new UK government should learn from Britain’s energy policy history
London, July 25, 2024, (Oilandgaspress) –– Energy and climate policy are by their nature long-term challenges. Yet governments in the UK are elected for a maximum 5-year term, so politicians seek to show progress in dealing with such far-reaching issues. So what’s the most sensible approach – and what can we learn from history in this area?
2 professors at Cambridge Judge Business School- David Reiner and Michael Pollitt approach this topic from a sobering perspective: that the easy part of efforts to reduce carbon emissions (largely through swapping coal for gas, and ramping up renewables) is coming to an end, and now comes the hard part to achieve ambitious further targets.
Reflecting in an article on “Some thoughts on the past, present and future” inspired by the manifestos of the various parties in the 2024 general election in the UK, Michael and David reach far beyond issues raised in the 6-week campaign. They delve back in history, and range into the future, to dissect what the UK has got right – and wrong – in energy and climate policies in recent decades, and how these wins and losses can colour decades to come.
The academics conclude that if the UK is serious about deep decarbonisation by 2050 “then we do not have the luxury of engaging in endless debates over green growth or focusing too much of the government’s attention on policies with minimal impact”.
In a no-nonsense paper issued through the Energy Policy Research Group, a cross-disciplinary research centre based at Cambridge Judge, the 2 faculty members conclude that if the UK is serious about deep decarbonisation by 2050 “then we do not have the luxury of engaging in endless debates over green growth or focusing too much of the government’s attention on policies with minimal impact”.
Instead, there needs to be an intense focus on ensuring that mechanisms and incentives to attract the necessary investment are effective – not least because costs of such decarbonisation will inevitably increase amid widespread populist backlash elsewhere in Europe against costly green policies.
Observations from the article
While Britain has done well in some niche areas of energy equipment, such as fossil fuel engines and generators, there is little evidence that UK energy policy can be used to encourage new technology that will effectively promote exports.
The UK should focus on global emissions in its climate policy, and resist the offshoring of emissions to countries with lower environmental standards.
Britain needs to encourage other countries to also decarbonise, which can be “most obviously done” through close cooperation with the EU.
Continuing decarbonisation will go hand in hand with continuing economic growth, because in general richer countries decarbonise more. “Thus, although there may well be rhetorical and political advantages, a policy of not granting new oil and gas licenses in the North Sea is economically non-sensical if it reduces UK GDP, while also not reducing global emissions. Similarly, policies which limit airport development rather than seeking to properly tax aviation fuel are bad for the environment (because they reduce UK economic growth) and bad for international relations and global economic growth (by discouraging international travel),” says the research by Michael and David.
The potential for green growth should not be overclaimed, as there is little evidence that faster green growth will, on net, benefit the UK economy. But that doesn’t mean that decarbonisation is not a worthy goal.
Policymakers should not confuse costs and benefits by “presenting costs as benefits”. While a given energy investment may create many jobs, these workers will likely come from other productive parts of the economy – both private (such as construction) and public (such as education and health).
“Energy should be a high productivity sector in the economy, with as few jobs as possible dedicated to satisfying home demand, precisely because as a society we don’t value energy per se, but the final services (thermal comfort, travel and entertainment, etc.) it facilitates,” says the research by Michael and David.
Energy prices are not dependent on ownership of production or the source of energy, as illustrated by the dramatic price increases in the UK in 2022 despite Britain being one of the least-dependent European countries on Russian gas.
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