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Seven months of savage cuts leave coalition’s green hue fading

With the final nails hammered into the coffin of the Green Investment Bank, it’s time for a look bac

By Ed Ballard

14 May: “This will be the greenest government ever”, pledges David Cameron, three days after the formation of the coalition government. He announces his commitment to the 10:10 campaign, saying that all government departments will cut their greenhouse-gas emissions by 10 per cent before the end of 2010.

29 June: The government’s Green Investment Bank Commission predicts that £550bn of investment will be needed to meet Britain’s renewable energy targets under the Climate Change Act, and recommends the establishment of a Green Investment Bank to meet the challenge by providing finance for clean-power stations, windfarms and smart grids. Experts agree on a fundamental principle: to be capable of kick-starting private-sector investment in potentially risky renewable projects, the GIB must have the ability to issue government-backed “green bonds” to raise money. This kicks off a feud between the bank’s backers – led by Chris Huhne – and the Treasury, in which there could only ever be one winner.

16 July: The Department of Energy and Climate Change (DECC) announces a £34m cut to its low-carbon technology programme, including a £12m cut to the Carbon Trust, which provides funding to sustainable technology and businesses.

22 July: The Sustainable Development Commission is axed on the day of the first great quango cull. Environmentalists question the value of the move: the £3m per year it cost to run the SDC was a negligible saving, far outweighed by the estimated £70m the SDC saved the taxpayer annually by recommending green efficiency savings. Caroline Spelman, Secretary of State at the Department for Environment, Food and Rural Affairs (Defra), says the decision was an easy one: because she is “personally dedicated to driving the sustainability agenda across government”, there is no longer any need for external agencies.

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8 August: More good news! All new homes will run on green power by 2016. That, at least, is the improbable but cheery-sounding claim of the housing minister Grant Shapps. Developers that fail to meet the target must pay a levy to fund local renewable energy projects. As Shapps pointed out, being so very green, the coalition government hardly had a choice in the matter. “We are committed to being the greenest government ever,” said Shapps, “and an essential part of that is to ensure that all homes in the future will be built without emitting any carbon.”

20 September: Two election pledges are struck from the list of things that the coalition might bring itself to do something about. The government will not carry out its proposal to make it an offence to possess illegally felled timber or to bring it into the country; nor will it extend the subsidy for small-scale solar production under the Feed-In Tariff.

20 October (the Spending Review): This is the point where it really starts to look bad for the greenest government ever, as George Osborne’s axe falls hard on environmental spending.

  • The review includes proposals to sell off national nature reserves, privatise parts of the Forestry Commission and sell off the Met Office (which has contributed as much as any organisation to the public understanding of climate change).
  • The review cuts Defra’s budget by 30 per cent, compared to a government average of 19 per cent, equating to efficiency savings of £700m by end of the four-year review period. Chris Huhne’s tiny DECC gets away with an 18 per cent cut.
  • The Environment Agency will shed 5,000-8,000 out of 30,000 jobs, while Natural England’s budget is cut by 30 per cent – about 800 full-time jobs. Flood defence spending will be cut by 27 per cent (though citizens of the “big society” are pleased to learn that they will be allowed to pitch in themselves).
  • Confusion about the GIB: Clegg writes to his party members telling them that £2bn has been set aside, but Osborne says £1bn.

21 October: Huhne tells the Guardian that the government may sell off one-third of Urenco, a company that makes enriched uranium for nuclear power – and that the money raised may fund the GIB. £1bn probably isn’t enough for a proper bank, but still – better than nothing.

25 October: Caroline Spelman announces that 150,000 hectares of forest may be sold off by the government.

18 November: Chris Huhne signals his frustration with the Treasury, which is continuing to oppose the Green Investment Bank, preferring to repackage some existing green pledges in a sparkly new fund. An anonymous member of the GIB commission says: “Frankly, if it doesn’t [have the ability to raise money by issuing government-backed bonds] there’s no point in it existing. If we were only ever going to do one thing, the green bond is the thing we need to do . . .”

18 November (continued): Later that day, Cameron puts these fears to rest in a rare speech on the environment. The GIB will be a proper bank, he promises. The Labour MP Joan Walley asks whether it would really be a bank with the ability to issue money, whether a dispute was likely between the Department for Business and the Treasury, and whether he would take a personal interest. Cameron replies: “Yes, yes and yes, to all of those questions.”

25 November: Oops! Grant Shapps messed up back in August when he said that all homes must be zero-carbon by 2016. What he meant to say was, “Some homes, but not all, will probably be zero-carbon by 2016.”

19 November: Chris Huhne’s frustrations in pursuit of his bank spill over into an open attack on the Treasury. He compares its obdurate opposition to the bank with the mistakes that led to the Great Depression.

15 December: The Treasury gets its wish: there will be no GIB. Huhne acknowledges that the “bank” will in fact be merely a green fund, and is also forced humiliatingly into repudiating his principles, saying that sustainability must not take precedence over cutting the deficit. The £550bn Britain needs to meet its emissions targets will have to come from somewhere else.

The greenest government ever – the seven-month summary: Forests for sale, a slashed green-tech budget, no green bank, flood defence budget hammered, no independent sustainability watchdog. But, looking on the bright side, developers will be allowed to build energy-inefficient houses for a few more years at least, and you can still import illegally logged timber if you like.

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