Yellow and blue coalition hoped to bring green government – runway rejection pleased protesters and the green bank is popular, but it still has a 'ready, fire, aim' approach to policy
Put blue and yellow together and you get green. Few commentators could resist the line when the Conservative and Liberal Democrat coalition came to power almost a year ago with the promise to be "the greenest government ever".
The pledge came as little surprise, given the records of the party leaders: David Cameron was the first Tory leader to make the environment a core election issue when he invited people to "vote blue, go green", and Nick Clegg was well aware that for Lib Dem voters the environment has long been a touchstone.
Nearly a year on from the election, it is far from clear that the mixing of the two parties has produced a green government. Environmental campaigners have been disappointed, business leaders have mixed views, and the government has alienated sections of green industry and spooked green investors.
There has certainly been a raft of policy announcements: on a green investment bank, subsidies for domestic renewable energy, electric vehicles, high speed rail, even badgers. But while some have undoubtedly burnished the government's green credentials – the commitment to pushing Europe to a 30% emissions cut by 2020, for instance – others have been less successful.
The green investment bank, which begins operations next year, was welcomed for providing £3bn in funding for green projects, but investors are disappointed that it will not issue green Isas or be able to borrow money until at least 2015. Feed-in tariffs for solar panels – where the government pays people for creating their own renewable energy – have been a resounding success, but the government now intends to cut them back, a decision that has led to legal action from solar companies. Flood defences were to be protected, Cameron had promised, but now are suffering severe budget cuts.
"It takes more than a husky ride to be a green prime minister," says Louise Hutchins of Greenpeace. "This government blew the chance to create a truly effective green investment bank, it's put key environmental regulations up for review in an ill-conceived war on so-called red tape, it has proposed billions in hidden subsidies for new nuclear power stations and presided over a sharp decline in renewable energy investment while offering licences for deepwater drilling in the face of the lessons from last year's BP disaster."
Some investors are prepared to wait and see. A prominent investment expert, who could not be named, says: "If all current and mooted policies work as planned, I'd give them eight out of 10. If most policies deliver less than expected and one or two fail to deliver, which is a high and significant risk, I'd give them 4 or 5. They are probably on course for a lower score now."
Perhaps the most eyecatching environmental policy so far – proposals to sell publicly owned forests in England and Wales – was also one of the biggest disasters for the coalition. When the sell-off was announced, the Department for Environment, Food and Rural Affairs (Defra) was caught unprepared for the scale of opposition. Within weeks, the campaign opposing the sell-off gained enormous momentum, uniting ramblers, National Trust members and even the Socialist Workers party. The 38 Degrees website attracted more than half a million signatures for its petition to prevent the sale.
The pressure, over what was only ever intended to be a policy footnote, became unbearable. Cameron ordered a stop, and Caroline Spelman, secretary of state at Defra, appeared in front of MPs to apologise and withdraw the sale.
For Tom Burke, the director of the green thinktank E3G, the debacle showed the mistakes in the government's outlook. The policy was announced without any attempt to build support for it – Fiona Reynolds, director general of the National Trust, which was expected to take on the management of large swaths of heritage woodlands, heard about the policy only after it had been broadcast. Burke says: "The government's approach to policy seems to be 'ready, fire, aim' and has not generated great headlines."
Whitehall observers say the enthusiasm with which Spelman has wielded the axe – she offered up a 30% budget cut, the biggest of any department – could spell trouble. Though frontline services were supposed to survive, the budget cuts to flood spending have the potential to backfire – the insurance industry is already uneasy about the potential impacts. For instance, a £100m programme for the first system to defend Leeds, which has narrowly escaped inundation several times in recent years, is almost certain to be scrapped. "Spelman doesn't give the appearance of knowing what she's doing," says one insider.
But if Defra has attracted its share of ire, the Department of Energy and Climate Change (DECC) has also suffered brickbats. The worst so far has been over feed-in tariffs. Almost 30,000 homes and businesses were fitted with solar panels last year, creating an unprecedented boom for the UK's solar industry. But to their dismay, the government abruptly announced in February that it would review tariffs across the board and slash the money for large-scale solar farms. "This is a huge blow," says Mark Shorrock, founder of Low Carbon Group. "It was totally shocking."
Whitehall sources dismiss the complaints as whining from a small group of self-interested companies – but the problem is wider. Penny Shepherd, chief executive of UKSIF, the sustainable investment and finance association, says the abrupt change in policy means investors across the green spectrum now worry that they cannot trust the government. This "political risk" could deter investment, she warns. "What confidence can investors have that policies will remain stable?"
The government has won plaudits for some policies. The renewable heat incentive provides £860m for biomass boilers, solar thermal systems and other forms of low-carbon heating, and new grants for electric vehicles are likely to spur their takeup. Having signed up to the 10:10 emissions-cutting campaign last year, the government will announce next month it has made big energy savings across the public sector, and the rejection of a third runway at Heathrow cheered green campaigners. Several big wind turbine manufacturers are planning to set up factories in the UK.
James Cameron, vice-chairman of Climate Change Capital, an environmental investment group, and a member of the prime minister's Business Advisory Group, says: "I think the UK has, in essence, become a better place for green investors. The coalition government has continued much of the previous governments policy on carbon and climate change but with a greater vigour and with more encouragement for entrepreneurs."
However, he adds, some key policies are unclear: "We await decisions on electricity market reform which will tell us whether there is coherence and durability in the policy system. I still think much more could be done to enable innovation in clean technology and new business models for resource efficiency to flourish."
The Conservative MP and environmental campaigner Zac Goldsmith says: "I would award the government a cautious seven out of 10. It kept to its promise to scrap the third runway and provide incentives for renewables. It has more or less kept to its promise to create a green investment bank, which though not as ambitious as we need it to be, is nevertheless significantly more ambitious than anyone expected it to be. There are problems in Defra though, where among other worrying signs, the agenda seems to be very much about agribusiness, and not sustainable farming."
Internationally, the UK's stance at climate change negotiations and in pushing the EU to toughen its emissions-cutting targets have won praise. "The UK has been in the vanguard, which is nice to see," says Tim Yeo, Tory MP and chairman of parliament's energy and climate committee.
Some of the government's key green policies have yet to be laid out in detail. Sweeping reforms to the way the energy market is regulated, to pave the way for much greater use of renewables, are several months from being finalised.
The green deal, by which householders can have their homes fitted to a high standard of energy efficiency then pay back the cost through instalments on their energy bills, will not come into force until late 2012, and ministers are confident it will be a big success. Even the green investment bank could yet change in its final form.
Shepherd says: "We will watch these policies with interest. The jury is still out."