The West’s Manufacturing Continues to Pay for Green Gesture Politics

The true economic cost of Western government’s obsession with fighting global warming is becoming increasingly apparent. News that a fifth of the UK’s soaring energy bills now consist of hidden environmental subsidies has brought home the cost of Britain’s economically suicidal commitment to reduce CO2 emissions by 80% within 40 years. It can’t be long before there is a political backlash from consumers and industry against the West’s green gesture politics.

Business groups across the developed world are becoming increasingly vocal, as industries protest the soaring costs that are being imposed on them and forcing plant closures. TATA recently announced the loss of 1500 jobs in the steel industry in the UK, with the explanation that this was in part because EU carbon legislation threatens to impose huge additional costs, and the “uncertainty about the level of further unilateral carbon cost rises that the UK government is planning.” These are the hard economics of the real world, where new unilateral carbon taxes to be introduced in the UK – tougher even than in the EU – will force industries to simply relocate abroad taking their CO2 emissions with them.

Heavy manufacturing has, of course, to compete internationally with countries which don’t have carbon trading systems. So the result of green policies is simply to move the CO2 emissions abroad to places like China. Already the world’s biggest CO2 emitter and largest energy user, China increases the world’s CO2 emissions by more than the total that Britain emits annually.

Britain’s determination to lead on climate will make our industry so uncompetitive that, it will lead to mass plant closures unless policy is changed, says the CBI. The European Metals Association warns that the EU’s “anti-carbon” policies are becoming so costly that they are already forcing steel, aluminium and other producers in their energy-intensive industry to relocate outside Europe, losing hundreds of thousands more jobs. And in the US, new rules – that are already leading to the closure of coal fired power stations – will cost electric utilities $184 billion by 2030 and kill 1.4 million jobs, according to a study the economic consulting firm National Economic Research Associates conducted for the coal industry.

Similar fears are voiced by  Jürgen Grossmann, head of energy giant RWE, in an interview with Süddeutsche Zeitung. He accuses Chancellor Merkel of creating an “eco-dictatorship” and promoting de-industrialization, warning that her  phase out plan will result in large companies like BASF and Thyssen-Krupp abandoning Germany .

In a display of either breathtaking dishonesty or economic illiteracy, Merkel’s government in Germany has been claiming though, that switching off nuclear power from 2022 will lead to falling electricity prices over the long term (besides actually worsening Germany’s CO2 emissions).  But Rainer Brüderle the leader of her coalition partner, the FDP, has said that it’s time to be honest with the electorate and tell them that renewable energy will be significantly more expensive than nuclear power – and that’s not including the cost of building a new grid and gas fired power stations to provide power when renewables can’t.

In the US, where green energy has become politically toxic, the Republicans are now trying to end federal funding for renewable energy research, describing it as an “anti-energy boondoggle” that fails to live up to its supposed potential. But in the UK there are few signs that the government realizes that its environmental policies are at odds with its primary objective, cutting the national debt and reviving manufacturing.

Following the mad rush by “hot money and speculators” to take advantage of the government’s solar subsidies and build large-scale photovoltaic “farms” all over the countryside, the British government slashed them by 70% last week, as they threatened to soak up a £360m pot of subsidies intended for households. However, the Department of Energy & Climate Change may yet support large solar farms by including them in the Renewable Obligation project – another environmental subsidy scheme which will use a different mechanism to encourage energy companies to buy more solar-generated electricity.

Ultimately, rising household energy bills – to be doubled in the UK by the £100 billion to be invested in a further 10,000 useless, windmills, plus £40 billion to connect them to the National Grid – will become increasingly indefensible for politicians, at a time when incomes are already being squeezed by the loss of jobs to countries which are not being burdened by daft environmental policies. Merkel supposedly has a nose for populism, but it’s Brüderle who can see that the political winds are veering. As household energy bills drive millions more people into “fuel poverty” – already a big issue in the UK – there is bound to be a backlash. All the more so now that one of the main arguments for switching to renwable energy – the depletion of fossil fuels – is no longer plausible following advances that mean there is at least six times as much recoverable natural gas today as there was a decade ago.

Related: Everything You’ve Heard About Fossil Fuels is Wrong [Salon.com], UK Faces Job Losses As Businesses Threaten To Move Abroad To Flee Abroad To Escape Green Energy Levies [The Sunday Telegraph]