(July 4, 2011) “If in the long run we are the makers of our own fate, in the short run we are the captives of the ideas we have created”. These words of economist and political philosopher Friedrich Hayek’s today resonate loudly in the carbon “idea” – that the West should fast-track a low-carbon economy no matter what the socio-economic cost.
For the moment, as climate science remains in its infancy in understanding CO2 issues – as the U.S. Supreme Court has lately reminded us (more later) – Western governments have developed a global narrative far from conducive to public debate. It is replete with rhetoric that claims that renewable energy has the capacity to hold a power plant candle to fossil fuel energy without subsidy. And it is political rhetoric with the unintended consequence of forcing countless millions into fuel poverty.
But the carbon “idea” as it directly affects renewable energy and decarbonisation programs is marked by a surprising disconnect, between a public expected to fund yet which is largely excluded from the debate and for whom the true economic cost is being systematically obfuscated.
Once again, the “British experience” reveals in microcosm the core issues writ large for all industrial societies, as a speech delivered by Sam Laidlaw, chief executive of British Gas owned Centrica, at The Economist UK Energy Summit in late June revealed plainly.
Laidlaw warned that Britain would have to abandon its carbon emission reduction targets altogether if the public continued to resist escalating domestic fuel bills. Making the critical link between rising energy costs that “keep the lights on” and generating electricity from more expensive lower-carbon sources, Laidlaw identified a “disconnect” between the public’s understanding of the role played by renewable/carbon targets and higher utility bills.
Calling for “an honest and transparent debate with Government, consumers and businesses” on the central issues, Laidlaw believed the public needed to “take ownership” of the policies of the Government as Britain was “rapidly approaching a tipping point in the energy story of this country and there is a risk that society is not being realistic about the path ahead”.
The Centrica boss was well able to back up his assertion. Laidlaw pointed out that the UK’s energy regulator, Ofgem, had warned that investment aimed at decarbonisation of the power industry in line with stated government policy for emissions targets by 2020, would mean an increasing cost to the end consumer of between 23 and 32 percent. However, according to a Centrica-commissioned poll, while a third of the public was willing to pay an additional £100 on their annual bill to ensure decarbonisation and security of supply, only 1 percent would be prepared to pay the extra £500 the Ofgem projection says is needed.
The survey also revealed that only 25 percent of the public felt it was vital for the government to stick to its low carbon targets if it meant higher bills. As Laidlaw summed it up, without wider public acceptance of higher energy bills to achieve renewable and de-carbonization goals, British carbon emission targets would have to be “ditched”. Of the true cost of alternative energies and low carbonization, Laidlaw stated “the public needs to know the price; and the public needs to take ownership of the decision, along with the energy companies and the government”.
Isn’t that how democracy should work? The increasingly urgent fact is that what every democratic industrial society urgently needs is to take ownership of the carbon debate over the three Big C’s, climate, carbon and cost issues. As the expression “climate expert” is something of an oxymoron, the place of the informed and concerned layman in debate is just as critical. As a result of a lack of public involvement in debate, a largely ‘hidden’ regime of green stealth taxes is able to mask the true cost of renewable energy and decarbonisation policies – and the extent of taxpayer subsidy for both.
But Laidlaw wasn’t finished. He related that his company had met with other UK major energy players with an agreement emerging that around £10 billion further would need to be forthcoming from homeowners to pay for a new back-up network of generators to supplement the volatility and intermittency of wind farms.
Over in Europe, E.ON’s Joergen Kildahl has warned the EU that its tough carbon reduction goals for 2020 were no longer realistic given Germany’s commitment to phase out low-carbon nuclear power stations. Just last week, Germany’s second largest utility RWE announced that power prices in the country would need to rise to “plug a supply shortfall” caused by closing the nation’s nuclear plants. According to the London-based research group, Policy Exchange, the EU should drop some of its renewable energy targets to cut the cost of “fighting climate change” which rely on “immature technologies”. Even EU transport ministers have voiced concerns over the threat to European industry competitiveness if the political push towards arbitrary emission goals persists.
The Scottish Parliament has even outpaced the Westminster Parliament in its rush to subsidize alternative energy sources, with First Minister Alex Salmond claiming Scotland could generate all of its electricity from renewables by 2020; a claim given short-shrift by Professor Ian Fell, emeritus professor of energy conversion at Newcastle University. Fell maintains that the maximum that could be achieved by Scottish wind farms over a timescale of nine years would be 40 percent. Yet more evidence of a political “disconnect”? And only then, Fell stated, by utilizing the “most expensive method of generating power”. In the face of Scottish Power’s management hiking prices from 10 to 19 percent, the prospect of further levies that “will double Scottish power bills” hardly looks a vote winner. And even the UK’s own Committee on Climate Change has advised the UK to build “more nuclear, less offshore wind power” to have any chance of meeting EU emission goals.
It is the largely left-leaning political ideologues who support fast-tracking the green energy, low-carbon revolution; the same proto-socialist, centralizing of power, zealots who so often claim the greatest compassion for society’s poorest. However, there seems precious little concern for the millions currently being forced into fuel poverty by rafts of green taxes. It seems when it comes to social engineering, an ideological green utopia trumps compassion for the poor every time.
In the UK, even the left-leaning Institute for Policy Research has recently warned that new green ‘stealth’ taxes could push tens of thousands into fuel poverty while, according to the latest report from the IEA, is doing nothing to reduce emissions. The IPPR were referring to the UK’s unilateral decision to set the ‘floor price’ of emitting carbon at £16 per ton from 2013, rising to £30 by 2020.
With the issue increasingly boiling down to just how much the public ought to be willing to pay to fund the carbon “idea”, the lack of public discourse on key issues is telling by its absence. That is almost certainly because many ‘green’ politicians, scientists and journalists long ago nailed their faith and reputations to the carbon “idea”. The prospect of renewed public debate when they know only too well that the carbon-climate debate remains far from settled is hardly in their interest.
Enter a timely reminder on “taking ownership” in a democracy from the U.S. Supreme Court.
The U.S. Supreme Court, normally a hot-bed of divergent left v right politics, was on June 20 unified 8-0 in a decision over carbon emission limits for industry. But it was in the court’s “opinion” delivered by “acclaimed liberal” Justice Ruth Ginsburg that carbon “idea” zealots of all stripes were reminded of one or two cogent facts. First, Ginsburg stated that “not all scientists agreed on the causes of the rise in global temperatures”. (That will have come as a shock to the UN IPCC and much of the mass media.) Second, it was in the public interest for “opposing views” to be read by all such was the potential social impact. Ginsburg even suggested where to get good reading material! Try starting with the writings of Professor Freeman Dyson – an unabashed skeptic – Ginsburg suggested. The Justice also noted that carbon dioxide is necessary, ubiquitous and that the rush to limit it should be weighed against “our nation’s energy needs and the possibility of economic disruption”.
Lawrence Solomon went so far as to suggest that the United States Supreme Court had “become the world’s most august global warming skeptics”. Possibly. But we think the Supreme Court was making an even more fundamental point – and one essentially in agreement with Laidlaw’s call. Where an “idea” – or put another way, a theory – has such a profound life-changing price tag, those being asked to pay for it need to “take ownership” when it comes to government policies.
Now that’s an “idea” we think has real democracy written all over it.
Peter C. Glover & Michael J. Economides, July 1, 2011 – Energy Tribune