David Cameron wants the coalition to be the “greenest government ever”. But it is doubtful this aim is compatible with strong growth and economic recovery.
New Labour’s climate change targets were very ambitious but the coalition has now gone even further. The government has committed to targets that imply in just twenty years’ time nearly all the UK’s electricity will have to be generated by renewables or nuclear power. There will also be a radical change in transport – a major reduction in mobility and perhaps a shift to electric vehicles. The housing sector will be transformed, with new homes required to be ultra energy efficient and extensive subsidies deployed to insulate existing homes. Nearly every economic sector will be subject to even more stringent environmental regulations, and more activities will be covered by the EU’s Emissions Trading Scheme – effectively an extra tax on business.
The costs involved are staggering. Over the next decade alone, the government estimates that £200bn of capital investment will be required to replace fossil-fuel power stations with renewable and nuclear plants. And this figure assumes the mammoth cost overruns that have plagued previous big infrastructure projects will somehow be avoided. Upgrading the national grid to recharge millions of electric-car batteries could cost a further £100bn.
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