Offshore wind power – an economic and jobs boom

Our response to climate sceptic Andrew Turnbull's piece in the FT in which he rails against renewables and investment in new energy technologies.

Andrew Turnbull, former Permanent Secretary to the Treasury, loses sight of the facts and objectives on energy policy in a column on the future of the Treasury in yesterday’s Financial Times.

He outlines seven ways to meet the challenges of the next Parliament. Number six says:

“The Treasury must retain its role as an economic department, arguing for better-functioning and better-regulated markets and defending the interests of consumers.

“It could start, for example, by exposing the hidden costs for UK electricity consumers of the huge expansion plans for offshore wind and challenging the high cross-subsidies imposed by the renewables obligation and feed-in tariffs.

“In pursuing this economic policy role, the Treasury should act as challenger of departments and not as the usurper of their policymaking function.”

His comments follow the announcement on Friday of a world-leading boom in offshore wind power off Britain’s coasts to generate upwards of 25 per cent of Britain’s electricity by 2020.

With around 30 per cent of conventional electricity generation scheduled to close over the next 10-20 years the question is what type of generation does Britain invest in, not should there be investment. World fossil fuel supplies over the next period are set to decline, pushing up prices. This coupled with the EU Emissions Trading Scheme raising fossil fuel prices will make fuel-free technologies increasingly attractive in terms of cost and energy security.

Indeed Ofgem’s evidence shows that the cheapest option for Britain’s consumer bills is a green stimulus with investment in energy efficiency and low carbon energy as the country emerges from recession. Missing Britain’s commitment to producing 15 per cent of energy from renewable sources by 2020 could raise prices by 60 per cent by 2016.

Offshore wind power will be crucial to meeting Britain’s renewable target. Market forces alone will not achieve the necessary shift to a low-carbon energy mix. Like all more established technologies, new offshore wind power needs initial investment in infrastructure and research and development.

Turnbull’s comments belie the fact that coal, gas and nuclear technologies have all been given vast levels of government support over the past decades. Indeed, no nuclear power station has ever been built without massive subsidy. The Energy Bill currently being debated in Parliament will again confer huge subsidies to coal power stations with its proposed levy on consumer bills for carbon capture and storage demonstration projects. He must compare like with like.

He seems also to have missed in his assessment the potentially extraordinary economic benefits this technology could have for Britain. The Carbon Trust judge that this expansion of offshore wind power could create 70,000 new jobs over the next ten years. The offshore wind sector as a whole is projected to create 135,000 direct and 85,000 secondary jobs by 2050. Net economic benefit is projected to be up to £65bn by 2050.

Britain is world-leading in offshore and engineering skills and with early investment could gain enormous advantages by developing an export industry in offshore wind technology and skills.

The economic cost of inaction on climate change should not be ignored in this calculation. Lord Stern made clear in his 2007 Review of the Economics of Climate Change that the cost of inaction on climate change could be up to twenty times higher than the cost of taking effective action now.

It is not the role of the Treasury to usurp the role of other ministries but to provide support for low carbon industrial growth in line with evidence. One only wonders if his jaundiced view of Britain’s renewable energy future is anything to do with his position as a Trustee of Lord Lawson’s climate sceptic Global Warming Policy Foundation.

In November Left Foot Forward took apart Lawson’s claims that the science on climate change “isn’t reliable” and exposed his links to big oil.

Our guest writer is Louise Hutchins

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14 Responses to “Offshore wind power – an economic and jobs boom”

  1. Ben Folley

    RT @leftfootfwd: Offshore wind power – an economic and jobs boom: http://is.gd/67zyn

  2. Tyler

    OK,all well and good saying you’d liek 25% of the UKs power to come from windfarms…and given the writer is from Greenpeace, you can hardly expect anything else.

    Might be worth remembering though, that you need upwards of 80% latency for windfarms (wind is unpredictable, and “normal” power stations can’t be turned on and off quick enough). Then there is the fact that the only ship in the North Sea capable of laying the deepwater pylons needed is booked up till 2014, and it’s sister ship will only be ready in 2015. So unless you can magic more out of thin air this simply won’t happen.

    Not to mention that the government doesn’t believe it’s own spiel either – after all, they let the only windfarm producer in the UK go bust…..which just makes the claims for job creation and economic benefit even more spurious.

    The incredible thing in my mind, is how the left have focused so totally on wind power, which is pretty ineffecient and pretty unreliable. Especially given that wave power is a much better alternative (unless the moon disappears, there will always be waves 24 a day).

  3. Matt Sinclair

    Louise,

    This is utter nonsense. The different scenarios in Ofgem’s research are largely determined by the pace of economic growth and the resulting pressure on international gas supplies, not the extent of renewable investment in Britain (all of their scenarios assume the second dash for gas which is being forced by the amount of unreliable wind going onto the grid and political opposition to coal from, among others, Greenpeace).

    A more rigorous analysis is provided by Citigroup in their review of pan European utilities (not online unfortunately), which is intended for investors rather than political consumption, which suggests the scale of investment needed, largely to meet renewable targets, implies real terms price increases of 57% to 100%. They argue that will mean an “affordability crisis” for climate change policy.

    The jobs numbers are completely misleading as well. If I stole Greenpeace’s budget, resulting in all of you needing to be fired, and burned it but for £25k which I used to employ someone to sweep up all the ashes, would I be creating a job? That’s what you’re doing in that analysis, ignoring the jobs lost in order to pay for the subsidies which buy “green jobs”. Analysis from Spain and Germany suggests that renewable subsidies result in net job losses. Citigroup suggest that, once you get past the mantra of “green jobs” the reality will be lower productivity (as energy will be more expensive and less reliable), reduced output and reduced consumer and business spending power.

    I love how quickly environmentalist organisations retreat from arguing the substance of their case – that we should accept significant sacrifices in material standards of living to combat climate change – to the ridiculous notion that by switching to a source of power far more expensive you’ll benefit the economy. It’s almost like you’ve lost all faith in your ability to convince the public of the actual merits of your case.

    Best,
    Matt

  4. Jim

    Offshore wind power – an economic and jobs boom | Left Foot Forward http://bit.ly/4nsPlA

  5. MultiPoweredProducts

    Offshore wind power – an economic and jobs boom | Left Foot Forward: Our response to climate sceptic Andrew Turnbu… http://bit.ly/7gHc2E

  6. Cityunslicker

    The two comments are perfect. Wind Farms have run in the cold snap at 27% utilisation – they are simply not a sensible proposition for building a power network. The answer is more gas fired plants and nuclear plants or constant power cuts.

  7. avn

    Offshore wind power – an economic and jobs boom | Left Foot Forward http://bit.ly/5eZgGF

  8. Adam Bell

    Wow Matt, that was a whole lot of rhetoric to pack into such a short post! It’s almost as though you’re attempting to rubbish Louise’s post on ideological grounds rather than, well, telling the truth. For example, ‘The different scenarios in Ofgem’s research are largely determined by the pace of economic growth and the resulting pressure on international gas supplies’ rather ignores the fact that the report specifically states that the four scenarios are the cross hatch of Rapid/Slow Environmental Action & Rapid/Slow Economic Recovery. I’d like you to demonstrate how this isn’t an analysis in which a primary driver is the extent of investment in renewables.

    Your reference to the Citigroup report is also rather suspect. Why is it more rigorous? Is it because it’s not that big old scary Government your TPA chaps are always railing against? Or is it because it supports what you have to say?

    The last paragraph is an exemplar of efforts to twist an argument. I don’t see a single line in this article in which Louise claims the economy will boom as a consequence of a rush for wind. Most environmentalists, as you allude, accept that stopping global warming will have an economic impact. What Louise is doing is pointing out that that economic impact can be lessened by the sort of government intervention you despise, so I’m not surprised you’re railing against it.

    Once you strip away the rhetoric, I’m sorry to say that the main thrust of your post is rather stupid. You appear to be objecting to the concept of government subsidies per se, which – as Louise points out – would mean not building any new CCS coal plants, and probably not any new nuclear plants either. You’re in effect saying that it’s okay to miss carbon emission targets – or that it’s okay for the UK to run out of power. Since you can’t possibly mean the latter, you must mean the former. If so, why not come out and say it?

    Unless, of course, you’re used to using rhetoric to hide your true opinion. But the TPA would never do that.

  9. Louise Hutchins

    @ tyler
    The offshore wind farms in round three of the Crown Estate’s programme are expected to work at 46% of their capacity on average. This is anticipated and will be planned for. As the wind farms will be distributed around the country the uneven wind speeds will be significantly evened out. In addition, although variable, the output of wind farms is very predictable and their predictability is improving all the time. See a review of the evidence on managing wind variability here http://www.greenpeace.org.uk/media/reports/wind-power-managing-variability. The National Grid have repeatedly said that they are confident of being able to manage variable wind power input into the system. No energy technology works at 100% capacity all the time.

    @ Matt
    There is no evidence that the jobs projected in Britain will displace existing jobs. Your analogy with Greenpeace is bizarre. Is the tax payers alliance against all energy investment or do you just have an axe to grind about a transition to a low carbon energy system? What do you think will happen to the British economy if it continues to rely as heavily on imported fossil fuels as global reserves run down and get more expensive to extract?

    @ Cityunsliker
    The times when the wind doesn’t blow at all across the whole of Britain are rare. On those occasions some back up will be needed. But because this will only be for a minority and predictable amount of time so there will still be significant carbon savings and a secure system that keeps the lights on. See the review of evidence cited above.

  10. Nick Drew

    @ Louise
    “National Grid have repeatedly said that they are confident of being able to manage variable wind power input”

    of course they have: they will be forced to invest hugely to achieve this, at guaranteed rates of return ! What’s not to like ?

    My blog colleague Cityunslicker’s comment is key: wind operates at very low average capacity (and 46% for offshore is pie in the sky) so the ‘can meet the needs of x million homes’ hype is meaningless. We all know how they manage large wind fleets in Denmark and N.Germany – ready access to Nordpool and large rolling reserves of coal plant: http://cityunslicker.blogspot.com/2010/01/utter-uselessness-of-wind-power.html

  11. Tyler

    @Louise Hutchins

    You’ve totally missed the point. Wind farms need an 80% latency BACKUP power supply. So even if your wind farm is at 100% capacity, your coal/gas/nuclear plant in the background has to still be going at, on average, 80% of domestic needs. Power supply is on demand, not on average – and that is where wind farms fall apart. They might work 46% of the time on average, but you can’t predict when, and certianly can’t predict them to be working at 6pm/8am peak time.

    Do you see what I’m saying? Wind farms could power the whole of the UK, but because the powr isn’t constant, predictable or consistent it has to be backed up to a very high degree by conventional power.

    The national grid would have to be upgraded partly to deal with the higher peak/trough variable loads windfarms would create, but also to deal with the higher capacity – effectively windfarms near double local capacity when at peak, for the reasons mentioned above.

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  13. Mark

    @AdamBell “I don’t see a single line in this article in which Louise claims the economy will boom as a consequence of a rush for wind” – erm except for the headline, “Offshore wind power – An economic and jobs boom”? That seems pretty clear.

    Also, you wouldn’t happen to be the Adam Bell who is National Campaigns Co-ordinator for the British Wind Energy Association, would you? http://www.bwea.com/about/staff.html Putting your comment in the context that you are paid by this heavily subsidised industry rather makes it seem that it’s you who has a concealed agenda here.

  14. Kevin Learmonth

    As a belated response to Mark, yes it could be the same one, or the same Adam Bell who appears as a member of the public on a number of WEA supported website which look like sites run by ordinary members of the public but seem to feature a number of BWEA staff and contractors… The renewable industry do themselves a disservice by employing the underhand PR tactics of oil, nuclear and tobacco companies when they orchestrate “concerned member of the public” activities.
    For the record I am vice chair of a community led group, Sustainable Shetland, we receive no industry funding or public grants, we are answerable to our 600+ membership, and our members are people concerned about sustainability in Shetland.

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