Adair Turner must be a bundle of nerves, sitting, as he does on both the Financial Services Authority and the Climate Change Committee.
He’s often asked to speak on behalf of ideas that are shaky, like cracking down on the banks with stronger regulation, whilst avoiding blaming the banks themselves for the financial crisis :-
“From Times Online : October 16, 2008 : FSA chairman Lord Adair Turner warns UK banks of hard-line regulation : Lord Adair Turner, the recently installed chairman of the Financial Services Authority, has warned that Britain’s banks face a hard-line regime of supervision after admitting that the regulator had been guilty of supervising them “on the cheap”. In an interview, he emphasised that, in the wake of the credit crunch and global bailout of financial institutions, the days of light-touch regulation were over.”
And when it comes to Climate Change, he was required to defend the continued increase in aviation, meaning that other sectors of the High Carbon Economy would have to economise further than expected :-
“House of Commons : Environmental Audit Committee Wednesday 4 February : Meeting started on Wednesday 4 February at 9.30am : ended at 11.17am : Carbon budgets : Witnesses : Lord Turner of Ecchinswell, Chair, Committee on Climate Change”
At the conference “The politics of climate change : from economic crisis to business revolution” last week on Friday 5th June 2009, Adair Turner was fidgeting and looking slightly paranoid.
I could have sworn he was staring at me from time to time, but I’m sure other people in the audience felt the same thing. He looked definitely cagey.
When he got up to speak his words were like verbal diarrhoea. “We’re talking about a Low Carbon strategy [with] 1) a clear sense of what aims and objectives we are [pursuing]; 2) a clear idea of how [we] define what we do and 3) what are the public policies to make sure we do [it]…the Climate Change Committee [agreed] the aim of an 80% Carbon Dioxide equivalent by 2050 versus 1990 [reduction] target – that will become a firm element of UK policy. The key thing now is to deliver it.” Er, yes. That would be the key thing, now.
“We think [it’s] achievable at relatively low cost, a few percent of GDP. How is it achievable ? a) We can change our lifestyle to a degree. Drive a smaller car. Ride a bike. Find you’re just as happy as before. b) We can improve efficiency. [There are] lots and lots of opportunities to save Energy – positive Present Net Value projects…negative cost. c) Need to do a third [thing] as well – de-Carbonise our Energy sources. In doing that we have to be technology neutral – we don’t need to decide…”
Ah, the “technology neutral” chestnut all over again, as in, “we shouldn’t be picking winners”. But isn’t “picking winners” what good Government policy should be about ? Climate Change technologies are all relatively well-scoped and costed now. Surely we know which will be the most cost-effective and strategic, for example in providing baseload electricial generation ?
And aren’t the Government going to come up with their Summer Strategy – where they will clearly be “picking winners” ? :-
“June 1, 2009 : Government to set clear targets for UK energy mix : Robin Pagnamenta, Energy and Environment Editor : Britain is set to turn its back on a wholly liberalised energy market and will return to a more interventionist, state-directed model, according to Ed Miliband, the Energy Secretary. In an interview with The Times, Mr Miliband said that a more assertive role for government was the only way that Britain could achieve its present target of slashing its carbon emissions by 34 per cent by 2020 and 80 per cent by 2050. “The market on its own is not going to ensure that we make the transition to low carbon,” he said. “It’s not necessarily going to ensure the right diversity in our energy mix.” Mr Miliband, who is pushing for a big rise in electricity generated from low-carbon sources, said that this summer the Government would set out a clear framework for Britain’s future energy mix — specifying future targets for total power generation from nuclear, gas, “clean coal” and renewables for the first time since the 1980s. The so-called Summer Strategy, dubbed the “2030 Masterplan” by senior industry executives, will also provide a long-term framework for the development of the National Grid, which is facing a big overhaul in order to support a huge increase in offshore wind power in the UK, as well as a fleet of new nuclear reactors.”
Anyway, back to Adair Turner : “We should be [pursuing] all three [routes of change]. We should be willing to progress on all three. We don’t need to decide which mix…[although] we know something about the highly likely shape.”
Yes, that “shape” has been spelled out to us already, in terms of very expensive and risky options such as new Nuclear Power and unproven Carbon Capture and Storage.
“[There will be] a very significant role for electricity. We can de-Carbonise electricity – we need to do that. [Grid electricity is currently] 550 grammes of Carbon Dioxide per kilowatt hour, [and it needs to come down to] 50 by 2030, and 10 to 20 by 2050.”
And then a really astonishing admission “[We] may introduce electrical heating into homes after having spend the last 30 years taking it out.”
Adair Turner admitted that we need a high Carbon price in order to achieve this de-Carbonisation of Electricity. Well, we will if we’re going to take the route of new Nuclear and Carbon Capture and Storage, both expensive options.
Adair Turner was confident that the European Union Emissions Trading Scheme would set a high Carbon price. He said that he had been asked ” “Why do you have any other policy ?” [Just] set the cap and let the price find its level, and leave it.” But, he asked, “How much can we depend on markets in Carbon to deliver ? We have to recognise there are some kinks to markets – don’t iconise markets – the last 8 months [we have been] confronting the reality of the wreckage left by markets. We have to be more open-minded. In the Energy Efficiency area it’s often best just to regulate. There are lots of Net Present Value [cost negative] projects [for example] compact fluorescent lightbulbs. To a Free Market economist this is [confounding][confusing]. If it was [of some benefit] someone would have done it already…if you want people to change their lightbulbs, don’t do it through price.”
As far as Electricity and Carbon Markets, Adair Turner asked “can we rely on the Carbon price to deal with coal ? We thought it couldn’t be left to the oscillating coal price. We said we couldn’t just leave coal to a Carbon price. [Our plan is] either by licence [to burn Coal] or by propping up the Carbon price.”
As for electric cars, he said : “if there is a take-off of electric cars – you need a point in the street to charge it – private companies are not going to put points in the street until they are certain that there is a large amount of electric cars.”
As for the already existing housing stock “there is a huge opportunity to improve the insulation of the housing stock…We love our “turn-of-the-Century” homes…solid wall insulation is very expensive. It is not clear we will get there by obligation [for example the Renewable Heat Initiative] – we may need [to set] roles for the Local Authorities that we have not thought about before.”
So, an idea there about coercion, by town councils, for everyone to get insulated.
Adair Turner didn’t seem to speak to the obvious point that people are planning to transfer activities away from Petroleum Oil, Coal and Natural Gas towards Electricity.
This will have the effect of massively increasing Electricity Demand, and this will have to be Green Electricity. It begs the question : how can we ramp up Renewable Energy deployment to answer to all that new Electricity Demand ?
Maybe Adair Turner is not the right person to ask about that, as he’s not an engineer.