As the FT noted this morning:
Extreme volatility in energy markets will present a continued risk unless investment in clean power is tripled in the next decade, the head of the International Energy Agency warned, as he issued a call to arms for world leaders ahead of the upcoming UN climate summit.
Fatih Birol, IEA executive director, told the Financial Times that public spending on renewable power was only at a third of the future levels required.
In this context I also noticed this in the FT:
Planning authorities in the UK are approving less than half of the onshore wind capacity that the country will need to install each year to achieve the country's net zero targets, according to the renewables industry.
This will not get better whilst Rishi Sunak seeks cuts to government spending and simultaneously demands that investment in renewables be funded out of borrowing that is a declining part of GDP. That's simply not going to be possible. Whatever is said by the UK at COP26 that is setting us up to fail, and Labour is doing exactly the same as it has the same basic policy proposals on funding.
What we need to do is to break the funding crisis. That's why we need to use savings to create the capital to fund the Green New Deal, as I argued on Monday.
Saving for the planet in tax incentivised and government-guaranteed accounts not only makes economic sense, it is also the way that most people with even modest funds can take direct action to help tackle climate change whilst also helping build inter-generational solidarity and help people save for pensions. What is not to like?
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Nothing.
I see this as a problem started long ago when utilities were privatised. When you have share holders, you have another mouth to feed and things like wages and investment are lost to investor returns – and their needs come first as I understand things.
And thus, another one of Thatcher’s chickens comes home to roost (chickens like ‘the great car economy’.
The idea that you could help markets like energy access more resources by privatising simply does not work, because the vested interests involved are motivated by profit and greed – all short term deviations from the strategic nature of energy, transport etc.,
The issue rests with the Government – as it always did.
Dealing first with your points: there is little wrong with privatising the generators. However, the market structure for electricity is based on marginal pricing – which does not work terribly well with fossils and will not work at all for renewables (which have zero marginal cost).
Power networks are monopolies, attempts at regulating them as private entities have, for the most part failed. They should be in public ownership.
Moving to Richards points.
The IEA has for more than 30 years said that renewables were costly and could not replace fossil. The tune now is that green hydrogen is expensive. Birol has a long track record of dissembling on behalf of the OECD members – telling them what they wanted to hear. Last year Euractiv published an article by me noting that renewable build out in the Eu needed to triple. IEA/Birol as usual too late.
Generally speaking, funding of renewables is not the problem, my business partner & I do not have problems raising money. Orsted recently obtained Euro500 million from the EIB. I know for a fact that there is a vast reserve of private capital swilling around looking for a home.
The problem is permitting & this is not just a Uk problem. The other problem is states, both in the EU and the UK acting as gatekeepers with respect to renewable build out – they do not hold anything like enough auctions (and auctions are a good way to get the project developers sharpening their pencils.
For those that are interested I have just completed a critique of what is missing in a Communication published by the European Commission on energy. The failure to “join up the dots” is, frankly pathetic.
You have constantly talked about the merits of pension funds and individuals buying long dated Government Bonds for security ..well have you noticed that from the summer 2020 the 30 year gilt is down over 40%!!!!! …pretty shocking for a “no risk” investment..you clearly have no understanding of duration risk. Thankfully some of us do.
Have you noticed that if you hold a 30 year bond you might do so for the long term?
Apparently not…
Thank goodness I do not engage investment advice from the likes of you
Richard, I am not giving you advice I am sticking just to facts so no conjecture. So yes from last summer the 30yr gilt is down over 40%. And from today if you hold it to maturity (so longer term as you say) when it repays at par you are guaranteed a further loss..those are the facts.
And the demand for them remains strong
I suspect you will find the volume traded is low
“And the demand for them remains strong..I suspect you will find the volume traded is low”
Trading volumes have been higher than average and as ever in very late notional . This highlights that whilst par value is indeed guaranteed at redemption, par value also guarantees loss in both nominal and real when buying long dates gilts on such incredibly low yields as has been the case in recent years through a market influenced heavily by QE. The duration and inflation is enormous and the pain is been felt now. I think it highly likely this will continue for a good while yet as yields have to rise (and obviously prices fall) to reflect reality. Without ongoing QE large and consistent price falls are inevitable.
Let me guess…you have hedged this?
Has everyone calling for rate increases done so?
Pete
Thank you for supporting my argument above.
Appreciated.
Richard can you explain the deal that Amazon and the rest of the super rich cronies for paying tax and why can the CEOs of these super rich companies have negotiating powers which we plebs have not and just have to accept what is thrown at us.
I don’t agree your premise
I have also been given negotiating power. Am I a crony?
The issue is simply more complex than you portray
While there is a lot of talk about ‘Pension Funds’ as a source of investment might a better idea be to have a better State Pension in the UK and raise money for Green Investment via Tax/money creation instead?
Which isnt to say of course that in the meanwhile there is clearly a lot of money mostly created via QE sloshing around that needs to be put to good use rather than jacking up asset prices which is all it is doing at the moment.
I really don’t think you are going to end saving
I agree we need a much better state pension
But let’s use pension savings appropriately too