The end of DECC - threats and opportunities

Press and Journal 19/07/2016 10:39 am by Stewart Stevenson

You don’t have to be an expert to recognise that the best time to repair the roof is when it ain’t raining. And that generally means summer rather than winter.

So it is perplexing in one sense, understandable in another, that one of the first major policy actions of the new UK Prime Minister has been to abolish her climate change department.

The practical effects of climate change are well understood but the timings at which they come into play less so. A succession of floods over the last few years is suggestive of greater difficulties to come.

So if the calculation has been that we reduce expenditure designed to delay, remove or diminish the effects of climate change because we have other economic issues to deal with, then there may be such a case. The Treasury commissioned “Stern Review on the economics of climate change” in 2006 suggested otherwise.[1] That the costs of addressing climate change are far less than the costs it would bring. But costs there would be either way.

The real issue for an economy facing significant challenge is quite different. And the abolition of a government department focusing on climate change has the potential to remove, certainly to diminish, a key economic opportunity for future jobs and growth.

Whatever one’s attitude to financial services, an industry whose recent failures have hobbled the economy, it is far from clear that it presents significant opportunities for future growth, innovation and jobs as it has in the past. We must look elsewhere.

In a global economy, manufacturing will flee to the cheapest competent workforce, and that is unlikely to be here. The countries of the far east have all but captured the making of electronic devices. Continental Europe is the byword for quality car manufacture.

We can be reasonably certain that there will be a shift in energy production towards renewable sources. Oil and gas will gradually shift towards being the primary feedstock of chemical industries and away from being a source of power.

For the UK, there is a looming crisis in electricity production. The planned Hinkley Point nuclear station is the “let’s put all our eggs in one basket” solution that locks in high future prices for generations to come at levels uncontemplated for any other energy source.

And the dependence on an increasing reluctant French, and perhaps Chinese, nuclear industry shows how far the UK has surrendered its early technology lead in this business and the dangers that flow from that.

Being a world leader in climate change technology remains an option for this country. And provides long term opportunity if we develop and control the intellectual and engineering resources that come with that leadership.

And we have considerable advantages right now.

The biggest immediate, predictable and long term source of energy lies off our coast. Our seas. The longest coastline in Europe gives us unique access to that energy. And the diurnal pattern of the tides is both predictable and variable around our coasts to the extent that, there can be sufficient available round the clock and round the year.

But being near the sea is far from our only advantage.

Forty or so years of exploiting oil and gas from under our seas leaves us with top to bottom offshore skills in our workforce. Gives us a commercial and support infrastructure able to redeploy its skills and knowledge in this sector. Means that there are educators ready to train future generations. Human capital that it would take competitors decades to acquire.

Critically it is a perfect sales pitch to other countries when we seek export opportunities. Proven experience, technology leadership and delivery capability that can be inspected. Not just paper promises.

Maintaining climate change as a policy priority should remain central to government decision-making, not just for the environment, but for a vibrant future economy.

Before the winter settles in, before the rains start in earnest, let’s repair the roof.

Notes:

[1] 2006. Stern Review on the economics of climate change. ISBN 0-521-70080-9. Cambridge University Press. http://www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/stern_review_report.cfm : accessed 16 July 2016.