Today the IPCC came out with its sternest warning yet about the dangers the world faces if global warming isn’t held to 1.5degC.
The thing is, we already know how Governments can do this. They tax the things they want less of and incentivise the things they want more of. This is simple and it works.
Take electric cars. If you want sales to grow fast bring in an effective incentive scheme. Norway leads the field on this. Its electric car policy saw a huge increase in the sales of electric cars. In 2015 22% of new car sales were electric and this is expected to grow to 30% in 2020. This was achieved through low road tax, VAT exemption, free parking for EVs and access to bus lanes, for example.
Or alternative energy.
Solar energy went from virtually nothing to 3% of the UK’s total energy generation between 2010 and 2017, driven by reducing costs for photovoltaics but mainly by Government incentives in the form of the Feed In Tariff.
Government actions matter. Concerned about the rising cost the Government changed the policy in 2016 with the result that solar installations plummeted by 74% year on year in March 2016. Solar will continue to grow because the economics are getting better, but more slowly that it would have otherwise.
Windpower is another case in point. Antipathy to onshore wind has effectively stopped dead development of new onshore wind, the cheapest form of renewable energy. Offshore wind is still growing strongly, though, and is now bidding for contracts below that offered to nuclear projects.
Governments all have a balancing act to perform, trading off the immediate needs of the electorate, without whom they will not remain in power, and the longer-term needs of the country.
To encourage the growth of more environmentally-friendly transport options – cycling, walking, public transport, electric cars – raising fuel taxes is a sensible policy. And yet petrol prices are a sensitive issue with the public so we have not had a rise in duty for nine years.
The best hope of avoiding the short term trap is the law. The Climate Change Act of 2008 was a great example of this – in effect the Government willingly making a rod for its own back.
This law obligates the Government to reduce CO2 emissions to at least 80% below the 1990 baseline. This allows citizens and environmental groups to hold the Government’s feed to the fire if they don’t live up to this challenge. This doesn’t eliminate the short term decisions which will have a potential long-term detrimental effect, but it does make it far more likely that course correction is forthcoming.
It will be interesting to see what this month’s budget tells us about the balancing act.