Sunday, July 13, 2014

The Poor Pay the True Cost of Renewable Energy

Government is not about doing what feels right. Good government is about what is right. 

Just because you support something 'nice' that gives you a warm, inner glow doesn't mean it's good for people or for the planet. Instead, governing a nation requires a government to be analytical in its assessment of an issue, considering both short-term and long-term implications and then deciding whether a particular decision is good for a majority of Australians or not.

If you are genuinely interested in the debate about renewable energy and the recent games being placed in the Australian Senate, please read what Alec Piper, a retired financial advisor has written:

The Al Gore/Clive Palmer circus in late June foretold the end of Australia's carbon tax but reopened debate about action Australia should take regarding global warming. What is the best path forward?

With the world as far away as ever from reaching an agreed position, Australia has little to gain by being a pace setter, especially if proposed action does more harm than good.  Professor Bjorn Lomborg, economist, former director of the Environmental Assessment Institute in Copenhagen is founder of the Copenhagen Consensus, "which seeks to establish priorities for advancing global welfare".

Professor Lomborg  "accepts the reality of anthropogenic global warming" but has unconventional ideas about the best path forward.  Back in April he made the following comments.

Renewables pave path to poverty
THE Australian government recently released an issues paper for the review of the renewable energy target. What everyone engaged in this debate should recognise is that policies such as the carbon tax and the RET have contributed to household electricity costs rising 110 per cent in the past five years, hitting the poor the hardest.

A Salvation Army report from last year found 58 per cent of low-income households were unable to pay their electricity bills on time. Lynne Chester of the University of Sydney estimated last year that 20 per cent of households are now energy poor: "Parents are going without food, families are sitting around the kitchen table using one light, putting extra clothes on and sleeping in one room to keep warm, and this is Australia 2013."

What is true in Australia is true globally. According to the UN Secretary-General Ban Ki-moon, "Climate change harms the poor first and worst." But we often forget that current policies to address global warming harm the world's poor much more.

Solar and wind power was subsidised by $65 billion in 2012. And because the total climate benefit was a paltry $1.5bn, the subsidies essentially wasted $63.5bn. Biofuels were subsidised by another $20bn, with -essentially no climate benefit. All of that money could have been spent on healthcare, education, better roads or lower taxes.

Forcing everyone to buy more expensive, less-reliable energy pushes up costs throughout the economy, leaving less for other public goods. The average of macroeconomic models indicates the total cost of the EU's climate policy will be $US310bn a year from 2020 until the end of the century.

The burden of these policies falls overwhelmingly on the world's poor, because the rich can easily pay more for their -energy. In the US, well-meaning and well-off environmentalists often cavalierly suggest petrol prices should be doubled or electricity exclusively sourced from high-cost green sources.

That may be OK in affluent suburbs, where residents reportedly spend just 2 per cent of their income on petrol. But the poorest 30 per cent of the US population spends almost 17 per cent of its after-tax income on petrol.

Similarly, environmentalists boast that households in Britain have reduced their electricity consumption almost 10 per cent since 2005. But they neglect to mention that this reflects a 50 per cent increase in electricity prices, mostly to pay for an increase in the share of renewables from 1.8 per cent to 4.6 per cent.

The poor, no surprise, have reduced their consumption by much more than 10 per cent, whereas the rich have not reduced theirs at all.

Over the past five years, heating a home has become 63 per cent more -expensive in Britain while real wages have declined. About 17 per cent of households are now energy-poor - they have to spend more than 10 per cent of their income on energy; and, because the elderly are typically poorer, about a quarter of their households are energy poor. Pensioners burn old books to keep warm because it is cheaper than coal; they ride on heated buses all day, and a third leave part of their homes cold.

In Germany, where green subsidies will cost $US35bn ($37.6bn) this year, household electricity prices have increased 80 per cent since 2000, causing
6.9 million households to live in energy poverty. Wealthy homeowners in Bavaria can feel good about their inefficient solar panels, receiving lavish subsidies essentially paid by poor tenants in the Ruhr who cannot afford solar panels, but still have to pay more for power.

In Greece, where tax hikes on oil have driven up heating costs 48 per cent, more and more Athenians are cutting down park trees, causing air pollution from wood burning to triple.

It is even worse in the developing world, where three billion lack access to cheap energy. They cook and keep warm by burning twigs and dung, producing indoor air pollution that causes 3.5 million deaths a year - by far the world's biggest environmental problem.

Access to electricity could solve that while allowing families to read at night, own a refrigerator or use a computer. It would also allow businesses to operate more competitively, creating jobs and economic growth.

Consider Pakistan and South Africa, where a dearth of generating capacity means recurrent blackouts wreak havoc on businesses and cost jobs. Yet funding new coal-fired power plants in both countries has been widely opposed by well-meaning Westerners and governments.

Instead, they suggest renewables. This is hypocritical. The rich world gets just 1.2 per cent of its energy from hugely expensive solar and wind technologies, and we would never accept having power only when the wind was blowing. In the next two years, Germany will build 10 coal-fired power plants.

In 1971, 40 per cent of China's energy came from renewables. Since then it has lifted 680 million people out of poverty using coal. Today, China gets a trifling 0.23 per cent of its energy from wind and solar. Africa gets 50 per cent of its energy today from -renewables - and remains poor.

New analysis from the Centre for Global Development shows that, investing in renewables, we can pull one person out of poverty for about $US500.

But, using gas electrification, we could quadruple that. By -focusing on our climate concerns, we deliberately choose to leave more than three out of four people in darkness and poverty.

Addressing global warming requires long-term innovation that makes green energy affordable. Until then, wasting enormous sums of money at the expense of the world's poor is no solution at all.

If you have the stomach for more on this topic please visit: -the-poorest-the-hardest/

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