‘Paul extinguished the flames by pouring champagne over them. That was efficient. Right or wrong?’
The answer the player is supposed to give is: Wrong, it was effective, but not efficient. Paul could have achieved the same end by using water.
Too bad the colleagues at the IPPR don’t seem to understand this. It could have benefited their latest report on wind energy, supposedly a ‘myth-buster’ which shows how wind farm subsidies really provide terrific value for money.
The report provides several estimates of the CO2 savings achieved through wind energy. The precise figures vary because it depends on the assumptions we make on what exactly is being replaced by wind. If wind primarily replaces coal, a very carbon-intensive energy source, the savings are high. If it replaces a less carbon-intensive source, the savings are smaller.
It is difficult to see the point of this exercise, because nobody argues that wind energy is ‘ineffective’ in a literal sense. If you start with an energy portfolio of technologies with varying carbon intensity, and if you then insert a zero-carbon technology without increasing total energy production, then of course the overall carbon intensity will go down. That is almost by definition true, and almost by definition irrelevant. But the most common critique of wind energy, which the IPPR report fails to address, is that it is simply an extremely expensive way of getting CO2 out of energy production. The same goal, if we accept it for the sake of the argument, could be achieved at a fraction of the cost. Even The Economist, which normally shuts down its critical faculty as soon as something comes with the magic word ‘green’ attached, recognises:
‘If Britain wants to achieve its decarbonisation targets, it can do so – but by switching more of its energy generation from burning coal to burning gas. Trying to get there by a pell-mell fielding of the costliest renewables is pointless.’
Most economists favour a source-neutral carbon tax, a mechanism which affects the volume of CO2 savings, but which is neutral with regard to how these savings are being achieved. Market participants would try to make these savings in the least costly way. They would pick the lowest-hanging fruit first, and then successively work their way up the fruit tree, up to the point where picking another fruit would require so much effort that they prefer to just pay the carbon tax. Under a carbon tax, shifting from a conventional energy source to renewables would still be an option. It cannot be ruled out that some market participants would choose this approach; it is just very unlikely, because renewables are a meagre fruit hanging on a long and thin branch high up in the tree crown.
And that is exactly the reason why no country has adopted a neutral approach to carbon reduction: It might work, but not in the politically preferred way. At some point, we have ceased to see renewables as just one among many potential options for carbon reduction, and have started to attribute moral qualities to them. The share of renewables in a country’s energy portfolio is now almost taken as a barometer of how culturally advanced that country is.
If we read the IPPR report as an attempt to rationalise this sentiment, it starts to make some sense. But as a defence of wind energy subsidies on cost-effectiveness grounds, it is utterly unconvincing.