The case for harnessing renewable energy
Tim Helweg-Larsen and Tim Holmes
9th April, 2009
The authors of the recent Climate Safety report make the case for harnessing the UK's renewable energy resource. By Tim Helweg-Larsen and Tim Holmes
At a time when economics has risen to the top of the agenda, it is worth stopping to pick up a dictionary and check what we think it means.
It is in fact defined as ‘the careful management of available resources’. This definition offers no reference to money, yet money and its pursuit have become synonymous with the idea of economics. I am sure few would have raised an eyebrow had I incorrectly stated the definition as ‘the careful management of available money’. Money is the medium with which we facilitate the careful management – or otherwise – of our available resources.
Few things make the case for such careful management as urgently as the rapidly accelerating climate crisis. For Britain to make a meaningful contribution towards addressing climate change, its exit from fossil fuels will need to be rapid and complete. While our own emissions represent just two per cent of the global total, the message of our actions – that a nation can respond with urgency and clarity while, despite fears to the contrary, serving to bolster our economy – will be worth its weight in carbon.
Regardless of dictionary definitions, there is a clear economic advantage to the UK for switching to zero-carbon energy. Supplying the UK with the energy it needs will require much more than rooftop generation can provide; it will require a large offshore energy infrastructure, tapping the strength of our winds and tides. A mobilisation of the scale and at the speed required to put this in place demands a concerted national effort, with both government co-ordination and strategic investment playing a major role. The up-front financial costs will be large, but at the same time will lay the basis for long-term resilience.
Yet putting this in the language of the Treasury – the kind of language the Government will take seriously – is surprisingly difficult. Today, nobody is able to calculate the financial value of Britain’s offshore energy resource: if Denmark were to put in an offer to buy this great underutilised asset, we wouldn’t know what price to put on it. Good data is available for its energy potential – which is clearly vast – and our relatively windy conditions make it cheaper for the UK to produce offshore wind power than many of our European neighbours. Crude estimates point to a financial value in the hundreds of billions of pounds – an offshore energy goldmine. More than almost anything else, this single number could add enormous power to the elbow of the minister for energy and climate change.
How do we get such a scheme up and running? The logical first step is to lay out a business plan, a blueprint for UK Plc, outlining the construction and operation of a renewable energy infrastructure, the income to be gained from energy sales to Europe, and calculating the total value of our resource. Such a plan would help the Treasury to explore the full economic benefit to the nation, including the costs we can avoid as fossil fuel prices skyrocket; the creation of hundreds of thousands of green-collar jobs, and the effect on our balance of payments. While rebuilding our energy system will be expensive, the cost is also an opportunity to invest in secure assets of enduring value. Britain is blessed with the largest offshore wind and marine energy assets of any country in Europe; developing this resource to supply energy domestically and for export means co-ordination and fi nancing on a large scale. While the Department for Energy and Climate Change is the appropriate body to co-ordinate such a programme, financing it is also an investment opportunity for individuals – whether directly over the post office counter or through the money in their pension funds.
Both in wartime and in peacetime, large-scale infrastructure projects have been financed by government bonds, and post offices have provided customers with a face-to-face means of accessing them. Today, people hold £35 billion in premium bonds. Government energy bonds – issued by the Treasury and bought by investors – could similarly be used to finance a trust dedicated to investments in the UK’s renewable energy, supporting new gridlines, wind farms, turbine factories and even energy effi ciency drives. Pension funds in particular would seem to provide a perfect match for such a scheme. Pension funds have long-term liabilities, having to pay their members at a later date, and will therefore be looking to balance this by investing in long-term assets. It is a real confidence boost for those paying into pension funds to know that the bonds in which they invest are backed by real assets – wind turbines, tidal or wave power – and that the quarterly dividends they receive are underpinned by a secure stream of income from the sale of energy. With the Government bringing in feed-in tariffs to guarantee the price of renewable energy sales, this income stream becomes very secure indeed.
Britain will never run out of wind, waves or tides. For every passing day of inaction, however, we must cover the increasing and avoidable cost of fossil fuel imports; we shall miss out on revenue from the export of zerocarbon energy, and the profound, cumulative risks of climate change will accelerate still further. Applying ourselves to economic policy in its true sense – the careful management of our available resources – provides a real route to securing our climate safety.
This article first appeared in the Ecologist April 2009
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