UK Green transition plan

A new green transition plan has emerged after a two-year consultation with citizens’ juries, business leaders and trade unions, by the IPPR-led cross-party Environmental Justice Commission, co-chaired by Green MP Caroline Lucas, former Tory MP Laura Sandys, and Labour MP/former environment secretary Hilary Benn. It says efforts to drive down carbon emissions should deliver an equitable ‘people’s dividend’ of improvements to lives, homes, jobs and transport. 

It reviews the issues and options in detail, looking in particular at employment and location implications and it wants quite radical changes, with some headline catching budgetary demands. It calls for an extra £30 bn of public investment in a low-carbon economy each year until 2030; a £7.5bn green subsidy scheme promoting zero-carbon tech for home heating & insulation; redistribution of carbon tax revenues to the less well-off; free bus travel by 2025; and a right to retrain for workers in carbon-intensive industries. 

It also calls on the government to ‘set a target to significantly increase the proportion of community-owned low-carbon assets. As part of this, one-third of all onshore renewables in England, such as wind turbines & solar panels, should be under community ownership by 2030’. And it wants more decentralization of power: ‘all local areas should be offered the powers and resources to play their part in achieving net zero and support nature to recover as part of a new devolution framework’. 

However, while, it is keen on devolving power (of all sorts) and on supporting local community inititatives, not all of the proposals are about local decentralisation. For example, the report says that ‘once clear targets and budgets have been put in place, we call for the establishment of Net Zero and Fair Transition Delivery Bodies (NZFT) by the UK government & the devolved nation. It says that ‘the UK-wide NZFT should be led by the Department for Business, Energy, & Industrial Strategy & include representatives from other government departments such as the Treasury, the Department for Work and Pensions, Defra & the Cabinet Office. Stakeholders from across business, academia and civil society should be invited to be members of the board’.                                                                                    

There are also some interesting points made about the transitional problems faced by heavy energy-using big industry. It notes that, ‘one of the major factors putting pressure on carbon- intensive industries is the cost of energy’ and says that ‘compared to other European countries, the UK has the third highest non-residential electricity prices, which squeeze businesses – particularly in energy-intensive industries – to operate under tighter margins.’ 

This, is says, ‘is largely due to the Climate Change Levy and the Emissions Trading Scheme (ETS), both of which tax non-residential electricity and gas use. As many industries pursue electrification to decarbonise their processes, reforming these taxes to reduce electricity prices will be an important factor in maintaining competitiveness’.               

The UK has in fact come up with a UK version of the ETS, now that it is outside of the EU, but there may still be room for improvements and for alternatives to the Climate Change Levy as away to stimulate low carbon industrial development. The report suggests that the UK government ‘should facilitate industrial energy ‘big switches’ that offer power purchasing agreements (PPAs) to multiple industries and green energy providers’. It says the agreements ‘would involve the government aggregating industries interested in participating and then conducting an auction process among energy suppliers to supply these industries with renewable-based electricity at a fixed energy price for a fixed number of years. The aggregation of high-carbon industries would ensure that the energy demand was big enough to incentivise energy suppliers to participate in auctions and lower competitive prices that could address business’ high electricity costs’. It added ‘Once PPAs were verified, participating industries should be exempted from Climate Change Levies on electricity as their electricity sources would be decarbonized’, while ‘for those not participating in ‘big switches’, between now and 2030 the government should gradually increase the Climate Change Levy on gas and decrease the levy for electricity in line with power sector decarbonisation to incentivise further investment into electrification’.                                    

So alongside the more familiar & predictable calls for more money, there are some proposals for removing some taxes – at least from the good guys. The Global Warming Policy Foundation may be happy! There is also a proposal for Carbon Contracts for Difference (CCfDs), which would operate similarly to the CfDs for wind. They would pay carbon-intensive industries (‘ranging from steel producers to landfill operators’) a fixed ‘strike price’ for ‘every tonne of carbon emissions abated against a net zero target for each industry’, with selling prices linked to the carbon permit trading prices. All very market-driven green-commerce orientated.   

It may be a big jump from big company concerns to the concerns and experiences common in small grant-aided community projects, but community and municipal enterprises can hopefully combine social and environmental concerns with commercial awareness in the context of local self-management and devolved power. To enhance local empowerment and effectiveness, the report stresses the need for local job creation and for education, skills, and training systems to enable the transition, where needed, from current employment to the new green jobs. It says that the transition will create approximately 1.68 million jobs by 2035, 780,000 direct jobs and 905,000 indirect jobs in sectors for clean products and services. 

There is of course the problem that, for some projects, some technology may have to be imported, in effect exporting jobs. The UK can’t expect to do everything well, and although ‘local content’ rules may help tip the balance, this may not always work. For example, in the context of wind turbine manufacture in Scotland, as the report puts it ‘offshore wind projects have snubbed existing supply chains such as BiFab in favour of international providers’. Certainly in a competitive global market system, all other things being equal, cheap labour overseas may undermine jobs in higher wage economies. That has clearly happened in the some cases quite tragically in the wind sector and no doubt in other green energy sectors. For example, there have been complaints that China has been ‘dumping’ cheap PV cells products, undermining western markets and western jobs. The Environmental Justice Commission does try to map out how some the the issues can be faced, but given the huge economic imbalances around the world, it is going to be hard to achieve a globally just socially equitable transition…