As governments across the globe scramble to advance climate agendas, the climate policy debate is dominated by government targets and activist demands. Yet, the engine of real progress – the private sector – remains largely overlooked. While I possess some scepticism of the ‘Net Zero’ target, it is currently enshrined in UK law. Similarly, with four more years of Labour and the leader of the Conservative Party only stating that Net Zero by 2050 is impossible, not the target itself, one has to assume that it is likely Net Zero will be a UK policy for a while.
As free marketeers, we must spend at least some of our resources and capacity fighting for a greater role for the free market and the private sector in the green transition. Indeed, only when the free market and private sector are unleashed in this arena will true green innovation take place in both consumer technologies and energy resources. Free from state dogma, industries will be able to innovate in how they decarbonise their sectors, knowing their operation and needs better than any state official.
As with most innovation, it is the private sector that should and will lead us, if we let it. As Milton Friedman said,
The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry… When government – in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.
Furthermore, years of climate policies and Net Zero being used as political football by activists and politicians who have chosen not to engage with the serious consequences of their arguments – think the global student climate crisis protests and Greta Thunberg lecturing politicians – has led many to possess binary viewpoints in energy: renewables equals good, everything else equals bad. Even then, only some forms of renewables and state climate action are good, as the Green Party and the Scottish Greens have demonstrated time and time again when they’ve argued against nuclear energy.
Contrary to the beliefs espoused by many who put climate change at the top of their concerns, the transition to a greener world will not be powered solely by wind turbines and solar panels. Nuclear energy should not only be a core pillar of any plan to bring down climate emissions, but it should be a key part of any plan to lower energy costs and improve our energy security.
Similarly, transition fuels, cleaner and more cost-effective energy than traditional sources, like liquified petroleum gas (LPG), liquified natural gas (LNG) and methanol, are crucial to any plan to reach a greener UK. Fossil fuels won’t simply disappear, and in pretending otherwise, activists and politicians are hindering not helping their desire for a greener future.
LPG, for example, emits approximately 33% less CO₂ than coal. It’s not just their lower emissions profile which makes them important, but also their ability to be immediately deployed. Methanol bunkering, the process of supplying methanol as a marine fuel to ships, is no less important as global shipping accounts for about 3% off all CO₂ emissions.
Many policymakers and activists overlook the practical challenges of the rigid climate mandates they advocate for. Instead of dismissing market-driven solutions, they should focus on policies that encourage flexibility and innovation, allowing businesses to develop the most effective green technologies, in terms of both emissions and costs.
Climate regulations and mandates that stifle free-market flexibility can be an obstacle to the private sector’s pursuit of switching to cleaner fuels. Excessive subsidies for certain state picked entities or ventures interfere with the private sector’s ability to cut costs on green technologies. Great bureaucratic hurdles cause delays in the deployment of clean energy projects.
The Emissions Trading Scheme imposes strict caps and trading requirements on carbon emissions, limiting the ability of businesses to adopt the most cost-effective or innovative decarbonisation strategies. The Contracts for Difference regime favours and therefore subsidises certain state picked technologies like offshore wind, making it harder for smaller firms or emerging technologies to compete. Those who point out issues like these are often lumped in with those who oppose all efforts to reduce emissions.
All one has to do is look at what the private sector is already doing in these areas to see that creating the conditions for their flourishing should be at the heart of any government’s climate change strategy. Take decarbonising the shipping industry.
In a sector that accounts for 3% of global emissions, Trafigura, a multinational commodities firm and one of the world’s largest oil trading houses, have been actively investing in low-carbon ammonia and methanol infrastructure for maritime fuels, showing great innovation in cutting the emissions produced by shipping.
Maersk, an over 100-year-old Danish shipping company, has been a major player in innovating the use of carbon-neutral methanol as a means of powering vessels. They created the first container vessels that could run on it. Not needing state directives or state-imposed solutions, they are innovating towards their goal of transporting 25% of their ocean cargo using green fuels by 2030.
Some like to make the case that the free market doesn’t incentivise companies to work towards cutting carbon emissions. Case study after case study simply proves this isn’t the case.
Another example is the global commodities trading giant BGN International, which has been a key innovator in the private sector’s shift to cleaner fuels in their work distributing LPG, LNG and sustainable aviation fuel. In following free market and private sector incentives, they are helping decarbonise the shipping industry worldwide.
A recent joint venture enabled BGN International to increase its fleet flexibility by acquiring mid-size gas tankers. This allowed it to ship to smaller ports that can’t service the usual larger vessels – a crucial necessity in emerging markets – and so expand its operations significantly in Africa. The free market incentivises the expansion of its work and in doing so, the free market incentivises the energy private sector to innovate and deliver practical, cleaner alternatives to regions still dependent on coal and diesel.
These are just a few examples of the many innovative actions private companies have developed to support decarbonising the shipping industry.
While all political energy is spent on government climate policies and state directives, the focus should shift to how best to create the conditions for these private traders to thrive in their goals.
For several more years at least, the drive to Net Zero and the green transition will be at the heart of the policy direction of this Government and therefore the UK. If Labour want to continue without increasing costs on the rest of us, they must create the conditions that allow the free market and the private sector to flourish in the energy sector. By removing unnecessary barriers and fostering open competition, the Government can accelerate innovation, cut emissions and ensure the green transition is done in a more practical and affordable way than the pantomime of good versus evil that we see now.
The verdict is clear. The Right has woken up to the innate statism associated with a statutory Net Zero target. Reform UK reject it outright, and the Conservatives have pledged to scrap the 2050 deadline and the 2008 Climate Change Act by which net-zero targets are enforced. Both accept the approach is a millstone around […]
This week, Nimby Watch is in Axminster, because where else would you go to talk about the technologies of the future? Alright then, where are we off to this time? In this edition of Nimby Watch, we’re focusing in on Axminster, where – Oh, I love that we’re finally doing something different! I’m a huge […]
In 1943, a Post Office engineer called Tommy Flowers built a codebreaking machine out of 1,500 thermionic valves, partly out of his own pocket. Within a year Colossus, the world’s first programmable electronic computer, was cracking Nazi High Command ciphers at Bletchley Park. Britain had invented the data centre, in a large shed, and chock-full […]
