I am a co-author of this letter in The Guardian today:
Caroline Lucas MP, Clive Lewis MP, Colin Hines and Richard Murphy call on Rishi Sunak to unveil a new market-leading bond to create jobs and decarbonise homes
To the acres of post-election coverage about jobs, levelling up and devolution, we now have a Queen's speech calling for lifetime training without answering the question “training for what?” What is lacking is any practical, transformational first-step proposal for achieving all these goals, while providing an answer to how to pay for it.
To fill this gap, the Green New Deal Group is calling for the chancellor, Rishi Sunak, to unveil a new market-leading “green recovery bond” Isa this summer, to keep his March budget promise of an NS&I green bond. Our research shows that this, like the pensioner bonds of 2015, could raise tens of billions of pounds and, as a first step to creating jobs in every constituency, that could be spent on employing a massive multi-skilled carbon army to make all the UK's 30m buildings energy efficient. Meeting the official UK government target of net zero emissions by 2050 will require making up to 20,000 properties a week energy efficient for the next 30 years.
Providing a secure, long-term funding stream for home retrofits is a priority, since buildings generate over a third of the UK's total greenhouse gas emissions. Green recovery bonds would not only be popular with older savers, offer good quality jobs for younger generations, and turbocharge the levelling up agenda by creating employment nationwide — they would also show that the government is finally getting serious about delivering on its climate targets in advance of the Cop26 climate summit in Glasgow in November.
Caroline Lucas MP, Clive Lewis MP, Colin Hines Convenor, Green New Deal Group, Prof Richard Murphy Sheffield University Management School
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
The necessity and logic of this excellent funding proposal will probably go well above the heads of Treasury thinking which is still imbued by the ultra free-market thinking of private investment good, government involvement bad. Unless the investment required comes from banks, hedge funds, and other profit-seekers they will not entertain the idea yet.
Thank you for submitting that letter. That 2015 Climate Change Committee report you linked to is interesting. It tells us the following:
“Direct emissions, resulting from use of fossil fuels (primarily gas) for heating, make up almost half of buildings
emissions.”
So while buildings generate about a third of emissions, retrofits to save heat energy would be targeting about one sixth of emissions. What fraction of that one sixth would be saved by the retrofitting programme by 2050 isn’t clear though from your letter.
The Climate Change Committee analysis goes on to say
“Buildings emissions have declined by 21% (19% weather adjusted) since 2007 due to a combination of high energy prices, improved energy efficiency and the recession.”
Also interesting.
We are looking at more than heating
Why assume eliminating gas and improving insulation is only about heating?
I didn’t make that assumption.
However looking at https://greennewdealgroup.org/wp-content/uploads/2021/05/Green-Recovery-Bonds-12-May-2021.pdf there are these that I think that are worth quoting
“This would require making up to 20,000
properties a week energy efficient for the next 30 years.
x The vast majority of these will also
require their fossil fuel heating systems to be replaced predominately by heat pumps”
and
“At present roughly 70% of UK homes with cavity walls have had them insulated. Around
65% of those that might do so have had some loft insulation, but only a few per cent of
homes have had solid wall insulation fitted.
xix A third of British homes have solid rather than
cavity walls, which are in general more costly to insulate.”
So this is predominantly about heating. You co-wrote this stuff I believe.
But there is also this:
“Up to a quarter of the energy
consumed in homes could be saved cost-effectively”
which answers my question.
We can infer then that the programme of retrofitting homes and other buildings will save approximately one twelfth of UK carbon dioxide emissions. Let’s take that. As long as it is cost effective of course.
We don’t have a choice
Cost does not come into it
I’m afraid that the report you co-wrote is literally full of information about costings.
From the links I found that UK CO2 emissions are around 480m tonnes a year in round numbers – and the programme of bringing the housing up to the required standard will save about 1/12th of that, at a cost of £80bn a year.
In round numbers again we are spending £2000 to save one tonne of emissions.
That does seem to be a lot higher than the going rate, so I’m not so sure this is a good way to allocate resources. You might say that once we’ve spent and delivered the retrofitting project then the savings after 25 years will be cost free apart from maintenance. And money isn’t a perfect proxy for resources of course, but it is a helpful tool to establish if something is worth doing in a certain way.
Go on then
Tell me how you will do it
If you’re so clever as a neoliberal troll here – what’s your answer, other than letting the world fry?
Would I be wrong in thinking that you are putting this proposal forward, which I like, because you don’t think that any MMT type proposal would be acceptable even though the government is able to pay for this at the drop of a dime so to speak?
See my reply to John Ayton
The govrnment doesn’t need to “raise” money to pay for a green recovery – it is a sovereign currency issuer. Launching a bond takes money out of the economy – it doesn’t, of itself, generate any spending.
I know the government is a sovereign money issuer
And I have explained at length the MMT ignores the fact that government deficits funded by currency issuance create private wealth disparities that are deeply harmful to society
So I am suggesting capturing private capital using the power of the state to reduce inequality
Now tell me why you would not want to do that
Or to use tax reliefs for social benefit come to that
MMT is good, but stop pretending it answers all questions. It can only do that if it develops. I have developed it. MMT will have to catch up sometime or become an instrument for social reperession
Dear Richard,
I am absolutely delighted to see joint articles with serious politicians. I can only emphasise the priority that must be given to the penetration of MMT into Party circles. That is the only available route from a fringe pressure group to political influencer. I do not mean to be deprecating in any way, but it is easy for the bubble that successful pressure groups inevitably form around themselves to exaggerate the extent of their own influence. The acid test of MMT must always be the extent to which progressive political parties have influential people who accept the fundamental arguments and are at least attempting OPENLY to incorporate them within economic policy discussions. This article is part of that process.
Clive and Caroline get that
They get the need to tackle inequality and climate change too
Generally speaking, raising money for renewable community projects (PV & wind) is not a problem, they tend to stand on their own two financial feet. In the case of renovating houses, many/most/majority are privately owned. Question 1: How to link “property improvement (= energy renovation)” to an increase in value due to a decrease in operating costs?
The UK housing stock is somewhat heterogeneous. Houses with cavity walls are not so difficult to insulate (lofts, trivial & for a trivial cost), high performance windows — trivial in effort, less so in cost. None of this is difficult or costly & could be accomplished quickly.
Which leaves the lump of non-cavity housing, mostly pre-1920s — about 4.5 million (25% UK housing stock). UCL did a quite good study on this group and there are no easy solutions. In broad terms insulation solutions break down into: internal insulation (loose floor area), external — difficult given that bay-windows are a feature in many of these dwellings and finally, demolition and re-build on a “fit-for-purpose” basis. Extract from report:
Starts: Solid wall dwellings are responsible for 36% of all the housing stock carbon emissions. Approximately 96% of solid wall properties in Great Britain have no wall insulation. In these dwellings, wall areas are thought to account for up to 45% of the dwelling’s total heat loss, thus representing an area of significant retrofit potential. Approximately 62% of solid wall properties were constructed prior to the 1920s, with the majority of them made of bricks . Ends.
Adding to the above, my ad hoc observations are that most solid wall houses are inhabited by poor people. Certainly the case in Wales, probably the case in the North of England.
More modern housing still needs energy renovation and the green bonds would go a long way towards completing the renovation of this group – fast. Question 2: However, this leaves the “25%/36% problem” of solid walls and what to do? Having walked the street of Cardiff (one city amongst many with its share of late 19th/early 20th century housing) in Nov/Dec 2019 (I will leave it to readers to guess what I was doing), I was struck by the sheer meanness of the streets — long rows of terraced houses, grim even on a sunny day. Question 3: Perhaps it is time we did better in terms of housing people, late 19th century/early 20th century domestic architecture designed to house large numbers of people may have been OK then, it is not now.
& in response to “can we afford the energy to demolish and rebuild 25% of the UK residential sector”, that depends on what you do. One possible route is re-build with wood — basically kit houses (design life: at least 120 years). Re-use lots of the bricks from demolition — re-used the timber. Plenty of possibilities. Sadly with the present gov’ of clowns little will happen. Twiddling, the UK’s preferred option since time immemorial when faced with substantive problems won’t cut it.
Thanks
It is great to see that Clive Lewis is getting ready to put his neck out on this issue.
One hopes that the representatives of constituencies that care about the long term future instead of short term ‘I’m alright Jack’ Thatcherite sand ‘having my cake and eating it – extremely comfortable with ever increasing wealth gap’ Blairites are daily challenged within their party ring fences. I hope that this can lead to a greater engagement by other party members. From acorns …