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Whenever something outrageously idiotic happens in the United States, there’s a tendency for us in the UK to declare “only in America”.
From Donald Trump seeing his poll lead go up after criminal charges to regular mass school shootings, we sometimes roll our eyes at American exceptionalism.
Part of the problem is that everything seems to be bigger in the US too: big political personalities, big tech, big oil, big pharma, supersize meal portions, giant family cars.
But there’s one notable area where America has something much smaller than the UK, and that’s inflation. While Rishi Sunak still grapples with rates near seven per cent, the US has seen its own price rise rate fall to around three per cent.
And on the first anniversary of Joe Biden’s “Inflation Reduction Act”, it seems the White House is also racing ahead of Britain when it comes to harnessing clean technology to cut energy bills, boost jobs and tackle climate change.
Sunak’s government has yet to form a coherent equivalent to this enormous economic stimulus, with Jeremy Hunt postponing until his Autumn Statement any new measures — a full 14 months later.
That’s all the more surprising given the sheer scale of the Biden act, which gives huge tax breaks, grants and loans to firms to invest in green energy in the US.
If proof were needed of that scale, one of the world’s most powerful bankers recently told a private event that the Biden legislation had caused the biggest shift in capital markets in his entire 40-year career — bigger even than during the 2008 financial crisis.
The White House’s support package was worth $369 billion but adding in the Infrastructure Investment And Jobs Act and the Chips And Science Act (Americans love to call a spade a spade with their legislation) there is a total of half a trillion dollars of Government support.
Most importantly, Goldman Sachs estimates that around $3 trillion of private investment will be leveraged into renewable energy technologies such as wind, wave and solar. These sums certainly are supersized indeed.
America is not exactly alone. Canada, India and Australia are looking at similar approaches and the EU has outlined its own plans to boost its own pivot away from reliance on China for green tech.
Failed third-party Presidential candidate Ross Perot once warned against the “giant sucking sound” of jobs going from the US to Mexico in free trade. Now, the rest of the world can hear a giant sucking sound of private investment flocking to America in green investment.
Yet here in Britain, the net zero agenda is in danger of slowing down, not speeding up. Ever since the Conservatives clung onto the Uxbridge by-election, having weaponised an air pollution travel tax, both Rishi Sunak and Keir Starmer have been keen to signal that costs come before climate.
Aside from some legitimate worries about the impact on less well-off households, there are some MPs who want to press the pause button on the whole drive to net zero UK emissions by 2050.
One of the most startling polls this summer was a YouGov survey for the Energy and Climate Intelligence Unit (ECIU) that found over 40 per cent of Tory MPs believe climate change can be stopped without reaching net zero emissions.
Experts said that betrayed a depressing lack of understanding of “the basics of climate science”. But MPs’ scepticism has also been fuelled by growing use of this trope that the UK “only” contributes one per cent of the world’s climate emissions.
Even Tony Blair resorted to such rhetoric recently, saying: “Don’t ask us to do a huge amount when frankly whatever we do in Britain is not really going to impact climate change.” He suggested any emissions cuts the UK made would be dwarfed by any increases in China.
But it’s worth considering that even our one per cent is still a big number, putting us in the top 17 emitters in the world.
Crucially, all these one per cents add up. Stripping out China, US, India and Russia, around half of the planet’s emissions are made up of countries which emit less than two per cent or less of the total. If each of them argued their “small” contribution was an excuse for delay, no targets would ever be hit.
We shouldn’t forget that many leading industrialised countries disproportionately contributed to the gases already in the atmosphere, and the UK is the eight biggest historic emitter. A key plank of the UN deal on climate change is for those richer countries to cut emissions faster and to help poorer states adapt.
More importantly, as the PM himself pointed out at COP27, net zero targets cover 90 per cent of the world’s GDP. That’s not just because countries see the self-interest in stopping extreme weather events like heat waves, floods and wildfires. It’s because their economic self-interest lies in cleaner, cheaper energy that provides good jobs.
Every country knows that the private sector is itching to invest over five-, seven- or 10-year cycles. Yet there’s nothing more off-putting to an investor than uncertainty, particularly if politicians wobble on previous commitments.
A case in point is the UK Government’s plan to phase out the purchase of new petrol and diesel cars by 2030. Despite heavy pressure from some Tory MPs (including Business Secretary Kemi Badenoch) after the Uxbridge by-election, Cabinet ministers have recommitted to this target.
But I can reveal that all is far from certain. It’s not the 2030 end date of this plan that is now the focus, it’s the 2024 start date. And it seems the Department for Transport is hedging its bets in the face of a backbench backlash.
A Government consultation earlier this year set out plans to start fining motor manufacturers who failed to make 22 per cent of their cars (and 10 per cent of their vans) electric from 2024. The so-called “ZEV mandate” will increase the percentage to 100 over time.
The Government response to the consultation has been expected this month but has yet to appear. Moreover, I understand that the statutory instrument implementing any plans will be subject to an “affirmative” vote — giving all Tory MPs a chance to reject it.
This may simply be a way for rebel backbenchers to let off steam, in the knowledge that the secondary legislation will pass with Labour votes.
Yet if it somehow leads to a delay in implementation, even putting it back to 2025, the impact on the whole auto industry — and signals to investors — will be huge. The most worrying message may be that even before the rubber hits the road, the PM goes wobbly.
Many car manufacturers can see the future is electric, and big van fleets like BT Openreach and Royal Mail are voting with their feet because it’s just a lot cheaper to run an electric car compared to petrol or diesel. Over the next decade, that gap will become even clearer.
That’s why although some manufacturers (mainly the minority that are lagging behind in the electric race and want time to catch up) want a delay, the industry as a whole wants the 2024 and 2030 targets to stay — because they’ve planned for it.
The great irony of all this is that the UK has actually been a world leader on clean energy. Its “contracts for difference” auctions have been an innovative way of leveraging private cash and cutting the cost of renewables. Its “carbon budgets” and statutory Climate Change Committee have been genuinely pioneering in giving industry certain timetables.
Another irony is that in leaving the EU, we are in a position to actually be more agile to take advantage of the clean tech race, not least as we are free of Brussels’ state aid rules and its lumbering bureaucracy.
The risk to the economy of not going green was starkly set out by the Office for Budget Responsibility when it said the UK will be 20 times more exposed to future gas price spikes by 2050 if we don’t deliver on our net zero commitments. A Government commissioned review found households could save up to £6,000 a year by 2050 if targets were met.
There is undoubtedly much more that needs to be done with skills, with an industrial strategy, with planning permissions, with boosting grid connections. The private sector likes the sound of Labour’s Green Prosperity Plan but wants to “see its working” in terms of what is deliverable. It also wants the Government to come up with something bold in the Autumn Statement.
Emma Pinchbeck, chief executive of the industry group Energy UK, sums it up well when she says: “The response to both the war in Ukraine and the inflation Reduction Act is to crack on with delivering net zero. That is the message. And we’d like to hear that from our politicians.”
In essence, it’s not “only in America” that clean energy can help households, industry and governments. It’s here in the UK too. But if “global Britain” is replaced by “wobble Britain”, we risk getting left behind in the planet’s clean tech race.
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