The power to save Britain

How our island could be supplying Europe with green electricity. Plus Peter

It may not feel like it on a gusty grey day in Rhyl, but this country is blessed. Take a boat out into the choppy waters off the North Wales coast, and you can see why. Thirty bright white turbines spin continuously just five miles off the coast, producing enough electrical power to supply 40,000 homes with clean, green energy. The wind and waves seem limitless and powerful - and they are. If the UK had been more aggressive and far-sighted in developing renewable energy, we would already be exporting green electricity and wind turbines to Europe and further afield.

In renewable energy terms, we would be the Saudi Arabia of Europe. A full 40 per cent of the continent's wind blows across British shores, enough to meet all our energy needs and more. But instead of leading the world in renewable energy and at the same time cutting carbon emissions, the UK languishes close to the bottom of the European clean energy league. Just 2 per cent of our energy comes from renewable sources and the rest from dirty, climate-changing fossil fuels. This is the legacy of years of contradictory policies, conflicting priorities, ideological pig-headedness and government incompetence.

It's a story that shames Britain.

A good place to start is the government's Low Carbon Buildings Programme (LCBP). This was launched in 2006 to provide grants to householders wanting to instal renewable generation technologies - from solar panels to small hydro schemes - on their properties. Ministers acknowledge that micro-generation could play a big part in our clean energy future, and that turning homes into mini power stations is good for energy security, household income and the environment. But what actually happened? Instead of kick-starting a whole new market sector, the government starved it of funds. A measly £12.7m was allocated, with a monthly cap. On the first day of each month all the available grants were snapped up within hours.

This stop-start approach led to frustrated householders and cash-strapped solar installation companies, many of which began to go bust. The number of grants given for solar hot water systems fell by half last year, and the number for micro wind turbines by two-thirds. For ground-source heat pumps, while 100 grants were made in the last three months of 2006, the equivalent number for 2007 was zero. For electricity, we managed to put only 270 solar panels on British roofs last year, while Germany installed 130,000.

Gordon Brown, first as chancellor, and now as Prime Minister, has successfully ensured that it makes no financial sense whatsoever for householders to invest in generating their own energy renewably. If you put up a solar photovoltaic panel in this country, you do it for altruistic reasons only: at present, you are guaranteed to lose money hand over fist.

Germany's renewables sector has rocketed, thanks to a system that guarantees long-term paybacks at above-market rates for cleanly generated power. This is called the "feed-in tariff", which has also successfully catapulted Spain and Portugal to the top of the European clean energy league. Portugal gets 39 per cent of its electricity from renewables and is aiming for 60 per cent by 2020. In stark contrast, the UK government continues to rule out feed-in tariffs, insisting instead on retaining its outdated Renewables Obligation system, a support mechanism which is so complicated and cumbersome that only the biggest players can make any money from it (or, indeed, even understand it).

The RO system reveals another classic new Labour problem: an obsession with the market. Instead of simply guaranteeing a good return for solar or wind electricity over a long enough time period to make this an attractive investment, the government insists on making the Renewable Obligation Certificates tradable. If a company doesn't meet its obligation to generate power renewably, it must buy certificates from another company that has produced a surplus. The result is long-term price uncertainty, which makes investment much more costly, due to the "risk premium" that must be added to any lending. The ROC system has been fiddled with so many times that the British Wind Energy Association (BWEA) now opposes a feed-in tariff system, on the grounds that yet more policy uncertainty might scare off potential investors for good.

Lost business

This catalogue of failure has not only been bad for the climate, it has been bad for business. Britain might once have led the world in wind turbine development. But with no domestic market, production moved elsewhere, and today most turbines installed in this country are imported from Denmark. The leader in solar power is not Britain but Germany, which has pioneered a lucrative export industry in solar photovoltaic cells. In China, too, solar manufacturing is big business: the country's second-richest man leads a solar energy company. This is an energy sector which saw growth last year of roughly 40 per cent, and has attracted tens of billions in venture capital. None of that came to Britain. Instead of creating a brand new industry and thousands of jobs, British-based renewables companies have been going out of business.

Wind should already be our biggest single power source. The BWEA estimates that wind could generate 27 per cent of our electricity by 2020, which, combined with other renewables, could easily meet our EU-assigned target of 15 per cent renewable energy by 2020. Instead, wind accounts for just 1.5 per cent of UK electricity generation today (the equivalent figure in far less windy Denmark is 20 per cent, for Spain 8 per cent and Germany 5 per cent). That 1.5 per cent could be ramped up very quickly if the planning system worked in favour of renewables. According to the BWEA, 220 windpower projects are currently stuck in planning. If all received immediate consent, they could generate 9.3 gigawatts of electricity, enough for an estimated 5.25 million households. If the 39 projects that were refused planning permission last year had instead been allowed it, they could have provided power for 750,000 households, and prevented the emission of three million tonnes of CO2. (Anti-wind campaigners need to recognise their moral liability for these climate-changing emissions.)

While 39 projects were refused planning permission, just 26 projects went ahead. This year, we are level-pegging: seven wind applications have been approved and six refused. It can now take ten years for a windfarm project to get approved and built, and another five for it to get a grid connection (unlike in other countries, renewable generators here have to pay for their own grid connections). This does not look like a country on the fast track to a clean energy future. Indeed, power companies such as E.ON are pro posing to invest billions in hugely polluting coal power plants instead.

The government has proposed to reform the planning system to make it easier for windfarms to get the go-ahead. Environmentalists and conservationists are opposed to the reform, however, for the good reason that it would also make it easier for new motorways, power stations and airports to gain approval, and stifle local democracy in the process.

A greener government might have focused on reforming the planning system for renewable energy projects, gaining support from greens and electricity generators alike. Instead, in its enthusiasm for aviation and nuclear power, the government has bundled windfarms into a planning policy package that will be opposed by almost all. A missed opportunity.

There is some good news. The 1000MW London Array - which will generate enough power from wind for a quarter of London's households - has been given the go-ahead. Several other major projects are under way, and this year the UK will overtake Denmark as the largest offshore generator in the world. The UK also still leads in marine renewables (wave and tidal stream power). With 30 marine technology developers headquartered here, compared to only 15 in the rest of Europe, the UK is able to put its offshore operational skills learned from North Sea oil - now in long-term decline - to good use. At the end of last month the world's largest conference on wave and tidal stream energy, Marine 08, was held in Edinburgh. Tidal power would address the intermittency question: what to do when the wind doesn't blow and the sun doesn't shine. Tidal power is predictable. Wave power is also more dependable. The more sources of energy we can call on, the less vulnerable we will be to losing power in any one sector.

Yet in marine renewables, too, the government has risked Britain losing its competitive edge. The world's first commercial-scale wave-generating array, while built by a UK-based company, is being launched off the Portuguese, not the British, coast. And, mirroring the disaster of the Low Carbon Buildings Programme, the Marine Renewables Deployment Fund - supposed to support the fledgling sector with capital grants and other financial aid - has a tiny budget and a cap per project of £9m, far too little for any British design to make it past the prototype stage into commercial production. Once again, we are wasting a historic advantage.

With the right policy levers pulled, we could in the not-too-distant future be generating 20 per cent of all our electricity out at sea using wave and tidal power, and far more from onshore and offshore wind. We could lead the world in a new manufacturing sector and generate thousands of new jobs. We could have a zero-carbon electricity grid as early as 2030. We could also lead the world in reducing greenhouse-gas emissions.

But, for this to happen, the government will need to admit that its policies have been a cala mitous failure and put clean energy at the top of its long-term agenda, before it is too late.

Mark Lynas has is an environmental activist and a climate change specialist. His books on the subject include High Tide: News from a warming world and Six Degree: Our future on a hotter planet.

This article first appeared in the 10 March 2008 issue of the New Statesman, How Hillary did it

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 10 March 2008 issue of the New Statesman, How Hillary did it