Naoto Kan at G8 summit in France (image source: @ANN News)

My previous article mentioned that it is now very difficult to pursue the current Japan’s energy strategies highly depending on nuclear energy because its ‘safety myth’ collapsed as a result of Chernobyl-level radioactive leak from the Fukushima nuclear plant. Further, reducing GHG emissions by 25% by 2020 seems infeasible because its global warming strategies are similarly focusing on nuclear energy. Then,  in order to suffice the present/future energy demand and achieve the mid-term GHG reduction target,  Prime Minister, Naoto Kan, seeks to replace nuclear energy by renewable energy especially solar power and his favourite wind power.

As a result, on May 25th, Kan at the OECD in Paris addressed that Japan will install solar panels onto ’10,000′ houses. However, this proposition is not the official Government’s policy proposition but just his idea off-hand. Even his cabinet members including the Minister for Economy, Trade and Industry, Banri Kaieda, mainly responsible for energy issues, came to know it after he suddenly made this proposition in Paris. Unsurprisingly, Kaieda was very frustrated saying ‘I came to know it through the media. I was not told’. Further, Kansei Nakano, National public safety commission chairman, criticized ‘as a member of Kan’s cabinet, I want to share information and concerns with Kan before Kan proposes something’. As Kan was severely criticized by his cabinet members, on May 31st, he finally apologize for his inappropriate behaviour.

Though his proposition might have been welcomed for those for solar power, it is therefore unclear whether Japan will actually pursue solar power. Moreover, it should be pointed that the main world-wide concern may not be Japan’s future energy strategies but resolution of the current nuclear accident, as clearly indicated at G8 summit again in France. The Japanese Government must  solve the accident as soon as it can and disclose any information that it obtains during dealing with the accident. This is the main responsibility for Japan to fulfill as information on the accident will be utilized for other nations that have nuclear power plants and Kan should be strongly aware of this responsibility.

Fukushima plant in Japan (image source: @Asahi Shinbun)

On June 6th, according to Jiji press, Japan is likely to abandon its mid-term GHG reduction target.

On March 12th, the earthquake and Tsunami attacked the Fukushima nuclear power plant and serious radioactive leak has been taking place since then in Japan. Both electric power companies and the Japanese Government eloquently insisted on the ‘perfect safety’ of nuclear power plants from natural disasters such as earthquake, Tsunami and typhoon for a long time. However, the ‘safety myth’ was too easily broken by the ‘March 12th’ disaster. Consequently, though no governors in the prefectures which own large nuclear power plants suggest closing nuclear power plants, they strongly insist that nuclear power plants which do not currently operate due to regular inspection must not start to operate again until appropriate safety measures are to be implemented. Further, Naoto Kan, Prime Minister of Japan, ordered Chubu electric power company to stop the operation of the Hamaoka nuclear power plant as the plant is located in the possible area within which the Tokai earthquake will be originated from.

This situation clearly indicates that Japanese strategies for global warming will fail or possibly already have failed. In September 2010, the former prime minister, Kunio Hatoyama, proudly announced that the mid-term GHG reduction target of Japan is 25%. One of the main strategies to achieve this is ‘switch from thermal energy to nuclear energy’. That is, in order to reduce GHG emissions dramatically, the Government plans to raise the ratio of nuclear energy in the electricity supply from 30% in 2005 to 53% in 2030 by building or rebuilding more than 14 nuclear power plants.  It is now apparent that this plan is unachievable, leading to the expected increase in the amount of GHG emissions by 166 million tons or 13%, compared to the 1990 level. It may be still theoretically possible to achieve the target by replacing thermal energy by renewable energy. However, this may be practically difficult because renewable energy is unstable in electricity supply and costly, which is often strongly proposed by industries especially Nippon Keidanren. Though a Scandinavian model is sometimes proposed by some citizens’ groups to promote renewable energy, the model cannot be applied to Japan which has many metropolitan cities such as Tokyo and Osaka; the Tokyo metropolitan area owns about 34,394 thousand people, while the Copenhagen metropolitan area has 1,870 thousand people. Further, insufficient human resources to advance renewable energy, in political, business and academic sectors,  are devastating in Japan.

Though Kan has not made it clear to abandon the mid-term target, Jiji Press discloses that though the target was to be included in the bill for the basic law for prevention of global warming which has been sent to the Diet, it is to be deleted from the bill. Although such a ‘backward’ decision of Japan will be internationally criticized, Japan needs to accept it because its plan and strategies are seriously flawed.

Kwajalein Atoll – Marshall Islands. (Image by: Vanderberg Witness)

Citizens from small island nations in the Pacific Ocean have known for decades that their geographic isolation, heavy coastal infrastructure, population dispersion across many islands, and low-lying atolls only meters above sea level make them the most vulnerable countries to climate change in the world. However, now changes in the global climate are accelerating, and the shorelines of countries such as the Federated States of Micronesia, the Republic of Nauru and the Republic of the Marshall Islands (RMI) are increasingly battered with severe storm, coastal erosion and sea-level rise. Frustrated with the lack of progress at the United Nations climate change negotiations, and mindful that they need to be prepared for the possibility the sea may soon submerge their homelands, these islanders have brought their case – and unprecedented legal and policy questions – to the world community.

A conference late May at Columbia University’s Center for Climate Change Law, Threatened Island Nations: Legal Implications of Rising Seas and a Changing Climate, organized at the request of the Marshall Islands government, brought together academics from institutions such as Columbia, NYU and the University of New South Wales; diplomatic groups such as the Alliance of Small Island States (AOSIS); and NGOs such as Islands First to explore complex and unusual questions on state sovereignty, marine rights, international treaties, and migration and resettlement. For those like myself who have worked with small island nations, this public discussion, as well as the burgeoning of academic papers on these subjects, were largely new.

Climate change and the highly likely scenario that small islands will disappear in the near future – even if emission levels stabilize at current levels, according to the IPCC’s 2007 Summary for Policymakers – challenge many aspects of international, and domestic, law and policy as we know them today. The host of new issues never before addressed includes what options are available for a state, deterritorialized due to climate change, to maintain its sovereignty; how to treat ambulatory coastlines in international law, which has implications for a country’s marine rights; and how to deal with the possible relocation and resettlement of thousands of individuals. These questions need to be balanced with the ongoing challenges of assigning responsibility for emissions and of developing countries accessing sorely needed mitigation and adaptation funding.

After three days of presentations and discussions among legal, science and social science scholars, it was clear that there are few easy answers. Some issues, such as statelessness and resettlement, are fraught with emotion and uncertainty. Others, such as migration due to climate change, are characterized by a lack of credible evidence. The conference wavered between, on the one hand, rallying the many lawyers in attendance into using the law to help the small island nations, and on the other hand, recognizing the limits of the law to provide that assistance.

Diplomats from small islands also issued their own rallying cries. RMI Ambassador Phillip Muller, said the fact his government had to organize this conference was nothing to celebrate because it highlighted the failure of the international community to address climate change urgently. Yet he also was buoyed by the media and academic attention, and hopeful that there was still time to save his tiny low-lying country. RMI Minister of Foreign Affairs John Silk said the conference represented his country’s first steps to finding solutions to difficult problems rather than acting as “passive or silent victims. “We, the Marshallese and all nations and people at the front lines of vulnerability,” he said, “should be more actively defining our future in all eventualities instead of letting others write it for us.”

This is the first in a series of posts on the conference at Columbia University, “Threatened Island Nations: Legal Implications of Rising Seas and a Changing Climate”. In upcoming posts, I will explore in greater detail the issues of statelessness, marine rights, ocean acidification, and migration and resettlement.

Canada's Parliament (Image: Chris Fane)

You would be forgiven if you looked at a map of Canada’s May 2 election results and did not see much evidence of Canada’s multi-party system, modelled on the United Kingdom’s Westminster style of government. The results from the election – the country’s fourth federal election in seven years – are historic on a number of counts.

The Conservative Party, on the right, has won a third consecutive term, this time achieving its long-sought majority (there are 308 Members of Paliament in Canada, and 155 seats are needed to form a majority government). The New Democratic Party (NDP), on the left, has, with record gains, become the official opposition party for the first time. The Green Party won its first-ever seat for a Member of Parliament. And two parties were trounced: the Bloc Quebecois, Quebec’s sovereignist party, went from 47 seats in that province to an unprecedented four, and the Liberal Party, once considered Canada’s “natural governing party” – so called because of its historical success in the center – dropped to an ignoble third place for the first time, with leader Michael Ignatieff losing his seat (he resigned on May 4). The Bloc’s leader, Gilles Duceppe, also lost his seat and resigned.

Essentially, this election has shifted Canada’s balance of power from seats shared between four parties across the political spectrum to a national map that bears resemblance to a two-party system, with significant representation on the left and on the right, as well as a gap in the middle. It’s a decisive change, whether or not it indicates a permanent shift in Canada’s politics.

So what does this all mean for Canada’s climate change and related environmental policies? Now that the leader of the Conservatives, Stephen Harper, has a majority, he can move forward with his policy vision without needing the support of other parties to stay in power, as is generally the case with Canadian minority governments. He also has at least a four-year time frame before the next election is called and he has to face voters again, rather than the shorter time period between elections that a minority government generally faces.

This is likely to mean that the Conservatives will continue their past negative record on climate change unabated. For example, rather than take a leadership role, Harper has been determined to wait for, and integrate with, American policies such as emissions targets and a cap-and-trade system – but since the bill died in the U.S. Senate last year, this means that there is currently no action to take. While integration makes sense, critics point out that Canada has unique concerns that must be addressed, and that integration would not be enough.

In addition, the Conservatives have touted significant investments in carbon capture and storage, despite it being considered a largely untested and sometimes controversial technology. And Harper has been an advocate of the Copenhagen Accord, which was delivered in Denmark in 2009 to criticism that it falls short of what is needed on climate change. If that support were accompanied by more action on emissions, it could be seen as a positive step, but his record of defending the oil sands rather than pushing harder to limit emission levels and environmental damage in Alberta shows that his views on the Accord have been, so far, less about action than they are about political positioning.

If the fact that climate change barely received mention in April’s election campaign (despite an Environment Canada report criticizing Harper’s record) is any indication, its future looks grim.

Yet there are a few possible bright spots. First, the NDP Party is a long proponent of environmental initiatives and lists climate change as fourth in a series of “practical first steps.” As the new official opposition, the party’s voice will be brought into the spotlight more so than it ever has before – and its leader, Jack Layton, is likely to oppose Harper on environmental issues. Layton is responsible for drafting the Climate Change Accountability Act, which passed the House before it was defeated by Conservatives in the Senate. Even though the bill may have been flawed, it was shut down without any debate, to public outcry. That Act is a key part of the NDP’s climate change policy, which also includes plans for renewable energy and public transit. While the opposition has no power to stop the majority government from enacting what it wishes, and can only play a critic role over the next four years, it is in the position – if it overcomes the challenges of a suddenly large and inexperienced caucus – to tap into public sentiment that might have greater effect in the coming election. This is new territory for the NDP and it remains to be seen whether they can pull it off, but some believe it has a golden opportunity to work for wide support of progressive government over the next few years.

Second, the election of Green Party’s first MP, Elizabeth May, the party’s leader and a former executive director of the Sierra Club of Canada with a strong record of environmental achievement, means that the House will have a stronger environmental voice. Climate change is a significant component of its “Vision Green,” which emphasizes that Canada needs to lead in climate negotiations and reach the ultimate goal of becoming carbon neutral. Although May is only one of 308 MPs, she is an outspoken critic of Harper’s record, and her policies will gain wider exposure now that she has a seat.

Third, pundits point to the possibility – if not immediately, than closer to the next election – that Harper will become more conciliatory than in the past and move the Conservative Party closer to the ideological center to attract and retain a broader base. (The same is said of the NDP, which would need to become a more moderate voice of the left.)  Harper’s willingness to set up an oil sands review panel last fall, and his subsequent agreement to monitor them more closely, can be seen in this light.

It is not clear whether climate change would be part of this shift or not, if change happens at all. Instead, it is more likely to affect policies on the economy, taxes and crime, a few of the Conservative priorities. On election night, Harper said he would remain true to those priorities, adding that Canadians are not interested in surprises.

If those words are any measure, we can expect what Harper has already promised or proven in the Conservatives’ 2011 Platform. This platform does include some realistic and welcome efforts on energy efficiency, clean energy research and development, and the creation of several new national parks. However, we can also expect his continued support of Canada’s oil and gas sectors, including the oil sands, as well as increased development in the Arctic that is not always aligned with Aboriginal knowledge or priorities, and which has its own emissions implications. In other words, it is likely that over the next few years, there will be a mixed overall picture and a Conservative government that moves ahead on these interests, with a less than optimal push on emissions.

Source: eschipul (Flickr)

The disappointment of Copenhagen, hardly eased by Cancun, has prompted the question: ‘Now what?’ One possible answer lies in The Hartwell Paper: A new direction for climate policy after the crash of 2009, jointly written by a group of academics in February 2010.

The recommendations of The Hartwell Paper emerge from the revision of some basic climate concepts.

Firstly, the authors resist the conception of climate change as One Big Problem. The conception that they prefer is of climate change as ‘a persistent condition that … can only be partially managed more—or less—well.’

Secondly, the authors resist the notion that climate change demands One Big Solution—namely, the reduction of carbon emissions through a globally binding agreement. Not only does this conception overlook the peculiarities of other greenhouse gases, they argue, it also treats issues such as clean energy, environmental protection and developmental justice as only incidental benefits, goods that hitch a ride on a ratified treaty.

The authors invert this conception, putting these ‘subsidiary’ issues at the forefront of climate policy. Here, the reduction of carbon emissions is regarded, rather, as a happy upshot of winning more manageable battles—specifically, adequate energy provision, sustainable development, and the mitigation of risks associated with climate change. Importantly, this strategy reflects a sensitivity to the political—to the short-sighted nature of democratic will and the practical importance of real-world progress.

The Hartwell Paper intends to provide a comprehensive alternative to the top-down models of Kyoto model and the cap-and-trade schemes (although for some doubts, read here). One attraction of the Hartwell approach, however, is that it can be implemented in parallel to large-scale negotiations. While diplomats strive for the king hit of a globally binding agreement, governments, councils, businesses and citizens could work simultaneously on a patchwork of more modest, more tangible issues, all of which contribute indirectly to the reduction of greenhouse gas emissions.

So, how might this approach apply to the New Zealand context?

As it stands, New Zealand already has a top-down strategy in place, its Emissions Trading Scheme (ETS). Given political inertia, this won’t be upturned any time soon, in spite of the ETS’s questionable effectiveness, so any new strategy will have to occur alongside existing policy. To some extent, however, the sorts of initiatives The Hartwell Paper approves of are already on the national agenda—either as current initiatives or ongoing ambitions.

Take, for instance, the country’s air quality strategy. This has encouraged a shift from open fires to log burners in domestic homes, and limited particulate emissions from industry and transport. While principally driven by local health concerns, the net effect is to reduce emissions of soot or black carbon, an emission thought to have about 600 times the warming effects per equivalent ton of carbon.

Similarly, insulation schemes have been in place since 1996. The current Heat Smart scheme plans to retrofit 188,500 poorly insulated homes throughout the four years since 2009. The policy is justified by appeals to health and reduced electricity costs, yet the consequent increase in energy efficiency could reduce the demand for electricity—Jevon’s paradox notwithstanding—about one-third of which is produced by non-renewable resources.

A salient topic yet to be resolved is water quality. New Zealand’s dairying boom has accelerated the degradation of waterways, particularly due to the run-off of nitrates, an issue that jars with the nation’s recreational and environmental values. Any success in addressing this problem—through nitrate inhibitors, new breeds of grass, revegetated waterway edges, or land use limitations—could reduce agricultural emissions of nitrous oxide which account for one-sixth of New Zealand’s total emissions.

Finally, The Hartwell Paper recommends public investment into research and development of clean energy technologies. New Zealand politicians have long paid lip service to technology and innovation, although to little consequence, the nation’s R&D investment being about half the OECD average. The much-touted ‘knowledge wave’ is a ride New Zealand is still to catch, despite its natural advantage as a top performer in education. The centre-right National Government has recently reiterated its desire for innovation and technology to drive the economic recovery; investment into clean energy R&D could satisfy this goal as well as fulfilling environmental obligations.

Which leads to one final strength of the Hartwell approach: its hospitality to a range of political ideologies. In New Zealand, where major parties agree on the existence of the problem, less so the appropriate response, it is important that climate politics are not ideologically exclusive. A singular top-down response, heavily reliant on state intervention, grates upon certain political mentalities, irrespective of their stance on climate science. In a worst case scenario, discontent with policy style can explode into outright denial of the problem—as appears to have occurred in the United States. A decentralized approach enables political parties to advance environmental goals in a way that is ideologically appropriate, pursuing policies and objectives that are near and dear to the hearts of their electorate.

So, for those disappointed with the grand plans of Kyoto and cap-and-trade, it might just be fruitful to divert one’s energies into more oblique strategies—both those mentioned and those yet to be put forward. The major question left begging is this: Can such small steps ever add up to a great leap forward?

UK’s Energy Minister, Chris Hulme, joins Ministers from over 190 countries today in Cancun, one of Mexico’s liveliest City’s to discuss ways to minimise climate change.

In efforts to prevent global warming of up to 2 degrees Celsius, Chris Hulme and his ministerial counterparts from around the world will put forward new ideas, policies and funding to achieve these goals.

Although the talks in Cancun will demonstrate a move forwards in agreeing that this is a global problem and action is required from all member states, it is unclear at this time as to what each country will bring to the talks.

A legally binding deal, a mitigation funding package and a clear and fair policy to allocating finance is perhaps what most of us sitting on the outskirts of the talks would expect to achieve.  But sceptics of how much progress can be achieved in Cancun may be settled with progress towards achieving such targets. 

Last year, the UK government under leadership of Gordon Brown pledged £1.5 billion to help countries adapt to Climate Change, use clean technology and protect forests.  This funding was requested to be new monies (90%), and not from existing commitments from the ODA Overseas Development Aid committed funds.

The UK has recently moved from a labour government to a Conservative – Liberal coalition government, of which the new ‘Green Deal’ and its financing for the UK to achieve its Climate change goals still remains relatively unclear.  It is therefore difficult to ascertain the UK’s stance in the talks in Cancun and how much finance as a country, the UK can ‘afford’ to allocate to global mitigation packages.

In terms of setting expectations from the UK camp of the Cancun talks, it will be interesting to watch out the following during the talks:

• If the financial commitments from Chris Hulme, new UK Energy representative exceed the former government commitment of £1.5 billion in December 2009; and that any new financial commitments are from new and not existing commitments (such as from the ODA).
• If the current EU bailout packages (under negotiation) for Ireland and possibly Portugal will affect EU country financial commitments to the global mitigation fund
• If a mechanism for issuing global climate mitigation funding is allocated on a fair and robust system (not just based on GDP i.e. a countries wealth) and that a strategy is agreed in terms of how the funding will be best used for maximum gain.

What we do know is that EU financial tensions are mounting, as the Finance Minister for the Republic of Ireland is currently agreeing the terms of an EU bailout package worth approximately £85 billion.  Ireland is not alone.  With mounting pressures facing the Portuguese government to accept a bailout package due to the poor performance of the Euro and subsequent stock markets during the past two months, how can the EU afford to fund a new Climate fund?

The public do not accept the ideology of some climate campaigners, and hence unconsciously reject the science of climate change

The more green groups ask us to “stop flying,” the less the public believes in man-made climate change. Niel Bowerman argues there is a link.

Today is the anniversary of “climategate”. It has damaged the credibility of the IPCC, and climate science in general, and yet scientists could not be clearer that the warming observed over the past century is largely man-made.  Is it time to ask why so many people dispute a scientific theory that the vast majority of climate scientists agree with?

Could it be that some of the public’s distrust of climate science comes not from qualms with methodologies for constructing temperature records, but rather from scepticism of the ideologies of the green groups that use climate science to reinforce their campaigns?

The UK’s recent prime-time Channel 4 documentary ‘What the Green Movement Got Wrong’ was criticised by many environmental groups, not least because it contained several inaccuracies.

Many greens rightly charged the documentary with being ideologically driven, while the documentary claimed “that by clinging to an ideology formed more than 40 years ago, the traditional green lobby has failed in its aims and is ultimately harming its own environmental cause.”  As with most debates, both arguments do contain an element of truth.

The documentary struck a chord with much of the public, who are sick of a bossy, lecturing, elitist and sometimes excessively ideological environmental movement.  Unfortunately this is likely to be one of the reasons for the drop in public belief in climate change. When green groups demand that people ‘stop flying now’ instead of also working to promote viable alternatives, the public begins to reject the science of climate change outright.

If we are to tackle climate change before it is too late, the climate movement must rapidly evolve from being seen as a lefty group taking part in self-deprivation.  Green groups must become part of a larger movement for positive change that spans political boundaries and seeks to inspire and empower, not just criticise and condemn.

Younger groups are already beginning to adopt this new approach.  Ben West, Communications Coordinator at the UK Youth Climate Coalition, said: “Many of us as young people, are excited about renewing the movement and in the possibility of creating something fit and ready to overcome the big challenges of the coming decades, rather than being stuck fighting the battles and stereotypes of our parent’s generation.”

Perhaps the American climate scientists who created their ‘rapid response unit’ would have more luck convincing the public on the science if they could persuade environmental groups to say, “We’re sorry if we sometimes lecture or sound bossy, that wasn’t our intention.  We’re just trying to create green jobs, ensure energy security, and build a clean energy future; would you like to help?”

Niel Bowerman is a research climate scientist at Oxford University, and a former executive director of Climatico.

© Shankar Narayan

Article By Guest Contributor:  Adalberto Maluf

Brazilian Greenhouse Gas (GHG) emissions are estimated to have dropped by 33% between 2005 and 2009 after having increased by 60% between 1990 and 2005.

Brazil’s second national communication to the UNFCCC, recently released by the Ministry of Science and Technology, shows that the country’s emissions have grown consistently from 1.4 to 2.2 Gigatones of CO2 eq/ year between 1990 and 2005, placing Brazil among the world’s top ten emitters.

According to the new inventory (based on 2005 data) Brazilian emissions from deforestation still represent the greatest share of emissions, 61% of the total, followed by 19% from agriculture, 15% from the use of energy, 3% from industrial processes (led by cement industry) and only 2% from waste management.

However, there are also good news: new estimates claim Brazil reduced its CO2 emissions by 33% between 2004 and 2009 compared to a business as usual scenario (BAU), a direct result of the reduction in deforestation of the Amazon Forest (70% reduction) and the increase of biofuels, especially ethanol from sugarcane, used by the growing flex fuel car fleet.

With these results, president Lula can go to Cancún confidently knowing that the voluntary proposal under the Copenhagen agreement to reduce the Brazilian carbon footprint by 36% to 39% by 2020 compared to the BAU scenario is feasible : “We are going to Cancún with our heads held high , because we already have concrete results to show”, said President Lula on the release of the National Report.

Celso Amorim, Brazilian Minister for Foreign Affairs, was quoted that his expectations for Cancún are still very low regarding the ability of some developed countries to deliver better proposals than were offered in Copenhagen. “It won’t be an easy task”. With these new results showing that Brazil is able to reduce its carbon footprint despite consistent economic growth in recent years, the Brazilian government wants to join the group of key countries that will be crucial for a final deal.

The UK’s Chancellor of the Exchequer, George Osbourne, led the announcement of the Comprehensive Spending Review last week, introducing what’s expected to be one of the most challenging economic periods in the history of the UK. Whilst spending cuts were inevitable from any Government, Ed Milliband, Leader of the Opposition, claims that the Coalition’s Government’s ‘slash and burn’ approach will hit those on the lowest incomes hardest, and risk the prospect of a double-dip recession in the UK.

With significant cuts announced across the board, the prospects for proactively transitioning towards a low carbon economy seem lost in the ashes, along with the Coalition’s claims to be the “greenest Government ever”. The Department for Environment, Food and Rural Affairs was the hardest hit Government department, an will be expected to reduce resource spending by 29% (including funding for biodiversity protection and climate change adaptation) and capital spending by 34%. Rises in public transport fees are also expected, but the Department of Transport has deferred these until next year. On the other hand, the Department for International Development (DfID) will see a 50% increase by 2015, making the UK the first major nation to spend 0.7% of GDP on international aid, as recommended by the UN – a controversial move in light of the major cuts in jobs and services across the UK.

The Department of Energy & Climate Change (DECC) suffered a number of changes, including:

1. Most controversial, was the Government’s U-turn on the Carbon Reduction Commitment energy efficiency scheme (CRC). The CRC requires small and medium emitters to buy permits to cover their energy emissions, with proceeds handed back to those who cut the most carbon, and penalising those who cut the least. However, the Comprehensive Spending Review shocked participants by announcing that all revenue raised from the emissions trading scheme (£1bn/year), which began earlier this year, will be used to support the public finances, instead of being recycled back to participants.

Steve Radley, director of policy at manufacturer’s group EEF, said: “If the private sector is going to play a greater role in increasing investment and growth it needs clarity. By changing the rules six months after the game has started and landing business with an unsignalled £1bn tax rise, the government has sent an unwelcome signal.”

Business and investment communities have been rallying Government for clarity on carbon policy, and this last minute ‘change of the rules’ is not expected to instill any confidence in the UK renewables market. Many participants also felt that the Government’s decision has punished the preparedness of hundreds of participants, which had already signed up to a number of initiatives, including the Carbon Trust Standard certification and others. Whilst the reputational advantages of performing well in the CRC are still expected to incentivise emissions reduction, the decoupling of the financial gain from recycled revenues has completely altered the investment equation. The pay back period and economics of existing investments will no-doubt be delayed, or even eliminated.

Climate Minister Greg Barker, said the decision had not been taken lightly, but was as a result of the “catastrophic” deficit inherited from the Labour government.

The Government now expects to raise around £3.5B (US$5.5B) over the next four fiscal years from the scheme in a move that means the CRC will effectively act as a carbon tax mechanism. Participants must reevaluate their financial budgets, to collectively raise to £1m each year to meet the Treasury’s estimation of £1bn/year (an implied price of £15/tonne of carbon).

Whilst these changes will simplify the incredibly complex scheme, designed to cut carbon, it has left participants, including the NHS and other businesses facing additional budget cuts, reeling with the potential implications. Whilst it is good news for the environment, it calls into question the equity of taxing small to medium GHG emitters, as the largest emitters, such as power stations, evade their carbon costs through the weak carbon price signals set by the EU ETS. The cap in the EU ETS remains ineffectually low as a result of the recession, and participants frequently make large windfall profits from the sell their share of surplus emissions allowances on the carbon market, over-allocated to them by the European Commission. Furthermore, weak political commitment for emissions reduction in the EU ensures that the carbon price remains low.

2. Osbourne announced a meagre £1bn for the proposed Green Investment Bank, which is expected to offer funding for investment in low carbon projects and industry development. Ongoing debate suggest that the bank will need a minimum of between £2-6bn to yield the investment power appropriate for the development of new energy infrastructure, to support the achievement of the UK’s CO2 targets.

Chris Huhne, Climate Secretary, has suggested that further funds may come in the form of the potential sale of the Government’s one-third stake in Urenco, the company, which makes enriched uranium for nuclear power. The previous Government’s attempt to sell its stake in Urenco as blocked by shareholders, raising questions over how long fundraising from the sale of assets could potentially take.

The final design of the ‘bank is still unclear, and there is much speculation about whether it will be a ‘real’ bank – independent and able to raise bonds etc – or simply a Government funding pot.

3. The Government’s commitment to the programme for the commercialisation of Carbon Capture & Storage has been reduced from the construction of four demonstration plants, to just a single one. However, the announcements confirmed that there is “up to” £1bn of public funds on the table for the first. DECC will have a challenge on its hands in restoring confidence as uncertainty around the policy environment and economics of the CCS projects has led to the withdrawal of all but one of the companies bidding for the Government funds, with E.ON pulling out last week.

Building and running four till 2015 would have cost about £10bn but the government still has the power – voted in with cross-party agreement – to charge a levy on consumer power bills to pay for the CCS demonstration. Watch this space.

4. DECC’s central budget is cut by 20%, though capital expenditure will increase by 28% by 2014-15 – most likely on nuclear decommissioning, carbon capture and storage and the renewable heat incentive for green home heating.

The state of the deficit has delivered a huge blow to the economics of the UK’s ambitions to transition to a low carbon economy. The introduction of a ‘carbon tax’ in the guise of the CRC, will mark a challenging time for the economy, as they struggle to internalise the carbon costs of their operations. The fact that revenues raised will not even feed into the Green Investment Bank signifies a significant lost opportunity, threatening risks to the economic sustainability of the UK economy.

Ed Milliband narrowly defeated his older brother David Milliband for the Labour Party’s leadership on Saturday, boosting the prospects of the environment taking priority at the forefront of UK policy making. During his last 18-month tenure as Minister for Energy & Climate Change, Ed Milliband boasts an impressive track record for progressing environmental policy within the previous Labour government. Notable developments include:

1. Passing the Climate Change Act – Considered to be Labour’s biggest environmental success, the CCA made the UK the first nation in the world to legislate for emissions reductions. Whilst David Milliband and others helped to drum up support for the legislation inside the party, Ed has been praised with strengthening the Act to deliver robust targets and ambitious goals.
2. Ed manoeuvred around existing party policy for the introduction of Feed-in tariffs, modelled on other European schemes, which offer long-term, guaranteed payments for every kw of renewable energy generated. This has successfully incentivised homes, communities and businesses to invest in small-scale renewable energy systems, boosting the UK’s renewable energy generation.
3. Ed also ensured that under his tenure, no further coal-fired power stations would be built without mechanisms to capture and store the CO₂ they produced.
4. The third runway at Heathrow, which deliver significant increases in the UK’s CO₂ emissions, was also opposed by Ed, but he ultimately lost this battle, as Labour became one of the only parties to support the idea.

Concerns have been mounting recently over fears that the Coalition Government could hinder progress for the development of a low carbon economy, potentially through cuts to the feed-in tariff rates, in addition to the previously announced closure of valuable quangos such as the Sustainable Development Commission (and possibly even the Carbon Trust – currently under review).  This bestows a golden opportunity on Ed Milliband  - to take the throne for the ‘Greenest party’. Milliband’s election as leader of the labour Party has bolstered the hopes of many environmental stakeholders, indeed many of whom Milliband will have previously worked with.

Milliband could do far worse than increasing investment and support for renewable energy and energy efficiency measures across the UK, providing thousands of new green jobs, business opportunities and spurring prospects for economic growth and recovery, reducing reliance and imports of fossil fuels and positioning the UK as a global leader in the global race for a low carbon economy.

However, despite his extensive understanding and background in the climate change agenda, a significant opportunity to reorder the party’s priorities was already lost at the Labour Party Conference last week. Whilst the agenda emphasised issues such as the economy and immigration, energy and climate change was nowhere to be seen. It seems Ed Milliband’s first challenge will be to unite his party, and deliver the optimism, passion, revolution, and youth he so emphasised in his leadership speech.