Against the Grain: Why expensive renewable energy policies are failing to save the planet

Paul Ormerod
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ENERGY price rises are again causing public anguish. The recent actions of some energy companies can be plausibly described as provocative, no matter how well-founded their decisions might be. They risk provoking the ire of the opposition, the government, and even former Prime Ministers like Sir John Major (who has just called for a windfall tax on energy company profits).

But one interesting aspect of the debate is that it has become even clearer that decisions taken by Ed Miliband himself (when energy minister in Gordon Brown’s government) are partly to blame for our high energy bills. The plethora of green taxes and subsidies has become very expensive for consumers.

But how effective have such policies been? Not very. Max Luke of the Breakthrough Institute in California has looked at the US numbers very carefully. Since 1950, he finds that natural gas and nuclear technology together prevented 36 times more carbon emissions than wind, solar, and geothermal. Nuclear avoided the creation of 28bn tonnes of carbon dioxide, natural gas 26bn, and geothermal, wind, and solar 1.5bn.

The Breakthrough Institute is an interesting bunch of people, with an eclectic mix of views that are neither dogmatically right or left, neither in favour of or against market-oriented solutions. So, for example, they point to the crucial role of the public sector in enabling innovative technologies like fracking to be developed in the first place.

But they go on to show that fracking in the US has been incredibly effective in cutting greenhouse gas emissions. Between 2007 and 2012, for example, the share of electricity generated from natural gas in America increased from 21.6 to 30.4 per cent, while electricity from coal declined from 50 to 38 percent. These are changes they describe as taking place at “light-speed in a notoriously slow-moving, conservative sector”. In contrast, the use of coal and carbon emissions continue to rise inexorably in Germany, a country lauded by environmentalists for its commitment to renewable energy.

Green taxes, and the higher prices caused by allowing huge subsidies for green technologies, do reduce energy consumption and carbon emissions. But even the current levels seen in the UK and much of the rest of the EU have not been sufficient to cut the absolute level of such emissions. To achieve this, prices would have to rise so high that it is hard to see any government that allowed it being re-elected.

By far, investment in innovation and new technologies looks to be the most effective way of dealing with the problem of climate change. France and Sweden have done exactly that over the past 40 years, by investing in nuclear technology and hydro-electric power. And to the rage of environmentalists, it is the US that is leading the world in reducing emissions.

Former US vice president Al Gore starred in his film An Inconvenient Truth about climate change. It is an inconvenient truth for progressives like Gore that, on this topic, the right seems to have the best tunes. Natural gas and nuclear (albeit also at a cost) are the best ways to save the planet.

Paul Ormerod is an economist at Volterra Partners, a director of the think-tank Synthesis and author of Positive Linking: How Networks Can Revolutionise the World.

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