The environment: A critical part of Theresa May's in-tray

Posted by Nick Molho on 18th July 2016
First published in: BusinessGreen

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As the new government settles in, it is in the interest of Theresa May's team for the environmental agenda to feature prominently in its in-tray, argues Nick Molho of the Aldersgate Group

As the shape of the new cabinet is becoming clearer, Theresa May's team is about to embark on a busy programme of work. From dealing with upcoming negotiations with the EU to stabilising the economy following the Brexit vote, the new administration has more than enough on its plate. But in the midst of all this, it will also have much to do on the environmental and low carbon agenda.

The government's Emissions Reduction Plan could deliver local and global benefits

The previous government recently approved the fifth carbon budget, which requires the UK to cut its greenhouse gas emissions by at least 57 per cent by 2030 to stay on track for meeting its long-term climate targets affordably. In order to deliver these cuts, the new government will have to publish a detailed Emissions Reduction Plan by the end of the year. This plan must clearly set out the policies that will attract much needed private sector investment in energy efficiency, low carbon heat, power and transport technologies.

This is important for several reasons. First, the Leave campaign talked much about the importance of "looking beyond the EU" and making the UK a competitive and relevant player on the global stage, a stage that is now taking climate change and the low carbon economy very seriously. The Paris climate change agreement supported by 195 countries, followed by the signing ceremony in New York attended by a record number of world leaders in April, has shown unprecedented global political will to tackle climate change. Much more needs to be done of course but the political will is growing.

Importantly, money is also flowing towards low carbon technologies. In 2015, a record $285bn was invested in clean energy, with China alone investing over $100bn and other major economies such as the United States, South Africa, Brazil and India driving this investment forward as well. By 2020, as part of its 13th Five Year Plan, China plans to double its wind power capacity, treble its solar capacity and increase the sale of electric vehicles by a factor of 10. This comes on top of a commitment to reduce its production and consumption of coal.

If the UK is to indeed thrive on the world stage, it needs to follow these global trends and capitalise on the framework provided by its Climate Change Act to grow its low carbon economy.

This is also important in terms of domestic investment. In many parts of the UK, such as the North of England, that voted in favour of the UK leaving the EU, there has been an understandable feeling of economic disenfranchisement. Whilst it is only part of the solution, the UK's growing low carbon economy can play an important role in bringing much needed investment to these regions and help deliver Theresa May's vision of Britain as "country that works for everyone".

Investments are already being made by Associated British Ports and Siemens to regenerate the port of Hull and build an offshore wind turbine blade factory that will employ 1,000 people locally, with more positive knock-on impacts on smaller businesses in the supply chain.

The new Department of Business, Energy and Industrial Strategy

From this perspective, the merger of the Department of Energy and Climate Change (DECC) and Department of Business, Innovation and Skills (BIS) into a new Department of Business, Energy and Industrial Strategy (BEIS) could potentially be a good move, especially given Greg Clark's positive stance to date on the low carbon economy.

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Despite climate change not featuring in the name of the department, this merger could work if it means that climate change and low carbon considerations will now become fully integrated in the government's decisions on energy, infrastructure and industrial strategy. This could be a unique opportunity to build a low carbon industrial strategy that could maximise the growth of the sector (which already employed over 238,000 people directly in 2014 according to the ONS) and consider how the UK's energy intensive industries could play an active role in the UK's growing low carbon supply chain.

A resilient UK needs a 25 year plan for the environment

Beyond the future of farming subsidies, which received most of the media coverage, Andrea Leadsom's Department for the Environment, Food and Rural Affairs (DEFRA) will also have much to do. In particular, it should deliver on its pledge to develop the 25 Year Plan to improve the state of the UK's environment. This matters because vital parts of the UK's environment such as the quality of soils are in decline and we rely on services provided by the natural environment to support our economy and society.

But it is also important because a stronger, healthier natural environment can help the UK's infrastructure, businesses and communities be more resilient to the impacts of climate change. As a recent report from the Committee on Climate Change made clear, the UK is currently poorly prepared to cope with the impacts of climate change and a clear strategy to improve the state of its natural environment can help improve its ability to cope with risks such as flooding, droughts and heatwaves.

The 25 Year Plan will also need to consider how the UK should incorporate important aspects of EU environmental law, which to date have played an important role in protecting the state of the UK's environment in areas such as water quality.

It has been tempting for governments in the past to consider environmental and low carbon economy issues as a luxury "add-on". But this new administration must realise that an ambitious environmental and low carbon agenda has a central role to play in delivering Theresa May's vision to make Britain "a country that works for everyone" and one which plays a "bold new positive role" in the world.

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