Why have Tory MEPs rejected a free market solution to climate change?

By sabotaging reform of the EU Emissions Trading Scheme, Conservative MEPs have shown that they can't be relied upon to champion British interests in Europe.

It may surprise some on the centre left but there is nothing innate to conservatism that makes it less able to take pragmatic decisions in favour of sensible environmental policy. It has had a refreshing ability to acknowledge the intrinsic value of nature and stewardship even if it has become more conflicted about the means to deliver these outcomes. It is a broad church that spans from the one nation Heseltines to the radical free marketeers like John Redwood. But if there is one thing that unites them, it’s the belief that markets offer most of the answers. Which is why it is so baffling that Conservative MEPs voted down a measure that might have kept the European Emissions Trading Scheme alive. Trading is not the only way of tackling emissions but it’s the poster child of free market thinkers because it promises an economically efficient, non-regulatory solution to a giant supranational problem.

The back story is that, on Tuesday, the EU parliament voted against a minor technocratic fix that would have rescued the floundering European carbon market, which is struggling under the weight of too many pollution permits in the system. The fix would have involved 'backloading' the sale of some excess carbon allowances to 2019, so the number of allowances in the system would be reduced, increasing the price which has dropped as low as €3 per tonne of carbon in recent months. While more profound reform is required, it would have been a first step to putting the mechanism back on track. The vote failed by 19 votes. Twenty Conservative MEPs voted against it. In doing so, they failed their constituents and UK business.

A strong carbon price across Europe is directly in the UK’s interest. Its main benefit is to provide financial incentives for switching from coal to gas, with the costs being born by coal heavy countries like Poland and Germany and rewards flowing to those that have already made the switch, like the UK. One of  Thatcher’s less controversial legacies is an energy system which has less and less coal and a relatively high proportion of gas, so UK generators and fuel suppliers stood to gain significantly from the EU carbon market fix. By voting against it, Conservative MEPs have rewarded coal at the expense of gas and Germany at the expense of the UK. This will be the first of many negative consequences arising from the failure of EU emissions trading. At our Chancellor’s insistence, the government has also introduced a carbon price floor, which means we are paying higher carbon prices than our neighbours. It creates an attractive revenue stream for the Treasury but many British businesses will now feel aggrieved that it could now be at least a decade before there is a single carbon price across Europe.

This is part of a pattern of conflicting behaviour from different parts of the Conservative Party that should worry its leaders. There is no evidence that the British public sees climate or environment as a partisan issue. It is a 'valence' issue, like national security, in which voters expect any party of government to be competent.

Emissions trading may be too obscure for the public to notice but experts in business, NGOs and academia do and,  for many, this will be another worrying sign that the Conservatives are struggling to govern coherently on one of the big issues of our age. We’ve already seen this confusion with the Energy Bill, where the Chancellor agreed to spend £7.6bn a year on new low carbon energy (mostly renewables) but then opposed a decarbonisation objective for 2030 which would have ensured that much of the equipment required would have been built in new UK turbine factories.

The debate now moves on to what 2030 climate package the EU should adopt. The UK should be at the heart of the debate, fighting for an ambitious carbon goal that matches our own. But the prime minister has yet to get his ministers to agree a common position. Whether or not the British government takes a lead, the EU will adopt a new climate package at some point in the next 18 months under pressure from France and Germany. Yesterday’s action by Conservative MEPs has made it more likely that it will be focused on fiscal and regulatory measures, and less on trading. That may turn out to be a good thing, but Conservative MEPs have just shot themselves in the foot by making market trading solutions less attractive. They have also made it considerably more difficult for David Cameron to demonstrate that his party has championed British interests in energy and climate change effectively.

Matthew Spencer is director of Green Alliance

Exhaust rises from cooling towers at the Niederaussem coal-fired power station at Bergheim near Aachen, Germany. Photograph: Getty Images.
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The NS leader: Cold Britannia

Twenty years after the election of New Labour, for the left, it seems, things can only get worse. 

Twenty years after the election of New Labour, for the left, it seems, things can only get worse. The polls suggest a series of grim election defeats across Britain: Labour is 10 points behind the Conservatives even in Wales, putting Theresa May’s party on course to win a majority of seats there for the first time in a century. Meanwhile, in Scotland, the psephologist John Curtice expects the resurgent Tories, under the “centrist” leadership of Ruth Davidson, to gain seats while Labour struggles to cling on to its single MP.

Where did it all go wrong? In this week’s cover essay, beginning on page 26, John Harris traces the roots of Labour’s present troubles back to the scene of one of its greatest triumphs, on 1 May 1997, when it returned 418 MPs to the Commons and ended 18 years of Conservative rule. “Most pop-culture waves turn out to have been the advance party for a new mutation of capitalism, and so it proved with this one,” Mr Harris, one of the contributors to our New Times series, writes. “If Cool Britannia boiled down to anything, it was the birth of a London that by the early Noughties was becoming stupidly expensive and far too full of itself.”

Jump forward two decades and London is indeed now far too dominant in the British economy, sucking in a disproportionate number of graduates and immigrants and then expecting them to pay £4 for a milky coffee and £636,777 for an average house. Tackling the resentment caused by London’s dominance must be an urgent project for the Labour Party. It is one that Mr Corbyn and his key allies, John McDonnell, Emily Thornberry and Diane Abbott, are not well placed to do (all four are ultra-liberals who represent
London constituencies).

Labour must also find a happy relationship with patriotism, which lies beneath many of the other gripes made against Mr Corbyn: his discomfort with the institutions of the British state, his peacenik tendencies, his dislike of Nato and military alliances, his natural inclination towards transnational or foreign liberation movements, rather than seeking to evolve a popular national politics.

New Labour certainly knew how to wave the flag, even if the results made many on the left uncomfortable: on page 33, we republish our Leader from 2 May 1997, which complained about the “bulldog imagery” of Labour’s election campaign. Yet those heady weeks that followed Labour’s landslide victory were a time of optimism and renewal, when it was possible for people on the left to feel proud of their country and to celebrate its achievements, rather than just apologise for its mistakes. Today, Labour has become too reliant on misty invocations of the NHS to demonstrate that it likes or even understands the country it seeks to govern. A new patriotism, distinct from nationalism, is vital to any Labour revival.

That Tony Blair and his government have many detractors hardly needs to be said. The mistakes were grave: the catastrophic invasion of Iraq, a lax attitude to regulating the financial sector, a too-eager embrace of free-market globalisation, and the failure to impose transitional controls on immigration when eastern European states joined the EU. All contributed to the anger and disillusionment that led to the election as Labour leader of first the hapless Ed Miliband and then Jeremy Corbyn, a long-time rebel backbencher.

However, 20 years after the victory of the New Labour government, we should also acknowledge its successes, not least the minimum wage, education reform, Sure Start, a huge fall in pensioner poverty and investment in public services. Things did get better. They can do so again.

The far right halted

For once, the polls were correct. On 23 April, the centrist Emmanuel Macron triumphed in the first round of the French election with 24 per cent of the vote. The Front National’s Marine Le Pen came second with 21.3 per cent in an election in which the two main parties were routed. The two candidates will now face off on 7 May, and with the mainstream candidates of both left and right falling in behind Mr Macron, he will surely be France’s next president.

“There’s a clear distinction to be made between a political adversary and an enemy of the republic,” said Benoît Hamon, the candidate of the governing Parti Socialiste, who had strongly criticised Mr Macron during the campaign. “This is deadly serious now.” He is correct. Mr Macron may be a centrist rather than of the left but he is a democratic politician. Ms Le Pen is a borderline fascist and a victory for her would herald a dark future not just for France but for all of Europe. It is to Donald Trump’s deep shame that he appeared to endorse her on the eve of the vote.

This article first appeared in the 27 April 2017 issue of the New Statesman, Cool Britannia 20 Years On

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