Tuesday 7 December 2010

The cost of going green

It seems to be largely taken as read that we all want to develop a green economy in Wales, and Government strategy documents are liberally sprinkled with the magic word ‘sustainable’, albeit at times in a context which throws doubt on the meaning of the word.  But how seriously is the ambition taken in practice – and how far are we really moving?
It isn’t just a question for Wales, of course – all economies are facing the same issue, and all are being pretty sluggish in response.  I pick on Wales solely because of the immediate focus on ‘acting locally’.
One of the big issues is around competitiveness.  In the public mind, I suspect that there is a positive correlation between being ‘green’ and being competitive – it’s the market that we want to be in.  But from a business and government perspective, ‘green’ can be – and frequently is – seen as being a bar to competitiveness.
People and areas in search of jobs and the economic boost they bring can end up competing on the basis of who will have the least restrictive regime whilst still giving access to the same market, in order to maximise the profit of the investor.  The result is that governments are, naturally, cautious about imposing tighter environmental standards.
The ERP produced by the One Wales Government earlier this year shows clear signs of that thinking.  Having gone to great lengths over a number of years to seek the devolution of building regulations in order to pass measures which will ensure new buildings in Wales are zero-carbon, the Plan then notes that the implementation of changes will be slowed so as to run only “a little ahead” of England, rather than the more radical approach which had previously been suggested.
Such caution is natural and understandable, but if followed by all governments will mean that progress is very much slower than it needs to be. 
New buildings are one obvious example, but becoming greener can often have an initial cost impact for businesses, governments, and consumers alike; there’s a ‘feelgood’ reward immediately, but any financial reward is likely to come some time later.  Part of the reason for that is that the environmental costs of those who do not follow the green route are generally external costs – not paid directly by those who are, effectively, incurring them, and ultimately falling back on all of us as taxpayers.
Encouragement and regulation will take us only part of the way, particularly if we fear moving too fast.  Internalising the costs of not going green, and assistance in spreading the initial investment costs are both needed as well if we want to get Wales ahead of the game. 
With the limited powers – particularly fiscal – that it has, and will have after the next referendum, the Assembly Government has only a limited range of options, of course.  We shouldn’t use that as an excuse for excessive timidity though.


Spirit of BME said...

Interesting observations you make.
However, in retrospect I think we will come to see the green agenda as a luxury of a growth economy. In the coming Depression (no matter how HMG cook the books to say we are not) ,private business has to fall back on short term priorities and the biggest is cash flow – get this wrong and you are dead, no matter how full a order book you have. Therefore the lowest price on the day gets the job rather than looking at the sustainability and time life costs of what you are buying.

John Dixon said...


"I think we will come to see the green agenda as a luxury of a growth economy"

Sadly, I think you're right, in the sense that the green agenda will be ignored in the interests of jobs and growth. I think that's a very misguided and short term perspective though, which our descendants will regret.