Osborne’s long-game? The politics behind the down-scaling of low-carbon policies

This blog includes contributions from me, and was first posted on the Sussex Energy Group Blog

Within weeks of the newly elected Conservative government coming into power, the down-scaling of low-carbon policies began. The Green Deal, binned earlier this week, is the latest victim of the post-election cull which has seen the end of a further 8 green policies. Commitments to renewable energy and climate change targets are unravelling before our eyes. The recent downscaling of climate change policies is, however, the culmination of a long-standing political struggle between DECC and the Treasury.

Since the creation of DECC in 2008, the Treasury has been embroiled in a battle for policy control over energy and climate; areas formerly located within the Department of Trade and Industry after the disbanding of the Department of Energy in 1992.  And, austerity in the face of the financial crisis provided the Treasury with the perfect opportunity, on the basis of cost, to contain green ambitions.

At the 2011 Conservative Party conference, Chancellor George Osborne had already begun to argue green policies were ‘piling costs on the energy bills of households and companies’ and might put the country ‘out of business’. Osborne further argued that the UK’s post-2020 carbon targets should be subject to review, pledging UK carbon emissions should not be cut faster than European neighbours.

By the autumn of 2013, the cost of green policies had escalated into a full-scale political row over rising consumer bills. Although the debate initially focused on market dominance and pricing policies of energy utility companies, the government and energy companies were successful in reorienting the debate towards green levies and energy-efficiency programs. These were subsequently scrapped, delayed or watered down in exchange for utility companies promising to cut energy bills by £50.

Recent policy announcements should, therefore, be seen as part of a longer political trend, partly driven by the right-wing of the Conservative party, partly by the Treasury. No longer constrained by the Liberal Democrats, the new government has been able to continue this trend with new might.

Our own suspicion is that this down-scaling is part of a deal between Cameron, who intends to step down as PM before the next election, and Osborne who hopes to become the new PM.  While Amber Rudd, new DECC Minister, is left with the difficult task of explaining these policy changes, which make little sense for long-term climate policy.

Despite all this, the government is still likely to meet its target of 15 % final energy consumption from renewable sources by 2020. This is due to the momentum of deployment and investment plans that are in the pipeline. It is becoming increasingly clear, however, that the government has limited post-2020 climate change ambitions, disregarding repeated calls for this by the Committee on Climate Change.

During the Coalition years, DECC openly referred to a renewable electricity target of 30% by 2020, with further decarbonisaiton to be achieved with CCS and nuclear power. Both CCS and nuclear power have progressed much more slowly than anticipated. It would come as no great surprise, then, if in a few years’ time, the government uses this low-carbon under-delivery to force a debate about the Climate Change Act, arguing that climate change targets are unfeasible and that the Climate Change Act needs to be removed or watered down.

Recent policy announcements could, therefore, turn out to be the first official moves in the ‘long game’ that the Chancellor is playing.

This blog was first published on Sussex Energy Group Blog and draws on two of Frank’s recent publications

Geels, F.W (2014) ‘Regime resistance against low-carbon energy transitions: Introducing politics and power in the multi-level perspective’ Theory, Culture & Society  31(5), 21-40

Geels, F.W (2015) ‘The arduous transition to low-carbon energy: A multi-level analysis of renewable electricity niches and resilient regimes’, in: Fagerberg, J., Laestadius, S. and Martin, B.R (Eds). The Triple Challenge for Europe: Economic Development, Climate Change, and Governance, Oxford University Press, .

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