The Committee on Climate Change released its latest report today highlighting the devastating impact the economic recession has had on carbon trading schemes and investment for low carbon technologies. The report emphasises the vast investment needed in efficiency through green housing, power and transport in Britain, to service the goal of meeting the commitments in the Climate Change Act.

The Committee has called for ‘dramatic improvements’ in efficiencies across the economy, suggesting that more ‘forceful’ policies may be required to increase annual cuts in emissions by four-fold.

The Committee also recommends

- The introduction of 1.7m electric cars, with 3.9m drivers trained in fuel-efficient techniques, by 2020

- Building 8,000 new wind turbines, alongside four new coal power stations fitted with carbon capture technology and three new nuclear power plants, to slash emissions from the power sector by 50% by 2020.

The Government’s largest proposed clean coal plant to be fitted with CCS was shelved by E.ON last week, also reportedly as a result of the recession. However, the announced delay in the Kingsnorth project, which had become the focus of protests against climate change, heavily targeted by climate camp activists and the media; leaves politicians wondering how they might fill the expected energy supply gap in 2016.

The recession has also had a significant impact on the world’s emissions trading schemes – expected to be pivotal in driving market signals for low carbon investment. The drop in energy consumption, which led to the shelving of the Kingsnorth project in the UK, has also led to a drop in emissions in Europe, resulting in a surplus of carbon credits in the EU ETS. It is feared that this might result in a carbon price of just €20 a tonne in 2020, rather than the €50 a tonne used for its previous analysis.

The Committee has suggested that options to strengthen the carbon price, including the government underwriting a minimum price or intervening in the electricity market, should be “seriously considered”. On Friday, a report from Ofgem suggesting domestic energy bills could rise 14-60% by 2020 was seen by energy industry experts as an acceptance that the market-driven system has failed and the government needs to be more interventionist.

So the recession has played its role in dampening the prospects of the low carbon investment opportunities, and strong leadership will be essential to deliver the ‘radical’ and ‘dramatic’ improvements that the Committee has demanded. With Ed Milliband’s small budget, and uncertainties over changes in government next year, the UK needs to dig deep to create green opportunities that rescue the nation from the dire straits, courtesy of the economic recession.

Sigmar Gabriel, minister for the environment and former prime minister of lower Saxony, welcomed the second ‘Konjunkturpaket’ (stimulus package), as a chance for both job creation and the environment. Public investment would be subject to environmental guidelines, while changing car taxation to a CO² basis and paying car owners to get rid of old cars (or, rather, for buying new ones), would be a big step towards a more environmentally friendly fleet of cars. Two days after saying this (and after the package was passed), his ministry published a report showing that German companies were holding a large sharge of business in fast-growing environmental technology markets, and had already created 1,8 million ‘Umweltjobs’ (green jobs) in Germany.

Yet, while the growth of companies and jobs in green technologies is certainly encouraging, with regards to the stimulus package’s environmental impact, the reactions of commentators and interested parties was telling. The automotive and construction industries were positive to enthusiastic about the car tax holiday and the bonus to buy new cars. Environmenalists were not. A newspaper commentary reminded readers that Angela Merkel, in 1995 still as minister for the environment, had strongly opposed the idea of a bonus to buyers of new cars, and called the measure ‘ready for the scrap heap’. DHU and VCD, a environmental NGO and a left-leaning motring association, pointed out that most emissions are created when a car is manufactured, and that the bonus only creates an incentive when the value of an old car is below 2500€, this mainly being the case for cars which (because they are small) don’t emit most emissions anyway. Worse, they provide a model calculation showing that under the new car tax proposals (even though they will be based on CO² emissions), the most polluting cars will actually pay a lot less than before.

Those arguing that the measures aimed at the car industry are in fact only a small part of the stimulus package are right, but there is scant evidence of environmental measures elsewhere in it. While spending on infrastructure (such as modernising schools) will a positive impact on energy efficiency, this is accidental rather than reflecting conscious design. The same holds true for much of the package. Even if the car stimuli have (which seems doubtful) a positive environmental impact, they are designed to shore up manufacturing jobs. And the draught of measures stimulating those green industries that have already created 1,8 million jobs in Germany is disappointing, but also suggests that in a time of crisis, most German politics are scared to believe their own rhetoric.