Our friends in the U.K. and Europe are especially green. Just hop off the plane in London and pick up the papers. Global warming is everywhere, and, for decades, the religion’s been that carbon dioxide reductions are fine, virtuous, and they’re going to make everyone rich. I have a social security system I would like to sell them.
This all splatters to a halt when economies go south. And the crash can be especially jarring if greenness is one of the causes. Thanks in no small part to the debacle in Europe, in a very few recent weeks, we have witnessed the great green crack‐up.
Admittedly, the first glimmers showed up a couple of years ago in Spain, which suffered the malady of economic miasma brought on by environmental populism. The government — which our president cited as his environmental role model in his last presidential bid — sought to buy support with outrageous subsidies, in the form of power purchases, to anyone who put a solar panel on his roof in sunny Seville. The government spent much more than it took in, sold bonds it couldn’t back, and pretty soon your portfolio is going to pay the price.
(I’m not so bullish on the notion that the president is going to be touting Spain and solar power this time around).
The United Kingdom followed suit, but instead required that electric utilities pay the price, which is far more expensive than their coal (or gas) power. As occurred in Spain, people know a good handout when they see one and, just last month, there were over 15,000 new installations. Nevermind that the U.K. is one of the cloudiest nations on earth — we’re talking Prince Charles here.
At the same time, consumers got an extra bill to support wind farms that, because of the inconstancy of the wind, operate at 25% of their capacity (figure from the British Wind Energy Association) or 8% (according to E.on, a large operator of UK wind farms).
Guess what? Electricity prices have gone through the roof. The average U.K. household bill is a tad under $200 per month, and so the thermostat goes down. It’s pretty chilly there for much of the year, and a cold house has consequences. A study just came out today on the health costs of what they call “fuel poverty”, commissioned by the Energy and Climate Change Secretary (don’t we need one of those?), Chris Huhne. Bottom line: the chill from green taxes is now killing more Brits per year than car crashes.
London has suddenly awoken to the costs of indiscriminate greenness and is proposing to reduce the solar subsidies and — this is big — now threatens the multibillion dollar subsidies for its massive (and massively ugly) wind power scam.
That’s just the tip of the iceberg that the green Titanic has run into. Just this week:
- Spain announced a 40% reduction in its wind power subsidy.
- The European Commission’s energy department is questioning the wisdom of its go‐it‐alone global warming policies, citing loss of economic competitiveness.
- The British government pulled the plug on its budget‐bending carbon capture and storage facility. That’s where carbon dioxide from the combustion of coal is pulled out of the exhaust and sent back into the ocean floor. It sounds expensive and fanciful, and it is.
- Japan announced it is reconsidering its plan to cut carbon dioxide by 25% in the next 8 years. Minister Nobutani, of the Global Environmental Affairs Office stated that “Japan’s wealth has been draining out” in its attempt to meet the target.
- The price of carbon credits—what you buy as a “permit” to emit—has dropped off the table because the Greek and Italian (and soon, Spanish) crises are crashing the European economy. No one needs to buy a permit to emit carbon dioxide when the factory is down.
This last one has an additional feedback: by dropping the price of permits, there’s little incentive to invest in wind and solar, from whom the permits can be bought.
And so, as history teaches us, when times are good, green is great, and when economies crash, green cracks up.