Tag Archives: Subsidies

Reformed trade rules can help to save the climate

If the British government agrees to reformed trade rules, that could help the crucial climate talks it will chair in November.

LONDON, 20 January, 2021 – This could be the year of opportunity for the United Kingdom – and far beyond it – in securing real action on tackling the climate crisis: reformed trade rules could provide a climate dividend of the rancorous Brexit process of leaving the European Union.

Success could earn the UK government an honoured place among the politicians visionary enough to confront probably the worst threat facing humankind. Failure would damn this generation of British leaders as a lightweight irrelevance.

Barely ten months from now, in November, the British government faces a massive challenge. In the Scottish city of Glasgow it will host and chair the annual United Nations climate conference, which must breathe new energy and hope into the global climate treaty, the Paris Agreement, adopted by 197 countries in the French capital in 2015.

Paris promised much but so far has delivered little in achieving the reductions in emissions of greenhouse gases the world urgently needs. Unless the Glasgow conference (COP-26 in UN jargon – the 26th Conference of the Parties) ends with iron-clad agreement that will inexorably ensure global average temperatures stay below 1.5°C, the planet faces dangerous and perhaps irreversible climate heating.

On the first day of 2021 the UK struck out on its own politically, leaving the EU after 47 years of membership to follow an independent route, not least on trade.

“We must shake up the economic model so that it doesn’t pay to destroy the environment”

Opponents of Brexit have dismissed the move as a risky gamble. Supporters say it gives the UK the alluring prospect of trade on British terms alone. Both agree in hoping the country may now enjoy more freedom and flexibility in trade policy.

Whether or not it does, campaigners argue, Brexit could open the way to a different but immensely important goal: it could be a game-changer in Glasgow.

They are pinning their hopes on the possibility that the UK will decide to join a new green trade grouping – ACCTS, the Agreement on Climate Change, Trade and Sustainability, formed by six countries committed to using trade policy to support action on the climate (New Zealand, Norway, Iceland, Costa Rica, Fiji and Switzerland).

If the UK does join ACCTS this year (it is an open agreement, which welcomes new members), that would send a clear message to the other members of the World Trade Organisation, its supporters believe, that post-Brexit Britain champions environmentally-sustainable trade and sees it as a potent way to strengthen action on the climate crisis.

Supporters of ACCTS say signatories are showing they back the reform of trade rules so as to give priority to the environment – a huge shift in emphasis for the global trading system. The Agreement has three main aims:

  • Liberalising trade in environmental goods and services: This means cutting tariffs on environmentally-friendly products (including, for example, wind turbines and solar panels) so they can be traded more freely and reach the countries where they are most needed, attracting investment and development. The UK already charges very low tariffs, so compliance will be simple
  • Eliminating fossil fuel subsidies: 89% of global carbon emissions come from fossil fuels and industry. Yet governments continue to subsidise coal, oil and gas, pouring US$500 billion (£367bn) of public money into their production and consumption every year. The UK currently offers an estimated £10bn (US$13.6bn) of public support to fossil fuels each year, in the form of direct subsidies and tax breaks. This runs counter to all the UK’s climate goals, which instead favour funding support for renewable energy
  • Developing eco-labels for goods: This aims to develop a common way of labelling goods with information about their environmental impact, to give consumers information on which to base their decisions.

‘Incoherence’

Speaking in Stockholm in March 2020 at an event to discuss climate change, trade, and sustainable development in the run-up to the Glasgow talks, Andrew Jenks, New Zealand’s ambassador to Sweden, said: “Fossil fuel subsidies are the height of policy incoherence on an issue where we cannot afford to carry on the mistakes of the past.”

From his diplomatic colleague the British ambassador, Judith Gough, there was if anything even more exuberant language for the potential offered by ACCTS: “We must shake up the economic model so that it doesn’t pay to destroy the environment”.

An active supporter of the ACCTS countries is the UK charity Traidcraft Exchange. It concludes a recent report, Getting in on the ACCTS, with these words: “In November 2020, the UK prime minister Boris Johnson announned a ten-point plan to ‘create, support and protect hundreds of thousands of green jobs, whilst making strides towards net zero [greenhouse gas emissions] by 2050.’

“Joining ACCTS would strengthen these commitments, and would send a clear message about how Britain plans to use its new independent trade policy.” There will be many listeners waiting intently in Glasgow to hear that message. – Climate News Network

If the British government agrees to reformed trade rules, that could help the crucial climate talks it will chair in November.

LONDON, 20 January, 2021 – This could be the year of opportunity for the United Kingdom – and far beyond it – in securing real action on tackling the climate crisis: reformed trade rules could provide a climate dividend of the rancorous Brexit process of leaving the European Union.

Success could earn the UK government an honoured place among the politicians visionary enough to confront probably the worst threat facing humankind. Failure would damn this generation of British leaders as a lightweight irrelevance.

Barely ten months from now, in November, the British government faces a massive challenge. In the Scottish city of Glasgow it will host and chair the annual United Nations climate conference, which must breathe new energy and hope into the global climate treaty, the Paris Agreement, adopted by 197 countries in the French capital in 2015.

Paris promised much but so far has delivered little in achieving the reductions in emissions of greenhouse gases the world urgently needs. Unless the Glasgow conference (COP-26 in UN jargon – the 26th Conference of the Parties) ends with iron-clad agreement that will inexorably ensure global average temperatures stay below 1.5°C, the planet faces dangerous and perhaps irreversible climate heating.

On the first day of 2021 the UK struck out on its own politically, leaving the EU after 47 years of membership to follow an independent route, not least on trade.

“We must shake up the economic model so that it doesn’t pay to destroy the environment”

Opponents of Brexit have dismissed the move as a risky gamble. Supporters say it gives the UK the alluring prospect of trade on British terms alone. Both agree in hoping the country may now enjoy more freedom and flexibility in trade policy.

Whether or not it does, campaigners argue, Brexit could open the way to a different but immensely important goal: it could be a game-changer in Glasgow.

They are pinning their hopes on the possibility that the UK will decide to join a new green trade grouping – ACCTS, the Agreement on Climate Change, Trade and Sustainability, formed by six countries committed to using trade policy to support action on the climate (New Zealand, Norway, Iceland, Costa Rica, Fiji and Switzerland).

If the UK does join ACCTS this year (it is an open agreement, which welcomes new members), that would send a clear message to the other members of the World Trade Organisation, its supporters believe, that post-Brexit Britain champions environmentally-sustainable trade and sees it as a potent way to strengthen action on the climate crisis.

Supporters of ACCTS say signatories are showing they back the reform of trade rules so as to give priority to the environment – a huge shift in emphasis for the global trading system. The Agreement has three main aims:

  • Liberalising trade in environmental goods and services: This means cutting tariffs on environmentally-friendly products (including, for example, wind turbines and solar panels) so they can be traded more freely and reach the countries where they are most needed, attracting investment and development. The UK already charges very low tariffs, so compliance will be simple
  • Eliminating fossil fuel subsidies: 89% of global carbon emissions come from fossil fuels and industry. Yet governments continue to subsidise coal, oil and gas, pouring US$500 billion (£367bn) of public money into their production and consumption every year. The UK currently offers an estimated £10bn (US$13.6bn) of public support to fossil fuels each year, in the form of direct subsidies and tax breaks. This runs counter to all the UK’s climate goals, which instead favour funding support for renewable energy
  • Developing eco-labels for goods: This aims to develop a common way of labelling goods with information about their environmental impact, to give consumers information on which to base their decisions.

‘Incoherence’

Speaking in Stockholm in March 2020 at an event to discuss climate change, trade, and sustainable development in the run-up to the Glasgow talks, Andrew Jenks, New Zealand’s ambassador to Sweden, said: “Fossil fuel subsidies are the height of policy incoherence on an issue where we cannot afford to carry on the mistakes of the past.”

From his diplomatic colleague the British ambassador, Judith Gough, there was if anything even more exuberant language for the potential offered by ACCTS: “We must shake up the economic model so that it doesn’t pay to destroy the environment”.

An active supporter of the ACCTS countries is the UK charity Traidcraft Exchange. It concludes a recent report, Getting in on the ACCTS, with these words: “In November 2020, the UK prime minister Boris Johnson announned a ten-point plan to ‘create, support and protect hundreds of thousands of green jobs, whilst making strides towards net zero [greenhouse gas emissions] by 2050.’

“Joining ACCTS would strengthen these commitments, and would send a clear message about how Britain plans to use its new independent trade policy.” There will be many listeners waiting intently in Glasgow to hear that message. – Climate News Network

Delays for the dawn of UK’s new nuclear age

FOR IMMEDIATE RELEASE As the months slip by, the optimism drains away that the UK government will make good on its pledge to build eight new nuclear stations. LONDON, 15 June – The British government’s promise not to subsidise new nuclear power stations in the UK looks set to torpedo its own stated energy policy which is to build a range of new reactors to keep the lights on. Ministers have been in negotiations with the French state-owned giant EDF for more than a year, trying to strike a deal that does not look like a subsidy but guarantees a price for electricity for 40 years – big enough to give investors a return on capital to make building the first two new nuclear stations a worthwhile venture. The government’s pre-election promise was to encourage low carbon energy production, to reach ambitious carbon dioxide emission reduction targets and so become “the greenest government” the UK has known. New generation capacity is needed to keep the lights on in Britain as several “dirty” coal fired stations are being closed because of European Union regulations and some old nuclear stations are nearing the end of their lives. Nuclear tax The problem is that nuclear power continues to get more expensive while renewable costs fall. The price that EDF is reported to be insisting on would provide a bigger subsidy than is paid to wind and solar power. This would make nuclear the most expensive energy in the UK and tie the British consumer to high bills for generations to come. Consumers would in effect be paying a nuclear energy tax. A formal announcement to start work on the first new nuclear build in Britain in more than 25 years has been repeatedly delayed – and the proposed finishing date of the first reactor has already unofficially slipped from 2017 to 2022 before the first concrete has been poured. With the delays new nuclear stations already under construction are experiencing in Finland and France, even this looks optimistic. While negotiations drag on between the government and EDF, the European Union and members of parliament in the House of Commons are investigating the proposed subsidies to be paid to nuclear power. The reason is that “mature” industries like nuclear are banned under European competition rules from being given subsidies because it is classed as “unfair competition.” Cannot go bankrupt The Environmental Audit Committee, made up of MPs of all the UK’s political parties, has been taking evidence on “Energy Subsidies in the UK” to try and work out which form of generation is best value for money for consumers. There is evidence before the committee that the lights can be kept on using renewables, wind, solar, biomass and half a dozen other technologies without resorting to nuclear power. But the inquiry is also an opportunity for the gas industry and others to have a go at the subsidies for renewables like wind and biomass. Some witnesses concentrate only on both the existing and proposed subsidies to nuclear power. Dr Gerry Wolff, representing a think tank called Energy Fair, said nuclear energy already had seven kinds of subsidy. If they were withdrawn, the price of nuclear electricity would rise to at least £200 a megawatt hour. This is compared with the next most expensive form of low carbon energy, offshore wind at about £140 a megawatt hour. The UK has more offshore wind turbines than any other country and plans more with the cost expected to continue to fall as time passes. Nuclear subsidies include the state underwriting the cost of a nuclear accident so the industry does not pay the full cost of insurance or pay for protection against terrorism, Dr Wolff says. He also points out that, as happened 10 years ago when the price of electricity fell below the cost of production, nuclear power is insulated from going bankrupt. The industry is too important in preventing politically unacceptable power cuts to be allowed to fail and would always be bailed out by the government. This is a commercial security no other power company has. The biggest subsidy, according to the Energy Fair evidence, is the cost of dealing with nuclear waste and dismantling nuclear stations. This is a vast and although ultimately spread over centuries, and therefore cannot be quantified, mostly falls on the consumer and taxpayer, not on the company. Dr Wolff says: “Renewables have a clear advantage on cost, speed of construction, security of energy supplies, and effectiveness in cutting emissions of carbon dioxide. Subsidies for nuclear power have the effect of diverting resources away from techniques and technologies which are cheaper than nuclear power and altogether more effective as a means of meeting our energy needs.” The European Union Commission inquiry is politically complex. The British government’s point is that nuclear is a low carbon form of electricity production and should be treated as a renewable. This has never been the case in Europe and there is powerful opposition to this idea in Germany and other EU states that have decided that nuclear power is not for them. As each week passes and no decisions are reached on this variety of issues, delays and therefore nuclear costs continue to mount making the dawn a new nuclear age in the UK seem as far away as ever. – Climate News Network

FOR IMMEDIATE RELEASE As the months slip by, the optimism drains away that the UK government will make good on its pledge to build eight new nuclear stations. LONDON, 15 June – The British government’s promise not to subsidise new nuclear power stations in the UK looks set to torpedo its own stated energy policy which is to build a range of new reactors to keep the lights on. Ministers have been in negotiations with the French state-owned giant EDF for more than a year, trying to strike a deal that does not look like a subsidy but guarantees a price for electricity for 40 years – big enough to give investors a return on capital to make building the first two new nuclear stations a worthwhile venture. The government’s pre-election promise was to encourage low carbon energy production, to reach ambitious carbon dioxide emission reduction targets and so become “the greenest government” the UK has known. New generation capacity is needed to keep the lights on in Britain as several “dirty” coal fired stations are being closed because of European Union regulations and some old nuclear stations are nearing the end of their lives. Nuclear tax The problem is that nuclear power continues to get more expensive while renewable costs fall. The price that EDF is reported to be insisting on would provide a bigger subsidy than is paid to wind and solar power. This would make nuclear the most expensive energy in the UK and tie the British consumer to high bills for generations to come. Consumers would in effect be paying a nuclear energy tax. A formal announcement to start work on the first new nuclear build in Britain in more than 25 years has been repeatedly delayed – and the proposed finishing date of the first reactor has already unofficially slipped from 2017 to 2022 before the first concrete has been poured. With the delays new nuclear stations already under construction are experiencing in Finland and France, even this looks optimistic. While negotiations drag on between the government and EDF, the European Union and members of parliament in the House of Commons are investigating the proposed subsidies to be paid to nuclear power. The reason is that “mature” industries like nuclear are banned under European competition rules from being given subsidies because it is classed as “unfair competition.” Cannot go bankrupt The Environmental Audit Committee, made up of MPs of all the UK’s political parties, has been taking evidence on “Energy Subsidies in the UK” to try and work out which form of generation is best value for money for consumers. There is evidence before the committee that the lights can be kept on using renewables, wind, solar, biomass and half a dozen other technologies without resorting to nuclear power. But the inquiry is also an opportunity for the gas industry and others to have a go at the subsidies for renewables like wind and biomass. Some witnesses concentrate only on both the existing and proposed subsidies to nuclear power. Dr Gerry Wolff, representing a think tank called Energy Fair, said nuclear energy already had seven kinds of subsidy. If they were withdrawn, the price of nuclear electricity would rise to at least £200 a megawatt hour. This is compared with the next most expensive form of low carbon energy, offshore wind at about £140 a megawatt hour. The UK has more offshore wind turbines than any other country and plans more with the cost expected to continue to fall as time passes. Nuclear subsidies include the state underwriting the cost of a nuclear accident so the industry does not pay the full cost of insurance or pay for protection against terrorism, Dr Wolff says. He also points out that, as happened 10 years ago when the price of electricity fell below the cost of production, nuclear power is insulated from going bankrupt. The industry is too important in preventing politically unacceptable power cuts to be allowed to fail and would always be bailed out by the government. This is a commercial security no other power company has. The biggest subsidy, according to the Energy Fair evidence, is the cost of dealing with nuclear waste and dismantling nuclear stations. This is a vast and although ultimately spread over centuries, and therefore cannot be quantified, mostly falls on the consumer and taxpayer, not on the company. Dr Wolff says: “Renewables have a clear advantage on cost, speed of construction, security of energy supplies, and effectiveness in cutting emissions of carbon dioxide. Subsidies for nuclear power have the effect of diverting resources away from techniques and technologies which are cheaper than nuclear power and altogether more effective as a means of meeting our energy needs.” The European Union Commission inquiry is politically complex. The British government’s point is that nuclear is a low carbon form of electricity production and should be treated as a renewable. This has never been the case in Europe and there is powerful opposition to this idea in Germany and other EU states that have decided that nuclear power is not for them. As each week passes and no decisions are reached on this variety of issues, delays and therefore nuclear costs continue to mount making the dawn a new nuclear age in the UK seem as far away as ever. – Climate News Network