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The Green Mirage: Why A Low-Carbon Economy Is Further Off Than We Think

solar wind renewables

Bottom Line: The current prospects for a sustainable low-carbon economy are poor in both the UK and across the European Union (EU). Germany and Spain have already clearly shown what happens when state coercion forces such a dramatic shift to less reliable and more costly renewable energy systems: unsustainably high subsidies, fewer jobs, and reduced economic growth.

Whatever the longer-term potential for a viable and prosperous global economy with a low-emissions profile, the present study demonstrates that the prospects for a self-sustaining low-carbon economy as the result of current UK national and EU-wide policies are poor.

The problem is that these policies for such a shift to renewable energy systems demand high levels of state coercion.

This has the risk of stagnating economic growth and leading to lower levels of invention and innovation, thus appearing to be a weak preparation for reduced usage of fossil fuels.

In addition, empirical experience in Spain and Germany shows that the costs of supporting renewable energy generation are overly high, compared to low-carbon alternatives, and almost certainly has, over time, net economic effects that are negative both in terms of gross domestic product and employment.

An age of subsistence-energy generation appears to be dawning. Overly high subsidies to force renewable energy into the system erode jobs in other sectors of the economy.

Finally, analysis for the EU suggests that the net effects of such policies would only be marginally positive if the EU retains a high share of the world export market in renewable energy technologies – something that appears rather unlikely.

Growth in Cost of Subsidy to Spanish Renewable Electricity Generators

• The prospects for a sustainable, low-carbon economy as the result of current UK national and EU-wide policies are poor.
• Empirical experience in Spain and Germany shows that the costs of supporting renewable energy generation are too high.
• Rising employment in the renewable energy sector compared to the wider UK economy stems from unsustainably high subsidies.
• Renewables are naturally less productive, so as they are relentlessly pursued, a painful rebalancing of the economy will occur, with fewer jobs and less economic growth.

Read the full study here.

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