Energy challenge: Ed Miliband, Leader of the Labour Party

Short-termism is bad for us and the planet. The Government should use the Green Investment Bank to fund clean-energy projects.

With oil prices having reached close to $120 a barrel, this is the opportunity to make decisive steps towards a post-oil economy. We cannot stop our reliance on oil and gas tomorrow. They are an essential bridge to our energy future. But the question is if they are a bridge or a stopping point.

The Conservative-led Government’s reckless approach on the deficit means they are not making the right strategic decisions for now or for the next generation. To create the green economy we have to get past the fundamental short-termism that exists in parts of industry, finance and governments.

The truth is that even despite the known risks and limitations, there is comfort and security about investing in old-fashioned hydrocarbons. UK pension funds still see investing in BP’s deep-water drilling as a lower risk than funding offshore wind farms. It is the worst sort of short-termism: for the planet and for all our economic futures.
But there is no point in railing against the short-termism of markets: it is what they do unless the rules are right. The job of government is to change this short-termism through concrete policies, not voluntary pledges and exhortations. The obvious opportunity is the Green Investment Bank.

Instead of endlessly delaying decisions, the Government should support a fully functioning Green Investment Bank. This has the potential to fill some of the funding gap faced by the low-carbon sector and unlock some of the potential 400,000 new green jobs that could be created by 2015. Clean energy investment in Germany and China is being driven by public development banks. It is time we gave the same support to British businesses.

The potential for long-term economic growth and jobs for the UK is there, if only government takes the right decisions for now and the long-term. There is a huge reservoir of energy and entrepreneurship in British industry waiting to be released. But industry needs certainty over future markets which has been clouded by hasty decisions, such as the early review of feed-in tariffs. Ministers must hold their nerve and show long-term vision.

But if we are to accelerate the creation of the green economy we should be making it easier for people to cut energy use. The proposed Green Deal risks becoming a lame duck unless the Government co-operates with us to improve incentives designed to encourage participation from households and businesses.

People need to know there is fairness in the way energy is provided and who pays. That is why the state has to play a strategic role in guiding change. Otherwise it would be too easy for the costs of tackling climate change to fall disproportionately on the poorest. Consumers rightly expect the Government to protect them so the Government should introduce a statutory code of consumer rights on energy bills.

This is the time to declare that we want a hi-tech, clean-tech future faster than ever before. The countries that make the leap first will be the successful economies of this century, exporting technology around the world to cities seeking cleaner air and lower emissions. We must enable our business to compete with China, which is targeting clean energy industries as the focus of its next Five-Year Plan.

Climate change poses a big challenge to our politics because the challenge is marked by a distance between the generation that needs to act and the generation that feels the greatest benefit. The DIY state cannot build the green economy. It requires determined action by government in partnership with people, driven by fairness. We must be prepared to rise to the challenge and to lead.

Telegraph March 19th 2011

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