Tony Blair is astonishingly unserious about climate change and energy policy. The brief mentions of the topic in his essay this week—pitting clean energy against cheap energy, and presenting North Sea oil and gas as part of a growth strategy—were misleading and wrong. If the Labour party is reconsidering its priorities, it needs clearer thinking than this.
A good strategy on climate change and energy would have three parts. First, name the threat that confronts us: climate change. Second, stop fighting the battle over oil and gas extraction, where there is nothing to win. Third, build stronger alignment between costs, jobs, security and the transition to clean technologies. This can be done in a way that contributes to increasing growth and reducing inequality.
Name the threat
There is a reason why those who oppose action on climate change avoid naming it directly, and instead increasingly use the term “net zero”. This avoids reminding people of the problem that needs to be solved and the awkwardness of explaining why doing less would be sensible. It is a shame to see a leader who 20 years ago spoke of the urgency of addressing climate change now adopting this rhetorical tactic.
The government should do the opposite: name the threat, and commission a risk assessment that makes clear its full extent, globally as well as nationally. If recent developments in geopolitics and artificial intelligence can be described as “epochal”, the changes in the climate are more so. The 10,000-year period of unusual climate stability that nurtured the growth of human civilisation has already ended. The risks of extreme heat beyond human tolerance, flooding, food insecurity, and breakdown of the ocean currents that give the UK a moderate climate are rising. The last time atmospheric carbon dioxide concentrations consistently reached today’s levels was 14m years ago. Mass extinction events have happened with slower rates of change.
Stop fighting the wrong battle
The debate over whether to allow more drilling for oil and gas in the North Sea is a dangerous distraction.
New drilling will make no appreciable difference to energy prices in the UK, as any oil and gas extracted will be sold at market prices, set globally. Neither will it improve our energy security, given the limited scope to expand fields that have been in steep decline for 25 years.
However, banning new drilling in the North Sea would make no difference to global emissions. Fossil fuel consumption globally is not constrained by supply: there are more than enough fossils to go around. If the UK puts fewer barrels of oil into the global market, other countries will put in a few more. Fossil fuel consumption is constrained by demand: it falls when people replace coal plants with solar panels, petrol cars with electric cars, and gas boilers with heat pumps.
The best argument for restricting the supply of oil and gas is to delegitimise the industry and so reduce its lobbying power. But this tactic has backfired. The government’s restrictions are being used as a weapon to delegitimise climate action. The entire climate policy agenda will be at stake in the next election, so the government cannot risk fighting battles that do more harm than good. It should let companies drill, tax them enough upfront to cover the costs of decommissioning their equipment, and spend any surplus tax revenues on supporting workers to move into sectors with growth prospects.
Connect costs, jobs, security and the transition to clean technologies
There are costs, difficulties and trade-offs in the energy transition, but it is wrong to suggest, as Blair does, that clean energy and cheap energy are conflicting policy goals. Solar power has overtaken coal power in Pakistan, annual sales of electric vehicles have doubled in Southeast Asia. These things did not happen only because those people were concerned about climate change.
The UK has high electricity prices mainly because our system relies too heavily on expensive gas. Continued investment in renewables is likely to bring prices down, but probably not fast enough to help at the next election. A better strategy, as UCL professor Michael Grubb has proposed, could be to split low-cost renewable power out of the market where gas sets the price, and give low-income households and energy-intensive industries that are exposed to trade priority access to this cheap, clean electricity. This would put the onus on Nigel Farage and friends to explain why remaining in the fossil fuel rump market is better than growing the pool of cheap clean power.
In road transport, the government has rightly cancelled a fuel duty increase that would have been a gift to the opposition and irrelevant to the transition. Having avoided an own goal, it should now go on the offensive. It should offer low-income consumers the opportunity to never have to fill a fuel tank again. This could be achieved by increasing the purchase subsidies for cheaper electric vehicles, extending them to second-hand cars, and offering a bonus for scrapping polluting old bangers (as China does). Pay for this with a small tax on road-damaging, pedestrian-threatening SUVs. People who drive tanks with armchairs inside can afford to pay a bit extra.
In industrial decarbonisation, recognise that 20 years of carbon pricing have added costs while failing to deploy clean technologies. A subsidy-and-recharge policy—where subsidies for clean steel are funded by a levy on each tonne of steel consumed—could enable investment in clean steel production at no cost to the government, creating no competitiveness risks for industry, and at unnoticeably low cost to consumers. Across energy intensive industrial sectors, such an approach could help UK companies establish competitive advantage by moving early to the new technologies, preserving good quality jobs.
The UK’s target of net zero by 2050, set by Theresa May’s government, is unremarkable, shared by countries from Australia to South Africa. The need at this moment is not to debate the direction of travel, but to get serious about the policies that can generate positive political, economic, and environmental returns in the near-term.
