European parliament puts jobs before climate orthodoxy for once
For the first time in my recollection, the European parliament has faced up to reality, and voted for jobs and economic survival rather than climate alarmism. This is an early indication that we are starting to make progress in our campaign for rational energy policies, and for Affordable Energy www.affordable-energy.eu.
It’s a really complicated story, with far too many twists and turns and double negatives, but I’ll try to make it accessible for readers who maybe haven’t followed the detail.
The EU’s Emissions Trading System (ETS) was launched in 2005, and was designed as a mechanism to incentivise the reduction of CO2 emissions and the development of low-carbon generating technologies. It was promoted as a “market-based mechanism” that would allocate CO2 permits to those activities where they were most necessary and valuable. So I took a lot of flak, as an economic free-market liberal, for opposing it. I argued that it was a wholly false market; that it depended on bureaucratic fiat; that it could be altered at the stroke of an apparatchik’s pen; that it dealt not in a real commodity with a real value, but a virtual commodity with no real value at all.
I also argued that if reducing CO2 emissions is a priority (and I don’t think it should be), a straightforward Carbon Tax would be more efficient (much as I hate new taxes). A carbon tax would have avoided the anomalies and distortions and grand-father rights inherent in the ETS; it would have obviated the armies of lobbyists and traders that the ETS has spawned; and it would have given greater planning certainty to businesses, entrepreneurs and investors. But they went ahead with the ETS anyway.
I hate to say “I told them so”, but of course it was a huge failure. With the recession, plus excessively generous initial allocations, the carbon price collapsed, so we were left with a costly mechanism delivering nothing. It utterly failed to “send the signals to the market” which had been intended.
So back comes the European Commission to do just what I had predicted — to alter the fundamentals of the market at the stroke of a pen. They propose to withdraw a large tranche of permits from the market to reissue later. The immediate effect will be a relative shortage, forcing up the price of emissions permits, and sending the “right” signals to the market. This is called “Back Loading”. It would also (though the EC doesn’t mention this) make energy more expensive; undermine European competitiveness even further; drive even more businesses and jobs and investments offshore (known in the jargon as “carbon leakage”); and force more households and pensioners into fuel poverty.
We MEPs have received a huge amount of lobbying to support the Commission proposal, from a range of green groups (see above). You see two sides of a small placard from the European Climate Action network (“CAN” — and they should be), and World Wildlife Fund. I fear that lots of old ladies leave money to the WWF, thinking it works for little furry animals. Not a bit of it. It works to promote climate alarmism and the destruction of European economies.
I was more concerned about representations from British industry, with a rather convoluted argument. Europe’s energy prices are already uncompetitive with the rest of the world, and George Osborne’s Carbon Floor Price has raised energy costs again in the UK, making the UK not only uncompetitive with the rest of the world, but uncompetitive even with continental Europe as well. So some letters urged me to vote for backloading — that is, for higher energy prices in Europe — merely in order to reduce the relative disadvantage of UK industry versus Europe.
I have some sympathy with this view, and it gave me pause. But I don’t see it as my job to vote for a ruinous energy policy, and for higher energy costs across Europe, merely in order to rescue George Osborne from the consequences of his folly. Those companies lobbying me for higher energy prices in Europe should instead be lobbying George Osborne to scrap his Carbon Floor Price.
I should add that I have also had letters from more enlightened British companies taking the opposite view.
And after that extensive and convoluted introduction, the GOOD NEWS. On Tuesday April 16th, the Commission proposal for backloading was defeated in the parliament , by 334 votes to 315. A small majority, but enough. At last, and I believe for the first time, the parliament has managed to put the needs of citizens and businesses and the economy before the demands of this new religion of climate change. And about time too, given that there’s been no climate change for nearly two decades.
The Commission undertook to go away and “reflect on parliament’s opinion” — or in plain English, to lick their wounds. A final thought: Is it any surprise that Hitachi and other nuclear companies are reluctant to make a sixty-year investment commitment to new nuclear in Britain, when they see how pricing and incentives are constantly chopped and changed by lawmakers and regulators?