13: A green covid recovery?
What could a green post-COVID economic recovery look like, and how can we make sure it has carbon reduction and a just transition at its core? Guests this time are Miriam Brett, research director at the Common Wealth think-tank, and Mairi Spowage, Interim Director of Strathclyde University’s Fraser of Allander economic institute.
Episode Transcript
[Music flourish]
Matt: Hello, I’m Dr Matt Hannon.
Rebecca: Hello and I’m Dr Rebecca Ford and welcome to Local Zero. In this episode, we’re looking at what role green, low-carbon solutions can play in the wake of COVID to get Scotland and the UK’s economies back on their feet.
Matt: So May 2021 is host to both the Scottish and Welsh Parliamentary Elections and local elections in England and as such, we’ve seen every party offer their own vision of what a post-COVID recovery might look like with some focusing on making it a green recovery but the question is just how feasible and how beneficial are these proposals and how do they fit into a wider, just transition?
Rebecca: Later, we’re chatting with Mairi Spowage from the Fraser of Allander Institute. Mairi has been looking at what a green recovery might look like in Scotland.
Mairi: I suppose the large circuit break we’ve had in our economy could provide an opportunity to do things differently. It’s certainly accelerated a number of initiatives around technological change. It’s made everybody think a bit differently about the model of working and how they might use office space or city centres in the future.
Matt: We’ll also hear from Miriam Brett who is Director of Research at the Common Wealth think-tank about the role of a local Green New Deal for COVID recovery not just in Scotland but across the UK in the months and years to come.
Miriam: The way in which we treated COVID with a sense of urgency is the way that we need to treat the climate crisis just now and we can’t be timid in our approach because there’s a deadline and we’re getting closer to it.
[Music flourish]
Rebecca: And as always, we want to hear from you. Please tell us what you think of the podcast and ask questions or suggest topics for future episodes.
Matt: You can tweet us and for now, we are @EnergyREV_UK and please use the hashtag #LocalZero.
[Music flourish]
Rebecca: But first, let’s bring in Fraser Stewart who is with us as always. Fraser, welcome. How are you doing today?
Fraser: I’m doing really well, thank you, Becky. How is everybody else?
Matt: Yeah, tip top.
Rebecca: Very well here, thanks, Fraser.
Fraser: Are we excited for today’s episode? It’s a big, big, big one I think, isn’t it?
Matt: Oh yeah, it doesn’t get bigger than a post-COVID, green recovery stimulus package [laughter]. I mean we’re talking billions and trillions. I’m not sure what comes after that but it’s lots of cash.
Rebecca: And the potential to affect everyone across society in Scotland, the UK and the world. I mean it’s absolutely huge and something that’s got to be playing on everybody’s minds as we start to come out of the pandemic.
Matt: Absolutely.
Fraser: Yeah, absolutely. I’m ever the optimist and I don’t know if you guys feel the same but obviously, it’s a moment we have to dig ourselves out of but do we think it’s an opportunity in terms of green and in terms of net zero? Do you think this is something we have to build into the recovery?
Matt: Yeah, for me, straight away, it’s an obvious yes and that’s largely because we have to consider the cost of net zero with the Committee on Climate Change pointing to the fact that each year, we’re having to invest around £10bn from 2020 and this is going to rise up to about £50bn from 2030. This is a long-term investment and so we’ve got to do that but at the same time, of course, the opportunity is there to put right the damage that COVID has done. We’re looking at GDP being 8% below levels in February last year. We’re seeing 800,000 payrolled jobs that have just disappeared and we’ve got nearly 5 million people still on furlough, so something has got to give. We’ve got to spend cash and we’ve got to put money back in people’s pockets.
Rebecca: I’m with you, Matt. I definitely have my days where I do look at this as an opportunity and an opportunity to try and be very considerate about the pathway forward and try and put right some of the inequalities that we face today. I then have my more negative moments where I’ve probably read the news and I’ve signed on to the BBC app...
Matt: Oh, don’t do that. Don’t do that [laughter].
Rebecca: ...or I’ve turned on the TV [laughter].
Matt: Bad, bad idea.
Rebecca: Definitely. I think, in the UK, certainly we are starting to progress forward. I think the rollout of the vaccine programme has had a massive, massive impact certainly on my mindset when I look at my life, my family’s life and the opportunities. I then look at what’s happening in India, for example, and you start to really see some of these inequalities at play when you start to look at that bigger global picture. That makes me, I guess, question things a bit more and I guess I particularly think about how we can deliver this on a global level. I think we need to talk about what’s happening in our own backyards. We need to understand what we’re going to do in Scotland and in the UK and how we can start to drive that forward but I think we can’t be forgetful of that bigger picture and how we are part of a global society. If a country as big as India is struggling with this pandemic and if there are huge inequality issues in terms of access to the vaccine and access to finance to bring us out of the recovery and so on, I think that’s something we’ve definitely got to start to think about as well.
Fraser: I completely agree, Becky, and I’m glad you highlighted the global inequality as well. I think when we talk about local, we can detach that sometimes.
Matt: So I’m guessing both of you know the esteemed Lord Nicholas Stern who wrote the Stern Report back in the 2000s. He’s actually had a pop at trying to define what a green recovery is and I have to say, as definitions go, it’s pretty damn impressive. I’ll get your feedback on this and whether you agree or not but he’s defined it as a ‘well-designed recovery package that can boost aggregate demand and employment in the short term, boost productivity and competitiveness in the medium term and bring about the transformation needed for inclusive, sustainable and resilient growth.’ If that is a green recovery, that’s one hell of a mountain we’ve got to climb.
Rebecca: Yes, it is. I think that’s an absolutely brilliant definition [laughter]. I’m trying to think if there’s anything I don’t like [laughter]. It’s an amazing vision. I guess, for me, the big question is... okay, that’s great. If that’s where we want to go, what’s the strategy to get us there? How are we going to start to do that? Because it is more than just delivering net zero. It’s also about all of those wider important dimensions of sustainability, so thinking about our environment more broadly, thinking about inequalities, addressing gender inequality, addressing water issues and so on.
Matt: Yeah, it’s productivity, GDP and jobs. What you’re saying is that’s not enough. We’ve got to have other metrics that we throw into the mix here so that we can gauge whether this is, indeed, a just transition.
Rebecca: And I think this brings us back to two really important dimensions that I’d love for us to talk about. One is about where all this happens. Let’s actually come back to what we’re all about which is local. Of course, we can talk about these facts and figures and we can look at what could happen in terms of global job creation and global job losses but the reality is that these are all going to be very different depending on the region that you’re in. Areas that are currently dependent on fossil-based industries are going to have a much harder time of it. They’re going to be much more hit than other areas that might not be dependent on those sorts of jobs. So I think this really brings us back to this kind of local perspective of how we’re going to deal with this in cities, in regions and in industries that are going to be right at the forefront of the transition.
Fraser: I think there’s a combination of those two things though, right? The just transition and the industries. We’ve been talking a lot about the green recovery, even on justice terms, and about the enormous amounts of jobs that we’re trying to create. Specifically, in Scotland, when we’ve been talking about it, we’re talking about 100,000 new, renewable energy jobs. That was the Green’s headline and the SNP were somewhere around three-quarters of that but is that a just transition if the jobs are only created in what can be quite an unjust industry and a very specifically skilled industry for a very specific type of worker or employee?
Matt: That’s a really interesting point. So if you think about the many millions of households we’re going to have retrofit and you think about many of the measures that we’ve got to take in the next few years, there are questions about the extent to whether those measures are going to be replicated at the same frequency over the long term. So take, for instance, lagging a loft or putting double-glazing in. We’ll see a spike in demand for this and the jobs that that creates but will those jobs still be there ten years after that? It then really starts to push at the boundaries of what you can define as a sustainable job for a just transition.
Rebecca: Oh, I’m glad you talked about a sustainable job, Matt because I think this is it. For me, it’s not about thinking about just clean jobs, green jobs or green skills. It’s about jobs that are better. Do these new jobs have the same sort of career progression? Do they offer the same sort of benefits? Do they offer the same sort of opportunities, for example, around unionisation? I think the answer right now, for most of that, is no they do not. Unless workers are bought into this and unless people are bought in and want to transition because they have something better to move to, we’re never going to bring along everyone. Actually, I want to talk about something that’s quite close to my heart which is some of the gender issues in all of this. The energy sector is one of the worst sectors if you’re thinking about diversity from a gender perspective. I think it probably has diversity issues across the board but I’ve explicitly been looking at this from a gender perspective. Despite the fact that women make up almost 50% of the global labour force, they’re only covering about 22% of the energy sector and when you start to look at management, that’s even worse. So over a third of the UK’s top energy companies have absolutely no women on their boards and more than two-thirds have no women on executive board seats. That is a massive issue when we start to think about what this means for the transition of the energy sector and the increase, possibly, in the number of jobs in the energy sector in our clean energy transition.
Matt: Absolutely. Spot on. I completely agree. I just wanted to broaden out the discussion briefly and also introduce a bit of a quiz because everybody likes a quiz. There was a fascinating report I read which was about the Greenness of Stimulus Index. Basically, Vivid Economics have gone across 30 different countries and ranked them by how green their stimulus is and how green their recovery package is. Who do you think came out on top? You don’t know which are the 30 countries, so you’re essentially picking from planet Earth but if you had to pick one [laughter], who do you think it might be?
Fraser: Overall, I think on paper, in terms of the size of it, the scale of it and the rhetoric around it, it might be the US.
Rebecca: Mmm.
Matt: Well, you might be right but let me just clarify the question [laughter]. It’s the proportion and so the size of the overall stimulus doesn’t matter. It’s the proportion of the stimulus package, so 80% green or 90% green.
Fraser: Yeah, yeah, yeah.
Matt: So it could be teeny tiny but you’re going for the US?
Fraser: I think so. I think there was a whole thing about the things that they’ve included as green and getting stuff over the line.
Rebecca: I’m going to go for New Zealand.
Matt: Okay, New Zealand. Right, so the US is mid-table.
Fraser: Okay, okay.
Matt: Almost every green dollar is wiped out by $1.5 in non-green dollars. I’m not sure New Zealand was on this actually.
Rebecca: Alright, then I’ll put a different guess in if New Zealand isn’t part of it [laughter].
Matt: Yeah, go for it.
Rebecca: I’m going to go with Finland.
Matt: Okay, Finland – let me count – eighth. Top was Denmark.
Fraser: Yeah, it makes sense.
Matt: Hazard a guess at where the UK came?
Fraser: Tenth?
Matt: Tenth. Okay, Becky?
Rebecca: You said there were 30 countries in total?
Matt: Yeah, 30.
Rebecca: Yeah, I’d say around that. Ten sounds about right.
Matt: Fifth. We do pretty well on this.
Rebecca: Wow!
Matt: That’s not because of anything that’s been announced recently particularly, even though there has been some interesting stuff which we’ll talk about later, but largely because of all the stuff we did beforehand or that was already in the pipeline. Just going back to Fraser’s point about the absolute size of investment, really you cannot look beyond the European Commission and particularly Germany in terms of the number of euros, pounds and dollars being spent on green stuff. These are the countries, or collective of countries, or confederations that are really leading the charge.
[Music flourish]
Now, Fraser, we asked you to do a bit of homework, I think, on the US and Biden’s stimulus package. So maybe just before we break, it would be great to hear a bit more about that.
Fraser: Yeah, so Biden’s package is obviously... Biden’s package? I never want to say that again in my life [laughter]. Obviously, the US stimulus package and the jobs guarantee are heavily focused on industry and heavily focused on infrastructure. I think what’s interesting in it is while it’s obviously a ton of money, it did really, really well to recognise justice which is something that I think the US, at least the US left, has always been better at than a lot of other places. It recognises justice and there’s a lot of money going towards clean energy in low-income areas and deprived areas which, for me, is a really exciting focus. But what’s super interesting about it is that within infrastructure, it includes not necessarily jobs that are decarbonising but jobs that are clean by nature. There’s a big focus on the care sector and about how care jobs are green jobs because they’re low carbon and because carers are at the frontline of climate emergency, at the frontline of wildfires, flooding, hurricanes and that kind of stuff. So it’s an interesting idea that care jobs are green jobs and that seems to have caught on in recovery discussions in the UK and particularly in Scotland as well where with this election, we’ve been talking about this National Care Service and where the UK are talking about it too.
Matt: It’s almost like they may be a bit polluting but actually, they have a kind of positive role on the wellbeing and functionality of the system that may be being crushed by various impacts of climate change.
Fraser: Yeah, absolutely and it’s an interesting conversation when we’re talking about if you remove the green element a little, I guess, in Scotland and the UK, when you’re talking about post-pandemic recovery and when you’re talking about jobs, it’s not just green jobs that are part of the recovery, right? There are other jobs that need to be developed and need to be funded and care is somewhere that’s at the front of everyone’s mind after the pandemic. It’s something that is largely carbon neutral and it’s interesting to see that being picked up here as well.
Rebecca: I think this is a really interesting conversation. What is a green job? Actually, for me, the conversation would be much more focused if we just said that every job is going to have to be a green job if we want a net zero and sustainable future. If we want that future that aligns with some of the definitions you gave us earlier, Matt, everything has to be a green job. I think the devil is going to be in the detail of how you simultaneously create a society that is sustainable and that is on a pathway to meet our net zero commitments in the timeframes that are required whilst also enabling economic recovery post-pandemic but also just economic development because there are lots of regions where, pandemic or not, that’s what needed to happen. So it’s about bringing together these two often considered quite disparate strands and bridging the gap between a sustainable net zero future and a future where people have better jobs and that are more available for all of society.
Fraser: Speaking of better jobs, jobs on fair work terms, more secure and sustainable jobs, a little quiz question from the Scottish Trades Union Congress (STUC) that published a report. How many jobs do you reckon that the STUC think can be opened up over the next ten years as part of a COVID recovery?
Matt: So just to clarify, you’re talking about Scotland only?
Fraser: Scotland, yeah.
Matt: And you’re talking about additional jobs versus today?
Fraser: Yes, new jobs.
Matt: Okay, so I know, reading the Cambridge Econometrics report that the CCC (Committee for Climate Change) highlighted, they said UK-wide, they’re expecting a bump by 2030 I think of 1% in employment which equates to about 300,000 jobs UK-wide. So if we were to take that as a benchmark, Scotland being less than 10% of the population, I’m going to say 25,000.
Rebecca: I’m going to be more ambitious and say that in Scotland, we’ve got the opportunity to really harness the energy transition. Look at the amount of investment being put into the North East of Scotland and the Energy Transition Zone. I don’t know how those jobs would be classified and if they would be classified as Scottish jobs but I’m going 50,000.
Fraser: 50,000? What did you say, Matt? 25,000?
Matt: I’m assuming 25,000 additional jobs but that doesn’t count for all the jobs, as Becky has just said, in oil and gas where they’re having to transition from one sector to another. These are people who are essentially unemployed now who will have jobs.
Fraser: Okay, okay. The actual number from the STUC report... hold on to your socks... is 367,000 jobs.
Matt: That’s monstrous.
Fraser: But that’s new jobs in renewable energy, in the affordable home building plan that’s been at the front of most of the election discussions this time around and around the extension and the dualling of various public transport, railways and that kind of stuff with waste, land use as well. It spans loads of sectors but within their vision for a green recovery, 367,000 fair work terms, union-supported jobs.
Matt: Yeah, I guess because you’ve got direct jobs, indirect jobs, induced jobs and all the rest.
Rebecca: And I love that you brought us back to talking about things like building efficiency, low-carbon heating, mobility and new forms of generation. For me, this comes right back down to the heart of our podcast, local in Local Zero. I think the local lens is so important when we start to talk about these things because actually, if you’re talking about creating new jobs in these areas, delivering this in a local way brings huge potential benefits through things like coordinated planning so you can start to look across heating, mobility, generation, efficiency and bring these things together in a way that makes sense through those local strategies that can drive engagement with local community, build trust, tap into local knowledge, help local development in the local context and start to unlock co-benefits and so on. I think that’s the heart of what we’re looking at, isn’t it? It’s why local could be such a key facet in delivering all of this.
Matt: Agreed, yeah, and now to get some answers I think.
[Music flourish]
Miriam: I am Miriam Brett and I am Director of Research and Advocacy at Common Wealth think-tank. We’re a London-based think-tank working on ownership strategies for a democratic and sustainable economy.
[Music flourish]
Fraser: You guys have been doing, at Common Wealth, loads of really, really slick and really cool stuff around Green New Deal and really big ideas around Building Back Better. For you, coming out of the pandemic, what are some of the key policies and ideas we need to be focusing on for a prosperous green recovery?
Miriam: Great question. So I think firstly, just on the Green New Deal because generally, it’s kind of rooted in a recognition that the causes of climate breakdown and the inequality crisis are one and the same and they’re rooted in an extractive, unjust, unequal economic system. The Green New Deal really joins climate justice and social and economic justice together through a public-directed programme for rapid decarbonisation of the economy that really builds the foundations for a post-carbon future. In doing that, we can create millions of good, green jobs and decarbonise the economy in the process. I think this is particularly important just now not least because of the escalating climate crisis but also our role as wealthy countries, we have contributed the majority of emissions, often through resource extraction from other states. So we have a much greater responsibility just now to rapidly and justly decarbonise the economy but also in the run-up to COP as well, there’s a lot of talk just now about the UK being a world leader. In the run-up to COP, I think there’s a window or an opening to turn that rhetoric into a comprehensive agenda of policies to actually see that happen. In terms of our economic priorities, there are 101 things that we could speak about here [laughter], so I’ll just speak through three.
I think one of them is the need to create good, green jobs. I think what was missing in the UK Budget was a stimulus package to create good, green jobs the length and breadth of the UK and what we need to see still is a green stimulus package that takes advantage of current low borrowing costs to actually see that through. Scotland needs a host of well-paid, good, green jobs and these jobs could be in areas like decarbonising the housing stock which is an absolutely critical one, building a new generation of social housing, supporting aforestation and peatland restoration, so a really comprehensive programme for green jobs. I think part of that is about reconceptualising how we view green jobs. Often, when people think about green jobs, that’s confined to areas like renewables and while that’s incredibly important, other areas of the economy are actually low carbon. So if we look at care work, for example, which has been massively highlighted in terms of the imbalances and injustices embedded into the current care system, care work tends to be low-carbon work by its very nature. So building a new vision for care, one that isn’t rooted in for-profit values and one that values care workers properly with good pay and conditions, that can be an important role in our green recovery as well. When we speak about green jobs, we need to speak about the economy as a whole. The second area of priority is that of land reform. Now we’ve come an incredibly long way in Scotland with land reform but we also have a really long way to go because our starting point was not good. The last area that I want to speak about in terms of a priority is that of housing justice. We know, in terms of the health impacts, that poor housing can have on folk and that damp, mould, poorly-insulated and overcrowded housing can have massive health impacts on people in the longer term. We also know poor quality housing has massive environmental impacts as well. So looking towards programmes like a national retrofitting programme, for example, can reduce fuel poverty, particularly in rural communities where that’s still a really prevalent issue. That can also create good, green, local jobs and it reduces emissions. So I think looking at policies and programmes like that, alongside a broader reimagining of the housing market by introducing rent controls, for example, should be a priority just now. Also, increasing our social house building to secure good homes for all but creating jobs in the process of doing so and maybe, in the aftermath of COVID as well, exploring the use of properties that have actually been made vacant by COVID to repurpose them. In the aftermath of something as devastating as this pandemic and its economic shock, we need to really reevaluate the fundamentals of our economic system. So those are just three of the many, many areas of priority that we should be looking at.
Fraser: Yeah, we could do this all day. This could be a series in itself [laughter]. One thing that I think that’s interesting when you say about reimagining the systems that led us to where are, particularly with climate, as we’re coming out of COVID and when we talk about a green recovery, there’s maybe a conversation that we need to have about how we measure the success of that. Are we measuring it by how quickly we can get back to pre-pandemic levels of growth? Are we talking about the size of the economy or do we need to move away from those measures? What do you think?
Mirian: The way that we measure our economy is so far detached from providing the type of economy that we actually need to see and that’s made so much more urgent and prevalent in the face of the climate crisis just now and the timescale that we actually have to address that. It’s reflective of, and it helps to drive, damaging policy agendas because our goals are not the goals that they should be. I think Scotland has come some of the way there being part of the Wellbeing Economy Government and the work of the work of the Wellbeing Economy Alliance has been incredible to highlight the failures of the current approach. If we are to fundamentally reassess the way our economy operates, who it operates for, who it’s owned by and whose interests it’s operated in, that necessitates seismic shifts in our economic structures and for me, that should be rooted in the democratisation of our economy. If we look at the post-war period, I’d argue that we are still seeing the benefits today of the institutions that were built and the safety nets that were created in the aftermath of that post-war period. That necessitated a big upfront cost. That necessitated really bold visionary thinking but there’s a legacy of that and we still see the benefits of that today. I think embedded in our fiscal metrics that we currently evaluate success under is real short-termism in thinking and actually, what we need to be doing now when we’re looking at how we challenge the inequality and how we challenge the environmental crisis, we need fundamental and transformative shifts in how our economy operates. That necessitates longer-term thinking as well. So I think the way that we measure our economy is held back in many, many ways but one of those ways is that it drives short-term thinking that is not conducive to the long-term sustainability of the economy.
Fraser: What role do you think local can play in a green recovery from the pandemic?
Miriam: Firstly, I think there are some pitfalls that we need to avoid. When we’re looking at reimagining a sustainable economy, the reason that we need to reimagine how our economy is owned and in whose interests is because there is a danger that we might fall into an agenda of greenwashing or simply just sort of greening areas of the economy without actually challenging the driving forces behind climate environmental breakdown and behind the inequality crisis. I think a good example of that is land ownership in Scotland and I think some of the trends that we’ve recently seen are big owners buying up loads of land in Scotland under the guise of greening that land. I think that’s the reason that we need to look at ownership, we need to look at democratising the economy and we need to look at locally-led and locally-driven strategies because we know that the concentration of ownership of wealth and power in our economy strips workers and communities of the wealth that they create in common. I think this is particularly important as we look to recovering from the pandemic because there is a danger that we see an Amazon recovery; that we’re going to see is high streets really struggling and local businesses really struggling and actually, there has been a handful of pandemic profiteers off the back of this crisis. If we look at the way that the platform economy has benefitted massively, that platform economy is rooted in extraction and in exploitation. I think in place of this, what we need to see is transfers of physical and financial assets to local communities to really redirect wealth, control and benefits to local communities.
Fraser: For your money, Miriam, one big headline idea? What is it that you want to see at the front of green recovery plans for the next couple of years?
Miriam: I think it’s interesting because if we look back to the pandemic and the way that it was initially spoken about as this great leveller [laughter], the virus itself does not discriminate but our economy does and our society does and those who were already vulnerable and already marginalised disproportionately shouldered the cost. What it did was expose the stark imbalances of power and the reward that have been designed into our economic system. Our economic system is often spoken about as broken and in many ways, it is because you can see the outcomes of it and it’s devastating but it’s not actually broken.
Fraser: It’s doing what it was designed to do.
Miriam: It’s doing exactly what it was designed to do [laughter] and those power balances are facilitating dilapidation of our ecosystems and that’s fuelling climate breakdown and creating vast inequalities in wealth and income in our society as well. We need to see the inequality crisis and the climate crisis as inherently intertwined. Our economic system is driving both climate breakdown and imbalances in power and wealth and those who have contributed the least to this, people in communities that are structurally marginalised, held down and kept poor by a system, are most likely to be affected by it. That is one of the many reasons that we need to tackle this at an economic systems change level but it’s also why we need to see the climate crisis and the inequality crisis as intertwined. I think that scale of ambition is important because, as so many before me have highlighted, the way in which we treated COVID with a sense of urgency is the way that we need to treat the climate crisis just now and we can’t be timid in our approach because there’s a deadline and we’re getting closer to it. We know that the current economic system is driving climate breakdown and time is running out to actually tackle this. So we need to harness that energy found amid the pandemic or seismic shifts and bring that into an ambitious programme of policies and strategies for how we actually build a recovery off the back of this.
[Music flourish]
I mentioned the post-war period before but I think it boils down to the need to see a 1945-style moment. This involves a chance to press reset on our economy and fundamentally build a new economic system out of the wreckage and one that is rooted in climate justice and rooted in economic justice. It’s about the need to press reset and build something much better out of the wreckage.
[Music flourish]
Fraser: Huge thanks to Miriam Brett, Director of Research at the Common Wealth think-tank. That chat ranged widely across a load of subject areas that we’ve covered in more depth in previous episodes as well, not least the widespread benefits of community energy projects which you can hear more about in our last episode Power to the People. Next, though, Matt and Becky have got a second expert guest for this episode on net zero and COVID recovery.
[Music flourish]
Mairi: Hello, my name is Mairi Spowage and I’m the Interim Director of the Fraser of Allander Institute which is an economic research institute at the University of Strathclyde.
[Music flourish]
The Scottish economy has been through an absolutely unprecedented year and I know that word has been used a lot in terms of the economic impact of this crisis but it’s been absolutely unbelievably large. At the height of the lockdown last spring, we saw falls of around a quarter of economic output. Obviously, this has been like no other economic crisis in that the impact on the economy has been deliberate. We’ve shut all these areas of the economy down in order to protect public health. One of the big questions is what is the impact going to be on the labour market in the long term? We haven’t really seen those impacts yet because of government policy interventions to protect the labour market but really, what is that impact going to be once the training wheels come off and we see what’s actually going to happen to the labour market?
Matt: So we haven’t felt the full force of this yet.
Mairi: Certainly not. A lot of it is still in the post, unfortunately.
Rebecca: I’m wondering if we can flip our conversation to think a little bit more about how this is playing out in the context of some of these bigger transitions that we’re also seeing and that we’ve been talking about before any of this hit. We know that we need to deliver a net zero economy as we move towards 2050. It’s built into our legislation and what that means is that there are going to be huge parts of the economy that need to transition, need to adapt and need to change what they’re doing. Obviously, COVID has had a massive impact on our economy in general but this is happening in the wider backdrop of a massive transition that’s needed for us to hit our net-zero targets. What sort of an opportunity do you see in terms of a green recovery? Can Scotland take advantage of that? Is it critical to our economic recovery? How do you see these things going hand-in-hand?
Mairi: I suppose it’s linked to the fact that the large challenges that the Scottish economy had prior to the pandemic haven’t gone away and some of them have been exacerbated. Obviously, we’ve been dealing with climate change, dealing with the challenge that we have around demographic change, dealing with changing technology and the inequalities that we have in our society. They all feed into and would be supported by the issues that we have around productivity. All of these challenges are still there but I suppose the large circuit break we’ve had in our economy could provide an opportunity to do things differently. It’s certainly accelerated a number of initiatives around technological change. It’s maybe made everybody think a bit differently about the model of working and how they might use office space or city centres in the future. Those have obvious links to, potentially, helping us deliver some of our climate change goals. Obviously, Scotland, within the UK, has a unique view of this because of the dominance of the oil and gas industry. Whilst this is not what it was before, it’s still a significant part of our economy. It’s around 5% of output just on extraction and then there’s a further 3-4% on support services. You then have all of the supply chain ripples throughout the economy.
Matt: Has the oil and gas industry been particularly hard hit by COVID-19? I’m just thinking of just one element of that. I know you identified a whole range of different jobs here but putting rig workers together in a space which is difficult to socially distance and if you’ve got infections... is this what you’re saying? It’s been a particularly difficult sector to adapt to these changes.
Mairi: It has been difficult to adapt to these changes. I think I would put them in the camp with things like construction which was really heavily shut down in the first lockdown but has found ways, over the summer as things opened up, to adapt. They’re not back at what they were but they’re not too far off.
Matt: Have we had a small glimpse, on that basis, on what cutting out that oil and gas sector might look like to the economy? Let’s say we’ve temporarily shut it down... we’ve had a bit of a glimpse, have we not, of what net zero might look like in Scotland even just for a few months?
Mairi: That’s an interesting question because obviously, the hope would be that this is a transition of these sorts of skills, the high salaries hopefully and the supply chain to newer, cleaner, lower carbon alternatives rather than it being this industry disappearing and a new one emerging. The oil and gas industry is part of the answer and part of the transition to net zero. It is and it kind of has to be. You can see that, over the last year, the numbers of businesses that are going all in on net zero and making themselves part of the solution. It’s not as simple as shutting that down and having a new industry replace it.
Matt: Yeah, so it’s almost all the bad bits of a net-zero transition without any of the good bits [laughter].
Mairi: What we saw in 2015, with the oil price shock, was very telling. It had a massive impact on the onshore economy in Scotland. Like never before, we saw the ripples onto the onshore economy and there was a gap that opened up between Scottish and UK economic growth at that point which has never really been caught up.
Rebecca: So does this mean Scotland has got a slightly different green recovery challenge to the rest of the UK? Does it give us a very different context in which to act? Does it provide us with different sorts of opportunities?
Mairi: I think it definitely provides us with different sorts of opportunities. To be honest, a lot of the progress that’s been made in Scotland is in the easier bits of transition in terms of energy generation. I’m not saying that’s easy but when you look at trying to tackle things like heat and those other thorny issues about the way our homes are heated and how we deal with that in the future, it does make a transition to renewable energy generation seem like the easier part of the journey.
Rebecca: Let’s bring this down to what it might mean for people on the ground and in society. We were chatting earlier and Fraser wowed us with the number of potential new jobs that could be created in Scotland being somewhere in the region of 300,000. It was massive. As you say, not all of these are going to be necessarily what we might immediately think of as a green job. So what’s this actually going to look like for people and for workers as we move forward? Where are these jobs going to be created? Is everyone in Scotland going to see this benefit or do you think that it might be concentrated either for certain types of workers or in certain regions?
Mairi: Yeah, I suppose not to be too much of a statistician about it, but that’s who I am so there we go [laughter], it depends how you define a green job I suppose. It’s got to the point where it’s every job... it’s not just about green but is good quality, it’s the sort of job somebody wants to have, it enhances their quality of life and these sorts of things which are all important, don’t get me wrong. We actually wrote an article about that this week in terms of the sorts of job numbers that are estimated by different potential investments. I guess some of the questions one would ask are if we’re spending money or government investment on, say, a green retrofit programme which can generate lots of jobs in construction... okay, great but what are you not spending the money on? What were you going to spend it on before? That will generate jobs, sure, but what’s the other stuff you were going to do with the generated jobs as well? What is it about these jobs that are preferable? Are they more locally-focused which they might well be? Why are these better jobs to generate? Is it just because of what they’re doing? That’s fine too but we shouldn’t focus too much sometimes on these jobs numbers because, at the end of the day, it’s about what’s the best way to spend that money, I suppose, both to generate economic activity and jobs but also what’s the best investment so that we see more return in the future.
Matt: Mairi, I think that’s a really, really crucial point. It’s not just the job numbers; it’s what the job numbers then provide. I’ve got your briefing in front of me here and you split it down into ‘direct’, ‘indirect’ and ‘induced impact.’ Is this what you’re saying? That some can lead to direct jobs, indirect jobs and some wider supply chain ripple-effect jobs.
Mairi: Absolutely and some of the key questions are to ask how much leakage is there out of Scotland? If you’ve got a bunch of construction jobs, how much stuff are they importing from other countries? Because that’s that economic activity leaking out of Scotland. The less import intensive an industry is, the more jobs it can generate because that will enhance and increase the economic multiplier effect that you get from investment.
Rebecca: Is there also a consideration of where these jobs might go next? So rather than just looking at that more immediate impact in terms of jobs that could be created now, is there any consideration of the career progression that these jobs could have and the people that might be going into these jobs and where they could go to in the future?
Mairi: It’s a really good point actually and one of the other points we make in our article is about labour supply. It’s all very well saying, ‘Okay, we’re going to spend this amount of money on a green retrofit programme,’ but where are the people going to come from? Do we have the people in our economy to fill those jobs and do they have the right skills? We talk to industry a lot and, for example, in the construction industry, they are hoping and maybe gearing up for big programmes in this sort of area to retrofit buildings so that they’re suitable for our low-carbon future but they need a long pipeline of work to be able to get the apprentices in, to train them up and to ensure that we have that kind of labour supply there. So this is a big challenge. You may have the money to spend on this but will we have the people who can do it?
Fraser: Something that we’ve talked about a lot, Mairi, is these jobs happening, like Becky mentioned earlier, coming up in industry and they’re coming up in supply but like you mentioned yourself, a lot of the sectors that have been hardest hit, like hospitality for one, they’re also struggling. There are a lot of people out of work and out of pocket in that sector as well. How do you think we can broaden the green recovery to include not just industry but other sectors as well?
Mairi: That’s a really good point. Obviously, the fact that hospitality has been so hard hit really impacts a lot of people who have precarious contracts, who have low wages, who tend to be younger and it also has a really important regional dimension in terms of the impact on particular parts of the country who rely quite heavily on these sorts of jobs. There’s a big case, I suppose, to be made to value jobs in hospitality and tourism more in our economy. People talk about a future Scottish economy and it’s all about high-tech, green jobs that are world-leading technology development, Fintech, life sciences and all of these different things which are great and really important but it remains the case that the majority of jobs in our economy will be in things like retail, accommodation, food services, caring, public sector and in terms of hospitality and tourism, it’s a really important part of us selling Scotland to the world. We want to bring visitors here to enjoy Scotland. We want them to come and buy our goods and services and having a workforce of highly trained, skilled people is a really important part of that.
Matt: So, of course, Scotland is, as it stands, still part of the UK and so we have the complication of two different governments and two different parliaments working together to deliver this green recovery in Scotland. Of course, it’s going to take both governments moving towards this but it doesn’t necessarily mean that both governments might be pushing towards the same green recovery at the same pace using the same tools. So a big question is having worked in economic policy for so long, how do you see these two governments having to work alongside one another to deliver a green recovery and have they been good at it in the past? [Laughter]
Mairi: Ohh!
Matt: I’m happy to answer that last bit [laughter].
Mairi: Yes, having worked in economic policy for so long – go on, Matt. Okay, fair enough. There are a lot of challenges there and you can obviously see in recent years, especially the last couple of years, that the UK government has obviously shown more willingness to try and invest directly into the devolved nations. I suppose around energy and climate change, the devolved reserve nature of it is a little bit more fuzzy than some other areas, so there is potential there for disagreements. I think it will be a challenge. There’s also, obviously, the layer of local government to consider as well and the various schemes that the UK government have announced recently such as the Community Renewal Fund and levelling up, for example, which are putting local government of bidding for money to do various schemes. Presumably, one of the goals of some of those schemes will be to promote different initiatives which can help us meet our low-carbon ambitions.
Rebecca: So do you think that the local dimension is a really key dimension in driving this green recovery? What role can you see for local authorities, local businesses, households and communities in achieving this?
Mairi: Of course, we all have an important role to play [laughter] but individuals aren’t going to be able to do this by themselves. We can all put our plastics in our blue bin but [laughter] we really need the systems there to allow us to help the country meet its goals. Obviously, local government have a really important role in terms of waste disposal and collection. They have a really important role in terms of housing and they have a massive part to play in terms of making sure our housing stock is at the right level to be energy efficient. They’re a big part of the house-building programme as well.
[Music flourish]
Matt: Thank you so much, Mairi. That was absolutely fascinating. I hope you can stick around for Fraser’s section on Future or Fiction?
Mairi: Absolutely.
Matt: Good stuff. Okay, so Fraser, over to you.
[Music flourish]
Fraser: Yes, thank you very much, Matthew. For the uninitiated, Future or Fiction? is a game where I present our guests, Matt and Becky with a brand, new technological innovation and they have to decide if it’s real, i.e. it’s the future, or if I’ve just pulled it out of my backside, in which case, it is fiction. This episode’s Future or Fiction? is Feel The Burn.
The gyms reopened in Scotland just last week, thank goodness, but one gym in particular, not necessarily in Scotland, is doing something special. Researchers have built a storage system that harnesses the kinetic energy from manual gym equipment, like rowing machines and spin bikes, and uses that to supplement the gym’s energy supply powering things like lights and air-conditioning units. Do we think it’s the future or do we think it’s fiction?
[Music flourish]
Matt: I know why you’ve gone down this route, Fraser, because you were in the gym this week, weren’t you?
Fraser: [Laughter].
Matt: If your Twitter account is anything to go by, I can almost tell how many reps you did as well [laughter].
Fraser: I tweeted once, thank you very much.
Matt: [Laughter] Felt like a thousand tweets.
Fraser: Yes, I was in the gym.
Matt: This is a good point. I don’t frequent the gym too much but what a waste of energy.
Rebecca: When I lived in New Zealand, I used to teach a third-year class and I used to show them this – I think it was from the BBC, actually – this little clip where they had connected up a house to a building next door and they’d gotten people on bikes that had to do the cycling to allow the house to operate. So all of the bikes were connected up and when somebody wanted to take a shower, they were like, ‘Quick! Get on the bikes. We haven’t got enough energy! Faster, faster!’ [Laughter]
Matt: That’s wonderful.
Rebecca: That was certainly for TV entertainment but it’s not that far of a leap to say that this could actually be implemented in practice.
Matt: Mairi, do you have any inside info on this?
Mairi: So like kind of a human hamster wheel type idea? [Laughter]
Matt: Exactly, yeah. Gym bunny wheels, yeah. [Laughter]
Mairi: I don’t know. I can imagine the size of the batteries you might need. I’m not convinced. I’m not sure. I think it might be fiction.
Fraser: You think it might be fiction?
Mairi: Mmm.
Fraser: You think I just made it up because I sound particularly buff this week after getting back to the gym? Is that what it is?
Matt: Yeah, I think you were thinking, ‘God, I’m lifting some serious weight. I wonder what this could have otherwise been used for?’
Fraser: Do you think?
Matt: Yeah, I do [laughter].
Fraser: Do you think I was in this gym this morning and I said, ‘Oh no! I forgot to do Future or Fiction? again?’
Matt: ‘I’m lifting tremendous amounts of weight here.’ [Laughter] I do wonder, though, because I’ve heard of kinetic dancefloors and I think roads have even started to use this where they take the weight transfer... I may be talking rubbish there but certainly, the dancefloors I’ve heard about and much of the gym equipment actually can be... I know lots of it is weight but some of it can be resistance. The obvious thing is just to tie that into some kind of generator. In fact, I think some of the bikes... I may have even been on a bike that actually uses some of the power it generates to light the screen that you’re looking at at the front.
Rebecca: For me, this isn’t an engineering challenge. This comes down to a cost/benefit challenge because I believe it can completely be done. I don’t see any issue in terms of the actual engineering ability to do it. For me, it sounds like it’s not something that would be cheap to do. You’d actually have to do quite an amount of retrofit in here and so I don’t think that the benefits would outweigh the cost unless it was for branding or there was some other reason for doing it. I think I’m going to have to go future with this one because I do think that somebody could just be incentivised to do this even though they’re probably not going to be reaping financial rewards for doing it.
Matt: Right, so you’re future?
Rebecca: Mhmm.
Matt: Mairi?
Mairi: I’m going to stick with fiction. I’m sorry but I’m naturally sceptical.
Fraser: You’re an economist. It’s understandable [laughter].
Matt: I’ve really got to get this one right because my performance has been so poor of late and somebody actually texted me the other day and said, ‘Are you purposefully getting these wrong to provide a little bit of colour and texture to the game?’ [Laughter] For listeners, no, I’m just not good at this [laughter]. I’m going to go with Becky on this because I suspect...
Rebecca: Oh no, wait! I want to change my answer now if Matt’s going with me [laughter].
Matt: Oh no! So you’re changing now? You’re fiction?
Rebecca: No, I’m not.
Matt: Right, that was just to throw me. Right, I’m going future because somebody is doing this but I agree with Becky, it doesn’t make economic sense currently.
[Music flourish and low, steady beat]
Fraser: Okay, so we’ve got the hosts’ two futures and Mairi’s going fiction.
Mairi: Because it doesn’t make any economic sense. I think that’s it [laughter].
Matt: We’re all kind of saying the same thing but I think Becky and me are maybe saying that one soon, it might make economic sense.
Fraser: That’s it. Spot the climate change researchers versus the economist [laughter]. Okay, the answer is... fiction.
Matt: God, I’ll get more texts.
Fraser: Although, not because I was just lazy in the gym this morning and forgot to put a Future or Fiction? together. There was a Kickstarter in the US a couple of years ago that tried to raise $5,000, which is actually quite a small sum for this kind of project, to put together their own self-sustaining gym. They raised a total of $5 over the course of a month [laughter]. So I’m presuming their audience didn’t think it was economically viable either.
Matt: Okay.
Rebecca: Well, I mean power in the US is so cheap. It’s the wrong country to start with [laughter].
Matt: You’re going to have to give me an easy one next week, Fraser. I’m going to get some hate mail now for that.
Fraser: Yeah, there are diesel generators that run the treadmill for you in the US [laughter].
Matt: Cheers [laughter].
Rebecca: I knew I should have changed when Matt followed my answer [laughter].
Matt: You really threw me there, yeah.
Fraser: You should have [laughter].
Matt: Right, well thank you, Fraser.
Fraser: Well played, Mairi. Well played.
Matt: Nil points for me. Okay, so thank you very much for listening. We’ve had a lot of fun this week and thank you very much again to Mairi Spowage for coming along and providing us with such insight. We also want to just quickly namecheck the pod that Mairi is part of. It is the Fraser of Allander Institute podcast and you can find this on Apple Podcasts or your preferred podcast supplier. Hopefully, I’m going to come along next week and chat on there, so I’m looking forward to that. So thank you for listening. Before we go, if you want to contact us, please do so at #LocalZero and use the handle @EnergyREV_UK and until next week, goodbye.
Rebecca: Bye.
Fraser: Bye, bye, bye, bye, bye.
[Music flourish]
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