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Could BEIS be the vehicle the low carbon economy has been waiting for?


Climate change took centre stage in the controversy surrounding the formation of Theresa May’s government this July. One day into her premiership, it was announced that DECC would be merged with BIS, to form BEIS. Politicians and campaigners were quick to point out that, in the acronym acrobatics of the new Prime Minister’s departmental restructure, two important letters had been lost: CC.

May’s decision to abolish the department with a named responsibility for tackling climate change provoked a backlash from civil society and former secretaries of state at the now defunct DECC (Department for Energy and Climate Change). Their main objections to the merger of DECC and BIS (Department for Business, Innovation and Skills), and the omission of ‘Climate Change’ from the name of the new BEIS (Department for Business, Energy and Industrial Strategy), were that it:

  1. was a capitulation to climate sceptics in Parliament
  2. would side-line climate change within the department and at the cabinet table
  3. sent a negative signal about UK climate leadership, hitting low carbon investor confidence.

Although these were legitimate concerns, the evidence suggests neither that the restructure was an attempt to kick climate change into the long grass nor to inhibit the process of de-carbonising the UK economy. Despite lingering uncertainties, signals from BEIS have been mostly positive and, if this continues, the new department has the potential to be a powerhouse for the low carbon economy.

Sign for the new BEIS Department © gov.ukSign for the new BEIS Department © gov.uk

Appeasing the climate-sceptics?

The Global Warming Policy Foundation, the UK’s foremost climate-sceptic think tank, has previously called for DECC to be abolished. In 2014 and 2015, Conservative backbenchers presented ultimately doomed private member’s bills to that effect, requesting DECC’s functions be absorbed by BIS.

Although this is what Theresa May appeared to do, there are important differences between what the climate-sceptics had proposed and what actually happened in the restructure. Rather than DECC being diminished and subsumed by BIS, it has been merged with a reduced BIS. All the previous climate change functions of the old department have been fully transferred to BEIS, which is now run by the permanent secretary from DECC. Furthermore, the ministerial division of roles and responsibilities with BEIS suggest an attempt to connect energy and climate policy with business and industrial strategy, rather than to side-line the former.

May’s appointments to key BEIS positions appear to confirm this. Greg Clark, the Secretary of State, previously served as shadow DECC secretary (2008-2010) and was widely praised for his leadership on energy efficiency. His first statement as BEIS secretary highlighted ‘delivering affordable, clean energy and tackling climate change’ as priorities for the new department. The minister responsible for delivering the last of these ambitions, Nick Hurd, is also an outspoken climate change advocate, and was earlier in 2016 named ‘MP of the Year’ at a green awards ceremony.

Minister for Climate Change and Industry Nick Hurd speaking about the Paris agreement and his priorities for BEIS © edie.net Minister for Climate Change and Industry Nick Hurd speaking about the Paris Agreement and his priorities for BEIS © edie.net

Side-lining decarbonisation?

Perhaps the strongest argument against the DECC/BIS merger is that it will weaken the status of climate change within government. Ed Miliband, DECC’s first ever secretary of state, argued that losing a dedicated climate change department would be a setback for the low carbon agenda because ‘dep[artmen]ts shape priorities, shape outcomes’. It is unlikely, however, that the restructure ‘risks dropping climate change from the policy agenda altogether’, as the New Economics Foundation has argued.

The government is legally bound by the UK’s Climate Change Act to meet its incrementally increasing emissions reduction targets. The department responsible for delivery, now BEIS, is obligated to produce carbon plans that spell out how these targets will be met. Sam Fankhauser, a climate change specialist at the London School of Economics, argues that BEIS provides a ‘much better, stronger basis from which to decarbonise the UK economy’ than DECC, as to do so ‘requires the close coordination of climate, energy and industrial policy’.

This coordination is vital for decarbonising the heat sector in particular, and for mainstreaming innovative technologies like storage and Demand Side Response – all of which should be at the heart of the carbon plan. Having responsibility for industry and climate change within the same department should lead to new policies for low carbon growth that, as Greg Clark has pointed out in to reference renewable energy infrastructure, will ‘build new industries and create new jobs’.

Heavy industrial area in Teeside @ WWF / Ashley CooperHeavy industrial area in Teeside @ WWF / Ashley Cooper

Sending the wrong signals?

Angus MacNeil MP, chair of the Energy and Climate Change Committee, pointed out that investor confidence in the UK energy sector has been low following the EU referendum and years of uncertainty on energy policy.

Environmental lawyers ClientEarth argued that abolishing DECC shortly after the unexpected and destabilising vote to leave the EU sent ‘a terrible signal at the worst possible time’. Of the 50 large business energy users surveyed by Inenco in early August, a majority were worried about a downgrading of the climate change agenda following the merger.

However, this ‘bad’ signal has been followed by series of good ones. The ratings agency S&P Global claimed that, despite uncertainty, the ministerial appointments at BEIS and the government’s decision the pass the 5th Carbon Budget, a requirement of the Climate Change Act that sets the government’s emissions reduction targets, had boosted optimism within the renewable energy sector. Although Amber Rudd, the last DECC secretary, had set the carbon budget’s wheels in motion before Theresa May’s ascension to the premiership, one of the first acts of the May government was to approve it. In his short time as BEIS secretary, Greg Clark has already given the green light to the creation of the world’s largest offshore windfarm.

Offshore wind farm off the Cumbrian coast @ WWF / Ashley CooperOffshore wind farm off the Cumbrian coast @ WWF / Ashley Cooper

These are important first steps, but the government still needs to do more to reassure investors of its future plans for the low carbon economy. The UK should follow in the footsteps of China and the United States by taking the symbolic, albeit easy, step of ratifying the Paris Agreement. The best thing the government could do, however, is produce an ambitious carbon plan before the end of the year that brings business and industry into its efforts to decarbonise the UK economy – something it is better placed to do now than ever before.

This blog was written by Liam Taggart, Public Affairs Intern at WWF-UK and President of the Energy & Environment Policy Centre at King’s Think Tank. 

If you have any thoughts or comments for Liam on this subject, you can Tweet him @MiddleKitchen

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