Since my last column, the world has turned on its axis. Watching the world’s finances spin into meltdown in a matter of weeks, the idea that catastrophe can lie just around the corner must suddenly seem horribly tangible to many people. For the banking executive, catastrophe lies in the mammoth hole in his balance sheet and the collapse of his institution. On top of this horror, some bankers find themselves the subject of criminal investigation by the FBI. For the owner of a small business, catastrophe means he is suddenly unable to borrow money for working capital. The banks who were so quick to gamble his money, blind to the toxicity in their casino, will now lend him not a dime. For the ordinary person, catastrophe has come with the realisation that as the economy implodes real poverty, potentially, is just one pay cheque away.
As the rebuilding starts, the battle of ideas has assumed an edge of deadly earnestness. UK Chancellor Alistair Darling says that the strategies of Depression-era economist Keynes must now be copied. A massive programme has been adopted of government expenditure on new infrastructure to generate jobs and fresh disposable wealth with which to help restart the economy. Liberal economists and environmental thinkers in the ‘Green New Deal’ group go further, saying the spending must be focused on activities that combat climate change and head off the worst of the coming oil crunch. The idea of a green new deal is equally welcomed by the United Nations, Al Gore and others.
Rubbish, say the traditionalists, defending the shattered ruins of their neoliberal, free-market project (1979–2008 RIP). In an article in the Sunday Telegraph, chief economists from financial institutions argue that it is impossible to guess which sectors will shrink, and therefore the Government would risk misallocating resources. ‘The best tools are monetary, not fiscal ones,’ they say.
But some sectors can be relied on not to shrink. Renewable energy will surely be among them. T ake wind power as an example.
Before the crash, insurance giant Aviva ran ads saying: ‘O ur strategy for the future is to make sure there is a future.’ The small print read: ‘We’re committing to becoming the first insurer to go carbon-neutral.’ There were no more words, just a picture of a wind farm.
The Head of Deutsche Bank Asset Management noted back in March that it is getting easier to use campaigning investment as a tool in fighting global warming. Until recently, mutual funds – the most popular form of investment – offered few options. In the last two years, an estimated 200 mutual and exchange-traded funds have been launched, targeting companies mitigating or adapting to climate change. Some $66bn (£33bn, €42bn) of retail investor money has flowed into them. Wind has proved particularly attractive. World investment in renewables exceeded $100bn for the first time in 2007. Investment in renewables generally is growing fast. In 2007, some $71bn was invested in new renewable energy capacity worldwide. Almost half went to wind.
Wind energy deployment in China is breaking records. The growth rate has exceeded 100% a year since 2005, as China pursues a policy of 15% non carbon energy by 2020, up from 5%. The wind target was 5 gigawatts by 2010, but that has been met and passed three years ahead of schedule. The secretary general of the China Renewable Energy Industries Association says that many believe wind power will be cheaper than coal by 2015. In 2007, domestic manufacturers took more than half the domestic market for the first time, and China might already have overtaken the US as the biggest manufacturer of turbines. Growth is fast in India and Brazil too, with these three countries’ share of global wind investment rising from 12% in 2004 to 22% in 2007.
In Europe, Portugal is making good progress with a clean-tech plan to wean itself off oil, with wind as its backbone. Its target, en route, is 60% of electricity and 31% of primary energy from renewables by 2020, up from 20.5% of primary energy today. In less than three years, Portugal has quadrupled its wind power. Along the Spanish border in northern Portugal, where the world’s biggest wind farm is under construction, turbine blades are built nearby in a factory employing over a thousand people. The intention is to bring much more renewables manufacturing into the country in this way. Economics Minister Manuel Pinho dismisses nuclear power as a result of all this. ‘When you have a programme like this there is no need for nuclear power. The relative price of renewables is now much lower, so the incentives are there to invest. My advice to countries like the UK is to move as fast as they can to renewables … Countries that do not invest in renewables will pay a very high price in future.’
In Spain, the state of Castile La Mancha has already hit 40% renewables in its energy mix, on the way to reaching a goal – captured in a regional law – of 100% by 2012. Most of this is down to wind power. It is stories like these that Al Gore draws on when he calls for a national US mission to power electricity 100% with renewables within ten years. He appeals to the new president to emulate John F. Kennedy’s Apollo mission. ‘We are borrowing money from China to buy oil from the Persian Gulf which we burn in ways that destroy the planet. Every bit of that has got to change,’ he says. The bad news is that climate change is happening faster than we thought, but the good news is that low-carbon technology is ready to go. ‘When we send money to foreign countries to buy nearly 70% of the oil we use every day, they build new skyscrapers and we lose jobs. When we spend that money building solar arrays and windmills, we build competitive industries and gain jobs here at home.’
Jobs are the key to this. In the green new deal, wind power has to stand tall as a vital piece in the jigsaw. Politicians intent on leading economies out of recession will be working with the grain in accelerating wind power. Major investment dollars had already begun flowing into wind power before the credit crunch began.
The cries of the neoliberal economists that the market knows best, and that politicians risk misallocating resources if they make choices, are misplaced. The market can be blind, and what the world needs desperately is leaders with vision, willing to steer the market towards sanity, survival and renewable resources. Wind and the other members of the family are going to become standard-bearers in the battle of post-crunch ideas now under way. They are talismans for renaissance in the effort to rebuild and maintain the social cohesion that arrogant bankers and their ideological supporters have so badly endangered.