Treachery or Common Sense?

I’m being hounded for taking a stand against feed-in tariffs: here’s a riposte to the critics.

By George Monbiot, posted on the Guardian’s website, 5th March 2010.

Once again I am a traitor to the cause, a corporate sell-out, a dangerous maverick who has gone over to the dark side. My column this week on feed-in tariffs provoked the same sort of charges that were levelled against me when I first came out against biofuels in 2004. We’ve now seen how that’s panned out. When other greens wake up to the amazing waste of money and opportunities this scheme represents, I think the feed-in tariff scandal will go the same way.

One of the more sophisticated responses came from my old sparring partner Jeremy Leggett, chairman of the installation company Solar Century. He managed to ignore most of my arguments, but never mind. Here is the fork he is impaled on. Either solar photovoltaic (PV) power in the United Kingdom is, as he claims, a cheap, efficient technology, or it isn’t. If it is, why should we be subsidising it to the tune of 41p per kilowatt hour? If it needs this subsidy, it is neither cheap nor efficient. If it doesn’t need it, the feed-in tariffs are even more of a swindle than I thought.

A recent paper Leggett helped to write claims that solar PV will achieve “grid parity” for homeowners in 2013. This means that the electricity produced, when all costs are taken into account, will be no more expensive than the electricity we buy from the grid. Assuming we can agree on terms and measurement, I have £100 that says his prediction won’t come true. Will Leggett accept my bet?

But here again he runs into the same contradiction. If Jeremy really believed his sales pitch, he would be calling for the feed-in tariff for new installations to be scrapped in 2013, as it would then be redundant. But the government does not share his view. Its table of tariffs shows that in 2013 it will pay 38p/kWh for new retrofitted PV: a decline of just 8% from this year’s figure, rather than the 56% Leggett anticipates.

If he has the courage of his convictions, Leggett should demand that the tariff is either abandoned that year or brought down to 18p, which is what his paper claims (though without attribution) grid-based electricity will cost then. He can’t have it both ways: defending the tariff while suggesting that the tariff won’t be necessary.

Leggett maintains that:

The companies who manufacture solar PV in the UK have shown that putting solar panels on all available building surfaces would generate more electricity in a year, under typical cloudy British skies, than the entire electricity consumption of our energy-profligate nation.

We could argue about that, but even if it were true it would be a ridiculous thing to do if, as the government’s tariffs suggest, solar PV costs nine times as much as other renewables. Every pound spent on PV is a pound not spent on a more effective technology. You need to spend £9 on solar to have the same impact as £1 spent on largescale wind or hydro. Does Leggett dispute these figures? If so he should, again, be campaigning against the feed-in tariffs.

He argues that:

Monbiot gets the precedent for the British government’s solar ‘cash-back’ scheme – the German feed-in tariff – upside down … all feed-in tariffs are supposed to decline

Indeed they are. But the German reduction was not a planned, gradual drawdown of the subsidy, but a sudden, additional cut. In fact the government had originally pressed for a 40% cut, but was beaten down to 16% by industry lobbying. The realisation in Germany, after 10 years of minimal returns, that they have been getting shockingly bad value for money from their scheme coincides with the launching of the same fiasco in the UK. Are we incapable of learning from other people’s mistakes?

Leggett goes on to claim, again without attribution, that the Germans have “created over 50,000 jobs in solar PV alone.” Of course you could justify any scheme with the creation of jobs: even employing people to throw bundles of banknotes into power station furnaces. But Leggett is confusing gross jobs created with net jobs. Given that tax money like this is necessarily scarce, you have to consider the opportunity costs of using the tariff for solar PV. As solar is capital intensive (the units are expensive) it is likely to employ fewer people than a labour-intensive, capital-light programme such as insulating and draft-proofing people’s homes. In this respect it could well be the case, as the paper in Energy Policy suggests, that Germany’s solar programme has destroyed more jobs than it has created.

The other question this raises is jobs where? Many of the panels Germany installed were manufactured in China and Japan. I have nothing against stimulating employment in those countries, but I think the electricity users who have to pay for the tariff would be rather put out to discover that the jobs the government says it will create are actually on the other side of the world.

Which brings us to his final point: who pays? Leggett suggests that it’s untrue that the poor will carry the costs of this scheme, as all electricity users must contribute. Yes, but all electricity users include the poor who a) often pay more for their power than better-off people and b) being less likely to own their homes or to afford the £10-12K needed to install solar panels are the least likely to benefit from the scheme. Their bills will rise just like everyone else’s to pay for a scheme which will mostly benefit the middle classes. This is why it is deeply regressive.

I won’t list all the points Leggett fails to address – his space was limited – but the killer fact he ignores is this: feed-in tariffs cannot reduce our carbon emissions by 1g while the UK remains within the European emissions trading scheme. This is because any savings they make will be offset by the extra emissions that other industries will be allowed to release. Either we are in the trading scheme and must make it work, in which case measures like the tariff are redundant, or we accept that it doesn’t work and get out of it. But at the moment all the feed-in tariff can do is to subsidise polluting industries to produce more greenhouse gases.

To the greens who accuse me of treachery I say this: we do not have a moral obligation to support all forms of renewable energy, however inefficient and expensive they may be. We do have a moral obligation not to be blinded by sentiment. We owe it to the public, and to our credibility, to support the schemes which work, fairly and cheaply, and reject the schemes which cost a fortune and make no difference.