Unbelievable folly: the ‘lose-lose’ EU climate policy

wind-farm-hero… I’d like to start by addressing two of the clichés — indeed the canards — that invariably come up in any debate about the EU and the environment.

The first is: “We have to thank the EU for clean beaches” … or for employment rights, or health and safety, or whatever.

Maybe I can remind you that most countries in the world are not in the EU.  Most countries in the world don’t want to be in the EU.  Most countries in the world are performing better in economic terms than the EU.  And most countries (or at least most advanced countries) have cleaned up their environments, and their beaches, in recent decades.

But the fact is that we gave up the right to set our own environment and employment policies to Brussels.  So of course they make our rules about clean beaches.  But no one can doubt that an independent UK would also have pursued similar policies.

If you doubt that, you are doubting democracy, and you are doubting the British people.

The second canard: “Pollution doesn’t respect national boundaries”.  Of course that’s true.  But it doesn’t respect the boundaries of the EU, either.  A ton of CO2 released on Shanghai has exactly the same effect, globally, as a ton of CO2 released in Sheffield.

So the “pollution and national boundaries” line may be an argument for global agreements on these issues, but it does not argue for an EU policy.

May I also clarify one further point — because I have no doubt that if I don’t raise it, someone else will.

We in my party take the view that the impacts of human activity on global climate have been obsessively, indeed hysterically exaggerated, and we believe that the rather small changes in mean global temperatures over the last century or so are entirely consistent with well-understood, long-term, natural climate cycles.

However I recognise that this view is unlikely to be well received in this room today.  So although I should be happy to defend it, I am prepared, for the purposes of this debate, to assume the orthodox position on climate and CO2.

I will therefore not argue against the theory of man-made climate change.  Instead, I will argue that EU climate policies are failing in their own terms, and doing more harm than good.

I will argue that we are forcing up energy prices.  We are undermining British and European competitiveness.  We are jeopardising our energy security.  We are driving energy-intensive businesses offshore, taking their jobs and their investment with them.

Frequently these industries move to jurisdictions with lower environmental standards, thus arguably increasing emissions.

First of all, energy prices.

The EU has higher energy prices than major competitors like the USA, China or India — and thanks to George Osborne, the UK has higher energy prices than most EU countries.

Energy prices are driven in large part by excessive reliance on renewables, which are intermittent and thus impose massive costs and inefficiencies onto the grid.

One of the many paradoxes of the renewables business is this: that on the one hand, they claim grid parity, while on the other, they admit that they cannot operate without subsidies.

But the explanation is simple.  The electricity provided from a wind turbine may be approaching grid parity.  But that fails to account for all the knock-on effects.  We have the capital cost of duplicating the capacity to provide the back-up; of adapting the grid to accommodate intermittency; of operating back-up plants below capacity, necessitating a whole new layer of subsidy, called “capacity payments”.

And beyond that is the fact that the back-up (typically gas) actually runs less efficiently when it is intermittent, so that the costs, the gas consumption — and the emissions — per unit of output are higher than if they were run properly.  So some of the supposed benefits of renewables are dissipated in the back-up.

Then energy security.

In an important paper recently, the Institute of Mechanical Engineers estimated that the UK would have a short-fall of 40 to 50% in generating capacity be 2025.  Why?  Because the EU’s Large Combustion Plant Directive is closing down perfectly good coal-fired power stations — and because while Germany is building new coal capacity, our UK government is running scared of the green lobby.

And also because much of our nuclear fleet is close to end-of-life.

But also for another reason: regulatory uncertainty.  I myself have sat in innumerable meetings in Brussels where discussion has centred on tweaking the EU’s Emissions Trading Scheme, with the deliberate objective of increasing the cost of energy, and making matters worse.

The rules, the subsidies are constantly changing, and are designed to disincentivise base-load energy production.  Massive regulatory uncertainty  is standing in the way of investment.  No one will put up the capital for a new gas-fired power-plant to run at 35% capacity.  We have created an environment where investment in major new energy infrastructure ranges from difficult to impossible.  Think Hinkley C.

So, we turn to competitiveness.

Energy prices played a major rôle in the demise of Port Talbot, though of course the dilatory approach of the European Commission to anti-dumping measures played a major part, in stark contrast to the USA’s timely and robust response to Chinese steel.

As Energy Minister Andrea Leadsom has remarked, a third major factor at Port Talbot was EU State Aid rules, which she says are a problem with almost all major energy decisions in the UK.

But it’s not just steel.  In the last decade we’ve seen a dozen aluminium smelters lost in Europe, with a couple in Britain.  This as the market for aluminium grows.  Imports are up, hurting our balance of payments.

Chemicals and fertilisers; dozens of plants have closed.  Jim Ratcliffe of INEOS says there’ll be no chemicals industry in the EU in ten years if we keep pursuing current policies.  And again, imports go up.

Petrochemicals refining: petrol and diesel refineries are closing, and more and more refined petroleum products are imported.  Paper and pulp.  Glass and cement.  The glass industry showed me a map, showing plant closures across the EU — and new factories to serve the EU market  in peripheral countries — North Africa, Turkey, Ukraine.

It’s the same story across all energy-intensive industries.  It’s no wonder that former Industry Commissioners Antonio Tajani said “We are creating an industrial massacre in Europe”, and former Energy Commissioner Gűnther Oettinger said “Europe can’t carry on with a unilateral climate policy”.

So finally, to the proposition that I hope will make you all sit up and pay attention.  We are arguable increasing global CO2 emissions.  There is anecdotal evidence from the steel industry that steel made in China implies double the CO2 emissions of steel made in the EU.  That is why at the beginning of my remarks I contrasted Shanghai with Sheffield.

But if you don’t like anecdotal evidence from industry, there is the report commissioned by DECC itself, from a reputable consultancy, showing that imported refined petroleum products imply 35% higher CO2 emissions than similar products refined in Europe.

We may have successfully reduced emissions within the geographical boundaries of the EU, but as we remarked earlier, pollution doesn’t respect national boundaries — or EU boundaries.  The emissions for which we in Europe are responsible are actually going up.

The irony is that in the US — that irresponsible country that failed to ratify Kyoto — emissions are in fact going down.  Not because of enthusiasm for renewables, but by the simple and economically effective expedient of switching form coal to gas.  We could have done that, but we chose to misallocate resources on a centuries-old technology — wind.

In short, we have an EU policy which is undermining competitiveness, closing plants, forcing jobs and investment to move offshore — while actually increasing CO2 emissions.

It is a lose-lose policy.

After Brexit, we shall at least be free to adopt a more rational approach — though we will have to educate our political class to understand the problem, and the solution.

Speech by Roger Helmer MEP delivered at the APPCCG Climate/Brexit Debate, at the House of Commons, 24 May 2016

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