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George Osborne says 'carbon cuts no faster than Europe'

George Osborne has pledged that the UK will cut “carbon emissions no slower but also no faster than our fellow countries in Europe”, causing dismay in the green business sector.

However, according to Energy and Environmental Management most of his own colleagues in government disagree with him.

Speaking to the main body of the Conservative Party Conference he said “we’re not going to save the planet by putting our country out of business” and expressed his scepticism that investment in the low carbon sector could be a strong engine of recovery for the economy, arguing instead that it would thereby increase energy prices and hamper the recovery.

His reasoning is that “Britain makes up less than 2 per cent of the world’s carbon emissions, compared to China and America’s 40%”.

But this figure is wrong. Due to its historical emissions, as birthplace of the industrial revolution to which Osborne paid tribute in his speech and which has led to man-made global warming, the UK’s real responsibility is proportionally higher than developing countries’ current emissions: 5.11% of total global emissions up to 2005 (source: WRI last date available).

Osborne added that “a decade of environmental laws and regulations are piling costs on the energy bills of households and companies”, apparently ignoring his government’s own evidence that by far the largest factor in high prices is volatility in gas and oil markets.

Events in Manchester are revealing a split in government on green policies that is more along traditional grounds than to do with differences between the Tories and their LibDem coalition partners.

At a fringe meeting about renewable energy yesterday, the energy minister, Charles Hendry, Conservative MP for Wealden, Sussex, said of the green revolution: “This is an incredible opportunity, and if we follow we will export jobs and import equipment.”

Hendry also tried to calm worries on high energy prices by saying that the reform of the energy market, which the UK is currently planning (although it is over six months late in ratifying the EC Directive on energy market reform), will be done “at the lowest possible costs to consumers, because we never forget who pays the bills”.

The Conservative climate minister Greg Barker also extolled DECC’s policies to the audience of party faithful, talking up the Green Deal and Renewable Heat Incentive.

He called the Green Deal “world-leading” and said it will help bring down costs to consumers because “after all, the cheapest energy is the energy we don’t use”.

Osborne’s opposition to carbon targets has been curtailed before, by David Cameron, who over-ruled him when the decision on approving the

Climate Change Committee’s fourth carbon budget was being made, but Osborne did manage to secure a review of the budget in 2014.

The Treasury is historically sceptical about green issues and has been criticised many times, most notably by Jonathan Porritt, former head of the Sustainable Development Commission, who has written: “The Treasury has in fact been the biggest single block on Sustainable Development in the UK, going right back to the UK’s first SD Strategy in 1994.

“It pursues its own agenda (regardless of who is in power), has no interest or expertise in SD, and (unless reformed) would make mincemeat of any new SD Minister.”

Osborne’s about-turn

But Osborne has previously expressed enormous enthusiasm for the idea of the Treasury leading the way on climate change.

Less than two years ago he wrote: “I want a Conservative Treasury to lead the development of the low carbon economy and finance a green recovery.”

He went on to explain in some detail how this could happen, including vowing that if government departments failed to take action to save energy, “a Conservative Treasury will simply give them less money to spend on energy bills. This isn’t just good for the environment. It will save up to £300m a year. That’s good for taxpayers too.”

He then discussed how “a Conservative Treasury will drive green growth by financing a green recovery” and spoke favorably about “how a Green Investment Bank can help kick start our green recovery by providing green companies with the investment they need”.

It’s entirely possible that since then Osborne has been influenced by the Treasury mandarins, because in the same piece he says he will introduce “Green ISAs, a new tax-free savings product in which all the funds invested would help green our economy,” an idea which was dropped under pressure from officials.

He has also been lobbied by the energy-intensive industries (such as metals and ceramics) and the CBI to reduce the costs from high energy prices.

To be fair, Osborne did argue for “investment in greener energy. And that’s why I gave the go ahead to the world’s first Green Investment Bank”.

Tim Yeo, Conservative Chair of the cross-party Select Committee on Energy and Climate Change, speaking privately at the conference, also disagreed with Osborne’s speech, saying: “I believe it is in Britain’s interests in the medium term to be a leader. Those countries will be the most competitive, not the least.”

But Charles Hendry qualified his earlier enthusiasm and signified some sympathy with Osborne’s view: “We should not go out on a limb,” he said. “European capitals are not saying ‘the Brits are doing this, so we will too’. They will rub their hands and say ‘that’s just making British Industry less competitive’.”

However, he did say: “There is nothing in what George said today that would mean we want to pull back from a roll out of renewables.”

This would be difficult, because the UK now has a legally binding commitment to rein in carbon emissions. Under the Climate Change Act 2008, there must be a reduction of at least 34% in greenhouse gas emissions by 2020 and at least 80% by 2050.

Paul Foote, the managing director of the Conservative Environment Network, a group within the party that argues for government policy to support private enterprise in tackling “critically important” environmental issues, said: “Osborne has betrayed a fundamental misunderstanding about how to make our recovery secure and sustainable”.

DECC, a successful department which is demonstrating how LibDems and Tories can work together on a common platform, has to operate within the Treasury cap on spending and policy development.

Osborne’s speech makes it clear that it has a continuing battle on its hands to fight its corner, but it has plenty of support from within Tory ranks, too.

What remains to be seen is which side David Cameron will choose to support in his next speech on the topic. Any sign of wavering on his previous commitment to be the “greenest government ever” will have clean energy investors walking away from the table to invest in other countries.