Green, But Expensive Energy

How green is environmental economics? British Prime Minister Gordon Brown, announced Friday a plan to expand offshore wind valued at 100,000 million pounds. The project is part of the Executive’s strategy to ensure that by 2020 UK generates 15% of its energy from renewable sources.

The business opportunities are involved: the State Crown, the authority that manages 55% of the coast on behalf of the Crown, rent enough seabeds to accommodate wind farms of 25 Gigawatts.

The bidding process could be the beginning of a development program comparable to the opening of North Sea gas production and oil in the decades of the seventies and eighties. At a time when the UK puts into question its excessive reliance on financial services, the importance being accorded to the project is understandable, especially since the restrictions on commercial gas supply have raised concerns on the country’s attractiveness as a destination manufacturing.

Although it might be an attractive option from a political standpoint, from an economic perspective is not so. Without significant state aid, energy companies are forced to develop a model of economic growth with lower carbon emissions will not get a return on their activity.

Moreover, according to Citigroup, investment in renewable and green energy, especially in the case of wind power will decrease productivity. Substantially broaden the wind capacity of British power grid will reduce its effectiveness. According to the entity, since it is necessary to retain the current ability to compensate for the variability of wind energy production, the overall production of the electricity grid will decrease by about one third by 2020.

It is likely that countries like France and Germany, which have competitive engineering sectors, obtaining a net gain in employment and growth, while Britain turns green with envy.