Pollution move gives little credit to its ‘shareholders’

I hesitate to introduce a theological thread to this column, but I note that there’s an interesting coincidence of events this week in that the Government is to introduce a trading system for companies’ unused pollution credits, while the clergy of the Church of England are to be granted industrial employment rights.

Clergy have hitherto been deemed to be employed by God, which has meant, in practice, that the Church has been able to do what it likes with them, as God has proved notoriously stubborn about turning up at industrial tribunals. Now priests will be able to sue for unfair dismissal – interesting in cases of sexuality – the same as anyone else. Meanwhile, industries that damage the environment are to be subject to a system in which heavy polluters will be able to buy credits for their environmental emissions from those which are only light polluters of the atmosphere.

In short, while the Church is being forced to take a more worldly view of the way it goes about its business, the secular and capitalist world of business is required to take a more high-minded view of the manner in which it treats the natural order. And equally, theologians and secular industrialists now appear to share common ground over responsible stewardship of the natural environment.

Whether the Government’s proposal for a trading system of credits for carbon emissions embodies a good idea is an entirely different matter. It is, naturally, an American idea – consequently, it has been adopted by a British government that believes that anything American is brilliant, from welfare slogans to selective regime change in foreign states.

But it has to be said that the Democrats’ environmental commitments in the US have rather foundered under the New Cons of President George W Bush’s administration. Notably, under pressure from environmentalists to respond to the Kyoto Treaty on environmental emissions, Bush is said to have sniffed the air and announced: “It smells OK to me.”

Unsurprisingly, the US system has been corrupted because the political will is lacking to make it work – with Bush boycotting the Earth Summit of three years ago, it is hardly surprising if American industry presses its advantage. But how might carbon emission credits work in the UK and throughout the European Union?

There is predictable resistance from some quarters of British industry. The Confederation of British Industry (CBI), for instance, greets the system of tradable environmental credits as extremely bad news. But one need not take too much notice of the CBI these days.

With its constant free-market refrain that amounts to business being left alone to do exactly as it pleases, we can imagine it as a Neo-Regency institution – all bursting waistcoats, venison on the haunch and hogsheads of port.

But there are legitimate concerns about the effect of such a system on the UK’s competitiveness. Principal among such concerns is that the EU cannot meaningfully commit to carbon-emission reductions.

This is because of the not unjustified suspicion that some member states will simply fail to observe the EU’s commitment to reductions and will not be penalised. We are into the realms of sovereignty and subsidiarity here, not to mention the EU’s lack of authority.

The avowed European aim, as stated in the Kyoto Treaty of six years ago, is to reduce carbon emissions by 2010 to levels 20 per cent lower than those that prevailed in 1990. The sense of urgency is caused by a polar hole in the ozone layer, appropriately enough the size of the US, which is leading to climate change, global warming and other radiation damage.

It would be wrong to suggest that industry doesn’t care about all of this. But as long as its chief priority is short-term earnings growth for shareholders, its attentions are understandably likely to be deflected elsewhere.

In this, polluting industries are ably assisted by flat-Earth old fogies who claim, in the face of all the evidence, that there is no problem. At first sight, it would seem that tradable pollution credits in Britain are as doomed as the planet.

But to adopt this view is just a failure of the imagination. From the CBI, to ecologists, to regulators, all the effort in environmental debate is directed towards identification of the problem, rather than to solutions.

Among the eco-warriors, for example, the received wisdom is that tradable credits amount to a privatisation of the atmosphere. This is considered to be a very bad thing – like being sold a library book that belongs to the public.

This psychology is a legacy of Thatcherite privatisation of public utilities. When the water industry was privatised, there was a silly outcry that it was like “selling air”, as though sewage left our homes and clean water arrived in them by some kind of natural osmosis.

But perhaps a proper privatisation of the environment could work. If it belongs to all of us, make the polluters pay all we “shareholders” a dividend for their degree of pollution, redeemable in shares in the polluting company.

It would give us a sense of ownership, not only of the environment but also of the companies that pollute it. But the trouble with that is that it cuts out the Government, the EU and the taxation system. So they’d never permit it.

George Pitcher is a partner at communications management consultancy Luther Pendragon