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The UK has endured yet another year of economic underperformance - there is only one route available that can break the pattern of managed decline, but the clock is ticking
How are you spending the New Year? Avoiding contact sports, black ice, and excessive drinking for fear of ending up sharing a trolley with another patient outside your local overwhelmed casualty department? Trying to calculate whether its worth buying a new annual rail pass when at least one week a month is set to be wiped out by strikes for the foreseeable? Despairing that global carbon emissions are back at record levels, deadly heatwaves are the new normal, and Michael Gove just went ahead and approved a new coal mine regardless? Trying to take bets on how many Prime Ministers we'll have next year? Me too.
The UK's public sphere and critical infrastructure feels like it is collapsing in on itself. The list of things that work better than they did a decade ago consists of on-demand TV, offshore wind farms, and the England football team, and that's about it. Inflation smothers economic hopes like a smog, choking off the optimism and confidence that is essential to recovery. The government's utterly shameless attempts to blame Covid, Putin, and Gordon Brown for the country's various rolling crises are quite rightly failing to gain traction when everyone can see the UK has become a miserable outlier on far too many economic charts and that our prospects have been so demonstrably damaged by the triviality, arrogance, and weakness of the Johnson-Truss-Sunak succession.
The rest of the public are being forced to experience the nagging sense of quiet decline environmentalists have lived with for years. The inescapable feeling that while the solutions are obvious and available, everything is gradually deteriorating, the moments of joy and beauty are scarcer and more fragile than they should be. Come on in everyone, the water is full of sewage.
But with New Year approaching it is appropriate to not just reflect on what's past, but also look forward. Time marches on. The 2030s will soon be just seven years away. It is the length of a single primary school career. You are probably living in the same house you will be living in at the end of the decade. You could easily be in the same job. You may well be driving the same car. It is at most two business planning cycles away. Less than one investment cycle for many industries. There could be just one election between now and then. We are past the halfway point between the signing of the Paris Agreement and the end of the decade when global emissions should have fallen sharply. We are seven summers from the point at which the government has promised nature will be in recovery. And yet, emissions are still rising and the animals keep dying. The clock is ticking.
What, then, is to be done? We obviously can't go on like this. We deserve better.
Thankfully, a route to recovery is available and it can be realised. But only if we act with a level of urgency, seriousness, and single-mindedness that has been utterly beyond the government for the past 12 years.
One of the under-reported stories of this bleakest of economic winters is that bubbling beneath the surface are countless projects that have the potential to be genuinely transformational and world-leading, many of them at relatively advanced levels of planning. In the past few weeks alone we have reported on new funding for five new sustainable aviation fuel (SAF) production plants, a boost in capacity for the Norfolk Offshore Wind Zone, the first marine surveys for the Celtic Sea floating wind zone, plans for two gas CCS power plants, the shortlist for a new small modular reactor factory, plans for three heat network projects, a contract for the UK's first CCS cement project, a commitment to put carbon labels on the menus of one of the country's largest restaurant chains, confirmation the world's first SAF powered transatlantic flight will take place next year, numerous new solar and battery projects, a corporate initiative to embed climate requirements in supplier contracts, plans for the UK's first net zero emission glass factory, and a veritable flurry of hydrogen projects. This is just the tiniest snap shot of the great hive of activity underway across the green economy, often in pursuit of projects that are hugely scalable, immensely popular, and increasingly competitive.
It is only fair to acknowledge that the government has played a role, sometimes directly, in many of these projects. But in the same brief period that the green businesses listed above have advanced so many strategically important ventures, the government has slapped a windfall tax on clean energy generators that is arguably more onerous than the windfall tax on oil and gas giants; delayed announcing what will replace the Energy Bill Relief scheme, leaving thousand of businesses fearing bankruptcy in the New Year; delayed the long-awaited green taxonomy for investors; broken the law by missing a deadline to publish new environmental targets and then belatedly confirmed it is to water down its legal goals; failed to confirm key details on its green farming subsidy reforms; and approved the first new coal mine in the UK in 30 years. It did all this on the back of months of inaction in the face of the worst energy security crisis in a generation, the appointment of several net zero sceptics to key Cabinet positions, and one of the most embarrassing and economically damaging periods of political incompetence in modern history.
Even where notable progress has been made with the long overdue move to lift the de facto ban on new onshore wind farms, the increase in energy efficiency funding, and the launch of a new energy-saving public information campaign, the government's efforts remain badly underpowered. The consultation on changes to onshore wind farm planning rules will still result in significant barriers to development for new projects, according to government insiders. Meanwhile, literally no one inside or outside government thinks the modest increases in energy efficiency funding approved by the Treasury will resolve the economic, health, and environmental crises that stem from the chronic condition of the UK's cold and inefficient building stock.
The good news, if it is not distasteful to put it that way, is that there is so much going wrong across the UK economy, and so much entrenched underperformance, that there is an awful lot that could be fixed quite quickly. And the growing pipeline of green projects is one of the most obvious and effective levers available for doing so.
The broad answer to the current full spectrum economic stramash is for governments and businesses to simply do what they have said they will do. Net zero by 2050, nature recovery by 2030, a 15 per cent cut in energy use by the end of the decade, a new wave of UK 'Silicon Valleys', zero carbon industrial hubs, the world's largest offshore wind fleet, eight new nuclear plants, energy independence. Deliver on that lot and the catalysing impact on the UK economy would be considerable.
But none of this can happen without government leadership. Businesses can and will continue to accelerate their decarbonisation efforts, but with so much of the transition dependent on emerging technologies, capital investment, and overcoming market failures and free-rider dilemmas, most conversations around how to accelerate climate action necessarily come back to questions of policy and politics.
Across the political spectrum think tanks and business groups are coalescing around a policy package and broad economic philosophy that would allow this vision to be achieved. Again, in the past few weeks alone there have been reports from Aldersgate Group, Onward, IPPR, BeZero Carbon, the Energy Systems Catapult, and the clean energy industry that have all made broadly the same case for government to urgently take proactive steps to get critical green infrastructure and supply chain investments over the line. The precise mix of regulation, public spending, and policy intervention may be up for debate, but from the CBI to Greenpeace there is a powerful and growing consensus that it is government that can unlock a surge in climate action if it only wants to. Concerns about the deficit are likely to prove overblown if spending is targeted firmly at the productivity boosting projects that can bolster UK competitiveness.
This last point is key. Because over the past year it has become painfully apparent that if the UK does not turbocharge its net zero transition others will. As the International Energy Agency (IEA) has repeatedly documented, Russia's terrorism has triggered less of a dash for gas and more a revival for renewables. The surprise passage of President Biden's Inflation Reduction Act and its generous support for low carbon industries has sparked a rapid response from the EU which has moved remarkably quickly to further strengthen its already world-leading decarbonisation plans. China and India continue to quietly build out economy-shaping clean tech industries. South Africa, Indonesia, and Vietnam are now working out how to invest their multi-billion dollar Just Transition Energy Partnership funding deals. It is not exactly a mystery as to why Glencore just announced it is accelerating its coal mine closure programme.
A clean tech arms race is now well underway and the very real fear among UK green business leaders is that the country risks squandering what was once a leadership position in multiple key sectors through a combination of economic mismanagement and sluggish policy progress.
It is not too late for the government to revitalise the UK's position and with it its faltering economy. Simply delivering long-awaited planning reforms, farming subsidy reforms, investment taxonomies, carbon pricing plans, CCS and hydrogen business models, nuclear deals, SAF policy frameworks, building codes, onshore renewables rules, wholesale electricity market reforms, a national energy efficiency programme, an end to the sale of new petrol and diesel cars and vans, an Environmental Improvement Plan, and an updated Net Zero Strategy all in their greenest possible guises would have a near immediate impact. And yet still we wait. Much the same to do list was in place at the start of this year. The lack of progress on multiple fronts has amounted to a genuine dereliction of duty.
You have to wonder: what is Rishi Sunak's alternative strategy is meant to be? A continuation of the fiscal austerity and political triangulation that has worked so well to date?
The government is flirting with 20 per cent support in the polls and is apparently committed to a battle with striking nurses and train drivers it seems impossible for it to win. It is on track to miss environmental and climate targets it is legally obliged to meet, is paying billions of pounds a month to subsidise energy bills that households and businesses simply can't pay, is deep into the third major recession inside 15 years, and is watching its competitors disappear over the horizon in a renewables powered electric vehicle that they are planning to use to drive their economic growth for the rest of the century. There is no alternative course of action available that does not centre on the kind of 360 degree pursuit of the clean tech revolution being advanced by the US, EU, and others. How else does the UK expect to pay its way in the world if not through this? Fracking and heritage tourism?
The story of at least the past six years, and arguably the past 15, has been a wait for the moment that the palpable sense of economic and post-imperial decline bottoms out, the point at which the sunlit uplands become less a grimly sarcastic punchline and more a palpable economic project. The nagging fear is that there is no guarantee that point comes. History is littered with countries that saw their economies stagnate for decades, rolling from one crisis to the next as their public sphere deteriorated and their prospects narrowed.
If the autumn and winter of 2022 - the end to the year of the four Chancellors of the apocalypse and actual climate sceptics jostling to become Prime Minister - is to mark a turning point, it will only happen if the government is willing to bring an end to the mixed policy signals it keeps sending and starts doing everything in its power to accelerate the net zero transition. If it is not willing to do so, it should step aside and let someone else have a go. There simply isn't time to waste on more years of barely managed decline.
