Does the Clean growth strategy live up to the hype?

9671501197_fb97e8941c_bThe journey of the government’s decarbonisation strategy, announced today, is a key to how it should be read: it started as the carbon plan, was downgraded to a compliance-focused emissions reduction plan, then transformed into a clean growth plan to match a shift in how government now sees green growth and, at the last moment, it has metamorphosed into the Clean growth strategy.

What has emerged is very much the latter document. It sets a direction, a tone and a set of goals, which together are an impressive reframing of government climate action, not as a painful but worthy struggle, but instead as an enormous economic opportunity that will underpin UK industrial success in a world which is rapidly decarbonising. Both Theresa May and Greg Clark make explicit that it is joined at the hip with the government’s flagship industrial strategy, which means it will be politically durable. In this respect, it is a vindication of the creation of the Department for Business, Energy and Industrial Strategy.

It signals a sea change
Make no mistake: this is a very significant shift. Back when it was called the emissions reduction plan, the strategy was to decarbonise at least cost. This was a deeply restrictive and self-denying frame: a business doing this would focus entirely on cutting costs, and ignore opportunities for sales growth. For a national economy, this is a recipe for slow decarbonisation, a static and backward looking take on technology costs, and it implied that the UK would buy in technology that others had developed and mastered. The UK might have decarbonised, but it certainly couldn’t have been a leader and it wouldn’t have built a competitive low carbon economy in the process.

The new strategy aims explicitly to “secure the most industrial and economic advantage from the global transition to a low carbon economy.” It recognises how much the UK has benefited from its low carbon leadership, and takes a much richer and more realistic view of technology, recognising that policy (and UK policy on offshore wind in particular) has “altered the way that we see many of the trade-offs between investing in low carbon technologies that help secure our future but that might incur costs today.” That’s a very British, very reserved way of saying that the UK took a risk on offshore wind, developed world-leading policy, funded it properly and, through hard work and unrelenting focus, turned it into an international industrial success story. It’s a model any entrepreneur would recognise. Finally, the government has understood that a bit of chutzpah and mission-oriented innovation is what’s needed and what works.

It’s a strategy, but not a plan
But the Clean growth strategy is not the same as a Clean growth plan. It is a set of strategic goals with some indication of how government might achieve them, and a number of promises to work up the detail. The gamble is that the extraordinary change of tone and strategy should begin to reset space for policy. The government will certainly need help to turn these goals into policy that actually delivers.

There are some impressive commitments: an industrial energy efficiency push to help UK industry become more productive (a key ask of our recent Lean and clean report), a regulatory driver to bring British homes up to a decent level of energy efficiency, a hint that government will support more than 10GW of offshore wind, with some real money to do so, and a promise to use the government’s buying power to purchase only clean vehicles.

But there are also some sizeable holes: the 2040 commitment to end the sale of diesel and petrol vehicles doesn’t look world leading compared to the 2030 goals which the Dutch government announced two days ago, or the same commitment India recently made. There is a promised new strategy for clean transport due out early next year which could address this.

The strategy isn’t ambitious enough on heat and efficiency
Similarly, the domestic heat and efficiency goals are excessively timid: this parliament needs to use regulation and innovation spending to radically cut the cost of solid wall insulation, and do very large scale trials of clean heat, but the biggest commitment is to roll on the Energy Company Obligation to 2028. This is a good proposal, but it reflects a steady-as-she-goes policy approach, not the buccaneering can-do attitude applied to clean cars and clean power.

Overall, the Clean growth strategy does not answer the question of how the UK will decarbonise. It doesn’t close all the gaps to meeting the 4th and 5th carbon budgets. But it does make explicit promises to develop plans that will add up, and hooks these into the overriding mission of the government’s industrial strategy.

So the right test to apply is that of an investor: does it make you want to invest in innovation and deployment of clean technologies and services in the UK? The strategy recognises that global capital is reorienting itself around clean growth, and Global Britain is open for this sort of business. It has started to open up the opportunity, but the big challenge will be to turn its goals and direction into investible and profitable clean growth policy.

[Image: Gyroflight Westerwald by Neuwieser from Flickr Creative Commons]

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