The Treasury missed a green trick when it handed out Covid cash | Phillip Inman


When the government reacted to the coronavirus pandemic in 2020 with unprecedented rescue funds, ministers were urged to attach strings before the money disappeared out the door.

The strings would have forced employers to adopt policies they had resisted for years, most obviously cutting carbon emissions and promoting a healthier environment.

An obvious target of a Treasury financial rescue mission that also sought to achieve such goals would have been the oil, coal and gas industries.

However, the UK’s finance ministry was clear from the moment it began dishing out grants and cheap loans that there was not time to draw up schemes that could successfully direct firms to do the right thing.

A report by the development charity Tearfund, the International Institute for Sustainable Development and the Overseas Development Institute shows the impact of the Treasury’s failure, and of other country’s finance ministries, to extract commitments to be greener from the worst offenders.

The new analysis reveals the G7 countries, which meet next week in Cornwall to discuss among other things how quickly they can stop an irreversible climate catastrophe, committed $189bn (GBP133bn) to support oil, coal and gas between January 2020 and March 2021. In comparison the G7 – the UK, US, Canada, Italy, France, Germany and Japan – spent $147bn on clean forms of energy.

As Tearfund argues, the contrast in cash terms is bad enough, and is made worse by politicians who yet again missed an opportunity to speed up the transition to net zero with some rules governing what polluting businesses must do to cut emissions.

BP’s purchase of solar farms in the US is a shuffling of existing assets from one owner to another. The commitment needed from BP and other oil majors should be to promote the renewable sources of energy that must become the foundation stone of their businesses.

To find out more on this subject, a book by former Guardian energy editor Terry Macalister and James Marriott, Crude Britannia, gives the background to a long history of lobbying that has kept most governments from attaching strings to much of the oil and gas industry’s upstream activities.

Before the pandemic, one gold star for the Treasury was the absence of support for the coal industry. But now a new mine in Cumbria, backed by an Australian investment firm and planning to sell mostly outside the UK, is potentially in line for significant subsidies.

One solution is a shift inside the Treasury to measuring progress using a broader metric than GDP, which only looks at the spending and income generated by businesses, households and government.

Adair Turner, the chair of the Energy Transitions Commission, who acted as first chair of the Climate Change Committee from 2008 and was previously head of the Confederation of British Industry, said last month the Treasury had the power to make or break a net zero roadmap.

Prof Sir Partha Dasgupta, the Cambridge University economist who recently completed a review for Rishi Sunak on the economic importance of nature, said the world’s governments must ditch GDP and use an accounting method that includes the depletion of natural resources.

If the impact on the environment was taken into consideration, subsidies would always take into account the impact on the environment. Maybe next time they will.

It may be a matter of regret that the tech entrepreneur Simon Beckerman has joined the long list of successful UK-based business people to sell out to a US mega corporation, but it should come as no surprise.

Beckerman has sold the Depop secondhand clothes selling app he founded for the GBP1bn target the London resident set himself when he established the business a decade ago.

Such is the high level of strategic financial planning adopted by Beckerman in the preparation for a sale, it would get more than a nod of approval from the Dragons’ Den judges.

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Last year he told GQ magazine that to reach his goal of a GBP1bn price tag he might need to go through six or seven private equity fund raisings, and at the last count it was six.

The benefit to the UK, as so often these days, is not that ownership stays onshore, but the jobs do. Think of the ARM computer chip maker that will stay in Cambridge, but is in the process of being sold to a US firm. When so many businesses follow this trend, it must be something ministers should worry about.


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