Earning our living in a low carbon world

Peter Mandelson2This post is by the Rt Hon Lord Mandelson, former UK secretary of state for business, innovation and skills. It is the speech he gave to the event ‘Will the UK succeed in a low carbon world’ on 9 June 2016, organised by Green Alliance, with CAFOD, Christian Aid, Greenpeace, RSPB and WWF.

During my time as business secretary I was preoccupied with one question: how does the UK earn its living in an ever more competitive global economy?

Today the question remains the same, but the answer is changing. And, as the report by Green Alliance and other environment and development groups forcefully argues, any answer to that question must include how the UK competes in the global low carbon economy.

The recent Global Status Report from the authoritative Paris-based Renewable Energy Policy Network (REN21) showed that, in 2015, global new investment in renewable energy hit a record high of over $280 billion: more than double the amount invested in new coal and gas-fired power generation. And, for the first time ever, investment in renewable power in developing countries exceeded that in developed countries.

The good news is that the UK ranked fourth globally for investment made into renewable energy in 2015. That is above Germany and behind only the behemoths of China, the US and Japan. Almost half of all renewables investment in Europe in 2015 took place here in the UK – a tremendous achievement.

But, in another report which tracks the attractiveness of countries for new future investment in renewables published by Ben Warren and his colleagues at EY, the UK had slipped to 13th place: its worst ever position.

These two sets of figures matter a very great deal for UK business, the economy and the country’s prosperity.

The successful conclusion of Paris and COP21 demonstrated the level and breadth of ambition on decarbonisation from countries across the globe. It also proved the strength of that commitment, made despite the travails that many economies have endured over the past decade. Those naysayers who said that action on climate change was only for good economic times have been proven wrong.

Decarbonisation will be a major global economic driver
Looking at the scale of global ambition and what that means in terms of investment, COP21 very powerfully confirmed that decarbonisation, along with digitalisation and robotics, will be the big drivers of the global economy in the decades ahead.

And, consequently, the strength of a country’s industries and expertise in decarbonisation are going to be a very big factor in determining the success of its businesses and the prosperity of its citizens.

This is not just about tomorrow. The low carbon economy is already important to the UK economy.

The opening of the Siemens wind turbine manufacturing facility at Hull demonstrates how it is boosting UK manufacturing and the regions. But global decarbonisation is equally significant for the City of London and the UK’s high value service industries, such as design consultancy, law and accountancy. This is all good news for UK plc.

But the UK government seems reluctant to champion it. The Conservatives’ former coalition partners, the Liberal Democrats, seem to have taken the language of the ‘green economy’ with them when their time in government ended. Most immediately significant, the government’s approach since the election has been dominated by a series of cuts to renewable support schemes and curtailing onshore wind.

The government is failing to provide long term vision
Now the government is right to push the industry hard on costs, but that needs to be combined with a clear long term policy commitment to the industry, and that is where the government is failing. The result is that many operators, manufacturers and investors are seeing only an amber light when they look at the UK as a place to invest.

This is something the government needs to rectify or decarbonisation risks being a missed opportunity for UK plc. The UK will not be a global hub for decarbonisation and low carbon industries and services if it is not itself at the forefront of deploying them.

The prime minister has demonstrated strong commitment to decarbonisation, internationally at COP21, but also domestically through the carbon price floor, legally binding carbon budgets and exiting unabated coal. But this needs to be combined with the government getting much better at joining up the policy dots across Whitehall.

Indeed, the industry and the whole low carbon sector needs a longer term policy framework and a much stronger effort to grab the business and economic opportunities that decarbonisation offers the UK. The commitment of the world at COP21 will lead to trillions of dollars flowing into low carbon projects. The UK has shown it is well placed to compete and win in one of the truly global and fastest growing new markets.

One key lesson I learned at the business department is that competition for the global market begins at home. Unless we can show some long term vision we are in danger of that amber light turning red.

See the infographic Will the UK succeed in a low carbon world? published by Green Alliance, CAFOD, Christian Aid, Greenpeace, RSPB and WWF.

You can follow the event discussion as it happened on Twitter at #lowcarbonuk and look out for our Storify record of the debate to be published shortly.

One comment

  • There are stacks of policy levers the Government can pull to speed the decarbonisation process. Instead of using those it has slashed subsidies for the renewables, increased subsidies for fossil fuel industries and scrapped CCS.
    Lord Mandelson, indeed all political leaders, need to reflect long and hard upon the implications of the 1.5C threshold target agreed at COP21. The low lying states demanded 1.5C because, if we exceed it, we will “annihilate” them, displacing hundreds of millions of people.
    Economic considerations are of course important to discuss but the scale of the threat must be seen as a moral imperative, and the failure to act appropriately, as an act of criminality.
    In September 2015 the Bank of England published a report on the financial implications of climate change upon the insurance industry which made for sobering reading. Business and political leaders need to understand that there will be a range of painful implications if government fails to deliver rapid and deep cuts in greenhouse gas emissions. As public outrage grows, those who seek criminal sanctions and the seizure of proceeds derived from fossil fuel activities will inevitably gain traction. We have now entered the era of consequences and those who understand that are already out of fossil fuel industries.

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