October 20, 2010
Speaking as a professional greenie, the anguish from my fellow greenies over the undercapitalisation of the Green Investment Bank is puzzling. The argument appears to be that the enormous amounts of capital required to build our new low-carbon infrastructure cannot be sourced from traditional sources of investment – the figures given by Ernst and Young indicate a £450bn requirement with only £80bn of funding available from utility companies, project finance and infrastructure funds.
A Green Investment Bank would be able to create financial products for particular areas of infrastructure development; for example, you could buy an ‘Offshore Wind Bond’ and receive a rate of return depending on the success of offshore wind development projects. These would be funded by capital from the GIB. This would make it relatively easier for these products to access capital, making the financing of these projects much quicker and cheaper. Ordinary people would be able to do things like invest in Green ISAs, knowing that their money would be used for projects that would help us move towards a low-carbon economy.
Sounds like a good idea, doesn’t it? There’s a bit of a problem, and it’s because you’re creating what will be in essence a State-backed bank that will be issuing bonds with what will be in all likelihood a rate of interest exceeding that of gilts, £370bn of them, to be precise. Interest rates on gilts have been relatively low because there’s been significant demand from institutional investors for safe state-backed finance products. Add £370bn into the market and all of a sudden interest rates on gilts will go up as demand drops as a consequence of the increased supply of Government-backed debt. This is, you know, the very thing the cuts are intended to stop.
That’s not even looking at the fact that infrastructure projects have a relatively long lead-time, meaning that unless the bank is severely restricted in the bonds it is able to issue in the short term, it’ll suddenly acquire massive amounts of liabilities that it will have to service at cost higher than that of gilts. These costs will be passed onto project developers, raising their cost of capital. Indeed, the only people likely to make money out of this idea would be – yes – the bankers, and people providing financial advice, like, say, Ernst & Young.
The way to secure investment in infrastructure projects is to provide grants for nascent technologies and long-term revenue support for technologies on the cusp of commercial profitability – and to provide a stable policy environment with respect to their development. With this in mind, the fact that the RO system remains untouched following the Spending Review and that £200 million of new grants for manufacturing infrastructure and technology demonstrations has been announced, it would seem the sector is in a pretty good place. Institutional investors want to make money, and they will invest more in project finance if there’s a clear rate of return. Breaking them out of the habit up relying on Government-backed debt to do this is not helped by a GIB.
September 30, 2010
“You’re a mentalist!”
– Alan Partridge
An article on the Guardian’s ‘Cif Green’ section today actually makes the claim that:
“Of course we could solve the problems of today if we reverted to a hunter-gatherer lifestyle.”
I would like to dispute this, if I may, and in doing so discuss further the rise of the group I would like to call the Environ-Mentalists; those who believe that our current industrial civilisation has doomed itself and all that’s left is to sing sad songs in the dark, like a race of angst-ridden teenagers.
Let’s first look at the land area hunter-gather tribes require to provide nutrition. This study of a tribe living the tropical rainforest of the Democratic Republic of Congo appears to indicate that the maximum this lush & bountiful environment can sustain is a population density of one person per square kilometre – and this is factoring in a certain amount of agriculture. Making the very charitable assumption that every part of Earth is equally able to support hunter-gatherer humans, a land area of 148,300,000 square kilometres implies that 97.5% of the current human population of 6 billion would have to die to make this ‘dream’ a reality. It’s good to know that Caroline Wickham-Jones appears to view slaughter beyond nightmares with such casual disregard.
To be fair, I didn’t supply the entire quote:
“Of course we could solve the problems of today if we reverted to a hunter-gatherer lifestyle, but global populations and changed circumstances make that impossible.”
Which does make clear that she doesn’t believe we should necessarily slaughter almost everyone on the planet, merely that the ‘changed circumstances’ that allowed that population to come about are an irritation in this sense.
But what are those changed circumstances?
“Over time, we have seen that economies of scale can be false economies; increasing specialisation can be loss of wisdom; industry can reduce ability.”
This woman is an archaeologist who believes that specialisation causes ‘wisdom’ to be lost. Just gape in astonishment at that statement; and ponder what ‘wisdom’ was lost when we stopped living in caves.
The Dark Mountain Project
Wickham-Jones isn’t the only one who believes that our pesky industrial civilisation is holding us back from running through the trees dancing and singing; we also have the astonishing chaps at the Dark Mountain Project who – honestly – believe that a civilisation isn’t defined by the machines they use or the goods they produce, but rather by the myths and stories associated with them. They’re trying to start what they term an Uncivilisation, which aims to be a collective of writers, artists & thinkers who will preserve these myths through the disruption and collapse of climate change. It’s all wonderfully romantic, but it contains a danger that the movement’s ostensible leader demonstrates in this article. His call for a return to the deep green of the older ecology movement is very enticing, but ultimately leads to the same conclusions as Wickham-Jones: billions must die to make it a reality.
On the other side, you have the anti-environmental ludicrousnessesses like James Delingpole, who are so wedded to such an individualistic epistemology that they’re willing to sacrifice science on its altar. Caught between the extremes of misanthropy and misology are the rest of us, whom I’m going to call the Industrial Environmentalists. This includes the likes of George Monbiot (despite his recent paen of despair). We believe that humans do impact on the planet, on its atmosphere and on ecosystems – but that this can be overcome, not by giving up civilisation but by using the ingenuity that gave rise to it in the first place. We believe that ecological damage and global warming are major concerns – but concerns we can overcome through the application of reason and industry. And, if possible, we’d like both extremes of the debate to start talking to each other rather than us, so we can get on with saving the planet and our civilisation while they cancel each other out.