It is the confluence of two things – the pandemic and the perceived urgency of doing something about climate change – which makes things different this time around, a sort of double dose of structural economic shocks. It is impossible to know at this stage exactly how the chips will fall, but that we will be looking at a very different economy a decade or two from now looks certain. Just as the spending challenge of the pandemic begins to subside, along comes another body blow to the public finances – climate change. Assuming that the Government weathers around a quarter of the costs of the projected energy transition, this would according to the OBR add a further 20 percentage points of GDP to the national debt, which would seem to leave little or nothing in the fiscal locker for the next pandemic or major economic crisis. More alarmingly still, that estimate assumes some offset from carbon taxes to help pay for the combined loss of fuel and vehicle taxes and the costs of subsidising green investment. Too hot to handle, there was no mention of road pricing in the Department for Transport’s recently published decarbonisation plan, but politically unpalatable or not, it is hard to see how it can be avoided if the Government is to avoid insolvency. The “Juncker curse”, after the former European Commission president Jean-Claude Juncker, has it that the politicians know what needs to be done; they just don’t know how to get re-elected afterwards. Quite so.
Telegraph 31st July 2021 read more »
Boris Johnson’s green dream is already turning toxic. David Cameron once railed against ‘green crap’. Now this PM is finding that warning voters they will have to rip out their gas boilers is a hard sell. Greg Nugent and Godric Smith, masterminds of the marketing and communications for the 2012 Games, looked at the plans for Cop26, They advised that the government needed a full spectrum effort with central control, just as in 2012, to ensure the whole of Whitehall was singing from the same hymn sheet and reinforcing the goals of the conference. That meant opposing plans for a coalmine in Cumbria, which the local council had backed. Different parts of government and the Cop26 team are at daggers drawn over the details, with little of the spirit of 2012 in evidence. With just 100 days to go, public awareness of the conference is minuscule and the policy solutions are mired in disagreements over funding. The government has already published an energy plan, a transport decarbonisation plan, an industrial decarbonisation plan and a North Sea plan, which deals with the future of the oilfields there. Three big reports are now due to set out the UK’s approach before Cop26. In the third week of August the government will publish a hydrogen strategy, designed to shift consumption away from fossil fuels. Officials have looked at putting a levy on household gas bills to subsidise hydrogen producers. But Johnson has decreed that consumers should be insulated from higher bills. That will be followed by a heat and building strategy that will outline how consumers will be encouraged to swap their gas boiler for a hydrogen device or a heat pump, which draws heat from the air or the ground. Households account for nearly a fifth of carbon emissions. New gas boilers will be banned from 2035, with all gas boilers gone by 2050. The boiler strategy had been due to be published a month ago but is now delayed until September amid rows about how to pay for it. Plans to supply “green cheques” to people to switch are regarded as a “non-starter” by the Treasury and the business department. Instead, work is continuing about how to help the least well-off transition to new technology, landing the middle classes with higher energy bills, estimated at an extra £170 a year. The third report will be the biggest, the comprehensive net-zero strategy, which will tie together all the other strands and outline how the UK reaches the goal. “The bottom line is that someone is going to end up paying for it, either as consumers or taxpayers,” an official said. Treasury aides point out the chancellor committed £12 billion at the last budget for green infrastructure and new technologies, including £1.9 billion for electric car charging infrastructure and £1.1 billion to decarbonise homes. But the total bill by 2050 is estimated by some to be £400 billion.
Times 1st Aug 2021 read more »