Probably not, since looking more closely at the situation reveals that things are far from what the headlines claim. Firstly, the projects mentioned in the National Grid report are still largely unfinanced, and will be subject to banks or the government stepping up to the plate, which is far from certain in the austerity era. Also, company announcements of new investment often do not actually take place. In any case, the target of 15% renewable energy generation is far below what experts say is required to tackle global warming.
Another bad omen is the closure last year of the only wind-turbine factory in the country, owned by the Danish firm Vestas, with the loss of 600 jobs. Internationally, Vestas, the biggest wind turbine manufacturer in the world, also plans to cut 3,000 workers in Europe, blaming excess capacity and a reduction in order expectations. Further, the number of new European wind energy projects getting financed has dropped sharply since the end of 2009, according to the Financial Times.
Stock market prices of renewable energy companies have fallen. For example, shares in Spain’s Iberdrola Renovables, the largest wind farm operator in the world, have halved in price since the group was floated in late 2007. The fall in share prices reflects an expectation that austerity measures will lead to cuts in subsidies. Two of the biggest wind power companies have problems: Gamesa has lowered its profits expectations and GE has also reported difficulties.
Any sustained expansion by the private sector will be dependent on support from government, as the firms themselves have made clear. The picture here, though, is far from clear. Despite some green window dressing inserted to save the face of Lib Dem energy and climate change minister, Chris Huhne, the comprehensive spending review confirmed that austerity measures will hit projects to tackle climate change. The few crumbs that were made available will be totally inadequate to address the scale and urgency of the problem.
The ‘warm front’ programme, to provide home improvements and insulation measures, is to be cut from £300 million to £100 million over the next four years. The ‘feed in tariff’, designed to provide funding for small projects, like installing solar panels, is to be cut by £40 million over the same time. Just as damaging to the environment will be the axing of bus subsidies by £300 million, which will force thousands in rural areas in particular to switch to using cars. On top of that, the announcement that train fares will rise well over the rate of inflation for the next four years will also force people to use their cars more, undermining energy efficient public transport and increasing greenhouse gas emissions.
The centrepiece of the Con-Dem green agenda was supposed to be the establishment of a green bank to provide funds for environmental projects that the mainstream financial institutions are reluctant to give. Previously, Hunhe had said that he was pressing for the £6 billion that consultancy firm, Ernst and Young, said would be required to maintain the competitive position of the UK renewables industry. In the event, only £1 billion was forthcoming. Furthermore, a quarter of this money – harking back to New Labour spin – was not new, since it had already been committed for investment in renewables in Scotland under the fossil fuel levy.
The possibility was raised that more cash could become available, but only from highly dubious future ‘asset sales’ which, if they occur at all, will involve further privatisation. It is also unclear what projects will be classified as green. All sorts of scams can be expected in the spirit of the ‘offsetting’ arrangements that characterise the loopholes in the Kyoto protocol, adopted at UN-sponsored talks in December 1997 and which has been totally ineffectual in combating greenhouse gas emissions.
Overall, the budget for the department of energy and climate change is to be cut by 18% in current spending over 2011-15. It is true that capital spending will increase substantially, but this will be very largely accounted for by the costs of decommissioning nuclear power stations that have reached the end of their working lives, an unavoidable expenditure by the government.
One billion pounds will be provided for developing carbon capture and storage (CCS) technology, a process where carbon dioxide, the main gas causing global warming, emitted by coal-fired power stations, is captured and stored underground. The CCS money will be spent on building a pilot power station. However, what is required is more research on the safe storage of CO2, since it will be dangerous if it leaks out of underground storage facilities in large amounts. This is a serious problem because the gas will have to remain in situ for an indefinite period.
There is another £860 million for small-scale projects, such as heat pumps, and £200 million for upgrading port facilities, so that wind turbine manufacturing can be carried out in them, and for promoting wind energy. The green lobby was relieved that any spending got through at all, but it is totally inadequate to meet the need to reduce greenhouse gas emissions by 40% by 2020, a level that most groups, including Greenpeace, say is necessary to avoid runaway global warming.
The government-sponsored Stern report into the economics of global warming found that it would be necessary to spend between £15-20 billion each year, at current prices, for several decades for Britain to reduce its greenhouse gas emissions to a level consistent with preventing the worst effects of global warming. Also, as Stern admits, this figure could be a significant underestimate if so-called feedback effects kick in. These include the release of methane, a very potent greenhouse gas, from the ocean floor, driven by the rise in sea temperatures, itself a symptom of global warming.
It is true that, even if the Stern figure is an underestimate by two or three times, the amount of spending required is still very small compared to total economic output (2-3%) and so should, in theory, be implementable without causing significant disruption to society. However, the sums allocated to tackle climate change in the comprehensive spending review, even if the cuts in it are ignored, still represent only a drop in the bucket compared to the (optimistic) Stern needs estimate. For example, the ‘new’ money for the green bank comes to £750 million over four years, whereas Stern is calling for a spend of £60-80 billion over the same period. The money announced by the private sector as green investment mentioned above – £300 million over four years – is also miniscule compared to the estimate by Stern.
It is significant that there was no money earmarked in the spending review for building new nuclear power stations. The only resources allocated in this area were to continue the clean-up of the now redundant old nuclear plants. The absence of money for new nuclear stations may be portrayed by sections of the Lib Dems as a victory for the environment. The more likely truth is that, in the age of austerity, capitalists are not prepared to fork out even for a cheaper (and unsafe, as Socialism Today has always pointed out) alternative to burning fossil fuels than renewable energy sources, such as wind, wave and solar power. Consequently, George Monbiot’s conversion to the merits of nuclear power, which coincidentally does not produce greenhouse gases, may have been in vain.