The Green Transition: Ready for take off?
Weekly analysis of the shift towards a new economy.
Dear Readers,
Welcome to this week’s edition of the Green Transition from the New Statesman’s Spotlight on Policy team.
It’s becoming increasingly clear that we have entered a new world order. Keir Starmer’s meeting with Donald Trump over the weekend and the US president’s subsequent berating of the Ukrainian president, Volodymyr Zelensky, in front of a crowd of reporters in the Oval Office have since dominated the headlines. Overnight, the news broke that Trump has halted military aid to Ukraine, providing the latest shock incident in this increasingly turbulent story.
On the face of it, these volatile international relations don’t appear to bear much of a link to the green transition. But as Shaun Spiers, the executive director of Green Alliance pointed out in this piece, Starmer’s historic defence spending increase has also been accompanied by news that the remit of the National Wealth Fund (a £22bn fund initially meant to fund early-stage green projects in order to crowd in private investment) will be changed so it can be spent on defence.
The government has made it clear their top priority is growth; in the UK, the net zero economy is growing three times faster than the economy as a whole. It seems a strange decision then to divert some of the funding originally intended to fast-track that growth, for instance by de-risking early-stage green technologies such as hydrogen or carbon capture and storage, into a sector notorious for wasteful spending. It should also be noted that clean power is vital for national security. A big reason why British households and businesses were hit so hard by the energy crisis following the 2022 Russian invasion of Ukraine was our reliance on gas for heating and energy generation.
Clearly, Starmer is faced with a tricky set of circumstances. Support from the US in Europe can likely no longer be relied upon and it is the job of government to defend its people. But any diversion of funding must be accompanied by a clear efficiency drive by the Ministry of Defence.
Meanwhile, this week we have an interesting piece from Alethea Warrington, head of aviation, energy and heat at the climate charity Possible on why the government’s announcements around airport expansion may not have their intended effect on economic growth.
Let’s get to it.
Labour’s airport ambitions won’t chart a path to green growth
By Alethea Warrington
Following Rachel Reeves’s controversial announcement that the government plans to approve a third runway at Heathrow, last week Transport Secretary Heidi Alexander announced they are “minded to approve” an additional 100,000 flights at Gatwick. According to a calculation by the Aviation Environment Federation, this could add a million tonnes of emissions per year to the UK’s straining carbon budgets. Reeves, who once promised to be the country’s first “green chancellor”, is now encouraging unprecedented UK airport expansions.
The government claims this will promote economic growth, pointing to a paltry promise of around half a percentage rise in GDP by 2050 for the Heathrow expansion, which is itself taken from an aviation industry-commissioned projection. However, it’s clear that the economics of airport expansion simply don’t add up.
For airport expansion to actually deliver the growth that is claimed, the new flights must be predominantly business flights and inward tourism. Neither of these conditions will be stimulated by bigger airports. Business flights have flatlined for decades, as companies realise the cost and carbon savings of virtual meetings, and the UK is already running a £40bn tourism deficit, which increased aviation capacity will likely worsen.
The result of all recent aviation expansion has been to allow a small proportion of Brits who take most of the flights to take even more holidays overseas. This minority of frequent flyers taking even more of their money to other countries isn’t going to get the UK economy booming.
The timing of this announcement is especially ironic given that the government’s own climate experts published their seventh carbon budget last week (26 February). They have made one thing very clear. Aviation is, to put it mildly, a sticky problem. It will be the UK’s highest emitting sector by 2040, and low-carbon planes won’t be ready to contribute more than a few percent of emissions reductions from the sector until long after 2050.
The government is betting the future of Heathrow and Gatwick on technologies like alternative fuels and carbon removals which are currently in their very early phases. They have huge cost and resource implications and no current payment mechanism, yet the government optimistically assumes that they will be able to deliver on an unprecedentedly vast scale, extremely quickly and without pushing the price of flights up far beyond the reach of an ordinary family. This isn’t going to happen.
When it comes to decarbonising aviation on the timescale that matters for our climate, there’s only one solution that works: fewer flights. Thankfully, constraining demand to bring emissions in line with climate targets could be done by reigning in the small number of people who take almost all of the flights.
At the moment, around half of us don’t get on a plane in any given year, and just 15 per cent of people take 70 per cent of the flights, while an even smaller group of ultra-frequent flyers and private jet users produce huge amounts of emissions from their wasteful travel habits.
Aviation emissions could be brought under control through relatively straightforward tax reform which would be fair, popular and could even generate income for the government. This would make much more sense for our economy, and for ordinary people - who want to be able to fly occasionally - than perpetual expansion of a high carbon sector that will be exceptionally difficult and expensive to decarbonise, if this can even be done at all.
A frequent flyer levy would squash demand among the highest emitters who cause most of the problem. We could also reform the tax structure for private jets and first-class passengers along a polluter pays principle, given that the status quo, astonishingly, is an inverse relationship between emissions and tax rate.
These reforms could get aviation emissions under control without affecting most of the population. Targeting increased taxes at those most able to pay and with the highest emissions would enjoy broad public support and bring billions in revenue into the Treasury. But the government must get real: we can’t go for growth by growing our airports. It just won’t work for our climate or our economy.
The good news is that there’s no conflict between a safe climate and a strong economy. If the government stopped chasing the pot of gold at the end of the runway, it could turn its attention to delivering things which slash emissions while strengthening the real economy and tackling the cost-of-living crisis.
That’s rolling out more renewables, insulating homes and powering them with clean, cheap energy, and investing in affordable, low-carbon public transport. All of this would unlock a wave of good jobs, stimulate a much higher return on investment and, crucially for this government, actually improve people’s living standards and their daily lives.
Polling shows that the British public knows that expanding airports is the wrong priority for the country and won’t make ordinary people’s lives any better. While ministers chase the phantom of economic growth via polluting, high-carbon projects, we miss vital opportunities to get to grips with the climate crisis while also boosting the economy.
In brief
The Housing Secretary (and Deputy PM), Angela Rayner, has written for the NS on what Labour has learned from the failures of “levelling up”.
Beaver releases are to be allowed in England for the first time in centuries.
“Think of buying a home today like buying a luxury item on finance.” Vicky Spratt on why homeownership is no longer a way to get rich.
Thanks to George Monaghan for the edit. Please send any news or comments to: megan.kenyon@newstatesman.co.uk.
Next Wednesday, from 4-5pm at One Birdcage Walk, the New Statesman is hosting a panel discussion looking at how to address long-term conditions to boost the economy and improve the NHS. It is being chaired by Spotlight’s very own, Harry Clarke-Ezzidio. If you’d like to attend, you can do so here. Registration is free.
Takeda has provided sponsorship funding to support this event but had no editorial control over the meeting content and participants.
For more on how our advertising services can support your organisation, please visit our page on Spotlight Marketing Solutions
or contact us at client.solutions@newstatesman.co.uk
The Green Transition is produced by Spotlight, the New Statesman's online policy section and print supplement. Spotlight reports on policy for the people who shape it and the business leaders it affects. Explore our in-depth reporting and analysis here.
Thank you for reading.