As an example of what could be in store in the US if the country is ever stupid enough to embrace wholesale the subsidy of renewable energy sources via levies on electricity users a recent report in Bloomberg details the impact of actions taken by the British government on consumers in the UK. Factories will pay 18 to 141% more for gas, electricity and carbon-reduction programs by 2020, adding about 7 million pounds ($11 million) to the bill for a typical large energy consumer the report has calculated.
Tata Steel, owners of Corus, the UK’s largest steel maker have threatened to leave the country if costs rise as expected. “Many of the taxes and costs identified in this report are UK specific and will reduce the competitiveness of Corus’ British operations, Kirby Adams, managing director and chief executive officer of Tata Steel Europe is reported as saying on review of the report into the impact of climate policy released this week and written by the London-based Energy-Intensive Users Group and Britain’s Trades Union Congress.
A major fertilizer manufacturer called GrowHow is quoted as saying the climate change policy will almost certainly make carbon leakage a reality. Carbon leakage is a term used to describe factories moving operations to countries where permits for emitting carbon dioxide are not needed.
The UK has committed to cut its emissions by 34% below 1990 levels by 2020, way beyond a European-wide initiative to cut emissions by 20%. The UK’s manufacturing industries, which include steel, ceramics, paper, cement and fertilizers employ about 225,000 people and could produce components such as wind turbines, electric cars and home-insulation materials needed to cut the nation’s emissions, according to the report. But if many are forced overseas or worse forced to close by the increased costs, the country will end up importing the parts, losing employment without achieving any net global reduction in emissions.
Nor is this an industry sponsored “less than independent report, an earlier report by Civitas covered in the Independent came to the same conclusions saying the previous Labour Government’s climate change strategy added an extra 14% on homeowners’ electricity bills and 21% on business bills, at the time of writing earlier this year. And last year’s renewable energy strategy if implemented will create “surcharges of up to 70% for businesses, and 33% for domestic customers by 2020.
As we wrote recently when we covered the technology of combined heat and power there are opportunities to make money from reducing carbon emissions. Both government and industry should be encouraged to embrace such opportunities by every means available, but simply pushing up tariffs to subsidize less reliable wind power projects sounds like a typical bureaucrat’s answer to a problem that requires a more holistic approach.