Speech delivered by Business Secretary Lord Mandelson at the Policy Network event: ‘The Politics of Climate Change: Overcoming the political challenges of climate change – from economic crisis to business revolution’ London School of Economics, Friday 5th June, 2009
I think we’re entering a precarious time for mainstream politics in the UK. Cynicism and scepticism about politicians and politics in the UK is obviously pretty high. We badly need a core of positive ideas about the future in this country and for me climate change is at the heart of that.
Rebuilding political trust in Britain matters for its own sake. But it also matters because politics is the only way that we will be able to legitimately make the huge decisions that need to be made now to face up to challenges like climate change, or our global economic future. Politics is the mulitplier for the sense of collective renewal and endeavour. This morning I would like to say just a few things about how we do that, particularly in industrial policy.
The core challenge of climate change politics is getting people to connect their choices now with outcomes in the relatively distant future and in different parts of the world. It’s going to cost in the short term, there is no way around that.
People often find the scale of the challenge overwhelming. So somehow we have to go from awareness to engagement, rather than awareness to resignation.
The only way to do this is to stress that at the levels of individual choices, business choices and national economic choices, the shift to low carbon offers economic opportunities as well as costs.
In energy savings or trade, the global market for low carbon goods and services is already worth around £3trillion a year, and will probably grow by half that again by 2015.
Almost 900,000 people already work in the sector or its supply chain in the UK, not just in green manufacturing but in green services like consultancy or low carbon venture capital. The sector is projected to maintain positive growth rates, even through the downturn. We are in a strong position to be a global first mover.
But how do we shape a positive business environment for low carbon goods and services in the UK? How do we ensure that UK companies have the necessary skilled workforces, clarity and certainty to invest in change?
The government has already set out some of the answers to these questions in its New Industry, New Jobs paper and its ultra low carbon vehicles strategy and will provide a full picture in its Low Carbon Industrial Strategy in the summer. At the heart of this work are three basic ideas.
The first is the need for a long term strategic approach from government. Businesses won’t invest in change and individuals won’t invest in training for low carbon industries or make low carbon consumer choices unless they believe that the direction of travel in our society is irreversibly towards a low carbon future.
Up until recently there has been too much ambiguity or uncertainty in UK climate policy – in nuclear energy or renewables for example. Clear leadership on these questions over the course of the last year has now unlocked billions of pounds of investment in UK capacity. We need to get that sense of clear strategic direction right through our action as a government.
The second basic principle is that market dynamics alone will not create the shift we need quickly or effectively enough. We cannot be ideological about the joint roles of the market and the state in driving this transition.
At the most fundamental level this can mean intervening in the market to raise the cost of carbon in certain ways, and to a level that forces a genuine change in behaviour.
It is also going to mean public sector interventions to ensure that Britain has the necessary infrastructure to support low carbon technologies. That can mean the grid, which is up for serious renewal over the next five years.
It can mean other forms of infrastructure such as the charging networks required to make ultra-low carbon vehicles viable. While these technologies and consumer preferences are still clearly barely off the drawing board, we do need to be careful to ensure that lack of infrastructure does not create a vicious cycle that undermines viable technological solutions.
We’ll need to ensure that UK-based companies can draw on a quality science base and the resources to develop and commercialise low carbon technologies.
In the budget, we created a £750million fund that will be used to strengthen the Technology Strategy Board and which we will use to make selective investments in, among other things, the resources our companies can use to test and commercialise low carbon technologies.
Our skills policy will be adapted in the summer to reflect the growing need for workers with low carbon skills.
We are also looking at ideas for a new public-private innovation fund that would be a source of growth capital for high tech SMEs many of which would inevitably be in the low carbon sector.
Where appropriate, it will also mean government intervening in the market to generate demand – with support for buyers of energy efficiency measures or ultra low carbon vehicles, or government procurement programs that increase demand for ultra-low carbon vehicle fleets.
Finally, I believe government has a responsibility to ensure that UK-based companies are equipped to compete for the new demand created by government climate change policies. This kind of strategic approach was set out in the government’s New Industry, New Jobs paper in April – no doubt you’ve all read it.
Peter Mandelson Video Part 2
Green politics sometimes presents business as the enemy of climate policy. For as long as business resists long term change then that will be the case. But low carbon business, and ‘low carbon consumers’ can also be a major positive driver of change.
Mainstream climate change politics obviously can’t be totally anti-politics, anti-business and anti-growth. We can’t just throw green slime at the problem. It will however mean a different approach to politics, business and growth. Mainstream green politics needs to inherit the passion and urgency of green politics, if not all of the inflexibility.
And it has to be positive, it has to be about opportunities. Of course business models are going to have to change and there will be costs. But negative incentives for change can only be half the story.
So three basic principles for a positive environment for low carbon business: a long term strategic approach from government; a pragmatic approach to the role of both markets and the state, and a recognition that we should be actively equipping our people to supply the demand created by climate change targets.
This is all the more important in the context of the current recession, where investment in the transition to low carbon has the potential to play an important part in our economic recovery and renewal.
I started by saying we are at a precarious time for mainstream politics in the UK. We can get cynical about politics in this country, or we can have a serious debate about what needs to be done to get our politics back on track and our economy back to growth.
A positive politics of climate change depends on us deciding that politics works, that it is how we focus collectively on a different future, and in focusing on it, make it happen.