Archive for June, 2009

The European Commission will just before the June 18-19 European Council publish an assessment of the economic stimulus packages tabled by EU member states in the last few months. These were supposed to have been prepared in a coordinated fashion, and to advance broad European goals.

The Commission will assess among other things what the packages do to put Europe on the path to the low-carbon economy, said spokesman Mark English. This was an “extremely strong” priority for the Commission and “you can be sure that the Commission’s assessment will take account of green issues,” English added.

It’s hard to see how the Commission’s assessment can be anything other than strongly critical in this area. The criteria for defining categories of expenditure as ‘green’ might be dubious (car scrappage schemes are labelled green for example, though they might have the effect of putting more vehicles on the roads), but however you measure it, green spending has been a low priority in member state stimulus packages. HSBC Global Research found that France’s package could be considered about 20 percent green, but for other EU countries the proportion is much lower: 13 percent in Germany, seven percent in the UK, and a measly 1.3 percent in Italy.

The Commission’s own stimulus plan, meanwhile, includes large subsidies for carbon capture and storage (CCS) projects and for offshore wind farms. These grants mainly take the form of enormous bungs to some of the most profitable companies in Europe. The power firms E.On and RWE for example, which had first quarter 2009 profits of €2.5 billion and €1.7 billion respectively, will receive portions of a €180 million CCS fund for the UK, to be spent on their controversial coal-fired power plants at Kingsnorth and Tilbury. Green MEPs have been strongly critical of this, saying that the money could have been much more widely spread and better spent.

There is a bigger issue behind all this, of course. Green spending, and the belief in the green economy, expresses the idea that huge environmental problems like climate change can be managed without too much pain. Through technology and the right stimuli in the right places, we can essentially continue with the usual business of economic growth, but in a cleaned-up way.

Scientists and economists are starting to question this comfortable belief. A survey of 250 climate scientists by The Guardian newspaper in April found that most of them believed the global temperature rise by the end of this century would be four degrees Celsius above pre-industrial levels – in other words, disastrous – because there is a mismatch between the emerging impacts of global warming and political rhetoric.

Dieter Helm, an Oxford professor and climate advisor to the UK government put it extremely succinctly in a Tanner Lecture earlier this year. Politicians were clinging as if to a life raft to the Stern Review on the Economics of Climate Change, said Helm. Stern’s message was “an old conventional view about economic growth and Keynesian economics, and it had the (politically) satisfying conclusion that climate change could be tackled at around one percent GDP, whilst in the background GDP could go on going up forever.”

Behind this notion is the belief that consumption can continue to grow because damage to the environment can be compensated for by greater wealth. Or as Helm put it: “the loss of the swallow and the tiger are traded off against the gains in buildings and iPods… There is, on this view [sic], nothing special about the environment.”

Helm argued that “cold, hard realism” is required. This would involve admitting that emissions are going up faster than ever, and it will be extremely difficult if not impossible to meet the greenhouse gas reduction targets currently being talked about ahead of the United Nations climate conference that will take place in December in Copenhagen.

There may be a lot of talk about the green new deal, and the Commission may huff and puff about EU member state stimulus packages when it publishes its assessment, but the bottom line is we should not expect to avoid some of the most disruptive consequences of climate change – something for José Manuel Barroso to think about as he makes his pitch to be re-appointed president of the Commission, and talks about the importance of decarbonising transport and energy supply. These may be worthy aims, but they are unlikely to save us from a future in which because of environmental damage resources will be compromised and economic growth will be interrupted or reversed, and we will all become considerably poorer.