London When it comes to the green economy, Boris Johnson likes to remind Walter Bersey. The British engineer had already invented an electric taxi in 1897, the British prime minister says. But his innovation failed at the time due to resistance from powerful interest groups. It was only more than a hundred years later that a “visionary mayor” introduced the electric black cab in London.
Said mayor was, of course, Johnson himself, the laughs of the audience are certain. His point: when it comes to climate protection, you just have to do it and don’t let skeptics slow you down.
The corona crisis is now testing the head of government how seriously he means his words. Britain was the first major economy to make a legal commitment to become climate neutral by 2050. At the COP26 world climate conference in Glasgow next year, Johnson plans to commit other countries to similarly ambitious goals.
As a host, he is under particular scrutiny: will he continue to drive the transition to a green economy or set other priorities in the recession?
Environmental groups are concerned about how the Bank of England is lending billions in loans to airlines and car manufacturers. The government’s stated goal is to save as many companies and jobs as possible. What is left of the ambitious climate plans?
“I’m afraid that if the government has to choose between economic growth and the environment, the environment will lose out,” said Nick Mabey, head of the think tank E3G.
Other observers, on the other hand, expect the corona crisis to accelerate the transition to a sustainable economy. “The crisis is a catalyst for the green agenda,” says Erik Fairbairn, founder and CEO of Podpoint.
The market leader, founded in 2009, installs charging stations for electric cars and has been part of the energy group EDF Energy since spring. June was the best month of sales in the company’s history, Fairbairn reports.
One of the toughest goals ever
The government also invokes “green reconstruction”. Treasury Secretary Rishi Sunak has announced £ 3bn for energy efficient homes, schools and hospitals.
If the government wants to achieve the goal of climate neutrality by 2050, it cannot stop now. It is one of the toughest goals ever, says former Secretary of State for the Environment and member of the British House of Lords, Lord George Barker.
He also believes that the pandemic will make climate rescue more urgent. People are “much more aware that there are big risks out there that could previously simply be ignored,” he says.
Barker remembers the 2000s when he tried to promote climate change in the government. “Back then, our meetings could have been held in a phone booth,” he says. Today there is a broad consensus in the government district, many MPs are actively committed to climate protection.
Johnson personally takes the issue seriously, that is in the family. His father was active in the European environmental movement decades ago.
The government has five major levers on hand to get closer to its goal.
- Renewable energy: The national infrastructure commission recommends increasing the share of renewable energies in electricity generation to 50 percent by 2030. It is currently 32 percent. The country is already a pioneer in offshore wind energy, which is to be expanded. Unlike Germany, Great Britain is also building new nuclear power plants.
If renewable energies and nuclear power are added together, more than half of British electricity came from low-emission sources for the first time last year. The share of coal, on the other hand, has dropped from 70 percent in 1990 to 2.5 percent today. It is expected to drop to zero by 2024. Natural gas makes up 45 percent of the mix. It is also important to be more transparent about the energy consumption of products, says Lord Barker.
As Chairman of the Board of Directors of the Russian aluminum company En +, he has a self-interest in the question. 85 percent of the components of a solar system are made of aluminum, says Barker. These can be obtained from energy-efficient sources or from companies, for example from China, that do not pay attention to their energy balance. Aluminum is not the only example.
- Energy efficient houses: Great Britain has a lot of catching up to do here. The drafty British houses are as legendary as the German triple glazing. In a European comparison, the outdated British housing stock regularly comes in last. According to Eurostat, a fifth of households suffer from a leaky roof, moisture or mold. From Mabey’s point of view, energy-efficient apartment renovation should therefore be a top priority.
The government’s new three billion package provides renovation vouchers of up to £ 10,000 per household. However, the sum is nowhere near sufficient to bring all houses up to date. Hopefully that’s just a down payment, says Rosie Rogers of Greenpeace. Treasury Secretary Sunak is expected to add more in the fall.
- Industry: De-industrialization, which has been promoted since Margaret Thatcher’s reign in the 1980s, helps to transform it into a climate-neutral nation. 80 percent of economic output is generated by services. Britain is in a relatively favorable starting position because it has less manufacturing industry with high energy consumption than other countries, says Barker.
That is why there is no strong lobby for fossil fuels. The government’s industrial strategy promotes “clean growth” in new technologies such as artificial intelligence, biotech and fintech. Energy-intensive companies are forced to change direction. For example, the new BP boss Bernard Looney has set the goal of making the entire energy company climate neutral by 2050 at the latest. The consumer goods group Unilever wants to be ready in 2039.
- traffic: The corona crisis has triggered a rethink, cities like London are making their streets more bicycle-friendly and displacing car traffic from the city center. E-mobility is also experiencing a boom. Electric car sales increased more than 200 percent in June from a year earlier.
Part of this can be explained by the pent-up demand for the Corona mandatory break, says Podpoint boss Fairbairn. But the main factor is a new customer attitude. “People pay more attention to green credentials.” His company now installs 2500 charging stations in private homes per month. The public infrastructure at supermarkets and petrol stations is also on the verge of a breakthrough, says Fairbairn.
Apart from Norway, the pioneer, it is best developed in Great Britain. He predicts that the network will “explode” in the next two years. This is largely privately financed. The state could help with investments in commercially less attractive places.
- Green Finance: The London financial sector also wants to become greener. Institutional investors are increasingly allocating their capital according to ESG criteria and exerting corresponding pressure on the economy. Central bank chief Andrew Bailey wrote an open letter in June with his predecessor Mark Carney for the green reconstruction of the economy.
A few years ago, the Bank of England was the first banking regulator in Europe to ask financial institutions to take climate risks into account in risk management. The problem: To date, these are only recommendations, not binding regulations. So not much has changed. “Banks could play a crucial role in climate protection if they change their criteria for financing companies,” says Sam Theodore of the Scope rating agency.
As long as there is no pressure from supervision, little will happen. The banks have so far defended themselves by not being able to quantify the regulatory risks of climate change. Theodore expects the corona crisis to initially set back: At the moment, the goal is to save the economy as a whole, which is why climate risks have moved into the background. In the medium term, however, the topic will push forward again.
In the coming months it will become clear how green the reconstruction in the UK will be. The government is expected to set up a state infrastructure bank. This is intended to replace the European Investment Bank, but could also focus on green projects.
A green investment bank already existed under the liberal-conservative coalition from 2012 to 2015. However, it was sold to the investment bank Macquarie as soon as the conservatives were back in power.
“We need a national infrastructure bank,” said Nicholas Stern, climate expert at the London School of Economics (LSE), in a recent webinar. It should invest in “clean infrastructure” such as bike paths, charging stations and broadband.
Brexit poses a risk to the green turnaround. If there is less cooperation between the power grid operators on both sides of the English Channel in the future, the switch to renewable energies would become more expensive, says Mabey. “In this respect, the green agenda could fall victim to Brexit.”
On the contrary, according to Barker, Brexit triggers a particular ambition among the government to become the European model student in climate protection. “A lot of people in Europe think that we Brits weren’t entirely comforting because we voted for Brexit,” he says.
Now they want to prove that they are a progressive nation and continue to be committed to the global agenda of multilateralism. Johnson will therefore do everything possible to make the climate conference in Glasgow a turning point similar to that of the 2015 Paris conference.
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