The Coalition and the Carbon Economy

Sean Lockie
What are the big Cameron/Clegg ideas on the carbon economy and sustainability? We review the parties' approach to carbon trading, transport, energy generation and the green investment bank.

 In the first days of the coalition government Faithful+Gould asks:

"What fundamental sustainability and carbon policies are likely to change under the new administration?"

As policies emerge, it is vital that the government embeds low carbon, sustainability and resource efficiency into the very fabric of the UK economy. This not only safeguards the future of our planet, but also establishes a leadership role for the UK in the global green economy, valued at £3.2 trillion. Green jobs should then follow.

So what are the big Cameron/Clegg ideas that could achieve this goal?

A ‘Green Investment Bank'

It is not yet clear if the remit of a green investment bank will go beyond investment in carbon reduction projects to include the entire environmental industry. If the bank's mandate to the low carbon sector is limited it would risk forfeiting the huge investment opportunities that exist across the wider environmental sector.

Sustainable buildings and energy efficiency

Policies are in place for:

  • Home energy improvement, paid for by savings from lower energy bills

  • Retention of Energy Performance Certificates

  • Roll out of smart meters.

Energy generation

The new government is committed to establishing a ‘smart grid'. Feed-in tariffs for electricity get a mention, as well as the maintenance of banded Renewables Obligation Certificates. However, plans for incentivising renewable heat remain unclear. Under a proposed emissions performance standard, coal-fired power stations would not be built unless equipped with sufficient CCS (Carbon Capture and Storage). The coalition will complete the Labour government's proposals for public sector investment in CCS technology for 4 coal-fired power stations.

The new government is committed to increasing the target for energy from renewable sources, subject to the advice of the Climate Change Committee. There are also measures to promote energy from waste through anaerobic digestion.

An issue that may cause friction is nuclear power, as the Liberal Democrats opposed the new build programme for nuclear facilities. The Climate Change and Energy secretary, Chris Huhne has said he is not ideologically opposed to an expansion of the nuclear sector, though he echoes the Conservatives' view that there should be no direct public subsidy.

The next step is for the government to bring forward a national planning statement for ratification by parliament, to enable new nuclear construction. While the Lib Dems would abstain from such a vote there should be enough support from Labour and the Conservatives MPs for the statement to pass.

Carbon trading

Another important plan is to create a floor price for carbon. This will help to stabilise the market, and support efforts to persuade the EU to move towards full auctioning of Emissions Trading Scheme permits. The government also wants a commitment to reduce central government carbon emissions by 10% within 12 months.


The new government is mandating:

  • A national recharging network for electric and plug-in hybrid vehicles
  • Establishment of a high-speed rail network
  • Cancellation of the 3rd runway at Heathrow
  • Refusal of additional runways at Gatwick and Stansted.