In ‘Europe’s Green Experiment: A costly failure in unilateral climate policy’, Dr John Constable, the Global Warming Policy Foundation’s Director of Energy, offers a contrarian view of EU energy and climate policy. It’s almost like a mirror image, inverting many accepted views. For example it claims that renewables are getting more costly and that renewable energy equipment manufacturing ‘has no future in the EU’.
It says that ‘up until 2005 the EU’s energy consumption was on a rising trend, but it has now fallen by over 10% on the 2006 peak, and is now back at levels last seen in the 1990s’. That evidently is a Bad Thing. Worse still, the UK is ‘even more severely affected, with consumption falling by about 30% on its peak in the early 2000s and is now at levels last seen in the 1950s’. It’s Bad since it is claimed that all this is ‘the direct result of the extremely high climate policy costs of adopting thermodynamically inferior renewable generation’.
The programme has certainly been costly. The report says the EU Emissions Trading Scheme has cost consumers €78 billion in the period 2013 to 2021, and continues to add about €17 bn a year to bills, while subsidies to renewable energy have cost EU 27 consumers about €770 bn in the period 2008 to 2021, and continue to add about €69 bn a year to bills.
However, the study says, the benefits are few: indeed ‘electricity generation productivity has collapsed, with system load factor falling from an adequate 56% in 1990 to a worryingly inefficient and expensive 37% in 2020’, and EU member states ‘have gained only a marginal share of the global market for renewable energy manufacturing, which is now dominated by Asia, and particularly China, where, in a bitter irony, manufacturing costs are lower because the energy supply in that region is principally derived from low-cost fossil fuels’.
It welcomes EU efforts to improve energy efficiency, but, citing the Jevons paradox, says ‘energy efficiency improvements have never & cannot lead to conservation, though they may offset the downward pressure on human welfare resulting from energy conservation resulting from other causes, such as the rationing of goods & service by legal intervention or by price’.
However, the bottom line is that ‘emissions reductions observed in the EU member states are only indirectly related to climate-change policies. The principal effect of those policies has been to suppress energy demand and hasten a trend towards economic restructuring, perhaps economic decline, and it is this that has caused the reduction in emissions’.
The detailed charge sheet
The GWPF says that ‘the claim that renewables would diversify supply and increase security has been falsified; the appearance of fuel diversity was a mirage concealing a fragile natural gas policy… Renewables contribute little or nothing to security of electricity supply because they are weather dependent.’
That’s very much its standard view, but it adds some updates on energy security which, it says, has ‘become increasingly reliant on natural gas, which is the sole remaining scalable & thermodynamically competent fuel, coal having been largely driven from the system. Many countries in the European region, with the UK prominent amongst them, therefore find themselves in the strange position of discouraging fossil fuel exploration & development while also creating a critical exposure to the cost of natural gas.’
In addition it says that ‘Asia is taking advantage of European errors and has maintained authentic and effective fuel diversity, while largely escaping any negative consequences from renewable energy adoption. Indeed, insofar as the West rejects Russian supplies of oil, coal & gas, China/Asia will benefit by purchasing those supplies at favourable prices’.
That leaves the EU and the UK struggling to stay afloat- although GWPF’s analysis of the jobs issue is a little tortuous. It says that employment in the European wind and solar industries has contracted sharply since 2008, with the Spanish industry falling from over 200,000 jobs in 2008 to under 50,000 in 2021, and the German industry halving from over 60,000 to under 30,000 full-time equivalent jobs. However, that actually seems to be the result not of the green energy programme, but of cutbacks to it. As it reports, ‘the all-but-total collapse of the Spanish solar industry in the space of eight years is quite extraordinary, and is doubtless in large part explained by the curtailment of subsidies, which caused a rapid contraction in the installation as well as manufacturing of solar generation’.
It adds ‘The recovery of employment throughout the EU in the period 2016 to the present is probably the result of an increase in the construction of new solar sites, well-documented in the UK for instance, typically using cheap imported solar panels, but employing Europeans in posts related to development permitting and construction’. So it’s still pretty bad news for EU manufacturing jobs.
No to change
Unsurprising, the GWPF has little time for the EUs new Green Deal reforms- which it sees as mostly more of the same. There certainly can be debates over the various carbon market based support systems, like the EU-ETS. But the GWPF has little time for the whole idea of energy transitions: ‘Firstly, and simply enough, the concept of an energy transition has no evidential reality in the past or present, and seems unlikely to have one in the future. At the global level, there is not, and never has been, any evidence of a transition away from fossil fuels, as demonstrated by the scale and character of Asian, and particularly Chinese, energy use. Secondly, where renewable energy has increased as a fraction of total supply, mostly in the West, the result has been stagnant or declining energy consumption, and an implicit dependence on manufactured goods from areas where fossil fuels are still consumed, principally China. Finally, where modern renewables such as wind and solar have been adopted in high proportions relative to the overall energy sector, mostly in Europe, energy systems have become critically dependent on natural gas to guarantee security of supply’.
Overall, while it is a wide ranging critique, underlying it is hostility to state intervention and the belief that, far from being cheap, renewables are costly: ‘The claimed falls in renewable energy costs, always implausible on the grounds of the high entropy of the fuel flows, are readily falsified by reference to the published accounts of offshore and onshore wind companies, where it is clear that capital costs have not fallen significantly, if at all, since the early 2010s, and that operation and maintenance costs, particularly offshore, are actually rising. Solar energy in the UK & in Europe is similarly troubled’.
It’s hard to square that with the conclusions that have emerged from IRENA and the business-oriented global consultants like McKinsey and DNV, as well as the regular cost data releases from Lazard. But the GWPF has its own take on the true cost of energy from renewables, as explored in its various reports on wind energy. At one point is was labelling the cost of offshore wind support as ‘obscene’. However, it may have been mollified by the latest UK CfD round, with the offshore wind strike price down to an all-time low of £37.35/MWh. In addition, as GWPF recognizes, China is pushing ahead very hard with wind power, and is cornering the market for PV cell production- though, as the IEA also says, that may be dangerous. But you can’t have it all ways. China is still heavily locked into coal, but, like the EU, and Germany in particular, it is trying to get away from that, mainly with renewables. Has China got it all wrong too?
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