Why low-carbon business has been virtually silent in the political debate

Why low-carbon business has been virtually silent in the political debate

Walking into Westminister tube station, members of parliament currently find themselves surrounded by a phalanx of purple adverts announcing that “The road to economic growth is … a flight path”. This is just the most visible manifestation of a massive business-led campaign arguing the importance of increased airport capacity to the UK economy.

At one level you have to admire the chutzpah of the British Airports Authority (BAA) in making this argument. New airport capacity is irrelevant to UK economic recovery and will not provide a single additional job before the end of the decade. With business passengers making up only 12% of total UK flights it is also clear that absolute capacity constraints are not a material business issue. But at least BAA’s opportunism is understandable; they are simply acting in their own best business interests. What is unforgivable is the lack of alternative business voices advocating a low-carbon, green pathway to economic recovery.

It was not always like this. The response to the financial crisis saw business leaders back a wave of “green stimulus” packages around the world with hundreds of billions allocated to green investment. The economic logic of these moves has been justified. Below the media radar clean investment has been a major driver of continued global economic growth. Renewable energy investment is one of the few growth areas of business investment globally and in the UK. Meanwhile, at the same time, the combination of high oil prices and high-carbon infrastructure have undermined global economic recovery by sucking money out of the G20.

But in recent years low-carbon business has been virtually silent in the political debate over UK recovery. Even when George Osborne undermined confidence in UK climate policy in his 2011 party conference speech there was no concerted and public business response. It is impossible to imagine such silence if he had talked down any other part of the UK economy.

The only audible businesses voices in the energy debate have been the utilities trying to avoid a populist windfall tax, EDF arguing for more nuclear subsidies and the gas lobby claiming it is the affordable route to a low-carbon future. This wasw despite increases in gas prices being one of the major drivers of falling living standards in the UK over the past three years.

Why the silence? It can’t be a lack of things to say. There is more evidence on the economic benefits of low-carbon investment than on any other recovery policy. It can’t be that clean energy companies lack the resources to speak. The major clean energy technology companies such as GE, Seimens, ABB and Alsthom are huge global ventures that have similar or larger capitalisation of the traditional European energy utilities.

The problem seems to be structural. The shift to a low-carbon economy moves the locus of profit making away from energy utilities and fossil fuel providers to project developers and the large technology companies. However, for years these companies have hidden in the shadows. Focused on the short term they see the energy utilities as their primary customers and this has made them extremely cautious about deploying their public affairs power to shaper the political debate. Many of these technology companies also produce coal and gas power stations so they feel able to earn profits in either a high- or low-carbon future. But this is disservice to their shareholders. The shift to a low-carbon economy would more than double their potential markets by replacing the flow of fossil fuel purchases with immediate investment in high-capital, high-technology and highly intelligent infrastructure. Any company which makes its profits from knowledge rather than holes in the ground will benefit from this shift.

The ambivalence of clean tech companies was evident at the Copenhagen Climate talks in 2009. The high-carbon industry lobbyists dominated political access in the negotiations and put pressure on heads of governments not to agree an ambitious agreement. Meanwhile, far away from the political action, the CEOs of clean technology companies could be seen making endless speeches about the low-carbon economy at business side events. The only major investment in lobbying by the clean technology companies was aimed at preventing any global rules for sharing intellectual property.

This free-riding cannot continue. The environmental movement has helped create a global market of $3-4tn from which these companies are happy to benefit. But this progress is under threat as politicians and public are absorbed by the economic crisis, and traditional business voices combine with advocates of unconventional fossil fuels push against further climate action.

The next few years hold critical decisions at UK, EU and global levels which will determine the pace and scale of growth in global low-carbon markets. Low-carbon technology companies need to identify that their real interest lies in the creation of future markets not the preservation of existing ones. This will require real leadership from CEOs to prevent their existing high-carbon business divisions dominating company public affairs priorities. CEOs need to publicly push for clean energy policies and shape the agendas of business organisations they belong to. Many will doubtless say that this is going on already and some small scale steps are. But this will not be enough until we see Westminster tube station – and Brussels – plastered in adverts arguing for massive investment in energy efficiency, borrowing powers for the Green Investment Bank, a North Sea Grid and strong 2030 emission targets.

Nick Mabey, chief executive and a founder director, E3G

This article appeared on the Guardian Sustainable Business Blog on 2nd May 2012.


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