One of the less anticipated consequences of Boris Johnson’s dismissal of Dominic Cummings is that the UK Prime Minister now feels it is appropriate to submit articles published to the Financial Times. I am not complaining; The text is a must, as it contains Johnson’s “10-point plan” for a “green industrial revolution” with which Great Britain catches up with the American ambitions “Green New Deal” and continental “European Green Deal” – rhetorically among the fewest.
How good is it? First of all, we should be clear that this is a political goal, not a detailed political proposal – a vision, not a plan. But vision is welcome and necessary: the decarbonisation of the economy is a multi-generation project that can only be successful with a sense of collective orientation. For once, Johnson’s unique talent for conjuring up alternate realities has constructive uses.
Many of the special elements of the vision also make a lot of sense. Promoting hydrogen as a carbon-free energy source lends itself to an economy in which both the production and consumption of natural gas play an important role. The capture and storage of carbon is a bright future for the oil and gas industry in the North Sea.
(We should add that a bet on hydrogen would be much more effective if the UK was still a member of the EU and could influence continent-wide politics – a point that applies to Norway, which has a similar interest in hydrogen There are many other ways Brexit can make a green industrial revolution in the UK more difficult, such as disrupting automotive supply chains or linking it to the EU carbon emissions trading system.)
The only tough, significant political commitment in Johnson’s announcement to ban the sale of diesel-only and gasoline-only vehicles from 2030 matters. Both of these bring Great Britain to the top international in this particular dimension of decarbonisation and should take a big bite off emissions.
Video: Boris Johnson hopes to give Downing Street a new style
Beyond that, however, a vision without a plan will do little. And Johnson’s promises and pledges, even if they are fulfilled, do only part of what it takes to achieve decarbonization. A good benchmark for measuring the UK or a government’s climate policy program is the IMF’s ambitious advice from last month’s World Economic Outlook.
In my recent interview with Gita Gopinath, the IMF’s chief economist, she explains that a tripartite approach is necessary: ambitious public investment to attract private investment; a significant and predictable increase in carbon prices; and a redistributive mechanism to ensure the carbon transition is fair and does not hurt those who are already worst off. This points in the direction of the “carbon fee and dividend” proposal, which is being endorsed by high-ranking US Republicans and economic advisory bodies to the German and French governments.
Johnson’s draft essentially focuses only on the first pillar: investing in new, environmentally friendly and innovative jobs and industries. This is politically understandable: The second and third pillars – carbon taxation and redistribution – show that decarbonization brings with it costs and losers, at least if there are no smart policies. (As Gopinath and the IMF show, with the right tripartite combination, switching to carbon can actually make the economy bigger than usual, so it should be possible for everyone to be better off.)
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However, without directly addressing these potential drawbacks, the government is less likely to take the necessary steps to prevent them. We should therefore remain skeptical of Johnson’s “plan” until we see a detailed commitment to increasing carbon taxes and an acknowledgment and solution to regressive redistributive effects.
Even the first pillar – public investment – leaves something to be desired. The amounts actually put on the table are smaller than the headlines advertised and nowhere near what is needed. Worse still are the signs that the UK government is not ready today to make spending plans for the future. A few weeks ago, the Treasury decided against a multi-year spending review because of the uncertainties caused by the pandemic. As I argued at the time, this was exactly the wrong approach: longer-term planning is one way to reduce uncertainty. This also applies to climate policy. The shorter the government stands behind the rhetoric, the slower and more expensive the carbon switch will be.
So that’s one half of three points. The verdict can only be: right direction, must do better.
Other readable elements
The FT report on the plight of young people in pandemic lockdowns is another must-see. Generation Covid is also a groundbreaking project that gathers the voices of many of our young FT readers from around the world.
Do not let the disagreement over the rule of law in the EU on shared spending overshadow the tremendous progress made in European budgetary policy this year.
On both sides of the Atlantic, the drive for higher wage floors is gaining support at the highest levels of policymaking. That’s good news.
As I wrote last week, the realistic extent of President-elect Joe Biden’s political ambitions depends on the outcome of Georgia’s two Senate runoff elections that will determine the balance of power in the upper chamber of the US Congress. It would be a steep climb for Democrats to take both – but in a state where more people voted for Biden than President Donald Trump, it shouldn’t be impossible. The registration and turnout of black and other minority voters by Stacey Abrams, a former candidate for governor, and others are part of the reason Georgia went blue in the presidential election. However, a New York Times Upshot study of district-level voting results shows that Biden hasn’t made much progress in the places with the highest proportions of Black and Hispanic voters compared to Hillary Clinton four years ago – his lead may even have decreased. It turns out that despite the election campaigns, the proportion of black voters in all registered voters has only remained constant and their proportion of the votes cast has decreased since 2012. If this can be reversed in the Senate runoff elections, the Democrats stand a good chance.