The Battle of the 4th Budget

So, the epic battle in the UK over the Fourth Carbon Budget (2023-2027) is now over and the dust is settling. The issue was whether to approve the Climate Change Committee’s recommendation that carbon emissions be effectively reduced to 50% of 1990 levels by the end of the period, with big implications for long-term investments, especially in the power sector.

And this was a real battle, as exposed by a letter leaked to the media. In one corner was Chris Huhne, LibDem Secretary for State for Energy and Climate Change, along with the CCC and the green lobby. In the other was Vince Cable (curiously also a LibDem, but of an old-fashioned social democratic kind that doesn’t really do climate change), the Darth Vader of the Tory economic command (i.e. George Osborne) and the energy-intensive industry lobby. (The CBI stayed on the fence until after the fight was over, and then climbed off and bravely said that the final outcome was a good decision.)

Until the weekend, it really did look as if the government might not take the CCC’s advice, and would reject the 4th budget. But then, following a letter from the directors of 15 environmental groups (and one from Ed Miliband) to David Cameron, the Prime Minister stepped in and took the decision that the CCC’s budget would be approved. There are some caveats, including a review in 2013, but the basic message is that the Coalition Government is still on board, and still aspires to be (a year on from the claim) the greenest government ever.

There are some good accounts of the details of the affair, including an excellent read-out from Mathew Spencer, head of Green Alliance, who put in a heroic effort to save the budget. Here, I’m just going to offer three observations about what the battle is telling us about the wider political context for climate policy in the UK at the moment.

First, this episode is a reminder that legislation does not remove the problems of politics. Of course, the Climate Change Act is an important framework, and without it there would be no Climate Change Committee and no 4th budget (and indeed it is highly likely there would have been a judicial review if the government hadn’t taken the CCC’s advice). But while it helps, the Act doesn’t guarantee anything, and certainly doesn’t make the underlying politics go away. This will be especially true in a crisis – look at what happened to the framework for financial regulation and oversight in the wake of the banking meltdown.

Second, after a few years which saw the Climate Change Act, the ban on new coal-fired power stations and ambitious renewable energy targets, the pace of change is slowing, and more importantly, policy progress that would have been taken for granted before is now having to be fought for every step of the way. Remember that the previous 3 carbon budgets went through Parliament on the nod. But the last year has seen a protracted battle over saving the CCS demonstration project from the cuts, another protracted battle over the creation of the Green Investment Bank, and now a fierce, albeit short battle over the 4th Budget. For environmentalist organisations, this is a phase of hard slog, with concomittant dangers of fatigue and burn-out. This is only partly to do with the change of government and the problem that some parts of the Tory party have with the climate agenda. It is also a product of the financial crisis and the period of very slow economic growth we have now entered.

Third, this is also a phase of brutal politics, rather than ideas. This is especially the case for the issue at the heart of the battle of the 4th budget – will tight emissions reductions targets stimulate green growth and provide the only viable future for UK plc, or will it drive our essential industries abroad? What is striking is that the “green growth” agenda, which has been around now for several years, has still not decisively won the argument in the places that matter, especially BIS and the Treasury. This is not through want of trying – the most recent attempt comes from the Aldersgate Group, which is only one of many such reports. But something about the intellectual and political story on green growth is still not working in the UK. Ideas on a postcard please.