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Five more years: What’s in store for the green economy?

With the Conservatives winning an unexpected majority in last week’s election, Green Intelligence investigates what the future holds for green and low carbon business in the near-term.

With the Conservatives winning an unexpected majority in last week’s election, Green Intelligence investigates what the future holds for green and low carbon business in the near-term.

The prospect of a Conservative majority Government for the next five years throws up intriguing questions for green business. While the loss of the more overtly green Liberal Democrats from Government might seem like a cause for concern, the ‘pro-green’ appearance of David Cameron’s new-look cabinet may have already dispelled lingering fears of a U-turn on environmental policy. 

Importantly, continued support for the ‘decarbonisation’ of the economy had already been confirmed before the election, after a cross-party commitment ensuring continued efforts to tackle climate change and accelerate the transition to a low carbon economy was signed by the three major parties in February.

In addition, although the now infamous claim to be the ‘greenest government ever’ is open to contestation, the Conservatives can also point to a broadly positive record for green business over the previous Parliament.

This is particularly true for the renewable energy industry, with the latest statistics from the Renewable Energy Association (REA) showing that jobs in the sector have grown seven times faster than the UK average over the past two years. 

Manifesto pledges

Looking to the future, however, the Conservatives are still yet to reveal much of the detail behind the new green pledges unveiled in their election manifesto, which include:

  • Ensuring that every home and business has a Smart Meter installed by 2020
  • Supporting energy efficiency by insulating one million homes
  • Pushing for a “strong” global deal on climate change
  • Continuing to uphold the UK Climate Change Act
  • Cutting emissions “as cost-effectively” as possible whilst continuing to invest in oil and gas
  • Funding for promising renewable technologies that “clearly represent value for money”
  • Ending subsidies for onshore wind farms
  • Building new transport infrastructure that “limits, as far as possible” its environmental impact
  • Continuing to invest £500 million in the rollout of low emission and electric vehicles
  • Extending the Natural Capital Committee to develop a 25-year plan to restore biodiversity

Cabinet appointments

A key area of uncertainty has revolved around the leadership and future of the Department of Energy and Climate Change (DECC), formerly led by outgoing Lib Dem MP, Ed Davey.

With Davey championing a number of important interventions in the energy generation and energy efficiency markets during the last Parliament – including the landmark Electricity Market Reform (EMR) and Green Deal schemes – the future of UK low carbon policy depends very much on the strength of DECC’s new leadership.

David Cameron’s choice of replacement in Amber Rudd, who served as a minister at DECC last term, is already being seen as a positive signal that current low carbon policies will largely continue as planned.

“Through her previous role as climate change minister, Amber Rudd clearly demonstrated that she understands the business case for energy efficiency and the low carbon economy, and has a strong commitment to tackling climate change”, commented Julie Hirigoyen, chief executive at the UK Green Building Council.

“Her appointment is important as it not only represents much needed continuity between the previous and new regimes on environmental issues, but hopefully indicates the direction of travel of this Conservative Government on the green economy and climate change.”

The replacement of Eric Pickles as communities secretary by Greg Clark is also being celebrated as good news for investors in renewable energy and green buildings, while Liz Truss – a leading voice in the Government’s plans to shift the solar industry towards rooftop installations – has retained her role as environment secretary. 

Challenges


However, the Government will have to tackle a number of immediate challenges, not least fierce opposition to its pledge to halt the spread of onshore wind, a sector which contributed nearly £1 billion to the UK economy in 2014.

Meanwhile, the spectre of new spending cuts also represents a challenge for both DECC and the Department for Environment, Food and Rural Affairs (DEFRA), particularly given that a recent International Energy Agency (IEA) report has suggested that public funding must be tripled if climate change is to be tackled effectively.

The prospect of an EU referendum is also being seen as a risk for green business. With a sizeable portion of UK low carbon policy originating from Brussels, and given the EU’s evolving plans to maintain its position as a global leader in the low carbon economy, a possible exit from the Union is likely to affect investor confidence as a referendum approaches.

In addition, the current lack of policy direction from the Conservative manifesto on waste and resource efficiency will also need to be tackled in the coming weeks, particularly given the European Commission’s current re-development of its circular economy policies.

Steve Lee, chief executive of the Chartered Institution of Wastes Management (CIWM), has highlighted the issue as key area of concern.

“We need to get the environment in general – and resources and wastes management in particular – back on the priority list for action. Neither have featured in the [Conservative’s] election campaign despite their clear importance in delivering jobs and sustainable economic growth.”

Green Intelligence will continue to cover the new Government’s green announcements as and when they are announced in the coming weeks.