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WSJ: Britain’s No-Energy Bill

The Wall Street Journal

The UK government puts ‘decarbonization’ above growth.

The U.K.’s 2013 energy bill is up for a key vote Tuesday, and even the best-case outcome is likely to hurt an already weak British economy.

Three years into David Cameron’s five-year term as Prime Minister, growth is at a standstill, government deficits remain stubbornly high, and Mr. Cameron’s Conservatives are on track for a stinging defeat at the polls. Yet Mr. Cameron and his Liberal Democrat coalition partners seem intent on pursuing the economic folly of total “decarbonization” of the British economy.

Voters could be forgiven if they haven’t noticed how crazy this policy is, as the government and its cheerleaders wrap the drive to zero CO2 emissions in the language of growth, jobs, investment and innovation.

The immediate flashpoint is a seemingly minor issue, but its symbolism is rich. The hard-core climate alarmists want to commit Britain to a zero-emissions target as soon as 2030. Mr. Cameron wants to put off that decision until 2016—that is, after the next election. For this, Mr. Cameron is being dressed down in the media for abandoning his commitment to running the greenest government of all time.

But even under the government’s preferred language, U.K. carbon emissions are supposed to fall by 50% in 12 years and by 80% by 2050. The government insists it can do this and keep the lights on by “incentivizing” £110 billion ($168 billion) of private investment to build Britain’s new low- to no-carbon future. This means subsidizing new nuclear plants, renewables like wind and solar, and carbon capture and storage, or CCS. No country has been able to pull this off. CCS in particualar is the great green whale of the climate-change movement, and every attempt at it on an industrial scale is over budget, behind schedule or both.

The government also claims the energy bill will create 250,000 jobs. Even if that is achievable, it’s the product of the single-entry bookkeeping so common in political green-energy projections. You can create any number of jobs putting up subsidized windmills or installing solar panels. But if in the process you drive up energy costs or taxes throughout the economy, you’re bound to destroy more work than you create.

Outlaw computers and you might create a boom in demand for typists. Ban ATMs and demand for bank tellers might rise—as President Obama himself once pointed out. But the economy would not be better off because you diverted people into lower-productivity or uneconomical work.

The Cameron government’s gamble is similar. It’s betting that if it outlaws cheaper ways of producing energy, the resulting investment in replacing it with more expensive, less reliable and unproven alternatives will somehow pay off. And despite it all, Mr. Cameron is under political attack for not being green enough.

Already British gas and electric bills are up 15% or more in real terms in the past five years, while real wages and growth have flat-lined. The U.K. counts for less than 2% of global carbon emissions, so even if it could cut CO2 to zero, its contribution to the fight against climate change would be wiped out by one year of decent growth in China.

In this context, Tuesday’s debate in Parliament over whether to set a deadline of 2030 for radical decarbonization does seem trivial. Whether it’s 2030, or 2050, the British government is taking a huge gamble with the livelihoods of millions of Britons for the sake of what amounts to a rounding error in the global carbon budget. Someone ought to ask the government whether those risks are worth the low-carbon candle.

The Wall Street Journal, 4 June 2013