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The green squeeze

18 February 2012

4:57 PM

18 February 2012

4:57 PM

Bjorn Lomborg’s article on why Germany is cutting back on its support for solar power is well worth reading and has clear implication for this
country’s debate about energy policy. As Lomborg argues:

‘there is a fundamental problem with subsidizing inefficient green technology: it is affordable only if it is done in tiny, tokenistic amounts. Using the government’s generous
subsidies, Germans installed 7.5 gigawatts of photovoltaic (PV) capacity last year, more than double what the government had deemed “acceptable.” It is estimated that this increase
alone will lead to a $260 hike in the average consumer’s annual power bill.’

At a time when living standards are being squeezed, these increases in energy bills are particularly economically damaging and politically unsustainable. They are also doing little to
help the environment: Lomborg calculates that ‘by the end of the century, Germany’s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours.’

The government’s role in energy policy should be to try and incentivise the kind of research and development that can lead to price-competitive green energy. (For instance, nano-technology
could vastly increase the efficiency of solar power.) As Lomborg notes, it is only once this work has been done that it makes sense to try and move businesses and households onto these new forms of
energies. Anything else is putting the cart before the horse.

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