The Green Transition: 2024 – What lies ahead?
Weekly analysis of the shift towards a new economy.
Dear Readers,
A very belated Happy New Year from the Spotlight on Policy team. We hope you had a good Christmas break. As ever, you can find our policy coverage on our section of the New Statesman website.
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For the opening edition of 2024, we’re taking a look at what the year ahead brings. Let’s get right into it.
2024: Onwards and upwards?
Laissez-faire is out and intervention is in. The era of small government is over, as Bill Clinton once didn’t say. Yes, ICYMI: big government is back, baby.
Big green investment packages are being used as a weapon in the war against a quadruple set of conundrums plaguing many advanced economies: slow growth; geographic inequalities; climate change; and, for some countries more than others, an over-reliance on fossil fuel imports from despotic foreign regimes.
2023 saw the green agenda increasingly framed as a way of creating jobs and reducing our dependence on oil and gas from increasingly belligerent parts of the world, rather than as a mission to save the polar bears or other worn-out tropes. That’s just the way that Keir Starmer wants it. Remember he was reported to have said he “hated tree-huggers”? He denied it, of course – but it spoke to a wider truth about net zero policy: the centre-left have embraced the transition, but on new, arguably far less fluffy, terms.
Biden purposefully called his game-changing green energy and manufacturing legislation the Inflation Reduction Act (IRA) and talked up its job-creating measures. He didn’t call it the Save the Planet Act and focus on emissions reduction and ice caps. In a similar vein, the Labour leader wants the green agenda to be seen as a bit less Extinction Rebellion, and a bit more national renewal; a bit less Just Stop Oil flinging paint at a Van Gogh, and a bit more professionals in suits doing deals on grid upgrades.
Geopolitics is fragile. In a year in which a record-breaking number of countries is headed to the polls, populism simmers beneath the surface of liberal democracy. Nation-states are turning inwards and away from open, globalised markets. Policymakers need a route out of decline, and have decided it’s best not to associate themselves, in the minds of voters, with the often deeply unpopular direct action protestor wing of the green movement (even though green policies themselves tend to poll relatively well).
2024 is a big election year. More people will go to the polls in the next twelve months than ever before in human history. The world’s largest energy producer, Russia, will decide whether to re-elect Vladimir Putin, in what is likely to be a closely fought and totally free and fair process (ahem!). Slightly more competitively, Narendra Modi will seek re-election in India, the world’s most populous democracy. The Hindutva nationalist is presiding over a steady slide away from liberal-democratic values and inflaming ethnic tensions against Muslim minorities. When Western countries stopped purchasing Russian oil and gas following the invasion of Ukraine, India stepped up its imports. But Modi will probably cruise to victory. The country is undergoing a rapid economic transformation, with its industrial base and service industries expanding as quickly as its carbon emissions, but its per capita output remains low. Modi, for his part, has been open to investment in renewables, but cheap fossil fuels still, of course, make up the lion’s share of India’s energy needs.
We’ll likely see an election here in Blighty, too. Labour is carrying on with their dithering “expectation management” over the £28bn green prosperity plan. The Manchester mayor, Andy Burnham, last week urged the party leadership to “stick by its guns” over the policy, while Shadow Chancellor Rachel Reeves and Keir Starmer have continued to emphasise the fact that the figure is actually only £20bn in new spending, and that lowering the national debt as a proportion of GDP will take precedence over investment.
If you’re not addicted to Twitter/X, you might have missed this great mini-beef that started off the back of a Guardian article, between the Chancellor of the Exchequer, Jeremy Hunt, and the Institute for Public Policy Research’s (IPPR) Carsten Jung. One thinks the £28bn spending plans would be inflationary, the other doesn’t. No prizes for guessing which is which. Sky’s Ed Conway also had this very useful explainer for broadcast, which shows that, in the grand scheme of things, the £28bn isn’t all that much, and will barely shift the UK’s place in the OECD’s overall investment rankings, if implemented.
But arguably the most globally consequential election this year will take place in the US. Trump is ahead of Biden in more or less every opinion poll, and his green transition policy roughly equates to “drill, baby, drill” (n.b. this is what he actually says). The former president is also committed to re-exiting the Paris Climate Accords, ending IRA clauses on subsidies for electric vehicles and pollution limits, and getting rid of new regulations on energy efficiency for lightbulbs, gas ovens, and dishwashers.
The car manufacturers, Nissan and GM, have warned that the measures on electric vehicles would reverse progress on building domestic supply chains and re-shoring industries in new car and battery manufacturing (not a great look for a man presenting himself as a champion of the blue-collar worker).
And yet, should Trump win, there will be some continuity with the Biden administration: the Republican candidate (he still hasn’t clinched the official nomination, but his rivals trail wildly behind), is unlikely to undo all the vast, broad measures set out in the IRA. In his first term, Trump was no free-market ideologue, and will shy away from dismantling policies bringing jobs to the Rust Belt.
Indeed, Biden has maintained many of the tariffs Trump imposed when he was in the White House. In fact, following his victory in 2020, the octogenarian Democrat did not return to a Clintonian-style status quo ante, and restore the US’s position as a beacon of free trade, open markets, and limited government. His Infrastructure Investment and Jobs Act, and the Chips and Science Act, received bipartisan support in Congress. Bidenomics was conceived as a response to Trumpian populism, not as its opposite. The Democrats interpreted the 2016 election as a protest against a failed consensus, and promised what Biden has called a “fundamental break from the economic theory that has failed America’s middle class for decades now”. Between the two presidents, with their very different styles and demeanours, there may be more similarities than first appear. At the beginning of his term, Biden even granted more oil and gas licenses than his predecessor, while simultaneously pursuing the biggest expansion of green energy projects the US has ever seen.
In short, we’re in for an extremely consequential year. 2023 has been confirmed as the hottest on record. The results of the coming elections and the delicate balance of our chaotic, proliferating geopolitical crises will determine the future of the planet. We are cursed to live in interesting times – and the Green Transition commits to being with you every step of the way.
In Brief
Reeves-y come, Reeves-y go: The Shadow Chancellor, Rachel Reeves, sets out her views on “securonomics”, in a special edition of the IPPR’s Progressive Review. Plenty to sift through on her thinking on what she calls “the new economic mainstream”.
Unsure on offshore: Our policy correspondent Samir Jeraj speaks to oil and gas workers about the just transition, which apparently is about making sure ordinary workers’ aren’t paying the price in the switch to renewables. Turns out, they are.
The Industrial (strategy) Revolution: Ben Westerman of Henham Strategy has penned this excellent piece for us on the importance of adopting robust industrial policies for the twenty-first century. Did someone say Inflation Reduction Act?
Skills to pay the bills: Our regular Policy Ask feature, asking a series of regular quick-fire questions to a different policy professional each week, recently featured Mat Ilic, the founder of Greenworkx, an organisation promoting skills and training in green sectors of the economy. See here for more Policy Asks.
Labouring under false pretences: What questions does Labour still need to answer in 2024? We gathered a few experts to find out. Including, you guessed it, several mentions of the opposition’s rather slippery climate and green growth commitments.
What went right?: And in case you are feeling nostalgic, before 2023 ended we asked experts to look on the bright side and tell us what went right, in policy terms at least, last year.
See you next week.
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