Tim Yeo MP called his proposal for yet another draconian target to decarbonise Britain’s power sector the ‘green jobs amendment’. It was defeated last week by 290 votes to 267. One sweeping new regulation was apparently enough for the day as the Commons settled for casually renationalising the energy sector by passing the government’s bill.
The amendment’s defeat is a setback for environmentalists, who had campaigned for it aggressively, but not for Britain’s two and a half million unemployed. ‘Green jobs’ are an utter farce. More expensive sources of energy will destroy more employment than they create.
That is not to say that no one has a green job. Tim Yeo has several and in the latest parliamentary scandal he appeared to be pitching aggressively for another one. In the past year he has earned tens of thousands of pounds working for green energy firms. And there are plenty of others working hard to turn renewable energy subsidies into more renewable energy subsidies.
Beyond the lucrative jobs for green lobbyists, it is true that there is more legitimate work making and installing the solar panels and wind turbines that earn those subsidies. Britain needs 374 million megawatt hours of electricity each year and it takes more capital and more labour to generate a megawatt hour of renewable energy than it does to generate a megawatt hour of conventional energy.
And what must be remembered is the jobs not created because people are spending their money on paying higher bills rather than other things; not created because tens of billions of pounds are invested in the energy sector rather than other businesses; and not created because industrial energy costs are too high here in Britain relative to other potential locations.
According to a recent Liberum Capital report, more than £160 billion needs to be invested in our energy sector by 2020 if the current policies remain in place. Another £215 billion will then be needed by 2030. Without government policy only £71 billion would be needed this decade and less than £80 billion in the following decade.
Paying for all of that unproductive investment will require higher profits for the energy companies and higher prices for residential and industrial consumers. Even compared to today’s high prices, that would mean total power costs rising by nearly a third above inflation by 2020 and doubling by 2030.
Does the government really think families can pay all that extra money on their utility bills, cope with the higher taxes that have been imposed in the hope of closing the deficit and not cut back on their spending, squeezing British retail?
Higher energy costs also hurt businesses. Even service industries from pubs to data centres are struggling to cope with ever higher bills. But the energy intensive industries are the hardest hit. The Lynemouth aluminium smelter in Northumberland closed in 2011, for example. The owners reported that it was ‘no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation’.
The 515 jobs lost at the plant will only have been a small part of the impact. All of the plant’s contractors, customers and suppliers will be in trouble.
Aggressive climate change policies destroy more jobs than they create. Studies in Spain, Italy and Germany have all confirmed that. There is only an overall increase in employment if they secure significant net exports. Those who sell the wind turbines, solar panels and so forth get the jobs, not the mugs who buy them. And basic arithmetic tells you not everyone can win that game. Every country cannot simultaneously sell more than it buys.
I put that point to Greg Barker, minister at the Department of Energy and Climate Change. He told me there was a bright new market I had not considered where even the small-scale renewables that need the most subsidy here are genuinely competitive — rural Africa. That is the government’s plan for growth: sell expensive wind turbines to poor Africans.
Buying lots of copies of Microsoft Office will not make you Bill Gates. Installing lots of expensive offshore wind turbines in Britain will not make us the most competitive location in which to make them. Over time, the jobs will leak to other countries where costs (including energy costs) are lower.
And the jobs lost when energy policy increases prices are at firms that could have stood on their own two feet, but the green jobs gained are subsidy junkies. That means the new jobs are much more vulnerable to changes in policy in the future.
The Humber Estuary Renewable Energy Super Cluster may sound like good news to people in Hull. Sadly it will leave them more dependent on the whims of politicians and the companies who are holding those politicians to ransom for more subsidies. The risk is that they will discover in a few years that it is all built on sand and they have wasted time and effort that could have been devoted to building a more sustainable future for their region’s economy.
While the Treasury is at least trying to limit the costs of all of these policies, it is making limited progress. Indeed it was the Treasury that was responsible for the disastrous carbon floor price that increases energy prices here and actually reduces them for our industrial competitors.
Ministers are mostly settling for protecting specific industries — like the protection announced for ceramics at the Budget — but that is a very limited and arbitrary approach. It might stop some factories from closing, but it does nothing for residential consumers and will not make Britain a competitive location for new investments. Industry saw how these special protections could disappear in a heartbeat when a 75 per cent increase in the Climate Change Levy for energy intensive firms was announced at the Pre-Budget Report in 2009.
MPs should be working to defend families and businesses struggling with high energy prices. Instead too many of them are trying to fool the public. They pretend to be angry at energy companies while promising them fat profits if they invest to meet climate targets. They point to the green jobs created by expensive climate policies and try to brush under the carpet all of the jobs lost by making energy more expensive.
It cannot last. There is an enormous opportunity for the first party which offers consumers a better deal, the party you vote for if you want affordable energy.