On Wednesday, the UK Chancellor of the Exchequer, Rishi Sunak, set out his annual budget in Parliament. And while most of the attention was, understandably, on his economic support measures in the wake of the pandemic, there was very little discussion surrounding how his budget helped the UK’s climate change effort. Are such provisions in place; what are they; and, indeed, are they enough?
It is, after all, not unreasonable to expect that the UK, a member of the G7, a country with one of the largest economies in the world, and indeed an MEDC with Carbon emissions above the global average per capita, would incorporate within its economic policy significant climate allocations.
The environmental-centred policy Sunak announced in his budget was the planned issuance of a large number of so-called ‘green bonds’, one of the biggest releases in Europe in fact. Despite many details and minutiae yet to be revealed, the basic principle is clear. Essentially, green bonds are bonds the public can buy to finance environmental schemes and initiatives.
Bonds are usually issued by governments to stimulate the economy; and that’s a large part of why these bonds are being issued now, in the midst of the worst economic climate the UK has faced since the War. But that clearly isn’t the whole picture; the UK government, after all, is keen to appeal to a more environmentally-conscious electorate than ever before.
A sceptical view of this response may be that these bonds serve as a ‘token’ response to the climate crisis, a ‘quick fix’ on the government’s part and an easy way to portray themselves in an environmentally friendly light, allowing them to neglect the more difficult and politically challenging policy decisions that really need to be taken to tackle climate change.
On the other hand, this may be unfair; the current Conservative government has shown itself to be genuinely environmentally conscious, for example by making the UK the first major economy to pass net zero legislation, enshrining the 2050 target in law. Indeed it would surely be wrong to dismiss progress merely because it is small: these green bonds may form the start of an incremental process. Each step will by themselves of course have minimal impact; yet in tandem with other economic measures, and measures from other government departments such as Defra, who anyway could be better placed to make these serious policy decisions than the Chancellor, serious progress could be made.
I have always been vocal in my support for market solutions to the climate crisis; introducing green bonds is arguably a brilliant way to combine fiscal conservatism and the need to fight this impending disaster. In my view strict regulation will in reality affect the small people, the new businesses who have to navigate all the red tape, and individuals who lose out from high prices as a result of monopoly formation.
Ultimately, green bonds will form only part of the puzzle that is the UK’s climate response. They may not be controversial regulatory measures; yet these bonds will surely play a part in both increasing awareness about alternative, ethical ways to invest with bonds, and actually making a true difference by ushering in an exciting era of brand new environmental ventures.