Future climate for business
“Political parties won’t be electable, and companies will not be profitable – or at least they will be less profitable - without credibility on environmental issues.”
Such was the resonant claim made last night by David Miliband, at an event hosted by the creator of a greenish stock-market index.
Picture him saying it. And when you do, is he holding a juicy delicious carrot or a huge great stick with which to beat the private sector?
Or to put it another way, if you believe climate change is a real and present danger (as it happens I do – but don’t hold that against me), is David Miliband saying that the market will automatically reward those companies – like or – that are taking serious steps to reduce their carbon footprint, and the market will also create massively profitable opportunities for companies engaging in all sorts of green product/service development, from the manufacture of to the burying of CO2 under the North Sea?
In this kind of world, where customers en masse would favour businesses doing the right green thing, the only role for Government would be to give the odd pat on the back for environmental pioneers (gongs for greenery, instead of loans for peerages, perhaps).
By contrast, and it is an ideological distinction of some importance, does believe that the market is bound to fail big time, and that it’s down to Government to severely punish companies that lack “credibility on environmental issues” (his words) by imposing swingeing taxes and punitive costs from emissions trading schemes on them?
As it happens, the choice won’t be quite as stark as that. But where we end up on the spectrum between dirty great Government-imposed penalties versus delicious market-generated profits represents a world of difference in respect of the future climate (sorry for the pun) for businesses operating in the UK. And what may be a slight concern is that mid-way through this Parliament, I don’t think we can really be sure quite yet where either Labour or the Tories are, in respect of wielding a stick versus dangling a carrot.
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Robert,
The reason for the Government's relatively sudden espousal of the climate-change issue is defined by the first five words of the Miliband quote which opens your article. Like you, I am sure that the gradual destruction of our environment is a very real threat. The evangelical attitude adopted by politicians of all parties, however, appears to me to be largely self-serving. The politicians know that the action necessary to counter climate change would be deeply unpopular and probably uncomfortable; electoral popularity, on the other hand, can be won with words which will never hurt them.
It is no good governments being wishy-washy on this subject. They fail to take the lead and make decisions that are required whilst threatening ordinary people and companies with the tax stick.
I do not, actually, know if things are bad or good. I know that climate change has always been a part of the Earth's history. So, maybe we are just part of that history.
I do not elect governments to clobber me all the time. I anticipate that they will demonstrate leadership when needed, any government.
I haven't seen all of Millibands speech, but he may be talking about charging for emissions.
The carrot and stick analogy sounds good, but I think it misses the point. Taxing and subsidising is, in my opinion, a backward way to think about curbing CO2 emissions, and so is "consumer power". Both are blunt, ill-informed forces that are likely to distort as much as they help, and force knee-jerk panic measures onto individual areas of the economy that cannot adjust at the same pace (which, incidentally, is great for tax revenues).
Instead, the Government should require ALL major sources of greenhouse emissions simply to acquire permits for their emissions on the open market, whether these result from power generation, sale of fuels for heating or transport (air, sea, rail or road), or other emission intensive industry. The total supply of permits should be regulated by a transparent, independent body according to publicised government emission targets.
Emissions are cheap today (£20 or so per ton CO2), and a gradual reduction in targets will gradually push cost of emissions up, this cost will be passed on to the consumer, allowing the economy to adjust gradually and efficiently to lower emissions, evenly across the board.
Forget about requiring cars to be green or taxing flights. Forget about your carbon footprint or that of your business. The role of the market is to force through profitable solutions, based on the rising cost of the emissions themselves, as permits become more and more scarce. If you save the enviroment, you save money. You decide if you want to cancel your flight or insulate your house. Build a windmill if it produces cheaper power than an emission costed coal plant, without subsidies (and only then). Use an electric car only if the (perhaps coal generated) electricity is cheaper than emission costed petrol.
Milliband appears to be in favour of this, and he may be talking about THAT kind of beneficial market force (although Gordon so far seems too fond of tax revenues to listen).
"...if you believe climate change is a real and present danger (as it happens I do – but don’t hold that against me)"
I find throwaway asides like this more and more worrying. Why would we "hold it against you"? Are you concerned we might confuse you with a sandal-wearing environmentalist instead of a hard-nosed business reporter?
After the recent IPCC report, who don't believe what thousands of the world's top scientists agree on? Oil lobbyists? Conspiracy theorists? Fools? Don't write for them, write for the rest of us: the vast, sane majority of worried citizens and concerned business-people. We want massive, immediate action to fix this impending disaster.
Please use your influence to help. Resist the urge for cheap 'ho ho' disclaimers or casting doubt on the validity of the science. We haven't got time for that.
Thank you.
There will be an energy crisis long before there is a climate crisis.
Having squandered the UK's engineering talent which should have started work on the energy problem ten years or more ago rather than admit their failure the Govt is using climate change as a proxy so they can tax our rear ends off.
Whether you believe in climate change or not is irrelevant.. The energy issue will hit us first and this lousy Govt and the City won't do a thing about it.