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Newsletter 14th September 2007

- Politics and the environment - Biofuels and food

Politics and the environment

The Conservative Party, as part of its repositioning, has a number of study groups working on policy options. The latest to report is the Quality of Life group, led by ex-Environment Secretary John Gummer and including Zac Goldsmith, son of the late Sir James, nephew of Teddy, editor of the Ecologist and now aspiring Conservative MP. It is clear that the Tories are big on the environment: this is more that David Cameron riding his bike or a dog-sled. The two big questions are which party is going to set the green agenda with workable policies which voters approve of and, if it is the Tories, will this open up structural rifts between the different wings of the party?

The headlines from the report are unsurprising. A lot of focus is on transport, and there are suggestions here for discouraging short-haul flying and cars with high fuel consumption. Two of the other ideas which, if adopted, could prove disastrous at the polls are to stop free parking at out-of-town supermarkets, and ban the sale of energy inefficient electrical appliances.

The first would affect the great majority of voters, and do little to encourage them into crowded town centres, where they would presumably need to use public transport. Neither John Gummer nor Zac Goldsmith has probably had to wait for and struggle on and off expensive and inconvenient buses with heavy bags of shopping. This would not be a popular move with the majority of people and would do little to regenerate town centres, if this is the  aim.

The second – the banning of plasma screen televisions and other items designated as unacceptably power-hungry – seems an unwarranted intervention into commercial and personal freedom. It is also likely to be very ineffectual, with any savings in energy more than offset by owners of LCD-screen models leaving the lights on or the thermostat set too high. Again, unlikely to be popular. Most voters are not keen on governments telling them what they can or cannot buy.

Which brings us back to transport. Putting VAT on domestic flights and discouraging the flights themselves would, in the policy group’s view, make new runways in the South East unnecessary, allowing a moratorium on further airport expansion. A similar moratorium on road building is also suggested, with everyone willingly flocking back on to the railways, which would be improved.

Are these people living in the real world? Do they know that large numbers of travellers have already gone back to using trains, but only if they can book affordable fares and travel outside peak times. This makes trains increasingly (over)crowded or, to put a more positive spin on the situation, the load factor is increased, making this an even more efficient form of transport. And at peak times, trains are still crowded; it’s just that business people are paying more for the privilege. The UK has some of the most expensive rail travel anywhere, but rising prices seem to have done little to reduce passenger numbers.

Taking a domestic flight from Heathrow to Manchester is already not a very pleasant experience but enough people choose to do it for there to be 30 flights a day. Putting the cost up by 17.5% is unlikely to persuade many of them that they really should take the train instead. It is simply pie in the sky to suggest that people can be forced to take whatever form of transport is deemed to be most socially acceptable.

The other headline policy which probably has more chance of acceptance (and remember, these are only policy group proposals; how many of them make it into an election manifesto is anyone’s guess) is a “showroom tax” designed to reduce the price of energy efficient cars while taxing gas-guzzlers more heavily. This does not interfere with an individual’s choice too much, but encourages more energy-efficient choices. In this sense, it is merely a potentially more effective step along the road already taken with car licences.

Of course, the simplest route to take if the goal is energy efficiency – and few people would argue with that, whether or not they believe it will have any effect on the climate – would be an increased energy tax. More likely, given the current obsession with carbon as the root of all evil, it would take the form of a carbon tax, thus not hitting nuclear or renewable power sources. This has the benefit of simplicity, without having to invoke more complex cap and trade systems, renewables obligations, carbon offsets and all the rest of the complex policy framework which has grown up.

The problem, however, is that consumption taxes of this sort will be regressive – rich people may consume more and therefore pay more tax, but the poor pay more as a percentage. Anything which increases inequality is surely not good for society. Meanwhile, as politicians grapple with the problem of how to reconcile the urgings of the green lobby with the aspirations of voters, scientific evidence on climate trends and their causes will continue to build. Let us hope that, by the time any serious policies are implemented, we will have more than circumstantial evidence that carbon dioxide is indeed the culprit.

Biofuels and food

In terms of unintended consequences, the current enthusiasm for biofuels by many governments takes some beating. From being an almost unambiguous good idea a couple of years ago, bio-ethanol and bio-diesel are now blamed for anything from loss of orang-utan habitat to the high price of tortillas in Mexico. Even the Italians yesterday had a symbolic pasta-free day to protest against price rises.

The OECD has now weighed in with a report, which casts doubt on the EU’s ability to meet its target of 10% of transport fuel being plant-derived by 2020. According to the report’s authors “The current push to expand the use of biofuels is creating unsustainable tensions that will disrupt markets without generating significant environmental benefits”. They claim that encouragement of the market via subsidies will have more negative effects of the sort we are now seeing and that the target is simply impossible without unacceptable environmental trade-offs. Since the EU target is predicated on it being achievable “sustainably” this provides a let-out for the goal to be dropped and join the pile of ambitious but failed European initiatives.

Not that this is the end of the story, or course. Converting food crops to fuel may make little sense, but harvesting the waste straw or other biomass and using that is eminently sensible. All we need now is an economic way to achieve this. With oil prices now at $80 a barrel and rising, this goal may not be too far away.