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Newsletter 11th January 2007

- Europe's new energy policy - The business response to climate change - Admitting the truth about organic food - Shooting the messenger

Europe’s new energy policy
This week saw the publication of the European Union’s latest energy policy proposals. They covers a range of issues, including opening up the market to more competition, setting binding targets for the use of biofuels and, perhaps most importantly, assuring energy security. Many of the proposals are very sensible, in particular the encouragement of new nuclear generating capacity as an important part of the mix, and the move to dismantle the vertically integrated electricity generation and supply industry. However the topic of carbon reduction targets has inevitably received the greatest media attention.
 
The Commission has proposed that Europe sets a target of 30% reduction in carbon dioxide emissions by 2020 (from the 1990 baseline). By doing this, it aims to lead the world in a renewed push for decarbonisation. However, the 30% target only applies if the developed world agrees to abide by the same target. In the meantime, the EU would commit to a 20% unilateral reduction. This is a very significant step, particularly in light of the fact that the far less ambitious targets for 2012 seem unlikely to be met by any but a few member states.
 
So, how should this bold move be interpreted? Is it a realistic attempt to reinforce the role of the EU as the leader in effective climate change mitigation, or a last-ditch attempt to match words with action, doomed to failure? Only time will tell, but it remains highly unlikely that the rest of the developed world – even if the Americans elect a Democrat to the White House next time round – will commit to a 30% cut in emissions. And even achieving a 20% cut in the EU looks very doubtful. Already, major member states are complaining about Commission pressure on them to reduce their emission targets.
 
This renewed initiative highlights the divide between rhetoric and action. Politicians, officials, environmental groups and the scientific establishment have been talking up the dangers of a warming climate and the necessity of making swingeing cuts in emissions if the worst is to be avoided. On the other hand, despite the talk and a bit of tinkering round the edges (increased air passenger tax and a move to paying carbon offset charges for official travel in the UK, for example) there is little sign of politicians doing what they say has to be done. To an extent, this is because of the reality that any effective action has to take place on a global basis. Any country taking significant unilateral action will be cheered on by environmentalists as its competitiveness and economic growth take a nose-dive.
 
At some stage, this conflict will be resolved. Either there will be a general acceptance by society that Mankind’s actions are a major driver of warming and that appropriate action can mitigate this, or there will be a recognition that we cannot realistically control the climate, and we can move on to tackle other issues. What will we be saying about this in ten years’ time?
 
The business response to climate change
In the meantime, there have been two significant developments in the way business is responding to climate change policy. The first is the announcement by the CBI of a new task force. Director General Richard Lambert was interviewed on the Today programme on 11th January about his organisation’s setting up of a group of leading companies to “have a constructive and serious debate in addressing the big challenges”. The second is the participation by Exxon Mobil in talks with other US companies on the form future emissions reduction policies might take. At the same time, they have stopped funding the Competitive Enterprise Institute and a handful of other groups which have taken a prominent part in criticising the mainstream view on climate change.
 
At first sight, all this may seem surprising. Big business, after all, is held by many activists to be part of the problem, and not part of the solution. Exxon Mobil has become the epitome of this, mainly because it has stubbornly refused to indulge in the same greenwashing practised by others in the sector. So, does this represent a change of heart? Almost certainly not, but there has clearly been the realisation that a bad public image can also be bad for business. Questioning the received wisdom on climate change may be intellectually honest, but it does nothing for profits. The sensible thing, therefore, is to take a lower profile and let others take the flak.
 
In the case of UK companies, the calculation will have been similar. Seizing the initiative and being seen to take action on climate change will polish their public image and may well provide profitable business opportunities. But not everyone appears to have done the same calculation. Chrysler’s chief economist has apparently talked of “quasi-hysterical Europeans” (whatever that means) with a “Chicken Little” approach to climate change. He may have a legitimate point, but this is unlikely to do much for the business.
 
Admitting the truth about organic food
The environment minister, David Milliband, told the Sunday Times that buying organic food was a “lifestyle choice” and that there was no evidence it was better for you. In this he is fully in line with the Food Standards Agency. He rightly says that promotion of the 4% of produce which is organic as in some way superior to the 96% of “conventional” crops tends to downgrade the latter in the eyes of many consumers. This is unfortunate, as no-one wants to feel they are forced to eat something which is second best because they cannot afford the organic premium.
 
Of course, there has been predictable outrage from the organic lobby, who firmly believe in the superiority of their system and produce. But lifestyle choice is a pretty fair description. Eating organic makes a statement, both about your attitude to food and to the environment. There’s nothing wrong with that, and no-one (well, very few) would suggest there is any problem with organic produce per se. However, it is possible to produce good food by a whole range of management methods. It would be more honest of the Soil Association and others to admit this, while sticking to their particular beliefs, rather than implicitly downgrading the vast majority of non-organic fruit, vegetables, meat, milk and eggs which we all enjoy.
 
Shooting the messenger
Sense About Science, an organisation which shares our own desire to put factual evidence into the public domain and challenge some of the unsubstantiated factoids we see in the media, recently launched an initiative to encourage celebrities to check their facts with scientists before voicing opinions on topics of which they may have little understanding. Very sensible, you may think, as we are sure would most of the population.
 
But not Zac Goldsmith, at present the green guru of the Tory party. In a piece in the Mail on Sunday, he attacks Sense About Science not primarily for what they are saying (although their lack of concern about trace environmental chemicals clearly does not chime with his own beliefs) but because of the backgrounds of some of the key figures in the organisation. Unfortunately, for those with a weak case, trying to discredit the source often forms the mode of attack. This is precisely the sort of thing we object to most strongly. No-one is 100% right or wrong, and truth can be found anywhere if we have open minds. Whatever our beliefs, we should debate on the basis of facts, and accept that we may need to change our minds. We can only hope that David Cameron and his team base their policies on something more substantial than aspersions cast on people’s integrity.