Unpicking the modernisation of the UK economy one step at a time
It generally pays to remain sanguine in the face of the ups and downs of the public policy debate, because it’s usually driven by short term concerns that don’t have a lasting effect in the real world.
Last week, however, I found myself looking at data from one of the dustiest corners of Whitehall and feeling shocked that the reverse had happened: a series of short term decisions is unpicking long term plans to modernise our economy.
In a little under two years the Treasury has gone from expecting this year’s energy investments to be mostly low carbon to expecting them to be mostly high carbon.
A similar, if less dramatic shift, has also occurred in transport infrastructure following the announcement of a huge road building programme. The response from government is to state the obvious: we’re still reliant on fossil fuels and it will take us time to decrease our dependency, but what these figures suggest is that they are kidding themselves. We’re busy making earnest commitments to a low carbon economy whilst investing in high carbon for the long run.
At this point it’s worth offering a prebuttal. Green Alliance is relaxed about the UK using gas as a back up fuel for a low carbon energy system, and we’re realistic that it will take time to wean ourselves off oil for transport, but that’s not what the Treasury figures are telling us will happen.
The Treasury’s new infrastructure pipeline figures, published last week, show the highest UK investment in oil and gas exploration ever, a road building programme which will result in a permanent shift to higher traffic levels and continued erosion of UK renewables ambitions.
Two years ago the energy infrastructure pipeline for the financial year 2014-15 was, as we demonstrated, 90 per cent low carbon. Now this proportion has dropped dramatically, to just 40 per cent. This is not a minor set-back but a serious commitment to cutting off the branch on which we are sat
We can hope that the oil and gas produced from the UK continental shelf will just displace the fossil fuels we would otherwise import, and that it will form part of a huge contraction of their use over the next few decades. However, since government is now expecting £50 billion to be spent on oil and gas exploration by 2020, we can’t bet on it, as it’s not easy making money in a shrinking market, and it’s even harder to constrain a market on which the UK economy remains dependent.
The story on transport is less dramatic but in many ways more damaging. We’re returning to an era of state profligacy on roads, where special pleading from local MPs and a blank cheque from the Treasury results in old road schemes being resurrected. These are often schemes which the Department for Transport has rejected as being too costly or damaging, but which ministers have now decided will produce economic growth and reduce congestion. The evidence for either claim is weak, but we can agree to disagree on that with the CBI and others who remain road advocates.
The point is that a series of bite sized decisions can lead to a horrible effect in aggregate.
I’m not sure anyone in politics wants the outcomes that this shift to high carbon implies. To celebrate our current infrastructure trajectory you’d have to believe that climate change is a hoax, that the UK can dig and frack its way to energy independence and that oil and gas prices will stay low. Even UKIP wouldn’t bet on the last of these.
So we find ourselves with an National Infrastructure Plan seriously at odds with our national interest, one that could reverse the modernisation of our economy. Given that ever larger amounts of the plan are state funded this creates a new jeopardy for our political system.
At a time of decreasing public faith in democratic politics, our leaders are proposing state activism on infrastructure which is definitely not in the public interest. It can only lead to greater disenchantment.
Many of us in the environment community overcame our queasiness about big kit projects to actively support a new UK infrastructure programme because it was supporting the transition to a leaner, cleaner economy. If it becomes a vehicle to take us back to a fossil fuel economy of the last century, we will change our position.