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