Dismantling the West’s Energy-Climate Paradigm
Good governance is a rare thing. Government acting in the best and common interest of the people is nothing less than the highest democratic ideal. And yet, as history plainly reveals, government all too easily loses sight of its ‘representation of the people’ mandate, diverting instead down the path of elitist, theoretical and ultimately self-serving policies bereft of any sense of realpolitik. Take the West’s prevailing energy-climate paradigm.
All the signs are, when it comes to the fundamentally key national issue of energy security, that the world’s leading Western economies have forsaken the best interests of the people. They have done so by confusing (energy) reality and (climate) theory as being of the same magnitude. As Einstein put it, “In theory, theory and practice are the same. In practice, they are not.”
Former UK Chancellor Lord Nigel Lawson put his finger on the nub of the matter writing in Parliament’s The House Magazine recently. Lawson pointed out that when he was Secretary of State for Energy some 30 years ago “the purpose of energy policy was to ensure a reliable supply of energy, for business and households alike, at the lowest possible cost.” Today, as he rightly observes, “the sole purpose” of the UK’s new Energy Bill – “the worst within living memory” – “is to enable the UK to reach the ambitious decarbonisation targets enshrined in Labour’s Climate Change Act.” In pursuit of compliance with EU directives, we might add. But Lawson’s observations could just as easily apply to the inherent contradictions endemic in the energy-climate beliefs of Barack Obama, Angela Merkel and the (unelected) elites at the European Commission or the United Nations.
30 years ago, when Lawson was UK Chancellor, the climate science consensus theorized that the planet was set on a course for a new ice age via global cooling. Today, the consensus has reversed believing we are inexorably – thanks to man’s carbon emissions – set on a course of global warming. In both situations energy security remained an ever-present practical reality for government. Climatology was then, and still is today, in the baby-science phase of theoretical possibilities. One can only wonder then at the crass stupidity that ranks energy security and climate theory as of equal import and as equally influential.
The UK even has the DECC, the Department of Energy and Climate Change. Well you can’t expect the planet-threatening issue of climate change to be left in the hands of the BBC Meteorological Office screw-ups, can you? Isn’t it far better putting it in into the hands of ideological politicians?
So how then are we doing at dove-tailing the policies within the energy-climate paradigm. Well here’s a quick summary of the contradictory results the attempt has wrought.
In the United States, despite the anti-hydrocarbon policies (including no Keystone pipeline) of the Obama White House working in tandem with its EPA regulatory ‘attack dog’, it is shale gas and shale oil that has singularly impacted the US economy and revitalised American manufacturing. The switch from coal to gas-fired power stations has also contributed to the American domestic energy user now paying just one half of that being paid by their European counterparts. While the US coal industry has been badly hit, US coal exports have now found a lucrative new market – in Europe where high green levies, fracking bans and a reluctance to pursue domestic shale interests have seen European heavy industry switch from using high-cost gas to low-cost American coal. This change has also caused US carbon emissions to fall further more than in any other Western country. Meanwhile the bureaucratically regulated EU emission credit schemes have largely collapsed.
The dramatic net result has been to see the United States supplant Russia as the world’s leading producer of natural gas. As for oil the United States is now the world’s largest producer and has let China to become the world’s largest importer. The shale gas and oil revolution is the singular reason why the United States has stabilised more quickly than the mostly anti-shale industry, pro-renewable energy European nations. Ironically, it will almost certainly be the anti-hydrocarbon incumbent in the White House who will claim the political kudos for the fossil-fuelled economic recovery.
In Germany the post-Fukishima knee-jerk decision to abandon nuclear power and pursue wind and solar energy has been a disaster. Squeezed in a pincer movement between decarbonisation targets and national green levies and regulations, the country’s energy giants are shrinking fast. RWE is shutting down 6 percent of its power generation capacity. EoN is considering following the same path. The dramatic loss of market share and market value has left them little choice. According to the Financial Times, RWE’s value has fallen by one-third since 2007, and Eon’s value dropped by 15 percent. The latter is seriously considering leaving Germany altogether. Citi Research suggests that neither will offer market growth until at least 2022. With green subsidies still in runaway mode, the whole issue of the switch to a green energy revolution has become a contentious political issue. All it will take to tip Germany into full reverse is for its over-stretched power generation to fail altogether in the coming winter.
Things are similar in the United Kingdom. Alone among its EU neighbours, the UK has green-lighted development of the continent’s potentially largest shale gas resource. Unfortunately, however, while George Osborne’s conservative-led Treasury is keen to reduce massive green subsidies (that have added ten percent to all household energy bills) and has granted significant tax breaks to the nascent shale industry, the strings of energy power are being pulled by the anti-hydrocarbon Lib Dem-led energy secretary at the DECC. While much noise is being made about pushing ahead on shale gas development, the DECC’s chief focus – and thus the UK’s – remains decarbonisation targets not economic energy security. In the winter of 2013-14 the UK power grid is expected to have a meagre four percent of extra capacity above expected needs directly due to the early closure of vital coal-fired power plants and an over-reliance on wind energy.
The bottom line is that, in all of the above leading economies, the policies associated with energy security realities and theoretical climate objectives are patently incompatible. Indeed, the European democracies still favour climate idealism and a focus on decarbonisation above economic welfare and energy security – while urgently attempting to diversify away from dependency on Russian gas imports.
Ironically, only in America, which alone refused to sign the Kyoto Treaty remember, has the free market accomplished – despite the attempts at Euro-style socialist engineering from the White House and the EPA – what the dead-hand of European bureaucracy and its various governments have failed to achieve: an economically viable switch to cleaner energy sources (in this case, shale gas) and economic recovery, with, for good measure, the world’s largest reduction of carbon emissions in any industrialised nation.
In the end, the needs of energy security and the impact of the free market will win out, just as they did when they forced the collapse of the stultifying policies of communism. But in Europe it looks as if it is going to take a whole lot of self-inflicted economic pain and power outages before the ill-conceived Western energy-climate paradigm – every bit as obscene as the Berlin Wall in its social effects – is finally dismantled.
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