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Cutting back on cutting back greenhouse gas emissions
ACCORDING TO the headlines, Britain is on course to
a green future based on renewable energy. The National Grid, which
organises electricity distribution, has just produced a report claiming
that 15% of the country’s energy will be generated by renewable sources
by 2020. At the same time, the renewable sector is expanding currently
by 25-30% per year internationally and some leading companies in wind
energy have announced new investment recently in the UK. For example,
GE, Siemens and Gamesa say they are going to invest £300 million in the
next three to four years. So, should we stop worrying about global
warming since everything seems to be moving in the right direction?
Probably not, since looking more closely at the
situation reveals that things are far from what the headlines claim.
Firstly, the projects mentioned in the National Grid report are still
largely unfinanced, and will be subject to banks or the government
stepping up to the plate, which is far from certain in the austerity
era. Also, company announcements of new investment often do not actually
take place. In any case, the target of 15% renewable energy generation
is far below what experts say is required to tackle global warming.
Another bad omen is the closure last year of the
only wind-turbine factory in the country, owned by the Danish firm
Vestas, with the loss of 600 jobs. Internationally, Vestas, the biggest
wind turbine manufacturer in the world, also plans to cut 3,000 workers
in Europe, blaming excess capacity and a reduction in order
expectations. Further, the number of new European wind energy projects
getting financed has dropped sharply since the end of 2009, according to
the Financial Times.
Stock market prices of renewable energy companies
have fallen. For example, shares in Spain’s Iberdrola Renovables, the
largest wind farm operator in the world, have halved in price since the
group was floated in late 2007. The fall in share prices reflects an
expectation that austerity measures will lead to cuts in subsidies. Two
of the biggest wind power companies have problems: Gamesa has lowered
its profits expectations and GE has also reported difficulties.
Any sustained expansion by the private sector will
be dependent on support from government, as the firms themselves have
made clear. The picture here, though, is far from clear. Despite some
green window dressing inserted to save the face of Lib Dem energy and
climate change minister, Chris Huhne, the comprehensive spending review
confirmed that austerity measures will hit projects to tackle climate
change. The few crumbs that were made available will be totally
inadequate to address the scale and urgency of the problem.
The ‘warm front’ programme, to provide home
improvements and insulation measures, is to be cut from £300 million to
£100 million over the next four years. The ‘feed in tariff’, designed to
provide funding for small projects, like installing solar panels, is to
be cut by £40 million over the same time. Just as damaging to the
environment will be the axing of bus subsidies by £300 million, which
will force thousands in rural areas in particular to switch to using
cars. On top of that, the announcement that train fares will rise well
over the rate of inflation for the next four years will also force
people to use their cars more, undermining energy efficient public
transport and increasing greenhouse gas emissions.
The centrepiece of the Con-Dem green agenda was
supposed to be the establishment of a green bank to provide funds for
environmental projects that the mainstream financial institutions are
reluctant to give. Previously, Hunhe had said that he was pressing for
the £6 billion that consultancy firm, Ernst and Young, said would be
required to maintain the competitive position of the UK renewables
industry. In the event, only £1 billion was forthcoming. Furthermore, a
quarter of this money – harking back to New Labour spin – was not new,
since it had already been committed for investment in renewables in
Scotland under the fossil fuel levy.
The possibility was raised that more cash could
become available, but only from highly dubious future ‘asset sales’
which, if they occur at all, will involve further privatisation. It is
also unclear what projects will be classified as green. All sorts of
scams can be expected in the spirit of the ‘offsetting’ arrangements
that characterise the loopholes in the Kyoto protocol, adopted at
UN-sponsored talks in December 1997 and which has been totally
ineffectual in combating greenhouse gas emissions.
Overall, the budget for the department of energy and
climate change is to be cut by 18% in current spending over 2011-15. It
is true that capital spending will increase substantially, but this will
be very largely accounted for by the costs of decommissioning nuclear
power stations that have reached the end of their working lives, an
unavoidable expenditure by the government.
One billion pounds will be provided for developing
carbon capture and storage (CCS) technology, a process where carbon
dioxide, the main gas causing global warming, emitted by coal-fired
power stations, is captured and stored underground. The CCS money will
be spent on building a pilot power station. However, what is required is
more research on the safe storage of CO2, since it will be
dangerous if it leaks out of underground storage facilities in large
amounts. This is a serious problem because the gas will have to remain
in situ for an indefinite period.
There is another £860 million for small-scale
projects, such as heat pumps, and £200 million for upgrading port
facilities, so that wind turbine manufacturing can be carried out in
them, and for promoting wind energy. The green lobby was relieved that
any spending got through at all, but it is totally inadequate to meet
the need to reduce greenhouse gas emissions by 40% by 2020, a level that
most groups, including Greenpeace, say is necessary to avoid runaway
global warming.
The government-sponsored Stern report into the
economics of global warming found that it would be necessary to spend
between £15-20 billion each year, at current prices, for several decades
for Britain to reduce its greenhouse gas emissions to a level consistent
with preventing the worst effects of global warming. Also, as Stern
admits, this figure could be a significant underestimate if so-called
feedback effects kick in. These include the release of methane, a very
potent greenhouse gas, from the ocean floor, driven by the rise in sea
temperatures, itself a symptom of global warming.
It is true that, even if the Stern figure is an
underestimate by two or three times, the amount of spending required is
still very small compared to total economic output (2-3%) and so should,
in theory, be implementable without causing significant disruption to
society. However, the sums allocated to tackle climate change in the
comprehensive spending review, even if the cuts in it are ignored, still
represent only a drop in the bucket compared to the (optimistic) Stern
needs estimate. For example, the ‘new’ money for the green bank comes to
£750 million over four years, whereas Stern is calling for a spend of
£60-80 billion over the same period. The money announced by the private
sector as green investment mentioned above – £300 million over four
years – is also miniscule compared to the estimate by Stern.
It is significant that there was no money earmarked
in the spending review for building new nuclear power stations. The only
resources allocated in this area were to continue the clean-up of the
now redundant old nuclear plants. The absence of money for new nuclear
stations may be portrayed by sections of the Lib Dems as a victory for
the environment. The more likely truth is that, in the age of austerity,
capitalists are not prepared to fork out even for a cheaper (and unsafe,
as Socialism Today has always pointed out) alternative to burning fossil
fuels than renewable energy sources, such as wind, wave and solar power.
Consequently, George Monbiot’s conversion to the merits of nuclear
power, which coincidentally does not produce greenhouse gases, may have
been in vain.
Pete Dickenson
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