What would you pay for 400,000 new green jobs?
This New Green Deal is gonna cost
Innovas’s analysis is useful under any definition of green, insists Sharp. Some environmentalists might want to reject the alternative fuel vehicles sector, or the entire 'emerging low carbon' sector on the basis that these activities aren’t green enough. But Miliband and Brown need the LCEGS sector to appear as broad and as potent as they can, in order to be able appeal to investors who want to see a return, and to the voter, who, in the month that unemployment level exceeded 2 million, wants to see jobs.
A genuine industrial revolution should make it possible to produce things more efficiently, creating greater dynamism within the economy. But the Green industrial revolution yields no net benefit.
Miliband wants to give the impression that the global low-carbon sector’s growth is a spontaneous phenomenon emerging under its own steam. It's inevitable, he believes. But this is a market created by legislation and international climate agreements that wouldn’t be necessary if this sector’s growth really was ‘inevitable’.
Carrot and stick power
Innovas estimates that the renewable energy sector is worth £31bn. Here's another sector that has expanded due to intervention. The Renewables Obligation Order 2002 (RO), forces suppliers to provide an increasing percentage of electricity from renewable sources. If a supplier fails to meet the target, it is fined proportionately. The fines are redistributed to suppliers according to their performance. According to BERR, this props up the renewable energy industry by £1bn a year, which is passed on to the consumer.
This fact was acknowledged by the Department for Energy and Climate Change (DECC) in a consultation document on the UK’s renewable energy strategy last June.
Our current climate change policies […] make up around 14% of average domestic electricity bills and 3% of average domestic gas bills. […] Our existing climate change policies are projected to add around 18% to annual domestic electricity bills and around 55% to industrial electricity bills by 2020.
The subsidy is intended to drive progress in the development of renewable technologies, but some argue that it may be doing the opposite.
"The [RO scheme] accounts for about 60 to 70 per cent of the income of renewable generators", says John Constable, Director of Research at the Renewable Energy Foundation. "It’s an artificial market."
The capture of gas from landfill sites to produce energy has never needed subsidies, so the RO allowed generators "to cover themselves in money". But the next best thing – offshore wind is "only market-ready if you exclude true costs and don’t make them pay their way", Constable points out. In order to make wind attractive to investors, regulation forces a market for its energy. So what incentive is there to make wind actually work?
Horse, push cart
But is this, as Mandelson claims, an industrial revolution? A genuine industrial revolution should make it possible to produce things more efficiently, creating greater dynamism within the economy. But this green "industrial revolution" yields no net benefit. What are called opportunities are generated at a net cost, absorbing money and labour that might be better spent on producing real industrial development, or public services such as schools and hospitals. Stagnation is spun as progress. For example, it is China’s industrial dynamism, not the UK’s, which has created markets for reclaimable materials. It is only by intervention and legislation that the UK is even able to collect plastic bottles, never mind reprocess them.
"Are these new jobs in these new industries going to be wealth-creating ones, or are they simply going to be reliant on funding which has to come from somewhere else? You can't just create new jobs in a sector which is politically appealing without there being knock-on effects further on in the economy," says Tom Clougherty Executive Director of the Adam Smith Institute.
You don’t need to be a free-market advocate or climate sceptic to see the point. The green sector can’t yet stand on its own two feet. If we want to create more jobs, it might be more sensible to invest in sectors that are capable of producing wealth, rather than merely absorbing it. ®
Innovas told us that we’d need to sign an NDA (non-disclosure agreement) to see a more detailed analysis than the highlights BERR published. It was signed, but they didn't send the analysis anyway. So you are unable to compare the growth in the green sector with what it receives in the form of benefits, or to establish the truth of the Government’s claims and the wisdom of its policies for yourself.
Ben Pile is a science writer and co-editor of the Climate Resistance blog.