In response to the unfolding coronavirus crisis, many commentators have been making bold statements about what consequences it might or even should have for energy markets. This is an extremely volatile time, and we should be careful before jumping to conclusions. Once this terrible disaster is over, the overriding priority needs to be on enabling a rapid return to economic growth and stability. Those who advocate exploiting the crisis to impose radical new decarbonisation policies are guilty of a dangerous kind of magical thinking.
The Executive Director of the International Energy Agency (IEA), Dr Fatih Birol, has opportunistically announced that we should ‘put clean energy at the heart of stimulus plans to counter the coronavirus crisis’. Why exactly building new wind turbines would make a sensible stimulus plan compared to other approaches is not explained, suffice to say it is justified on the basis that it will both stimulate the economy and ‘accelerate clean energy transitions’.
To say that such plans will simulate the economy doesn’t really tell you anything; a government could do this by paying people to do almost anything. A sensible stimulus plan should be well-targeted and effective, and I haven’t heard any good reasons why investing in clean energy would be either of these things.
There is greater reason to believe it would be a most iniquitous strategy. The history of climate change policies, from grants to pay for expensive electric vehicles to green energy subsidies that have primarily benefited large landowners, is one of ordinary people paying the privileged few to feel good about themselves. On what basis are we to think the regressive distributional basis of crony green capitalism has changed?
The early signals are that the Coronavirus pandemic may not have the galvanising effect that green activists crave. For a start, it creates new problems for a renewable energy sector that is already struggling. Figures from Bloomberg New Energy Finance show that investment in renewables has flatlined since 2015. Now, solar panel and wind turbine manufacturers are facing significant disruption to global supply chains. In the United States, this could mean that projects fail to qualify for lucrative tax credits because they cannot meet building deadlines. Lower fossil fuel prices will not help either.
Politically speaking, decarbonisation is falling down the list of priorities for many governments. As exactly it should do when they are dealing with a much more immediate crisis. The Czech Prime Minister has said that the EU should abandon its ‘Green New Deal’ to focus on fighting the spread of coronavirus, and a Polish minister has said that the EU’s Emissions Trading System (ETS) should be scrapped. Britain faces the postponement of the COP26 climate summit that it is planning to host in Glasgow this November. If the pandemic lingers until then, it should not be a difficult choice to put the health of citizens first.
These developments have environmental activists and the rent-seeking renewable energy lobby terrified that their beloved climate change is no longer centre stage. But we should not write them off yet. They aim to persuade everyone that decarbonisation is simultaneously the solution to every problem under the sun: world poverty, gender inequality, racial inequality, the persecution of indigenous peoples and now spectacularly the coronavirus pandemic too. They will not stop claiming that so-called clean energy is the panacea that we need.
If Jeremy Warner is correct, they may just get their way. Writing in The Telegraph, he warns that just as government control of the economy in wartime led to the Post War Consensus, so this crisis will ensure a shift to the left. Such attitudinal changes, and the normalisation of radical government intervention, could well inspire politicians to double down on their decarbonisation obsession.
As politicians eventually move on to the task of rebuilding after this crisis, it is crucial that their efforts do not become hijacked by a pernicious form of green wishful thinking. In this dark moment, it is inspiring to see the community come together for the common good. That new-found public spiritedness is a wonderful thing, but it can easily be misdirected by those in power. We should do well to remember the lessons of Britain’s post-war period, when we became known as ‘the sick man of Europe’. Let us not make the same mistakes all over again.
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