Holding their nerve

It might not be often that I get to say this but I think this week we should applaud the UK Government and the EU leaders. Locally, our newly appointed Climate Change and Energy Secretary Ed Miliband has agreed with the analysis Committee on Climate Change (CCC) and agreed to cut UK greenhouse gas emissions 80% by 2050. It has proven to be a popular choice amongst many key groups, however, some have expressed concern that aviation and shipping are excluded from the target. Lib Dem energy spokesman Steve Webb summed it up as "It's like telling everyone you're going on a calorie-controlled diet but not counting cream cakes". The eagle eyed amongst you will also have noticed that Ed Miliband made specific reference to amending the Energy Bill to include a feed-in tariff for microgeneration. We will all now wait with bated breath for the CCC to publish their first greenhouse gas budgets, and therefore the trajectory through which we will seek to meet the target, in December this year.

There have been further announcements and the launch of a website for the new Department of Energy and Climate Change. We now know that in addition to Ed Miliband, DECC will be served by three ministers. Mike O'Brien will be responsible for delivering a low carbon economy and ensuring secure and affordable energy supply. Lord Hunt of Kings Heath will be responsible for energy innovation and emerging technologies, heat supply (including locally distributed energy) and coal liabilities including coal health payments. Finally, Joan Ruddock will be responsible for taking forward the Government's fuel poverty policy and, delivering the PM's fuel bills initiative, energy savings (in the residential sector), Carbon Reduction Commitment, behaviour change and Act on CO2, Climate Change Levy and Climate Change Agreements and Bill Minister for the Climate Change Bill.

In Europe, EU leaders stood firm against a last minute rebellion by several countries against the EU climate goals. Unsurprisingly the vexed countries cited worries that keeping the targets would further damage their industries already weakened by the current financial crisis.

As you have probably figured out by now, I am obsessed by the credit crunch. I have been doing some back of an envelope calculations about the costs of the UK bail out package in comparison to the 1-2% of GDP that the CCC predict that it will cost to reduce greenhouse gas 80% by 2050. Current UK GDP is approximately £1.4 trillion. The recent bail out of HBOS and other banks cost around £40bn (2.8% of GDP). You could add to this the £127bn (9% of GDP) of mortgage debt that the Government has acquired through nationalising Northern Rock and Bradford and Bingley. In fact the full scale of the bail out package is a whopping £500bn (35.7% GDP) amounting to a potential liability of each taxpayer of £20,000. Wow! Now I know it's an utterly unfair and completely pointless thing to do, but how about contrasting this number with the cost of low carbon technologies? For example, each MW of wind power costs (very roughly) £500K and the proposed E.ON 1.6GW nuclear power stations cost £4bn each. As you can see we are talking very big numbers.