Leading economist Lord Stern has urged the chancellor George Osborne to seize the opportunity presented by his annual budget to boost investment and innovation in the green economy.
Stern led the writing of a government commissioned review on climate change in 2006. He has since admitted that the review underestimated how quickly the effects of climate change would have an impact and said we have to “act strongly”. Stern is also working on a second review looking at the economic costs.
The government estimates that an additional £100 billion needs to be invested in electricity generation alone by 2020 in order to replace aging infrastructure and improve efficiency.
Writing for the Financial Times, Stern said, “This week’s budget provides a vital opportunity for George Osborne, the UK chancellor of the exchequer, to boost economic growth and employment by stimulating investment is cleaner and more efficient energy for homes and businesses.”
Stern had previously said that delaying climate action was “dangerous” and noted in his article that uncertainty is currently limiting investment. This is something that a report from consultancy firm EY also found.
Stern wrote, “The private sector is still holding back because of uncertainties about the direction and pace of government policies.
“In particular the announcement last year that the government was reviewing the UK’s targets for reducing greenhouse gas emissions by the mid-2020s created doubts that the commitment to the development of low-carbon energy.”
Other factors such as the UK government opting out of setting a 2030 renewables target and uncertainty around the governments support for the commercialisation of carbon capture and storage technology have also had an impact.
Additional concerns have been raised following reports that Osborne will announce a freeze in the carbon price floor in the budget.
“Such a U-turn would further damage the credibility of government policy as well as cutting off an important source of revenue,” Stern said.
He urged Osborne to announce further improvements to the green deal to boost energy efficiency and cut the cost of household bills. He also called for all political parties to recognise that turning energy policy into a “political football” is very costly.
Stern concluded, “In short, there is a set of policies that will promote growth, private investment and employment, raise revenue, correct market failures, protect the poorest, improve energy security and efficiency and keep the lights on. What an opportunity for the chancellor and the government.”