This article was originally published as an edition of the Green Transition, our weekly newsletter on the economics of net zero. To see more editions and subscribe, click here.
In the latest attempt to turn the tide on miserable growth figures, poor labour market data and a deteriorating fiscal picture, government ministers look set to give the green light to the controversial third runway at Heathrow Airport. Like the never-ending story that is HS2, this has been a long-running feature of British politics since the days of the last Labour government. A public consultation on the proposals began way back in 2007 – the year the first iPhone was unveiled by Steve Jobs (feel old yet?) – and they were strongly supported by two unusual bedfellows in the Confederation of British Industry and the Trades Union Congress. When the national employers’ and the workers’ organisations are singing from the same hymn sheet, it’s usually down to the potential of a project to provide secure, long-term jobs, not to mention the wider growth, connectivity and agglomeration benefits that an expansion of capacity at Britain’s only hub airport would bring.
But as keen observers of the UK’s snail’s-pace infrastructure upgrades will know, these things aren’t simply dreamed up and delivered. Eighteen years after the idea was first mooted there are yet to be any spades in the ground. That is, in no small part, due to intense local (and a fair amount of national) opposition. Air travel is, of course, both a major emitter of dangerously unhealthy particulate air pollution, and also a heavily carbon-intensive mode of transport, contributing more than its fair share of CO2 into the atmosphere. Research from the Transport & Environment think tank last year found that London is more exposed to aviation-related pollution than any other city in the world. According to the International Energy Agency, air travel accounts for just 2.5 per cent of global CO2 emissions – but that’s a number that’s growing faster than rail, road or shipping.
On top of that, research from the New Economics Foundation found that increasing take-offs and landings on a third Heathrow runway would cancel out all of the carbon savings achieved through the government’s expedited clean power plan, which promises a net zero electricity grid by 2030 (as opposed to the previous target of 2035). But supporters say that the building process alone would create thousands of jobs in construction, and, upon completion, the increased airport capacity would provide more opportunities for trade, tourism and mutually beneficial international travel for generations to come.
So Starmer, Reeves et al. find themselves in a familiar bind, caught between two apparently contradictory poles of responsibility on climate on the one hand, and the search for ever-elusive growth stimuli on the other. Heathrow’s third runway also provokes political headaches; the Labour Mayor of London Sadiq Khan is vigorously opposed, along with a host of London Labour councillors, MPs, environmental and residents’ groups. Khan even joined a cohort of opponents in 2020 to apply for a judicial review on airport expansion, successfully claiming that a new runway would break the law by breaching the government’s obligations under the Paris Agreement. (Judicial reviews are a frequent tactic employed by opponents of transport and energy infrastructure, and are notorious in slowing down developments as part of Britain’s byzantine planning and legal frameworks.)
The Energy Secretary and former Labour leader, Ed Miliband, himself a passionate climate advocate, is also sceptical of the plans (although he has stopped short of publicly refuting them). At a meeting of the Environmental Audit Committee, Miliband appeared to almost break rank telling MPs that any airport expansion would need to fit within the UK’s carbon budgets (a series of legally binding targets that limit the amount of C02 the UK can emit). ‘If it can’t be justified, it won’t go ahead,’ he said. It appears a cabinet rift may be rumbling…
Heathrow is operating at its limit. It’s the busiest airport in Europe. Charles De Gaulle has four runways. Frankfurt and Rome’s airports have the same. Amsterdam’s Schipol has six. Even Copenhagen’s Kastrup airport and Stockholm’s Arlanda have three each. But they all operate with far fewer passengers than Heathrow’s 72 million annual visitors across just two landing strips.
Demand for air travel is expanding. In the developing world, there are billions of upwardly mobile workers hoping to join an ever-expanding global middle class. They will expect the similar privileges of international travel and occasional foreign holidays that their Western counterparts have enjoyed for several decades. Limiting the UK’s only hub airport to two runways is unlikely to stem that tide. Failing to deliver on yet another major infrastructure project after more than a decade of laborious political and legal wrangling would add yet more voices to the chorus of commentators and policy wonks who claim that Nimbyism, sclerotic bureaucracies and restrictive red tape are causing economic stagnation. “At some point it becomes impossible to grow because investment is banned”, claimed a recent influential essay that did the rounds in Westminster.
But there is a potential missing piece in this puzzle: Grangemouth.
The last remaining oil refinery in Scotland, owned partly by a Chinese state-owned firm, is set to close this year. It will be converted into a fuel import terminal. But Unite, the union representing Grangemouth workers, has claimed that the facility could be converted into a centre for the production of sustainable aviation fuel (SAF). The government has set ambitious targets for the adoption of SAF over the next decade. SAF must make up 2 per cent of airlines’ jet fuel this year, rising gradually with mandates to reach 22 per cent in 2040.
By using these targets, the government has created a massive market demand for SAF adoption while simultaneously allowing the potential domestic supply chains to wither.
Sharon Graham, the general secretary of Unite, told the GT that when she raises this issue “I get blank faces”. “China, who owns half this refinery”, she continued, “wants to import SAF into Britain, so we will get it, but we’ll get it as imported fuel. Instead of that, we should transition the refinery into a SAF refinery. It’s absolutely easy to do. They’ve done it in the US. They’ve done it in Sweden. In both those countries, they haven’t lost a single job. How is it that in Britain, we’ve created a ready-made market through the government’s own SAF mandates, but we’re refusing to save 400 jobs to meet that massive increase in demand domestically?”
The Chancellor Rachel Reeves has made fine speeches about “securonomics” and rebuilding the UK’s “resilience” by fostering investment in domestic manufacturing jobs. But on Grangemouth, she may have missed an open goal.