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UK Renewables Costs Exceed Gas By Over 100 Billion Pounds

LONDON, Sept 2 (Reuters) – The cost of investing in renewable energy in Britain is 105 billion pounds ($170 billion) higher than building the same capacity using gas-fired power plants, an economics professor said in a report published [by the Global Warming Policy Foundation] on Friday.

The extra investment cost of building power plants such as offshore wind farms is equivalent to nearly 10 percent of overall British business investment in the next 10 years, Gordon Hughes of the University of Edinburgh said in his study “The Myth of Green Jobs.”

“It is clear that the public and its political representatives have never signed up to the proposition that the UK should sacrifice a minimum of 4-5 percent of GDP annually in order to meet climate change targets,” Hughes said.

The UK aims to cut greenhouse gas emissions by 34 percent below 2009 levels by the end of the decade, compared with a 17 percent reduction in 2010.

Many renewable energy developers, as well as the government, have promoted the sector as a creator of new jobs at a time when UK unemployment figures are rising.

But Hughes said green job creation was misleading as its impact was only short-term during the production and construction phase, which would also apply to the creation and building of conventional power plants.

If the government’s aim was to create long-lasting job opportunities it should select sectors which generate the highest level of net benefit, he said.

“If (instead) the primary objective of such policies is to reduce CO2 emissions, then we should seek to minimise the costs of meeting that objective, including any wages for jobs directly or indirectly linked to the project,” Hughes said.

At the same time, high investments into renewable energy mean these costs will increase wholesale energy prices which will eventually have to be passed on the consumers, lifting inflation.

Hughes’ calculations show that once the economic growth effects are taken into account, the cost of saving one metric tonne of CO2 will be 270 pounds by 2020.

Carbon prices are currently trading at around 12.50 euros per tonne on the EU’s Emissions Trading System.

Reuters, 2 September 2011

 

New Report Slams “Illusion” That Government’s Green Policies Would Stimulate Sustainable Economic Growth And Create Jobs

Evidence does not support the coalition government’s assertions that green energy policies would stimulate the economy by creating thousands of jobs in the sector, a new report published by the Global Warming Policy Foundation has argued.

The report “The Myth of Green Jobs”, produced by Professor Gordon Hughes (University of Edinburgh, claims the cumulative impact of the government’s policies on green energy would lead to a 2-3% drop in UK GDP over the next two decades.

The research highlights the capital costs for generating electricity from renewable sources are 9-10 times higher than conventional power plants meeting the same energy demands. This would require an additional £120 Billion in investment which would have to diverted from more productive uses in the rest of the economy.

Pursuing renewable energy would inevitably lead to higher energy costs for businesses especially manufacturing and can prove to be fatal for many manufacturing firms. t is impossible for the UK to acquire a long-term comparative advantage in the manufacture of renewable energy equipment by any combination of policies that are both feasible and affordable.

In addition, the report claims government policies could add 0.6 -0.7% each year to core inflation from now to 2020.

“Claims by politicians and lobbyists that green energy policies will create a few thousand jobs are not supported by the evidence,” Professor Hughes said. “In terms of the labour market, the gains for a small number of actual or potential employees in businesses specialising in renewable energy has to be weighed against the dismal prospects for a much larger group of workers producing tradable goods in the rest of the manufacturing sector.”

The report can be downloaded here

 

James Delingpole: Green jobs? Wot green jobs? (pt 242)

The Daily Telegraph, 2 November 2011

The Global Warming Policy Foundation has published a report into the future of “Green Jobs” in Britain. It is damning indeed. Though it doesn’t actually say as much – the GWPF is too austere and restrained for such flippancies – this Government’s green policies are the equivalent of trying to pay off the national debt by breeding unicorns to sell to Chinese millionaires.

Among the conclusions of The Myth of Green Jobs by Gordon Hughes, Professor of Economics at Edinburgh University, are:

1. “Green jobs” are a chimera. Though diverting taxpayers money into the renewable energy sector may indeed “create” jobs in the renewable energy sector, it will cost many more jobs in the broader economy.

2. Policies to promote renewable energy will add 0.6 to 0.7 per cent per annum to core inflation from now till 2020. This is equivalent to a rise in the same period of the Consumer Price Index by 6.5 per cent. if the Government sticks to its inflation targets and applies restrictions on speed of growth through higher interest rates, then the “sacrifice cost” – ie what the economy could have made, but was prevented from doing so by monetary policy – is £250 billion.

3. These same policies will, on top of that £250 billion cost, reduce GDP by 2 per cent to 3 per cent for at least ten years. This will cost Britain the equivalent of 60 per cent of the amount the government spends each year on primary and secondary education.

4. Renewable energy will cost £120 billion – making it 9 to 10 times more expensive than energy from conventional sources.

5. Claims about “innovation” and the development of “new industries” are a nonsense. “Almost every country in the world wants to claim the same benefit so the numbers do not add up….For the longer term, there is little doubt that the primary beneficiary will be China. That is already apparent from the way the market is developing.”

6. Not only is there no evidence to support lobbyists’ and government ministers’ claims that green “investment” will create green jobs, but also such a policy will result in lower real disposable incomes and higher prices. Little thought appears to have gone into considering the real consequences of this government policy. Indeed, all these claims about green jobs “seem intended to divert attention from the consequences of setting arbitary and poorly considered targets for renewable energy.”

Not, of course, that we didn’t know all this already. I’ve written before about those non-existent “green jobs” herehere (the one where we learned that for every “green job” created in Britain 3.7 jobs are lost in the real economy) and here (my evisceration of the beyond-dismal Climate Change minister Greg Barker). What’s more significant, though, surely, is that for all the overwhelming evidence out there of the environmental and economic damage being done by the Government’s green policies, the Government is making no effort whatsoever to change course.

Full story

‘Green jobs promise is an illusion’ according to leading professor

The Scotsman, 3 September 2011

By Terry Murden

ONE of the UK’s top energy and environment economists has warned that the government’s promise that green energy policies will create tens of thousands of jobs and stimulate competitive industries is an illusion.

In a report, The Myth of Green Jobs, published yesterday by the Global Warming Policy Foundation, Professor Gordon Hughes of Edinburgh University challenged a number of assumptions.

He says government targets for generating electricity from renewable sources will involve a capital cost nine to ten times the amount required to meet the same demand by relying on conventional power plants.

He also claims the extra investment required for renewable energy – about £120 billion – will be diverted from more productive uses.

Hughes, who was a senior adviser on energy and environmental policy at the World Bank until 2001, argues that increases in the cost of energy together with the diversion of investment funds means that many manufacturing firms will either go bankrupt or relocate and argues that it is impossible for the UK to acquire a long-term comparative advantage in the manufacture of renewable energy equipment by any combination of policies that are both feasible and affordable.

Policies to promote renewable energy could add up to 0.7 percentage points per year to core inflation from now to 2020, he says and asserts that the cumulative impact of these policies could amount to a loss of 2 to 3 per cent of potential GDP for a period of 20 years or more.

“Claims by politicians and lobbyists that green energy policies will create a few thousand jobs are not supported by the evidence,” argues Hughes, who has advised governments on environmental policies and was responsible for some of the World Bank’s most important environmental guidelines.

“The gains for a small number of actual or potential employees in businesses specialising in renewable energy has to be weighed against the dismal prospects for a much larger group of workers in the rest of the manufacturing sector.”