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Andrew Simms is nef’s Policy Director and head of nef’s Climate Change programme.
This was touted as the ‘green budget’, but the commitments on energy efficiency and low-carbon industry are obscured by a cloud of greenhouse gases spewing from the prop-ups given to the car and oil industry. It’s as if the Chancellor wants to ‘have his planet and eat it.’ You could say this is a balanced budget in the sense that any positive environmental action is likely to be cancelled-out by the Government locking-in a fossil fuel intensive infrastructure for transport and energy. As a result the budget turns out to be more beige than green.
Any shoots of recovery will not be green unless they are part of a rapid transition to a low carbon economy. The budget should be solving two problems. First, we need a green economic defibrillator to kick-start the country out of recession, but the Government seem to be just sparking two rusty wires together. Second, if we get the patient on its feet, we still have to cure its chronic fossil-fuel smoking habit.
It’s good to now have a proper, legally binding target for reducing emissions. But, the UK’s continuing dependence on oil, coal and gas, and plans to build more runways and roads, means the target is like setting someone a deadline to give up smoking, and then pushing them into a smoke-filled bar where all the walls are lined with cigarette machines.
Plans for electric cars may sound attractive, but you still need the clean energy to power them. As things are, together with ‘scrappage’ schemes, the initiative could even see total emissions rise rather than fall. More than a low carbon vehicle strategy, if the UK is to improve its own energy security and environment, and tackle climate change we need a low car vehicle strategy.
Dr Stephen Spratt is Director of nef’s Centre for the Future Economy.
Bail-outs have now boosted UK national debt to staggering levels but have done little to stop the rot in our financial sector. By refusing to acknowledge the deep structural failings in the banking system, the Government is storing up debts they’ll probably never have to deal with, and no future government will be able to meet without decimating core public services. Banks that really have become too-big-to-fail leave the UK very vulnerable and must now be broken up. Soon to-be-published plans for banking regulation must go much further than tinkering with corporate governance and transparency. We need to separate investment banking from retail banking. We also need local banks that are in touch with their customers and able to respond to the needs of the dynamic small businesses on the frontline of our economy that will lift us out of recession.
Josh Ryan-Collins is a researcher in the Connected Economies team at nef.
Demanding efficiency savings from our public services now is like asking us to burn our lifeboats in the middle of a storm. The unintended consequence of efficiency savings is that they erode local public services. Ultimately this impacts most on the poorest in the UK who are least responsible for causing the crisis, exacerbating already untenable levels of inequality and storing up more problems for later.
Measures to rebalance the tax burden are welcome, but don’t go far enough. With the worst impacts of the recession still to play out in full, the Government should be using this opportunity to take a progressive approach to taxation so that the companies and individuals who have benefitted most pay their fair share, ensuring that we can invest in the public safety nets we need to protect us from the worst impacts of the recession, and against future shocks. In addition, measures to help local businesses win public procurement contracts would both help to shore up front line services when they are needed most, and keep more money circulating in our local economies for longer.
For more on the real costs of efficiency measures, see nef’s report A Better Return.
Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.
The Chancellor rightly talked about his careful preparations for the future and about the need for increased regulation of our failed cowboy banks.
He should also have offered a tangible reform in both areas in the form of a Post Office Bank which would simultaneously help small local businesses- the underpinning of our economic future- and increase people’s trust in the banking system. It’s not too late. As a practical and popular measure, he can still announce the setting up of a Post Bank in the wake of the Budget.
Read more about our campaign to establish a Post Bank and sign the petition to make it a reality.
Andrew Simms is nef’s Policy Director and head of nef’s Climate Change programme.
Selling permits to emit carbon dioxide is fine in theory, but there's a fatal flaw that means it can never avert climate catastrophe.
One day renewable energy looks like a sunrise industry, the next, tumbleweeds are blowing around a setting solar panel. What has changed? The price of emitting carbon dioxide.
In 2005 the European Union created the world’s first proper carbon market, the EU Emissions Trading Scheme (ETS), which compels highly polluting industries to buy permits to emit CO2. The number of permits is limited, so the idea is that supply and demand set a price that encourages the development of a low-carbon economy. A rising price with no wild fluctuations sends an economic signal to invest in clean energy. But it’s not working.
The price of a tonne of CO2 on the ETS has had a roller-coaster ride – soaring one minute, plummeting the next. In the past year it has lurched from over €30 to €8, and now languishes at around €10. Disastrously, such low and unpredictable prices for CO2 remove the economic incentive to decarbonise economies.
This is the partly the result of the economic downturn. As heavy industries mothball factories, energy use drops and demand for permits goes down. At the same time businesses try to raise cash by selling their unused permits, flooding the market and further depressing prices. French energy company EDF recently complained that carbon markets were failing just like the market for subprime mortgages. As a result, all kinds of green energy schemes are grinding to a halt.
So how do you set a meaningful price for carbon? The reality is more complicated than the ETS might suggest, which is a problem for those who advocate using market forces to reduce emissions. As NASA climate scientist James Hansen points out, getting it right or wrong could determine whether or not we can avert irreversible climate change.
Apart from the ETS, there are many ways to put a value on carbon. You can, for example, work out what it costs per tonne to reduce emissions. But calculating this “marginal abatement cost” is complicated by doubts over the effectiveness of carbon offsetting and the true impact of some supposedly green technologies.
Another method is the “social cost of carbon”, which estimates the cost of the damage from emitting a tonne of carbon over its whole lifetime in the atmosphere. This has been used by the UK treasury, and the Dutch government and the World Bank have experimented with it. But with so many variables to account for, estimates range from £35 to £140 per tonne. The UK has now dropped it for a new “shadow price of carbon”, an approach supported by the French government and some members of the European Commission.
The shadow price is similar to the social cost but includes “other factors that may affect willingness to pay for reductions”, to use the UK government’s own words. It is “a more versatile concept”. In other words, it gives politicians some scope to rig the price. Although well intentioned, it is vulnerable to abuse.
Each of these methods has its advantages and disadvantages, but there is one problem that none can solve. I’ll call it the paradox of environmental economics, in which worthy attempts to value natural resources hit a wall.
The paradox is this. All these methods of pricing carbon permit the creation of a carbon market that will allow us to pollute beyond a catastrophic tipping point. In other words, they require us to put a price on the final “killing” tonne of CO2 which, once emitted, tips the balance and triggers runaway global warming. How can we set such a price? It’s like saying, how much is civilisation worth? Or, if you needed a camel to cross a desert alive, what is a fair value for the straw that breaks its back?
The paradox reveals the fatal shortcoming of market solutions to environmental problems. Unless the parameters for carbon markets are set tightly in line with what science tells us is necessary to preventing runaway warming, they cannot work. That palpably did not happen with the ETS, which initially issued more permits to pollute than there were emissions and now, in the recession, is trading emissions that don’t exist – so-called hot air.
Carbon markets cannot save us unless they operate within a global carbon cap sufficient to prevent a rise of more than 2 °C above pre-industrial temperatures.
In wartime, rationing proved to be both fairer and more effective than taxation.
Governments are there to compensate for market failure but seem to have a blind spot about carbon markets. They could counteract the impact of low carbon prices by spending on renewable energy as part of their economic stimulus packages, yet they have not done so. The UK, for example, has spent nearly 20 per cent of its GDP to prop up the financial sector, but just 0.0083 per cent in new money on green economic stimulus.
Price mechanisms alone are unable to do the vital job of reducing carbon emissions. They are too vague, imperfect, and frequently socially unjust. To prevent over-consumption of key resources such as fuel during the second world war, the UK government rejected taxation in favour of rationing because taxation unfairly hit the poor and was too slow to change behaviour. Rationing was the quicker, more equitable option. Carbon rations calculated in line with a safe cap on overall emissions provide a more certain way of hitting emissions targets.
Is there an answer to the paradox of environmental economics that could make the market approach workable? I can’t imagine one, but am open to suggestions. Even if you could price the killing tonne, it is a transaction that should never be allowed. Economics becomes redundant if it can rationalise an exchange that sells the future of humankind.
This article was first published in the New Scientist, April 2009.
Andy Wimbush is nef’s Communications Assistant and blogmaster.
We’re pretty enthusiastic about alternative currencies at nef. We have a ‘funny money’ wall decorated with Berkshares, Totnes Pounds, Lewes Pounds and Time Bank dollars. Since these notes are only accepted by small local businesses, they keep money circulating in their respective local economies, rather than being leaked out out the area through chain stores. Local currencies help to create thriving communities, and help keep our high streets from turning into Clone Towns.
So we’re pleased to report that a new community currency will soon be circulating not far from nef headquarters. A few enterprising souls at Transition Town Brixton are introducing their very own pound this September, and have a new website to promote it. Members of nef’s Connected Economies team have acted as advisors on the project and Lambeth Savings & Credit Union (LSCU), a financial co-operative that has been serving Lambeth since 2006, are holding the Brixton Pound’s sterling backing.
Stopping the spread of Clone Town syndrome is particularly crucial for Brixton. It has plenty of independent retailers, but these are under threat from aggressive chain store expansion. Tesco already has a huge superstore just off the High Street and a Tesco Metro on the road up to Kennington, and yet it still has plans for expansion in Brixton, draining more customers away from local businesses. Earlier this year, Brixton’s vibrant market only narrowly avoided being turned into a yet another dull shopping precinct. Thanks to campaigning by Friends of Brixton Market, the planning application from developers London and Associated Properties (LAP) was rejected. Initiatives like the Brixton Pound will help to make this victory secure.
If you live in Lambeth – or even if you don’t – and want to support the scheme, you can pledge to buy ten Brixton Pounds (B£10) when the scheme goes live in September. Or, if you’re a business owner in Brixton, you can pledge to accept the currency from your customers.
And while I’ve got the attention of all you South Londoners, why not join Project Dirt?
Andrew Simms is nef’s Policy Director and head of nef’s Climate Change programme.
The experience of small islands can teach us a lot about living good lives at low environmental cost
“A man who falls from a 100-storey building will survive the first 99 storeys unscathed,” wrote the economist EJ Mishan in response to critics of his attack on the costs of economic growth. It was the 1960s and then, as now, it was heresy to question growth. The cry went up: “But natural resources haven’t actually run out yet, and what about the costs of not growing?” Mishan returned to his falling man: “Were he as sanguine as our technocrats, his confidence would grow with the number of storeys he passed on his downward flight and would be at a maximum just before his free-fall abruptly halted.”
The environmental movement was labelled alarmist and wrong in reaction to the subsequent Limits to Growth report, written by scientists at MIT, which projected the natural resource constraints of trying to grow indefinitely in a finite space. When, last year, a detailed study compared the original report with 30 years of data and trends, it found a solid correlation between projections and reality. Among environmentalists there was less a sense of final triumph than sadness at a critical opportunity lost.
Now, with the UK’s ecological debt still rising, and perhaps about 90 months to go before the world enters a more perilous phase of warming, we cannot afford another lost month. We must look for new models of economy that can operate in dynamic equilibrium with the biosphere on which we depend. In getting out of this mess, our creativity needs more help than anything. How can we begin to imagine what it looks like to live within our environmental means?
Britain is an island nation, and we could start by looking at the experience of other islands, especially small ones. Try to grow indefinitely on a small island, and you’ll come a cropper. It’s not so different on a small island planet. When societies get it wrong on small islands the consequences are clear, think of the Pacific island of Nauru, mined to virtual destruction for its rich phosphate. But when islands get it right, they show how it is possible to lead good lives at much lower environmental cost.
Vanuatu is a happy nation with a tiny ecological footprint. And yet it is seriously threatened by climate change thanks to the high ecological footprints of industrialised nations.
The Happy Planet Index is a measure that assesses the relative efficiency with which natural resources are converted into meaningful human outcomes. It compares peoples’ ecological footprints with life expectancy and life satisfaction. On average, island nations score better than other states on all three indicators. Within different global regions, islands come top. Malta was ranked highest in the western world, the top five nations in Africa are all islands, and two of the top four are in Asia. Sitting on top of the index was the island of Vanuatu.
Several reasons might explain why. Isolation and relative vulnerability have probably encouraged more adaptive and supportive ways of organising island societies and economies. Traditional Pacific agriculture is, for example, highly resilient to extreme climatic conditions. Island economies like that of Tuvalu developed around sharing and gift giving, helping to create highly co-operative and mutually supportive communities.
In Karl Polanyi’s classic work The Great Transformation, he presents various types of social and economic organisation on islands as evidence against some of Adam Smith’s more sweeping assumptions on the central role of markets. Complex forms of “gift exchange”, in which people partly meet their needs not through markets mediated with cash, but through the giving and receiving of gifts, operated over vast areas, revealing a system that met people’s needs in a challenging environment, and bonded society together.
In their book The Spirit Level – on the comprehensive importance of equality – Richard Wilkinson and Kate Pickett point out that economies more based on sharing and reciprocity equalise access to resources and create more equal, resilient communities. Conversely, unlimited growth, fed by individualistic, beggar-thy-neighbour competition, is no recipe for survival on an ecologically stressed and finite planet.
The next lesson is deceptively simple: on islands you have to respect environmental limits. Close contact with nature may also help develop deeper cultural respect for ecosystems and ingrain notions of environmental stewardship. But we are challenged at the global level to learn – in a few short years – lessons that such small communities often took millennia to arrive at. We can bail out the banks, but if we bankrupt the biosphere there is nowhere else to go.
This article was first published in The Guardian, Monday 13th April 2009.
Andy Wimbush is nef’s Communications Assistant and blogmaster.
A warm welcome | Photograph: Mike Russell
It’s been a week now since protestors of a variety of stripes descended on London’s financial district to challenge the G20 leaders meeting on April 1st. As more details emerge about the aggressive policing – notably surrounding the death of passer-by Ian Tomlinson – it seems a good time to look back on our experience of the day.
nef was at the Climate Camp on Bishopsgate, which was, for the most part, a peaceful and celebratory affair: the streets were decked with bunting, the air was full of music and a phenomenal amount of homemade cake – including gingerbread bankers – was being shared amongst the crowd. And it wouldn’t be climate camp without a bit of education: nef’s Policy Director Andrew Simms led a loud discussion about low-carbon living and positive policies to fix the climate.
I asked two of our researchers to share their reflections from the camp: Victoria Johnson – our resident climate expert – and Lucie Stephens, who heads up nef’s work on Co-production.
AW: Why did you decide to go to the protest?
Victoria Johnson: I’m a climate scientist, and I’m increasingly worried by what the numbers are telling us. There has been a growing consensus in the scientific community that we have less than ten years – perhaps as little as four or five – in which to stabilise greenhouse gas concentrations in the atmosphere. If we don’t managed to do that, we’ll cross a threshold which makes a 2°C rise in the average global temperature much more likely. And with a 2°C rise, the effects of climate change will almost certainly worsen.
Lucie and Vicki remain cheerful during the "kettle"
AW: And presumably you don’t think the Government has taken this to heart?
VJ: No. Despite the massive sea-change in scientific understanding since the publication of the IPCC’s Fourth Assessment Report (AR4) there is little evidence that any government is really taking the situation seriously. Greenpeace recently commissioned nef to explore the how green the economic stimulus package outlined in the Pre-Budget Report was. We found that less than 1 per cent was ‘new’ spending. And the total figure of the green fiscal stimulus was 0.0083 per cent of GDP. That’s a long long way below what experts are recommending: Lord Stern has said we need £11 billion a year, while the Green New Deal Group say as much as £50 billion annually.
AW: Did you have any apprehensions about what the day would bring?
Lucie Stephens: I was initially pretty wary about joining the protest, given all the talk of trouble in the media. In fact as I was cycling to work on the Wednesday morning I went past a TV camera crew interviewing a man in a suit outside the London Development Agency on Blackfriars Road. In the spring sunshine he greeted the journalists with “Nice day for a riot!” which I found so completely offensive that I made up my mind to march. The fact is many, many people care deeply about the issues that the protestors were highlighting. The assumption of trouble, of riots, undermined people’s confidence in their ability to peacefully protest. As someone who cares deeply about the environment and also our legal right to free speech, I felt it was really important to attend and be counted as a peaceful protestor.
Bunting on Bishopsgate | Photograph: Amelia Gregory
AW: What was the atmosphere like at the camp?
VJ: Walking from Liverpool Street to Bishopsgate at 3.30pm – several hours after the Climate Camp had started was a really strange experience. There was no traffic, and lots of people walking in the road.
LS: During the day there was a great atmosphere. The workshops were well-attended and people were keen to engage and learn from one another. As the sun started to set, there were business people and tourists walking through the camp, with lots of them stopping to take pictures on their phones, seeming to enjoy the spectacle of tents in the centre of the city. The roads were full of people and bikes, not taxis and cars, the immediate environment felt peaceful in the spring sunshine.
VJ: And we kept bumping into the environmental elite. Established journalists, chief executives from environmental pressure groups and so on. People were casually strolling in and out.
AW: Did any of that atmosphere change as evening set in?
VJ: Yeah, around about 5.30pm it definitely shifted. Police began to ‘kettle’ the protesters causing the mood to change in a flash. By 6 pm the police had blocked us in the camp and were refusing entry or exit. Climate Camp organisers tried to diffuse the situation by providing information. Leila Deen – the protestor famed for sliming Mandelson last month – calmly suggested that we sit peacefully on the pavement to prevent the police from encroaching further into the camp. We did, and sat chatting with other protesters around us. A three man band – acoustic guitar, tambourine and bongos – began to play music and the mood picked up again, but then we were sitting in the centre of the camp – in the distance, from both ends of the street we could hear people chanting ‘shame on you’ as the police started to push forward into the crowds.
LS: Even after as the kettle was going on, there was still a fair level of camaraderie. Protestors were incredibly dignified, sitting peacefully at the feet of the police, dressed in riot helmets, shields, balaclavas – hardly recognisable. In many cases the police and protestors struck up conversations and chatted amiably into the evening. At one point a protestor started being a bit bolshie and yelling at the police, but the rest of us held her to account. We were about peaceful protest, so while still sat on the pavement we managed the situation, encouraged the woman to move away, which she did.
In order to illustrate how calmly protestors behaved and therefore how safe the police felt in our presence at least one office removed his helmet and balaclava (he said his head was getting hot) in order to have a scratch and a stretch. Many put down their riot shields for long periods of time to stretch and some squatted down to rest their legs or slumped on the chained up bikes. None of them would have been prepared to make themselves vulnerable like this if they felt their safety was in anyway threatened.
The irony is, I would have gone home at about 7pm if they’d allowed me. I had wanted to be at the camp during the day, to be counted and have my voice heard, but I had no intention of staying until 11.45pm. And I’m not the only one, lots of people around us were keen to leave and would have drifted away peacefully had the kettle not been put in place.
AW: Did you feel the protesters were being treated unfairly?
LS: While we were sitting on the pavement we struck up a conversation with a couple, both of whom are still finishing their A-Levels in north London. This was their first Climate Camp and they were trapped in alongside us. It really saddens me to think that their expression of freedom of speech is being misrepresented in the press – who would lump all protestors together as thuggish louts – and violently corralled by the police for daring to try to draw attention to the havoc that our generation is creating for their future on this planet.
The sense was that we were being punished for protesting, kettled for caring, that this had always been the intention. Not once did I see any violence from a camper that would justify police intervention. In reality this policing approach curtails our freedom of speech and makes protesting something that only those prepared to challenge authority are willing to do. This creates a vicious cycle and robs the majority of us of the right to peacefully protest and make our voices heard.
It was interesting talking to those who had seen police brutality at earlier Climate Camps, such as Drax protests. They were very fearful of trouble and of being attacked again. The impact of these policing tactics will be to scare people off protesting peacefully.
See also:
Andy Wimbush is nef’s Communications Assistant and blogmaster.
After climbing Hong Kong’s Cheung Kong tower in order to publicise our One Hundred Months campaign, “French Spiderman” Alain Robert is at it again, this time scrambling up the Lloyds Building in London’s financial district. Robert’s motive was to encourage G20 leaders to take action on climate change which, according to nef research, we have at most 92 months to stop.
Great coverage from CNN here:
more about "CNN Most Popular – Spiderman climbs G-20", posted with vodpod
And a piece from the BBC:
Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.
The business secretary's plans for privatising the Post Office are in tatters – after his select committee put the boot in
The words choke and cornflakes suggest themselves when thinking of how Lord Mandelson responded to a report released (pdf) by the business, enterprise and regulatory reform select committee yesterday.
The committee, chaired by the highly respected Tory MP Peter Luff, is doing a forensic job on the various options for the Post Office network. It seems from the public sessions (where key witnesses are invited to give their views on how the Post Office is and should be run) that it’s a motivated, informed and tough body, intent on finding the right solutions for a great national institution – and applying its keen intelligence to the postal services bill (prop: Lord Mandelson) and its proposal that the Royal Mail be broken up through a 30% sell-off.
The latest report on the bill is an astonishing attack on the business secretary’s plan. Though couched in the silky language of parliamentary discourse – “it is surprising”, “worrying”, “the government is coyly refusing …” – the report, to use a technical term, tears the government plan to bits. It also rips apart the key recommendations of the Hooper report, which Lord Mandelson accepted in its entirety on the day of publication and then used as a basis for his sell-off bill.
The report is a rattling good read. Its main conclusions are unambiguous. It agrees with Hooper and the government that the Royal Mail pension deficit should be taken over by the government. And it agrees that Royal Mail should be differently regulated and governed – taking away the malign political interference (or negligence) that has dogged it over the years. Nobody could disagree.
Then it gets down to business, shredding all the arguments made for the 30% sell-off.
“We do not consider either the independent review or the government has properly made the case that these two reforms, about which there is a broad consensus, can only be made as part of a package that includes the third reform – the involvement of a private sector equity partner in Royal Mail.”
The report points out that the government has not put out the figure it hopes to get from the sell-off – or explained why a much-needed cash injection has to come from a sell-off.
“We are left with the conclusion that either the government has not fully thought through its position about future share sales, or that it has done so and is refusing to reveal its hand. Either case is worrying.
“It is entirely unacceptable for parliament to be asked to approve such fundamental changes to Royal Mail Group when there is no indication of how much money Royal Mail Group needs for investment; while the government appears to have no business plan and has not indicated the use to which any private sector capital would be put.”
After such a slating, it’s hard to see what will be left of the rationale for Lord Mandelson’s plan to break up Royal Mail, given that there is no certainty that there will be a cash injection from a private-sector partnership. There are several questions about the proposed partnership that must be addressed:
The figure cited by Lord Mandelson at the second reading was 30%, but why?
How much openness will there be about the partner’s rights and any arrangements between the parties about sale of the partner’s stake? As the bill is currently drafted, parliament will not have any right to see any agreement before the government enters into it (or afterwards). Is the government prepared to make such details public before a partnership is agreed?
What is the detailed rationale for dividing the Post Office from Royal Mail Group?
What will be the effect on competition if, as is very likely, the chosen partner is already active in the UK mail market?
What will happen if Royal Mail needs further capital injections? The natural assumption is that investors would fund this in proportion to their stake in the company. But such an injection from the Treasury would expose the company to all the state-aid rules that we are told this scheme is intended to avoid.
It’s hard to see how Lord Mandelson can now persevere with his wretched, destructive bill. Nobody – including now this august select committee – wants anything to do with it. Can’t someone throw the noble lord a lifeline out of this sinking ship?
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