UK must go green to stimulate growth, says Chris Huhne

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Former cabinet minister Chris Huhne has issued a stark warning that the UK's economic growth strategy will not work unless the government pursues "green growth" by investing in industries such as energy efficiency and clean energy.

Former energy secretary's intervention comes amid growing concern over how to recover from double dip recession.

Writing in the Guardian, Huhne says: "Much of our economic debate implies we must choose between going green or going for growth. That view may be the opposite of the truth. There is now hard evidence that the real choice is between green growth or no growth at all.

Huhne, who resigned as energy secretary in February while he fights charges that he asked his former wife to take points on her licence for speeding, does not criticise the government and declined to name those he says are portraying green policies as a barrier to growth.

However, senior Liberal Democrats in the coalition have privately complained that some Tory colleagues have been obstructing policies such as the green deal and new building regulations to make homes and offices more energy efficient, as well as the powers of a new green investment bank.

Huhne's intervention also comes amid growing concern about chancellor George Osborne's strict austerity cuts in public spending, with critics arguing that he should be spending more to boost growth.

Pressure rose last week when official figures showed a second successive quarter of falling economic output – meaning the UK had entered a double-dip recession for the first time since 1975.

This week's cabinet meeting spent 45 minutes on the issue. The prime minister's spokesman later denied ministers discussed a change of tactics, but he said there was a conversation about the importance of making sure existing investment schemes did go ahead as planned – suggesting, perhaps, there was some unease about the pace of recovery.

Huhne's argument focuses on an unprecedented situation where developed countries are in recession while energy and materials prices are rising. In the past lower demand from rich nations would have reduced the price of such key commodities, but now they are being driven higher by growth in Asia "on a scale never before experienced in economic history".

Despite the promise of new energy sources such as shale gas, it would be "rash" to bank on prices falling in future, writes Huhne.

"Energy-saving is the win-win: it has the potential for job creation (for example in household improvements) and it supports growth by cutting bills and boosting spendable income," he adds. "But there must be a wider agenda for resource efficiency too – recycling metals, repairing and reusing.

"There is a facile view that our green commitments – to tackling climate change, avoiding air and water pollution, protecting natural habitats – are an obstacle to growth. The message of the commodity markets is surely different. Resource-hungry growth could rapidly stall due to commodity price rises, simply because so many of us now want it. If we want sustainable growth, we do not have a choice. We must go green."

The EU's strategy for sustainable growth and jobs, called 'Europe 2020', comes in the midst of the worst economic crisis in decades.

In June 2010, EU heads of state and government signed up to five 'headline targets' that had to be translated at national level in order to reflect national differences (see full table with targets broken down per country):

  • Raising the employment rate of the population aged 20-64 from the current 69% to 75%.
  • Raising the investment in R&D to 3% of the EU's GDP.
  • Meeting the EU's climate change and energy objective for 2020 to cut greenhouse gas emission by 20% and source 20% of its energy needs from renewable sources.
  • Reducing the share of early school leavers from the current 15% to under 10% and making sure that at least 40% of youngsters have a degree or diploma.
  • Reducing the number of Europeans living below the poverty line by 25%, lifting 20 million out of poverty from the current 80 million.

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