UK shifting to ‘pragmatic’ climate policies—Canada should, too

After voters speak, PM Rishi Sunak pulling back on Boris Johnson’s aggressive phaseouts of natural gas boilers and gas-powered cars

By Jack Mintz, Financial Post, Aug. 11, 2023

Barely a nanosecond into our holiday trip to London last week, our airport cabdriver started telling us about the city’s “despised” Ulez (ultra-low emission zone) tax. Originally put in place in 2019 to curb pollution, it is being extended by the current mayor, Sadiq Khan, to include the outer boroughs and triple the area covered, effective Aug. 29.

A daily charge of £12.50 (roughly C$21) applies to each car and van that emits more nitrogen dioxide than allowed under an EU standard adopted in 2014. Most vehicles — including most gas-powered cars less than 14 years old and diesel cars less than seven years old — are currently exempt.

On an older car driven every day, however, a U.K. resident could end up paying a whopping £4,660 (C$7,750) per year. Many Londoners subject to the tax are angry that the only recourse they have is to buy an exempt car at inflated prices. The compensation that’s paid is a measly £2,000 (C$3,400), barely enough to buy a scooter.

It is therefore no surprise that Ulez became a central issue in the July 22 byelection in Uxbridge, an outlying borough of London with few public transport options that has the highest rate of car ownership in the U.K. The Conservatives were trounced by Labour and the Liberal Democrats in two byelections outside London but they narrowly won Uxbridge.

The Uxbridge result has inspired Prime Minister Rishi Sunak to try a new strategy for hacking away at Labour’s almost 20-point lead in the polls. By accusing Labour of supporting high energy costs, Sunak hopes a more common-sensical approach to environmental policy might coax back Conservative supporters. Officially, he remains committed to net zero emissions by 2050 but any new measures, he now says, must be “proportionate and pragmatic.”

It is quite a turn of events. At the 2021 Glasgow climate conference then prime minister Boris Johnson declared the U.K. would be the world’s climate leader in coming years as wind and solar replace coal and natural gas. But with Russia’s invasion of Ukraine in early 2022, electricity and heating prices surged. Idled natural gas plants have had to be turned back on and energy imports from the U.S., Qatar and Norway increased.

Climate policies popular—until the bill arrives

Though still holding firm to the 2050 objective, Sunak took steps this past week to dismantle several of Johnson’s policies. Climate policies are widely supported, it seems, until the invoice arrives.

In a recent YouGov poll, 55 per cent of Britons said they were opposed to carbon policies if they resulted in ordinary people facing additional costs. (Five per cent were opposed to carbon policies regardless of cost while only 27 per cent backed carbon policies even if they did result in higher costs). Of those who voted Conservative in 2019, 74 per cent were opposed to carbon policies either altogether or if they involved higher costs.

Just a week after the byelection, Sunak announced the government will issue 100 new licences to develop new oil and gas fields in the North Sea. Given that oil and gas will still be needed for decades to come, he argues it is better for Britain to produce it at home than to import it from distant and sometimes not so friendly countries. Not surprisingly, environmental groups and at least two prominent Conservative MPs have criticized expanding oil and gas production — though the polls tell a different story.

Oil and gas leases are not the only green policies that have been revisited. Forty Conservative MPs have challenged the government’s ban on new gas and diesel cars after 2030, asking whether it is practicable. Don’t be surprised if a more pragmatic approach isn’t soon in the offing for the Johnson government’s ban on new natural gas boilers by 2025, along with a program to replace 600,000 of them at a grant cost of £5,000 (C$8,500) per boiler.

Even the U.K. Emission Trading System (a cap-and-trade approach to carbon pricing similar to that used in Quebec) is being softened, with free allowances given to large emitters to meet required emission reductions.

On Aug. 2, the ETS price fell from £47 to £40.60 in just the one day, resulting in the U.K.’s carbon price falling to 55 per cent of the EU price. The lower ETS price does help U.K. businesses to be competitive and makes lower consumer prices possible, but the government fears the EU will impose a border tariff on U.K. goods to make up the difference.

Carbon policy has not been an easy political road in the U.K. Nor in Canada. Like Boris Johnson, Justin Trudeau wants to lead the world in phasing out electricity from natural gas by 2035 and eliminating gas-powered car sales by 2035 and also discouraging oil and gas production. But if the Liberals’ carbon policies result in non-pragmatic blackouts, brownouts, energy price spikes and falling real incomes, Canadians may well elect a government offering policies that are more “proportionate and pragmatic.”

Dr. Jack M. Mintz is the President’s Fellow of the School of Public Policy at the University of Calgary. To read the original of this article in the Financial Post, click here.

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