‘Like Sunak, Starmer must recognise net zero trade-offs – but make the rich pay’

The proposal from the Conservatives to begin chipping away at ‘net zero’ policies is one in a long line of baffling political decisions, which leave you wondering quite what they are trying to achieve. The Tories’ endless conveyor belt of strange, reactionary backbenchers are seemingly the only people in Britain who are so passionate about something so mundane as the year in which off-grid oil boilers should be phased out. This intra-party conflict, however, is insightful in that it points to problems that any future government may face with the energy transition.

As recent interventions – such as over crumbling schools – show, the ‘chaos’ comes from them having to decide who should pay for public goods. The transition to net zero by 2050 itself is already a compromise position to lower the burden at risk to the environment, but ultimately there are three ways in which changes in energy, transport etc. will be paid for: by consumers (in bills or direct payments, including paying for private investment), by the government (in spending/borrowing) or by individuals and businesses in taxation. 

The Tory panic, and political miscalculation, is that some of their core voters are being asked to bear the costs and that they need to be seen to challenge this imposition – dressed up in the usual nonsense about being ‘freedom-loving’. The problem they face, however, is that with much higher interest rates than during the decade they wasted not investing in a green transition, they and much of the rest of the media-political class cannot countenance public spending either. Nor are the Tories likely to want to tax the rich (i.e. themselves and their donor base) either. And now, even their programme to underwrite private investment through guaranteed prices – contracts for difference – is failing to bring the magical market in to save us either.

Labour must be honest about the costs and trade-offs of net zero

Faced with the choice between taxing their wealthy friends or ratcheting up fear in middle England that the hippies are coming for your Audi A7, the Tories have chosen the latter. It is probably a mistaken strategy to suddenly move to appeal to the small group of people concerned about ’15-minute cities’ and low-traffic neighbourhoods – but one which could be thorn in the side of the next Labour government even if in the short term it puts the Tories at odds with some corporations (like Ford) making investment decisions on the existing net zero plans (for ending the sale of internal combustion engine vehicles).

This was the weirdest bit of the whole thing, where he just listed things that he was scrapping that…aren’t actually happening. https://t.co/EtVklGP7MC

— Gareth (@g_f_red) September 20, 2023

The important lesson for Labour, though, is on its own position. Like a stopped clock twice a day, Sunak is right to say that politicians need to be “honest about costs and trade-offs“ involved in the major energy and industrial transitions required to reduce greenhouse gas emissions. And in the run-up to a general election, honesty is in short supply from the Labour front bench on almost any matter. Rolling back the level of green investment this summer, and the constant refrain of ‘fiscal rules’, shows that Labour is increasingly unwilling to put the costs of the transition on the state, and they have also ruled out tax increases for the wealthiest individuals and firms, thereby freeing them from paying the costs of the damage they disproportionately caused and from which they continue to profit. 

Labour’s great hope, following the US Democrats, is that they can leverage in private investment through subsidies and tax breaks – which in the long run will likely leave consumers to pay the costs. And as we are already seeing in the US (and in Port Talbot), simply subsidising private sector firms with no strings attached can lead them to introduce new technologies but also lay off thousands of workers. This would inevitably undermine the popularity of all green measures and also prove a pretty surefire way to delay and undermine emissions reductions, a significant problem if workers end up paying in either bills or taxes for the private investment (plus profits) anyway.

And have the courage to say the rich should fund the transition

One way to ensure that costs are more widely accepted is of course to demonstrate and begin to deliver, at scale, some of the immense benefits of the green transition. Apart from fulfilling our historic responsibility to help ensure the planet remains a place that sustains life, there are a wide array of ways the transition can improve people’s lives in the short term: investment in public goods, less pollution, cheaper bills, good jobs, healthier lives, to name a few. The major political battle of the next decade concerns not only how quickly this transition to a lower carbon economy happens, but more fundamentally, who wins and who loses in the process. 

The Tories have responded to the ‘honesty’ required in making these decisions by hiding in the dark corner of a deeply reactionary and dangerous politics, hoping that will somehow allow them to keep the (fossil-fuel powered) gravy train going a bit longer. What we need from Labour, at this crucial moment, is the courage and honesty to say that the green transition is one which the rich have to pay for and from which the public will be the winners. It is dishonest, or deluded, to think that we can continue with the austerity consensus and the UK’s systemic inequalities and somehow still reduce emissions rapidly enough. To bring enough of the public with them, Labour needs to take the lead through steadfast commitments to public investment, ownership and empowering workers and their unions rather than vacillating over whether they will even continue the Tories minimal ‘net zero’ efforts. The costs of inaction could not be higher.