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The signals in favour of green investment get clearer by the week, it is just a shame that while President Obama seeks to lead David Cameron remains silent 02 Jul 2013 I have a vague recollection of a time when climate change topped the political agenda. When the world’s most powerful politician announced a sweeping strategy to cut greenhouse gas emissions, declaring that “as a President, as a father, and as an American, I’m here to say we need to act”. When the world’s largest single market announced wide-ranging new efforts to cut international shipping emissions . When the world’s premier energy analysts confirmed renewables will overtake gas as the second largest global source of electricity by 2016. When the world’s largest emitter of greenhouse gases took the first steps towards slapping a price on that polluting externality. And when the home of the world’s first industrial revolution revealed how it will deliver the next industrial revolution by mobilising massive investment in clean energy, rail infrastructure, and climate adaptation. That’s right, I remember – it was last month. The past few weeks have seen a host of hugely significant developments for the low carbon economy (and by extension the wider economy), further underlining the gap between the anti-green narrative of faltering political ambition on climate change and the reality of ambitious new policy and investment programmes that are explicitly designed to move the world economy on to a low carbon path. Virtually everyone involved in these various climate strategies admits they do not yet go far enough – and those who have not yet acknowledged this reality should read Stephen Emmott’s absolutely terrifying new tract on the scale of the existential environmental risks that will characterise the coming decades. But while current policies are not commensurate to the scale of the environmental challenges we face, arguing that these policies do not exist or that they amount to nothing more than political window-dressing is a sorry distortion of reality. Particular progress was made last week in the UK and the US where the climate strategies that could well dominate much of the next decade were fleshed out. Inevitably, the media omerta that governs coverage of countless environmental and green economy issues remained in force. The President of the world’s largest economy setting out the urgent need to fundamentally reshape that economy largely failed to make the front pages, while the coverage from the media’s partisan wing surprised no one by mocking Barack Obama’s willingness to respond to scientific evidence. Displaying the utterly dispiriting predictability that is its calling card, Fox News responded to Obama’s speech by again providing a platform for climate sceptic mythologising. On this side of the Atlantic, the government’s raft of green infrastructure announcements was clearly part of a fairly transparent (and largely effective effort) to spin the spending review’s tacit admission of economic failure and explicit admission of the need for further cuts to departmental budgets . But it was also a hugely ambitious policy and investment programme designed to pump billions of pounds of investment into a greener and more resilient 21st century infrastructure. Inevitably, the bulk of the media again failed to see it this way and tended to either ignore the announcements or spin them as further evidence we will suffer 1970s-style blackouts during the middle of the decade. However, those business leaders who are canny enough to make long term decisions based on scientific, economic, and policy reality, rather than the version spun to them by a partisan media, will have interpreted last week’s events as a clear signal that pressure to decarbonise is only going to intensify. Obama’s cri de coeur in support of climate action left no one in any doubt that the President plans to use his final term to deliver significant progress on emission reductions. His ability to deliver sweeping climate legislation may be curtailed by a deadlocked Congress, but businesses can be certain that the administration will directly or indirectly support projects to enhance energy efficiency, curb emissions from transport, invest in climate resilience, and bring online all forms of cleaner energy, ranging from CCS and shale gas to solar panels and wind turbines. Energy and fuel efficiency standards will get tighter, funding will be made available to support emerging clean technologies, investments in climate adaptation will be prioritised, and the President will use his bully’s pulpit to criticise and condemn those politicians and businesses who stand in the way. The administration has been quick to argue that the President is not declaring a “war on coal”, noting that the new strategy includes $8bn of loan guarantees for clean coal projects. But Obama is declaring a war on reckless businesses that have no intention of responding to the climate threats. Of course, the US political landscape is so polarised on the topic of climate change that there is a very real chance that many of President Obama’s decarbonisation efforts could be reversed by a Republican President after 2015. But business leaders know that for the next few years decarbonisation will be on the administration’s agenda, just as they know that Obama’s internal polling must show that a majority of Americans are concerned about climate impacts and want to see cleaner technologies and business models succeed. In the UK the green economy landscape is far more complex given the nuances of coalition government and the fact that the decarbonisation policy framework is already well under construction. But again the broad signal to businesses is much the same – the government wants you to mobilise investment in cleaner technologies and business models, and it is willing to help you do so. There are significant and legitimate questions to ask about the policies the government has put in place to drive this decarbonisation, not least around the cost of certain clean technologies and the ability of the government to deliver hugely ambitious programmes such as the Green Deal. But the policy support for green technologies and businesses is becoming clearer by the day, just as the risks associated with carbon intensive business models are also becoming ever more apparent. Of course, that is not to say everything is perfect. There are still important unanswered questions about the future role of shale gas in the UK energy mix, the viability of CCS, the effectiveness of energy efficiency policies, and the cost of the entire low carbon agenda. Meanwhile, despite his signing off numerous multi-billion pound support programmes for clean technologies it often appears Chancellor George Osborne regards the decarbonisation agenda in the same way as he regards late night takeaway food – as more of a political plaything than a source of sustenance. But any business waiting for the political and economic climate to be perfect would never get anything done. Cast iron certainty can never be delivered, but it is clear that most of the government is working to deliver as much certainty as it can. The simple fact is that the vast majority of policy, political and economic signals are now pointing businesses in the direction of more ambitious climate action. And again, anyone doubting this reality should read Stephen Emmott’s new book, 10 billion , on the daunting challenges we face this century and realise that unanswerable environmental signals are pointing ever more urgently in the same direction. In fact, increasingly the only people pointing in the opposite direction and arguing in favour of the status quo either work in industries that are too scared to countenance a green economic transformation or act as their cheerleaders in the media and politics. The problem is that on occasions these cheerleaders are loud enough to counteract some of the signals in favour of action. And this brings us to the main flaw in last week’s flurry of US and UK climate announcements – they acted as a mirror image of one another, Obama providing the political signals that action is required while failing to deliver sweeping policy action, Cameron delivering sweeping policy action but failing to provide political signals. The vagaries of the US Congress may make it impossible for Obama to pursue any other path, but in the UK it is still possible to envisage a hybrid of the two leaders’ approaches (the Obameron doctrine?) that would see the Prime Minister trumpet from the rooftops that action on climate change is essential and he is determined to deliver it. Sadly, the reality is quite different. There was a rumour going round Westminster early last week that the Prime Minister was planning to announce the predominantly green infrastructure measures unveiled by Danny Alexander, but again it looked like Cameron ducked the opportunity to promote his government’s green goals. Equally, the Prime Minister could have this week ordered Environment Secretary Owen Paterson to make a big splash with the latest report on the scale of the climate adaptation challenges the UK faces, but again Defra’s climate work was highlighted with nothing more than a short press release. After a long and frustrating wait, Obama has finally confirmed he is bold enough to lead from the front on the need for climate action, taking the fight to colleagues and opponents who disagree with him. Meanwhile, Cameron signs off on ambitious climate policies, but lets others do the leading, preferring to duck the necessary scrap with climate sceptic colleagues. The coalition’s green policies may point ever more clearly in favour of decarbonisation, but without the kind of strong leadership displayed by Obama last week political risk remains. As a result, progress is slower and the cost of capital is higher than it should be. Cameron may think that he is appeasing his more vocal backbenchers by keeping silent on the topic of climate change, but in failing to publicly back an agenda he was once so closely aligned with he only highlights the weakness of his position. Last week provided a clear signal to businesses that the green economy will continue to prosper on both sides of the Atlantic, regardless of the media and political spin that seeks to derail it. But it also provided a tantalising glimpse of what a combination of strong leadership and strong policy can deliver. All it needs is for those leaders like Cameron who are actually delivering ambitious green policies to respond to Obama’s challenge and declare publicly that they do indeed have “the courage to act before it’s too late”. Continue reading →