Monday, 23 March 2009

New Deal or dead end?

The UK, like the US, has heard a lot of talk about using investment in renewable energy and other clean technologies to lever us out of both our economic and environmental crises. Last week, energy minister Mike O'Brien was spreading the word at OPEC. In the Guardian, economics editor Larry Elliot again outlines the case for a Green New Deal:
For Britain, a Green New Deal (GND) is even more of a no-brainer than it is for other developed countries, since the economy is acutely unbalanced, is experiencing a manufacturing meltdown almost on a par with that of the early 1980s, and has a strong science base that could, with the right sort of support, provide the products for a new industrial revolution.

But that looks much less likely if even the current projects are being crippled the downturn. The Guardian, again, led Saturday's financial pages with a two-page warning about green power companies heading for crisis:
The difficulties - triggered by the credit crunch, recession and a collapse in the carbon price - have led to new demands this weekend to ministers from companies warning that their renewables schemes are at risk without more financial aid.
Over the past week alone, the previously fast-growing renewable energy sector has seen Shell decide to stop building wind and solar schemes worldwide, the wave company Pelamis hit by technical and financial troubles, and EDF Energy warn that UK renewables targets would not be realised and should be scaled back to achievable levels.
In addition, a group of more than 40 businesses has taken the unique step of writing collectively to Joan Ruddock, the energy and climate change minister, warning her of the threats to a host of projects unless something is done.

For those with a cynical (or ideologically anti-renewables) turn of mind, it'd be easy to dismiss all this as special pleading by an industry already damned as subsidy-led. But the industry is far from alone in requiring government support (whether that's to correct market failure or to prop up favoured industries) and certainly not the worst offender - a graphic in the newspaper's report compares the £1bn annual UK renewable subsidies and £12m R&D support to the £75bn cost of nuclear decommissioning. And its job is one that needs doing, regardless of politics.

A side story from Terry Macalister outlines some of the current schemes in trouble, while environment correspondent David Adam offers a critique of UK renewables targets:
It was always going to be a big ask for Britain to meet its European target of generating 15% of its energy from renewable sources by 2020. And despite official optimism, government insiders privately admit that the task is hopeless[...]
The recession has made the task harder but experts say the financial crisis is merely peeling back the curtain and revealing Britain's renewables ambitions to be punier than advertised.

Still, could be worse. Things are looking really dirty in Spain:
Clean energy is believed to have attracted dirty money, as the notoriously corrupt construction business sought ways to launder illegal earnings.

Also on the policy side, PricewaterhouseCoopers adds its voice to calls for a global overhaul of the carbon trading market, suggesting a hybrid tax and trading scheme:
‘Carbon taxes vs carbon trading: pros, cons and the case for a hybrid model’, a white paper by PwC, argues that a modified trading scheme would bring some of the advantages of price certainty provided by a carbon tax while also capturing both the potential political attractions of carbon trading schemes and the virtues of allowing some price flexibility in response to evolving economic and technological conditions.[...]
The kind of hybrid scheme considered in the paper could be readily applied in Europe through relatively minor modifications to the existing EU Emissions Trading Scheme and this could then be linked to congruent schemes in the US and other major developed economies. In the longer term, such a scheme could also be rolled out to China, India, Brazil and other major emerging economies. This would, however, require international agreement on the levels of price caps and floors among participating countries, including arrangements for co-ordinated government action to buy or sell emission allowances in order to keep carbon prices within these limits.

Nice idea but, again, implementation will be the tricky part, to put it mildly.

No comments: