IT's election season. Politicians are giving us a barrage of policies. But we often forget to ask the most important question: will they actually work? In this column I take policies on their own terms and asks whether they solve the problem they're supposed to solve. This week:
WHAT'S THE PLAN?
Finally, some ambition! Regular readers will know I often criticise policies for tokenism.
REASONS TO GET EXCITED The plan gets three important things right. First, it tackles net zero as an opportunity rather than a burden. The plan aims to simultaneously enhance energy independence and (consequently) security, bring down prices, provide a much-needed economic stimulus and hit net zero by 2030.
Second, it recognises that the state needs to lead in this area. Energy has never been a free market. Since 2015 the government has pumped at least £140bn in subsidies into the sector. The bulk of these go to fossil fuels (in addition picking up the tab for fossil fuel's externalities, worth at least £11bn per year). If subsidy is inevitable, it should be targeted better. State investment in green energy will reduce upfront costs of financing new green projects, allow them to stay the course when they hit snags and facilitate a strategic approach to green investment.
Third, it treats the challenge with a package of interconnected measures. There's no point investing in new green projects if the
Potentially. The plan is ostensibly funded by closing loopholes in the windfall tax on oil and gas. Given it's mostly stimulus and investment, there would also be a case for funding it through borrowing. The question remains, however, whether the plan will generate the impacts it promises. The investment strategy relies heavily on private sector buy-in, with a target of raising three times as much private investment as the government puts in. Even if this is achieved, the total package only amounts to around £80bn over the course of the next parliament (depending on how it is calculated). It's estimated that, to break out of the current stagnation, the government needs to generate nearly that amount of investment every year.
HOW DOES IT SCORE?
ELECTORAL APPEAL: 3/5 VALUE FOR MONEY: 4/5 EFFECTIVENESS: 3/5 ORIGINALITY: 4/5 OVERALL: 14/20 VERDICT: It's (at least the shape of) the right solution to the right problem. But, unless the private sector rides in to save the day, it might sink without a trace.
(c) 2024 City A.M., source