The United Kingdom has been the heralded as most committed country on earth to embrace green economics. Powered by huge government subsidies, environmental and low-carbon businesses now claim to employ over one million people and make up 8% of the UK’s GDP – from biofuels, electric cars, wind turbines and solar installations. But with the nation heading into its third recession in four years and UK losing its AAA credit rating, the British public seems ready to pull the plug on green economics and join the “Dash for Gas” to begin fracking the nation’s immense deep coal deposits.
Following the Financial Crisis of 2008-09, the UK government committed to Keynesian deficit-spending stimulus to “grow” the country into the world leader in green economics. Through public spending and government direct guarantees of high returns to private leveraged investors, total investments in UK renewable energy projects grew from $6.9 billion in 2010 to $9.4 in 2011. More than 800 MW of wind, 300 MW of solar and 500 MW of biomass generating capacity was funded. Phyllis Cuttino, author of the Pew Charitable Trust Energy Report, Who’s Winning the Clean Energy Race?; stated: “In part, investment growth in the United Kingdom can be attributed to investors initiating new projects before policy incentives are curtailed. To maintain growth, the UK must provide consistent, long-term market signals that provide certainty to investors.”
Despite international media adulation for investing public funds in the “industries of the future”, the UK fell back into recession in 2011. Facing falling tax revenue and rising feed-in tariff subsidies for solar panels, the government attempted to cut subsidies to spare slashing social spending. But the UK Supreme Court ruled cutting solar subsidies was “legally flawed”. Despite public protests, the government’s March 2012 budget cut $14 billion in child and welfare spending.
With public scorn against the crony capitalism of green economics mounting, Prime Minister David Cameron hacked subsidies for future wind turbine, solar and biomass projects by 50%; causing 2012 green energy investments to fall back 11% to $8.4 billion. In September, the Prime Minister, replaced pro-renewable energy minister Charles Hendry with John Hayes, a known opponent of wind power.” In Mr Hayes opinion, Britain is already “peppered” with onshore wind farms and “enough is enough.”
For two hundred years, Welsh coal mining was the dominant energy source in the UK. But with the mines and electric utilities nationalized after WWII, Labor government administration resulted in skyrocketing costs and the peak chaos of 4583 mine strikes in 1979. Margret Thatcher was swept into office and over the next 11 years uncompetitive Welsh coalfields were mostly shuttered with a loss of more than 85,000 jobs.
The government sold off the land and privatized the electric companies in the 1990s. Once freed of political pressure to burn coal, the electric utilities began converting to natural gas as a feed stock to benefit from the efficiency of gas turbine power stations and the cheap new supplies from North Sea natural gas discoveries.
Having decisively rejected green economics, the UK government fully committed to the Dash for Gas movement on December 13, 2012 by lifting its ban on hydraulic fracturing (fracking) for natural gas from shale deposits on its derelict coal fields. Support for fracking now has broad political support. Mr. Edward Davey, secretary of the UK Department of Energy & Climate Change and a member of the left-of-center Liberal Democrats emphasized the decision to lift the ban “is based on the evidence. It comes after detailed study of the latest scientific research available and advice from leading experts in the field.”
Richard Davies, Director of Durham University’s energy institute, commented that the U.K. produces about 1.5 trillion cubic feet of gas a year and consumes roughly 3.3 trillion cubic feet. “The geology is there but the question is: How much can we get out?” Jon Clark, Director of Oil and Gas Transaction Services at Ernst & Young LLP, said “Shale gas has had a transformational supply impact in the U.S.” He estimated if the recovery is similar to the U.S., the UK could enjoy a 75 year supply of natural gas.
George Osborne, will deliver the 2013 UK budget on March 20 that will slash public sector green subsidies and embrace the private sector Dash for Gas as the path to create highly skilled jobs, halt gas imports, increase tax revenues and benefit the environment. The leftist UK media responded this morning with the usual demands to increase deficit spending, increase minimum wage, cap rents, nationalize banks, and raise taxes on the rich. But what is conspicuously absent is any willingness to walk the political plank to keep the green economics from turning brown.
CHRISS STREET & PAUL PRESTON
GREEN ECONOMICS TURNS BROWN IN UK
Leave a Reply
You must be logged in to post a comment.