Saturday, May 14, 2011

Cameron must listen to business and implement the 4th carbon budget

David Cameron must announce on Monday that he is accepting the fourth carbon budget for the period 2023-2027 published by the independent Committee for Climate Change last December.

The Cabinet is split on the affair. Even the Liberal Democrats are divided, with business secretary Vince Cable seeking a watered-down version while energy and climate minister Chris Huhne is recommending full acceptance.

Labour leader Ed Miliband has written to Cameron with the support of Huhne's shadow, Meg Hillier, challenging him to accept the budget.

If he doesn't, it will be the first time that the Government has not accepted the CCC's recommendations.

The fourth budget limits emissions over the period to 1950 MtCO2e, which will attain an emissions cut 50% below 1990 levels in 2025 and 60% by 2030.

The budget says that it "represents our assessment of a minimum UK contribution likely to be appropriate to a future global deal covering the 2020s".

In a leaked letter, Cable writes about his concerns that the level of abatement "may not be technically feasible" and is "not cost-effective", because it assumes that a future EU-ETS cap consistent with a 30% emissions reduction target by 2020 is set.

However, as I reported last month, this level is not far off in any case.

Cable would like to set a level instead of 2170 MTCO2e, but is prepared to accept a compromise, of CCC's recommendation for the non-traded sector. He claims that this can allow the Cabinet to claim that the Coalition is "The Greenest Government Ever" [sic].

In his letter, Ed Miliband says that for Cameron to do anything other than accept the CCC's recommendations would be to abandon the cross-party support that has so far characterised action on climate change.

He says it did appear "that on this crucial issue for the future of the planet which our children will one day inherit, there was broad cross-party consensus".

Not to cut emissions at a rate that "independent experts say is necessary to prevent dangerous climate change would send a terrible signal to business and to the rest of the world", he adds.

One thing is absolutely certain: the Government has been inundated with requests from business for a clear set of policies into the future, to give reassurance to investors in financing the low carbon industrial revolution that can let Britain lead the way.

Two weeks ago even the CBI told the Government that "low-carbon investment is vital for the UK", that "the pace and scale of investment is a barrier to success" and "Government must take action to set the right investment conditions".

Amongst those who have cried out for this assurance you can find John Lewis, Unilever, Shell, water and energy companies and many more.

This week Danish wind turbine manufacturer Vestas offered to set up an offshore manufacturing base in Sheerness, Kent. Vestas, but only if the UK Government delivers "stability in the market and long term political and regulatory certainty.”

Maria McCaffery, Chief Executive of RenewableUK, agrees: "We have an unprecedented situation where some of the best known companies in the world are literally queuing up to invest in the UK. The Government now needs to seal the deal on offshore: it needs to bag the first 8,000 jobs and hundreds of millions of pounds already pledged, by firmly supporting the technology.”

Even Foreign Secretary William Hague is in favour of accepting the budget. In another leaked letter sent last month to the Prime Minister, he wrote, "I agree that we should not reject the fourth carbon budget recommended by the Committee on Climate Change in order to retain public support for our climate policy at home we need to be able to point to similar effort abroad. If our domestic resolve is seen to be weakening, we will lose traction elsewhere."

This week CCC chair Lord Turner met Vince Cable in an attempt to persuade him to change tack, and to show agreement with Cable's concerns about cost effectiveness even made a concession, in saying that offshore wind targets could be changed because more onshore wind would be more cost-effective.

This is a key test of the Government's commitment to tackling climate change and to the low carbon revolution which can create so many jobs in this country.

In opposition, Cameron argued that an independent body was necessary to set and enforce emission targets, and ministers shouldn't be able to change them.

With so many voices in support, it is vital that David Cameron remains firm as a champion of this sector, the only sector that has a chance of leading the country out of the economic doldrums in which it remains stuck.

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