Iain Murray: Waste of energy

Iain Murray is Vice-Chairman of the new Washington DC branch of Conservatives Abroad and a Senior Fellow in International Policy at the Competitive Enterprise Institute.

Both the Conservative Party and Her Majesty’s Government have issued reviews of their energy policies in the last two weeks.  Curiously, neither actually address energy policy directly.  Instead it is viewed as a consequence of other polices, in this case, environmental ones. Yet energy policy is actually a bedrock of what should be, alongside the defence of the realm, one of the two main priorities of any responsible government: economic policy.  This curious entrenchment of misplaced priorities results in a perverse approach to energy policy.

Both the Tory and Government reviews start from one principle: that the United Kingdom must reduce its emissions of carbon dioxide and other greenhouse gases.  The justification for this is concern over the possible effects of climate change.  Yet the United Kingdom is a minor player in the emissions game, contributing just 2 percent of global carbon emissions.  Even cutting that to zero would have no measurable effect on global temperature, or on the purported effects of man-made global warming.  If the rest of the world is going to carry on emitting these gases, both the UK and the rest of the world will reap the consequences.

Thus is illustrated in the first misplaced priority.  If one wishes to reduce the growth in global temperature by reducing emissions, one must treat this not as an energy issue, but as a foreign policy issue.  Nor is it an area where Britain can “show a lead.”  Britain is, it needs to be repeated, a minor player in the emissions game.  This is not like the UK stamping out the slave trade in the 19th century.  The scale of emissions reductions that would need to be implemented by the US, China and India dwarfs anything the UK could achieve.  Even Germany is demonstrating that emissions reduction is difficult for it is attempting to exempt new coal-fired power stations from European emissions regulations.

What this means is that the world is slowly but surely rejecting the preferred emissions reduction approach of the two energy reviews and the Kyoto Protocol.  All other western European nations will have severe difficulty meeting their Kyoto targets and, as a result, they are moving away from emissions reduction policies.  The Emissions Trading Scheme, intended to enable industry to profit from emissions reductions, has crashed as a result of European politicians failing to match their rhetoric with actions.  By giving generous emissions allowances to their industries, they have removed the incentive to reduce.

The reasons why they would do so are obvious.  Energy use is a vital contributor to economic growth.  The link is so strong that one can predict quite accurately the effects of a reduction in energy use, or a growth in the expense of energy, on an economy.  Forecasts from the International Council for Capital Formation indicate that, for instance, Germany can expect to lose 1,800,000 jobs by 2010 if it adheres to its Kyoto protocol commitments.  The UK would lose 1 million jobs.  Already, the effects of the UK’s attempts to meet its commitments can be seen on the economy.  A couple of weeks ago, for example, the kaolin processor Imerys said that it would cut 800 jobs next year as a result of high energy prices.  Michael Grubb, head of the Carbon Trust quango, even admitted last month, “In the future, European companies may decide to make big investments abroad, say in Brazil, because Europe is too expensive.  There is an option of driving energy- intensive industries out of Europe.”  The Europeans have decided not to let that happen.

If the rest of the world is not going to follow the UK’s lead, then, both energy reviews are merely sacrificing British jobs and growth for no benefit.  The world will continue to warm, and Britain will actually be less well placed to meet the possible effects of such warming because the nation as a whole will be poorer.  Individual households, for instance, will have less money to spend on air conditioning, which will in turn be more expensive because of the more expensive electricity generating techniques.  Companies will have less capital and find it more expensive to build infrastructure improvements, such as will be needed in the water industry.  And governments, local and national, will find it more difficult to fund projects such as sea defences and a replacement to the Thames Barrier (which will be needed even without further warming as London is slowly sinking).

Which brings us to the second misplaced priority: if we accept that the UK has a duty to the developing world in respect of the supposed damaging impact of climate change as the first industrialised nation, then that duty is better discharged in helping the developing nations than by restricting energy use at home.  A richer-but-warmer world is better off than a poorer-but-cooler world, as Indur Goklany has shown.  To that extent, climate change is not an energy issue, but an overseas development issue.

How could the UK help?  For a start it could work with its Commonwealth partners India and Bangladesh on improving sea defenses now against the threat of rising sea levels.  Sea levels aren’t going to rise by 20 feet, as Al Gore suggests in his global warming movie, but those countries are particularly susceptible to even small rises in sea level.  It could also work with African Commonwealth partners to combat the rise in vector-borne diseases like malaria, which have actually been re-emerging primarily because of factors like movement of populations rather than climate change, but which global warming could exacerbate.  If diseases like malaria were extinguished now, however, no amount of global warming would make them a threat again.  Yet even anti-malaria programs require first and foremost an upgrading of Africa’s infrastructure to ensure their long-term viability.  For that reason, improving the continent’s economic resilience is itself a valuable contribution to fighting the effects of environmental change.

The list goes on.  Britain could help improve access to water, increase resistance to famine and preserve biodiversity by helping Commonwealth partners improve their agricultural techniques.  Indeed, if one believes that the Commonwealth has any value, then Britain could find a significant role for itself in that partnership of nations by helping the younger nations increase their resilience to environmental changes.  Working with those countries to liberalise and modernise their economies while aiding in technology transfer to ensure that rapid growth is less environmentally damaging than it was in the developed world would be a massive boon.  To start with, a new Commonwealth agreement modeled on the USA’s Asia-Pacific Partnership, enthusiastically entered into by India, would also be a great help in reinvigorating the Commonwealth structure.

What this means is that climate change should not be thought of as first and foremost a domestic energy issue.  Climate change is not in itself reason to cover England’s green and pleasant land with dark satanic windmills.  Quite the reverse, in fact: if Britain is to contribute effectively to helping the world adapt to environmental change – whether natural or man-made – it must have a secure base of affordable and reliable energy that will help contribute to the economic growth that will underpin such outreach.

So, when the Tories assert that it is time to “give green energy a chance,” one must ask whether green energy can supply that secure base.  A survey of the potential for advanced technologies to reduce carbon emissions was undertaken by Hoffert et al of New York University and published in Science magazine in November 2002.  This cold, hard look at the science found that biomass “has too low a power density...for biofuels to contribute significantly to climate stabilization.”  Solar energy, even in sun rich America, would require a massive area of land (220,000 km2) to provide the emissions-free energy needed, but all the photovoltaic cells made from 1982 to 1998 combined would only cover an area of 3 km2. 

Wind power, more suited to windy Britain, also suffers the same problem of being an “intermittent dispersed source unsuited to baseload without transmission, storage and power conditioning.”  Hoffert et al do not spend much time on the subject, which tells us much of its real potential for reducing carbon emissions.  For more on its impracticality, we can look at a study by the German government released in February 2005.  It concluded, “Instead of spending billions on building new wind turbines, the emphasis should be on making houses more energy efficient.”  Klaus Lippold MP told the Guardian, “The problem with wind farms is that you have to build them in places where you don’t need electricity. The electricity then has to be moved somewhere else. There is growing resistance in Germany to wind farms, not least because of the disastrous effect on our landscape.”  Another study found that, in order to provide enough power to create the hydrogen needed for hydrogen fuel cells to replace petrol engines in the UK, we would need to build 100,000 new wind turbines, which would cover an area the size of Wales.

Green energy, therefore, while certainly having a role to play, is not a magic bullet.  It cannot cope with energy demands of the scale required to support a growing economy.  That is why Hoffert et al also look at increasing energy efficiency, technologies to remove or sequester carbon and at nuclear fission and fusion.  Indeed, they find that “available reactor technology can provide CO2 emission-free electric power,” although they warn that uranium reserves do not make this a long-term solution.  Nuclear fusion, however, could provide emission-free power “longer than any source other than the sun” but will require considerable research and development.

That is why the Government is right and the Conservative Party wrong in their relative assessments of the role of nuclear power.  If concern about emissions is to drive energy policy, nuclear power cannot be ruled out or relegated to “last resort” status.  The Tory policy cannot hope to meet the demands of a growing economy, especially if there is an intention to replace petrol engines with hydrogen fuel cells in the medium to long-term future.  HMG has also been sensible in its refusal to contemplate subsidies for nuclear power.  The nuclear industry has repeatedly said publicly that it no longer requires subsidies and the government is right to ask them to put their money where their mouth is. 

It is also worth pointing out that fossil fuel technology is advancing rapidly, so much that hydrocarbons are worth considering as part of a clean energy mix.  As Professor Mark Jaccard says in “Sustainable Fossil Fuels,” one of the best overviews of the problem available, “Viewed according to their quality and quantity, and the technological potential to use them differently than we currently do, fossil fuels can play a key role over this century and beyond as we pursue an enduring, benign and affordable energy system.”

The best energy policy for the United Kingdom and for our role in the world would be to recognise that the central government responsibility of ensuring economic growth requires an expansion and retrenchment of energy supply sources.  Secondary to this should come a desire to minimise carbon emissions by a variety of methods: elimination and sequestration of emissions from fossil fuel use, expansion of nuclear power, use of renewables where effective and improved household efficiency.  Subsidies to fossil fuel use should be eliminated and no subsidies introduced to try to favor inefficient energy generation methods that will just become drags on the economy.  As a result of the improved economic growth a sensible energy policy will bring, the UK could then revamp its development policies to help developing countries with whom the UK has a special link improve their resiliency to environmental change.

For conservatives especially, it is important to remember that the modern economy depends on energy use.  We cannot go back to the Wordsworthian rural idyll.  Ramping back energy use means leaving many to freeze in the dark.  That is neither a message worth sharing with the world nor one that reflects conservative precepts.  As I write this, Environment Minister David Milliband has just suggested that households should have individual carbon rations, complete with a debit card that checks off your allowance of emissions every time you spend money.  Ultimately, that is the road down which emissions reduction theory leads us: the Environment Ministry in control of the economy.