Climate change envoy calls for state aid to create low-carbon economy

Tim Webb
guardian.co.uk, Sunday 25 January 2009 14.06 GMT

Energy companies should be able to tap the billions of pounds of state funding being used to bail out the banks in order to create a post-recession low-carbon economy, says the government's climate change envoy.
Elliot Morley wants the government to back clean energy projects such as offshore wind farms that cannot get funding because of the credit crunch.
The MP and former environment minister says the financial stimulus packages being drawn up by governments around the world should not just put money into people's pockets. This risked encouraging further unsustainable consumerism and environmental damage, he warned the G20 group of leading nations.
Morley is speaking tomorrow at a summit in London on climate change organised by Global International, the international policymakers' forum of which he is ­president. He told the Guardian that many of the financial packages put forward by governments so far including Britain's were not environmentally sustainable.
"They are focusing on a quick fix. Some are designed to put money into people's pockets. I'm not criticising putting money into people's pockets. It's not a bad thing in a recession. [But the packages] could be part of a sustainable stimulus. You have to have a balanced approach."
He said that the global economic downturn and huge infusion of government money to prop up the financial system represents a "unique opportunity" to create a low-carbon economy.
But he warned that some countries – such as Italy and Poland – were already going back on their environmental pledges, blaming economic pressures. Other countries were drawing up stimulus packages that did not include any funding for clean energy infrastructure or green technologies at all.
"There is a real risk [the issue on the environment] is being pushed aside", he said. "The risk is that unless there is a real strategy to incentivise low-carbon investment within packages from the very beginning there is a danger that a lot of money will go into the economy [and] may be not be invested well."
Morley's warnings come before the G20 summit in London in April when leaders of the world's largest nations will discuss how to respond to the economic crisis.
The British government – like others around the world – is facing competing calls for assistance or bail-outs from different industries, particularly from the car industry and other manufacturers.
President Barack Obama wants to invest $150bn (£109bn) in renewable projects and clean energy technologies such as solar over the next decade, delivering millions of jobs in the process.
The German government's €50bn (£46bn) fiscal stimulus package to be finalised this month includes investment in transport, education and infrastructure projects as well as financial incentives for people who trade in gas-guzzling cars for more environmentally sound vehicles.
In the UK, Gordon Brown has promised a "new deal" to help the country out of the recession, by investing in infrastructure including clean energy projects. But little detail has followed. Of the high-flying rhetoric employed by world leaders, Morley said: "More thought should be translated into action."
The UK has signed up to very ambitious EU renewable energy targets. But the credit crunch has made it much harder for energy companies to find the billions of pounds needed to build offshore wind farms, for example. Most projects have been delayed and some are scrapped or scaled down.
Morley said energy companies should be able to tap government funds and loan guarantees to get clean energy projects off the ground.
"You have to make sure that companies investing in big schemes have access to the capital they need. In the same way that guarantees have been put in place, these need to be utilised for such things as offshore wind projects and infrastructure for low-carbon technology."