Those who hate environmentalism have spent years looking for the definitive example of a great green rip-off. Finally it arrives, and nobody notices. The government is about to shift £8.6bn from the poor to the middle classes. It expects a loss on this scheme of £8.2bn, or 95%. Yet the media is silent. The opposition urges only that the scam should be expanded.
On 1 April the government introduces its feed-in tariffs. These oblige electricity companies to pay people for the power they produce at home. The money will come from their customers in the form of higher bills. It would make sense, if we didn’t know that the technologies the scheme will reward are comically inefficient.
The people who sell solar photovoltaic (PV) panels and micro wind turbines in the UK insist they represent a good investment. The arguments I have had with them have been long and bitter. But the debate has now been brought to an end with the publication of the government’s table of tariffs: the rewards people will receive for installing different kinds of generators. The government wants everyone to get the same rate of return. So while the electricity you might generate from large wind turbines and hydro plants will earn you 4.5p per kilowatt hour, mini wind turbines get 34p, and solar panels 41p. In other words, the government acknowledges that micro wind and solar PV in the UK are between seven and nine times less cost-effective than the alternatives.
It expects this scheme to save 7m tonnes of carbon dioxide by 2020. Assuming – generously – that the rate of installation keeps accelerating, this suggests a saving of about 20m tonnes of CO2 by 2030. The estimated price by then is £8.6bn. This means it will cost about £430 to save one tonne of CO2.
Last year the consultancy company McKinsey published a table of cost comparisons. It found that you could save a tonne of CO2 for £3 by investing in geothermal energy, or for £8 by building a nuclear power plant. Insulating commercial buildings costs nothing; in fact it saves £60 for every tonne of CO2 you reduce; replacing incandescent lightbulbs with LEDs saves £80 per tonne. The government predicts that the tradeable value of the carbon saved by its £8.6bn scheme will be £420m. That’s some return on investment.
The reason for these astonishing costs is that the government expects most people who use this scheme to install solar panels. Solar PV is a great technology – if you live in southern California. But the further from the equator you travel, the less sense it makes. It’s not just that the amount of power PV panels produce at this latitude is risible, they also produce it at the wrong time. In hot countries, where air conditioning guzzles electricity, peak demand coincides with peak solar radiation. In the UK, peak demand takes place between 5pm and 7pm on winter evenings. Do I need to spell out the implications?