Samuel Teale Chadwick
Inflation in the price of natural gas is set to increase the average household energy bill by hundreds of pounds in the spring. A ‘Green New Deal’ has the potential to increase domestic energy capacity and affordability, as well as achieving the government’s target of sourcing all electricity from renewable and nuclear sources by 2035. However, a long term plan appears absent from the political agenda.
With a second rise in the energy price cap expected in the spring, The Treasury is exploring measures to mitigate against the risk of fuel poverty, according to the Financial Times. A dwindling in European gas capacity in recent years has led to a dependence upon imported gas, leaving consumers vulnerable to unstable prices. This is proving less reliable when compared to renewable energy. Increasing domestic energy capacity, especially through renewable energy, delivers energy security in a sustainable manner.
Proponents of a Green New Deal point out that government investment has a crucial role to play in covering the initial costs of schemes and projects which consumers and companies will not pay. It can be radically effective to invest in the seemingly mundane. Home insulation involves retrofitting lofts and replacing gas boilers with heat pumps. This creates jobs in the short term and also cuts energy costs in the long term, aiding the target of reaching net zero carbon emissions by 2050. The New Economics Foundation calls for a ‘Great Homes Upgrade’, reporting that, as families struggle with increasing prices for energy, nearly 19 million homes “are in need of upgrading as they are draughty, cold and rely on fossil fuels to heat them”. The government Department for Business, Energy and Industrial Strategy aims for installation of heat pumps en masse in order to cut average costs. But it points out that “As long as the cost of low carbon heating systems exceeds the cost of fossil fuel equivalents, voluntary measures and incentives will not displace all off-grid fossil heating installations”.
A Green New Deal faces challenges related to popularity, feasibility and implementation. A ‘Green New Deal’ appears politically divisive, with one argument being that it amounts to statist imposition upon ordinary consumers. The USA, where a Green New Deal appears prone to predictable polarisation and partisanship, shows that national projects necessitate widespread political appetite in order to be viable.
Scalability is the first challenge to achieving targets of environmental or employment benefits. If the public are not informed or reluctant to come forward, initiatives falter. The Department for Business, Energy and Industrial Strategy introduced a Green Homes Grant Voucher Scheme in 2020, partly as a stimulus to support the housing sector during the pandemic. It cost the taxpayer £50 million, yet only 47,500 properties benefited from it, a fraction of the original prediction of 600,000 properties. The Public Accounts Committee said that the “fragmented, stop-go activity has hindered stable long-term progress towards Government’s energy efficiency ambitions”. The report also pointed out that the Green Homes scheme’s abrupt closure caused premature redundancies. Furthermore, in 2017, the then Department for Energy and Climate received only 14,000 applications for its ‘Green Deal’ to enhance the energy efficiency of housing. Public awareness and incentive are a crucial component for such schemes to succeed. The latest efforts to upgrade the long-term energy efficiency of homes indicate the limits and importance of scalability and take-up, which a well-planned, long-term Green New Deal would have to address to avoid similar shortcomings.
So far, a slew of major capital projects have attracted overseas funding amounting to £5.8 billion. This is a fraction of the £68 billion figure published by the UK’s Green New Deal as the ideal government investment. It is estimated this would more than offset covid-related job losses. Creating green jobs via a neo-Keynesian-style stimulus package generates a multiplier effect, boosting GDP growth. Furthermore, new capital stock and high skilled jobs could improve the UK’s puzzling and flagging levels of productivity. A recent Oxford Review of Economic Policy survey of experts from G20 economies cited research from the UK Energy Research Centre, that constructing sustainable energy “generates more jobs in the short run… when jobs are scarce in the middle of a recession” but in the long run “renewable energy conveniently requires less labour for operation and maintenance”. Most jobs in construction of green energy are not as sustainable as the energy sources themselves. In areas where solar, wind, tidal, biomass plants are installed, there is a risk of a return to unemployment shortly after the infrastructure is added to the energy grid.
A phasing out of fossil fuels is needed to prevent further global warming. In this respect, the UK is not inhibited by the problems of accessibility and affordability faced by developing economies seeking energy security and sustainability simultaneously. The term ‘Green New Deal’ was coined before both the Covid-19 pandemic and the global financial crisis of 2008. The key parallel with Roosevelt’s pioneering ‘New Deal’ is a collaboration between the government at all levels and the private sector, under a common scheme to achieve a revival in the wake of a once-in-a-generation collective shock. The rhetoric around it evokes a sense of one step back and two steps forward. A ‘Green New Deal’ may not be a panacea, but the UK cannot afford to overlook the combination of economic regeneration, local investment, and environmental protection in the transition to a low carbon economy. This can also include practical alternatives to most polluting combustion engines, by investing in reliable, fast, green public transport and a market-led increase in the availability of shared mobility.
Aditya Chakrabortty, “Muddled, top-down, technocratic: why the green new deal should be scrapped”, The Guardian, 11 November 2021, https://www.theguardian.com/commentisfree/2021/nov/11/green-new-deal-bad-idea-policy-left-joe-biden-john-mcdonnell
Frank Duffy, “We tried to transition to green jobs, but the bosses are closing our car factory down”, The Guardian, 20 September 2021, https://www.theguardian.com/commentisfree/2021/sep/20/green-jobs-car-factory-strike-industry-offshoring
“Putting People at the Heart of the Green Transition”, IPPR and WWF, https://www.ippr.org/files/2019-10/putting-people-at-the-heart-of-the-green-transition-oct19.pdf
David Powell, “Clean Energy for the Poorest: This is what a Green New Deal Means in Practice”, New Economics Foundation, 16 May 2019, https://neweconomics.org/2019/05/clean-energy-for-the-poorest-this-is-what-a-green-new-deal-mean s-in-practice, accessed 5th January 2022
Engel, Hauke, Alastair Hamilton, Solveigh Hieronimus, and Tomas Nauclér, with David Fine, Dickon Pinner, Matt Rogers, Sophie Bertreau, Peter Cooper, and Sebastien Leger, “How a post-pandemic stimulus can both create jobs and help the climate”, McKinsey, May 27 2020, https://www.mckinsey.com/business-functions/sustainability/our-insights/how-a-post-pandemic-stimul us-can-both-create-jobs-and-help-the-climate, accessed 5th January 2022
Hepburn, C., O’Callaghan, B., Stern, N., Stiglitz, J., and Zenghelis, D. (2020), “Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?”, Oxford Review of Economic Policy, https://www.smithschool.ox.ac.uk/publications/wpapers/workingpaper20-02.pdf
Weise, Zia “Germany spells out ‘gigantic’ effort to cut emissions and boost renewables” https://www.politico.eu/article/germany-emissions-boost-renewables-climate-targets, accessed 14th January 2022.