosting the first stage of the Tour de France in 2014. We have the sporting heroes to inspire us to get on our bikes. Now the Government needs to ensure we have the cycling infrastructure and policies to allow that success to be rolled out to more people across the country.

Sam Hall is researcher at Bright Blue

Holding back the tide on flooding

The imminent arrival of winter means a renewed deluge of political interest in flooding. For the few days or weeks when these extreme weather events occur, they inevitably dominate the national media. But, as the waters recede, so does the political interest in the subject. As a result, it can be difficult for policy-makers to sustain the momentum required to introduce policies to tackle the problem.

The risks and potential harm from flooding are significant. As well as damaging businesses, homes and infrastructure, it can endanger human life. Take the example of last year’s floods: The Association of British Insurers estimated their members would pay out around £1.3 billion in flood-related claims. The Local Government Association estimated councils faced £250 million of damage to local infrastructure. Storm Desmond, the weather system that caused the flooding, also claimed three lives.

Nor was this a one-off: academics have found that this kind of flooding event is being made 40% more likely by climate change. A warmer climate enables the air to hold more moisture, which increases the likelihood of flooding. Flooding is already a major environmental challenge, and is going to get worse as average temperatures continue to rise.

Forecasts of the future impact of flooding are stark. In its last Climate Change Risk Assessment in 2012, the Government forecast that the average annual cost of coastal and flooding damage will rise from around £1.3 billion now to as much as £6.8 billion by 2050. In its report this summer, the Committee on Climate Change modelled a scenario where average temperatures rise by 4°C. In that case, they predict that the number of at-risk households would rise from 860,000 today to 1.9 million by the 2050s.

Land management

One strategy to reduce flooding damage is to slow water flow from the uplands where rivers form to lowlands where population centres are. These upland floodplains can in effect store excessive rain water.

There is academic evidence to suggest planting more trees further up a river’s catchment area can help to slow flow rates of water. Rewilding Britain recently called for tree planting in areas where overgrazing has denuded landscapes of natural forest cover in order to assist flood management.

Dredging of rivers is similarly important to upland catchment management. In 2013, the Environment Agency published a review of the academic literature on dredging, which found no clear evidence that lower water levels from dredging led to reduced flood risk. On the other hand, they did find good evidence that dredging increased water flow rates, increasing flood risk downstream. This evidence was disputed by some commentators in the aftermath of the Somerset floods in 2014.

The Government’s National Flood Resilience Review, launched after last winter’s flooding, tested how well the UK’s infrastructure would cope with a 20-30% uplift in extreme floods across the UK, relative to last winter. As well as ordering key assets to be reinforced, the report highlighted the importance of the 25-year plan for the environment, due next year, in the context of flood risk management. The plan will enable a ‘whole river catchment’ approach to be adopted.

Other policy responses

In the aftermath of flooding events, debate often centres around levels of public spending for flood defences. Last year, there was a disagreement between the Government and the Opposition over whether there had been cuts or not. Comparing the spending envelope for the whole 2005 parliament and the 2010 parliament, there was a real-terms increase from £3.1 billion to £3.4 billion. However, the spending wasn’t evenly distributed over the parliament, with some years seeing a spending reduction relative to previous years.

The Environmental Audit Committee’s recent report criticised these big fluctuations in spending within a parliament and the often reactionary nature of those decisions. Dieter Helm has called for funding to come from a flood levy on water bills or council tax. He argues this would depoliticise the issue, facilitate a ‘whole river catchment’ approach, and create a more stable revenue stream to fund investment in flood defences.

There have also been calls to change the National Planning Policy Framework to prevent unnecessary building on flood plains. This was one of the Environment, Food and Rural Affairs select committee’s recommendations in the last parliament. Despite being in the 2010-15 Coalition Agreement, this policy was not implemented. Now, with the supply of housing so constricted, further limits on housebuilding would be politically difficult, and risk undermining one of the Government’s other key policy objectives.

Conclusion

Flooding has major economic and environmental costs, which policy-makers should seek to mitigate. But flood risk management also presents opportunities. There are potential actions that both strengthen flood defences and improve the natural environment.

It is likely following the EU referendum that the UK will withdraw from the Common Agricultural Policy. Former Environment Minister Richard Benyon MP has suggested using a portion of this funding to pay farmers to hold back water. This could involve planting trees on their land or using fields as flood plains. Such an approach is worth serious consideration, and could deliver benefits for flood mitigation and the environment simultaneously.

Sam Hall is a researcher at Bright Blue