“Dieter Helm of the University of Oxford estimates that, regardless what the benefits of emission reduction are, the government policies have wasted around £100 billion ($136 billion) to date, and the waste will continue to rise unless reforms are made. He is particularly concerned that the government picks which new technologies to back, leading to regulatory capture by special interests.”
This century, the government of the United Kingdom has adopted an energy policy designed to reduce the use of fossil fuels, especially coal, to generate electricity and replace them, as much as possible, with renewables, especially wind.
What has been the impact on its citizens? Is the policy wise?
Dieter Helm, Professor of Energy Policy at the University of Oxford, performed a review of the UK’s energy policies, released last fall. Citizens and governments around the world should take some lessons from his work.
Background
Most economists acknowledge the benefit of unfettered supply and demand in determining the allocation of scarce resources. But many people think government must intervene with regard to some commodities. Electricity is one.
There are three stages in getting electricity to consumers: generation, transmission, and distribution. This article focuses on generation.
Unlike most products, electricity must be generated in a way that meets the instantaneous demands of consumers. Current technology allows for little storage of electricity during low demand. Therefore, generating capacity must at every moment be sufficient to meet peak demand.
This is the argument for government regulation. A for-profit company would not invest in excess capacity. Instead, its generating plants would meet average, not peak, demand.
This argument for government regulation (if not ownership) could become moot if battery (or some other storage) technology improves. If an electricity firm could store excess electricity generated during low demand and transmit it during high demand, then most economic regulation would become unnecessary. However, environmental regulation is a different matter.
Carbon Dioxide vs. Pollutants
In the United Kingdom, as in most developed countries, environmental regulation has already succeeded in reducing “traditional” pollutants from electric generating plants—soot, sulfur oxides, nitrous oxides, carbon monoxide, and heavy metals—to levels so low as to be of little or no risk to health. Practically the only things coming out of the “smokestacks” of most coal and natural gas electric generating plants are water vapor and carbon dioxide.
But some people now think of carbon dioxide—emissions of which are thought to drive dangerous global warming—as pollution. That makes it the new focus of environmental concern with electricity generation.
UK Activism
The UK government passed the Climate Change Act in 2008, aiming to achieve an 80% reduction, compared with 1990 levels, in carbon dioxide emissions by 2050. Multiple policies have been introduced to achieve this goal, and many, Helm among them, have argued that some are contradictory, redundant, or superfluous.
Back to Dieter Helm’s study. He does not oppose carbon dioxide emission reduction. But he believes it should be achieved in the least costly fashion.
Helm’s cost-benefit analysis of carbon dioxide reductions takes the benefits as given. Unfortunately, however, those who favor the objectives of the Climate Change Act are likely to overstate the benefits, while opponents are likely to understate them.
Costs, on the other hand, can be more objectively determined. Helm estimates that, regardless what the benefits of emission reduction are, the government policies have wasted around £100 billion ($136 billion) to date, and the waste will continue to rise unless reforms are made. He is particularly concerned that the government picks which new technologies to back, leading to “regulatory capture” by special interests. “Regulatory capture” denotes a situation in which a government agency meant to serve public interests serves the interests of affected commercial or political entities instead.
As Helm notes,
Government has got into the business of “picking winners.” Unfortunately, losers are good at picking governments, and inevitably—as in most such picking-winners strategies—the results end up being vulnerable to lobbying, to the general detriment of households and industrial customers.
The £100 billion waste Helm identifies is due largely to redundant and overlapping regulations. Unfortunately, nowhere in the 230-page report does Dr. Helm estimate the total cost of the policies under the Climate Change Act. The Global Warming Policy Foundation estimated the average household cost to be £324 in 2014, rising to £584 per household in 2020, £875 in 2030, and £1390 in 2050. From 2016 to 2030, this puts a cumulative burden of £10,800 on the average household. However, these estimates assume constant energy use and no energy savings due to technological advances.
Policy Correction?
After six months, there has been no change in government policy in the United Kingdom in response to Helm’s call to streamline regulation and replace the myriad of environmental taxes and levies, which favor some corporations while harming others, with a single carbon tax that would affect all indiscriminately.
This should be no surprise. Vested interests will ensure that the privileges they currently enjoy will remain in place.
The environmental bureaucracy is no different from any other governmental bureaucracy. And the £100 billion wasted to date will only continue to grow as new technologies will be slow to be adapted when they impinge on vested interests’ current benefits.
Helm rightly notes in his review that technological change is occurring at a rapid pace, yet he is still comfortable with allowing government bureaucrats, whether in the Department for Business, Energy and Industrial Strategy, the Committee on Climate Change, the Department of Energy and Climate Change, or the Office of Gas and Electricity Markets, to decide the fate of the energy industry.
Conclusion
Almost everyone wants to be a good steward of our environment. But we should be more than that. We should be good stewards of the money spent to protect the environment. Everything spent on that could instead be used to meet other priorities, so waste in environmental spending means forgoing other spending that would bring its own benefits.
Without the waste, the government could use the funds to build schools, raise teacher pay, finance housing programs, improve health care, enlarge aid to the poor, and so on. Better yet, it could leave the funds with families so they could choose to meet priorities as they determine them.
Decarbonizing the United Kingdom’s energy production comes with costs. A rough estimate of its cost to the UK as a whole can be gained by multiplying the annual costs or the cumulative cost listed above by the roughly 27.1 million households in the UK. That yields roughly £15.8 billion in the year 2020 alone or £292.68 billion cumulatively through 2030.
One can only imagine what other priorities could be met with this money.
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Mark Ahlseen, who holds a Ph.D. in economics from Texas A&M University, is Associate Professor of Economics at Briercrest College, Caronport, Saskatchewan, Canada, and a Contributing Writer for The Cornwall Alliance for the Stewardship of Creation.
The most basic principle of scientific evaluation of data, includes the rule, coincidence is Not proof of cause and effect. This is totally ignored by all of the “scientists” who claim Al Gore’s Hockey stick data chart proves cause and effect. Al Gore’s scientific credentials are a degree in divinity, which is perfect for what he is now doing, which is claiming that people should accept on faith what he is propounding, and ignore the most basic principles of evaluating data, using scientific principles.
This is why the underlying data (used to support the global warming cause and effect claims) was destroyed by the “scientists” who claimed that their data supported the rise in temp of the world for the last few years, and the cause is increased co2 in the atmosphere. True science will always rely upon reevaluation of the original data, which is NOT possible when the data is destroyed, apparently because it does not support the conclusion propounded by the global warming alarmists, who are all on the left, and think this scare is their road to even more power over the unwashed masses, which is their ultimate wet dream.
The last time “science” was so badly abused was when Hitler and the Nazis decided that they had a scientific basis to kill all of the jews of Europe, and everyone else who opposed their view. And, their science was “correct” in some respects, but their interpretations of the best course to deal with their view of their distorted views of their “science”. I see little difference between what and how the Nazis viewed and implemented their (very distorted and contorted) views of their “science”, and what the left is now attempting.
The left has not yet started the extermination camps for the people who do not accept their science, but some have proposed that as the proper solution.
Attempts to criminalize views and people with such views that dissent from the global warming alarmist views are many and widespread in the US and in Europe, to silence honest dissent, and honest attempts to actually use real science to honestly and accurately try to understand this “situation” and the best response to it, on a policy basis.
This is the ramp up to the left wing Nazis total control of everything, including life and death, which is their ultimate goal. And, they are relentless, as they are mostly driven by insecurity in their personally, which is why they want total power over others, and such inadequate personalities are never in short supply, and they flock together, this time it is on the left of the political spectrum. The the Nazis were one example, the soviets another, remember pol pot, or the roughly 100 million people killed by Stalin and Mao. The reason was always the same, they don’t support the dictators control over them particularly their thoughts, they have to be killed. This is where the global warming alarmist are headed with their attempts to suppress all dissent, now by criminalizing dissent from their views, when will such dissent have the death penalty.
You probably think this will go away, which is what the Jews of Europe thought as Hitler spewed out his verbal poison, and even after the death decrees were in full implementation.
How long will we wait until we put the “global warming alarmists” into the place they dissever, which totally and completely out of power over others, which is their only ultimate goal, and they will resist nightly.