12 June 2019

Hammond’s project fear won’t derail the clean industrial revolution

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Whilst serving as Margaret Thatcher’s Minister for Agriculture, Fisheries and Food, John Gummer attempted to increase the height of Britain’s sea defences, concerned as he was by rising sea levels. However, he was told by his officials that the Treasury would not allow it, so he made his case to the Prime Minister. Gummer recalled her response on a Radio 4 programme last year. Mrs Thatcher said: “There are two people in this Government who believe in global warming. You and me. We are therefore a majority. Go ahead.”

Fast forward to today and the majority that believe in global warming has grown considerably. It now transcends left and right and even unites Leavers and Remainers. Boris Johnson, Andrea Leadsom, Dominic Raab and Michael Gove have already set out their pro-climate credentials and Johnson has the support of green Brexiteers Zac Goldsmith and Simon Clarke among others.

Likewise, recent polling from Lord Ashcroft showed that supporters of all parties were in favour of action to tackle climate change. Even Ukip voters put themselves more in favour of “big cuts in carbon emissions to tackle climate change” than “thinks the threat of climate change is exaggerated.”

However although belief in global warming has changed since Mrs Thatcher’s days in Number 10, one thing that hasn’t is opposition from Number 11. According to a leaked letter to the Prime Minister, Philip Hammond has tried to pour cold water on the Government’s plans to announce the UK’s 2050 net zero emissions target following advice from the Committee on Climate Change (CCC).

Hammond’s letter is straight out of the well-worn project fear playbook. He overstates the costs to the UK of going net-zero without factoring in the benefits of green jobs, cleaner air and lower oil and gas imports. The CCC has estimated the cost to be £50 billion per annum. This remains within the current spending plans of 1-2 per cent of GDP, which was the cost level agreed when the current target of 80 per cent emissions reduction was set in the 2008 Climate Change Act.

Just as that estimate has fallen dramatically in the past 11 years, innovation means it’s highly likely the current figure will follow suit. Global solar costs have fallen 85 per cent since 2008 and battery technology is on a similar heading now. The CCC’s conservative forecast assumes that the world in 2050 won’t have moved forward from today. Their report assumes that all aviation will run on fossil fuels in 2050 despite easyJet already planning electric and hybrid planes for short-haul flights. They assume electric vehicles will only reach cost parity with petrol by 2030 when studies show that moment has already arrived and electric cars will cost half as much as petrol cars by 2030.

Even pessimists expect the UK economy to at least double in size by 2050. The direct costs of going net zero by then will be about 0.7 per cent of growth over that period. As Nick Mabey of the think tank E3G puts it, “The price of stopping the UK’s contribution to climate destabilisation is waiting four months to be twice as rich as we are now.”

Hammond’s naysaying also fails to distinguish between spending and investment. Almost all of the UK’s net-zero cost is investment, which will create an economic return. So much so that there’s an argument that the overall cost of going net-zero will actually be negative. The Telegraph’s International Business Editor, Ambrose-Evans Pritchard, points out that that the current bond market shows the global economy is facing secular stagnation with some £8 trillion of debt trading at negative yields. Writing in favour of the net-zero target, he says: “The switch to a post-fossil economy is more likely to be an accelerant to GDP growth akin to the successive upheavals of steam power, electricity and digital technology.”

The politics of Hammond’s climate pessimism are the politics of the past: Prime Ministerial front-runner Boris Johnson tweeted his commitment to the net-zero target last Wednesday, the CBI has backed the CCC’s recommendations and the President of the National Farmers Union, Minette Batters, has pledged that the country’s agriculture sector will be net-zero by 2040.  Already a world leader in green finance and insurance, becoming one of the first countries to end our contribution to climate change would complement our service economy perfectly.

In reality, a net-zero Britain would not be all that different from today. We would drive different — less polluting — cars, we would live in similar, but better insulated homes and the electricity that went into those homes would come from homegrown renewable sources. The CCC advises we would eat 20 per cent less beef, lamb and dairy but this could be replaced with pork and poultry. Already plant-based diets are on the rise among young people in particular.

Britain has a proud record when it comes to decarbonising our economy, driven by the carbon floor price and offshore wind auctions which have seen the cost of renewables tumble.

As the country that birthed the industrial revolution of the 19th Century, it would be fitting for Britain to be the first country to embrace the benefits of the clean industrial revolution of the 21st.

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Joe Ware is a journalist and writer working in the field of international development.