By Paul Homewood
h/t Philip Bratby
Harrabin’s sidekick thinks the looming global recession is good news:
Good news is in short supply at the moment, so brace yourself for a rare burst of optimism about climate change.
World leaders know their countries face one of the most severe recessions in history thanks to the coronavirus restrictions.
That presents a unique challenge, but also a massive opportunity.
Politicians know they are going to need to spend huge amounts of money to kick-start economic activity as the threat of coronavirus finally recedes.
It is a one-off, never-to-be-repeated chance to transform their economies. So the question is, what will they spend it on?
‘Europe’s moment’
This week the European Union put its cards on the table. On Wednesday it unveiled what it is billing as the biggest "green" stimulus package in history.
"This is about all of us and it is way bigger than any one of us," announced Ursula von der Leyen, the European Commission president, when she told European Parliament members what was planned. "This is Europe’s moment," she said.
As well as being a big step towards federalism, the recovery package puts fighting climate change at the heart of the bloc’s recovery from the pandemic.
The scale of what is being proposed is mind-boggling. The headline figure is €750bn, but add in spending from future budgets and the total financial firepower the European Commission says it will be wielding is almost €2tn ($2.2tn).
There will be tens of billions of euros to make homes more energy efficient, to decarbonise electricity and phase out petrol and diesel vehicles.
The idea is to turbo-charge the European effort to reduce carbon emissions to net zero by 2050.
"If we do not do it we will be taking much more risk," Teresa Ribera, the deputy Prime Minister of Spain told me.
"The recovery should be green or it will not be a recovery, it will just be a short-cut into the kind of problems we are facing right now."
A Green New Deal
If you are thinking this is just something that sandal-wearing European liberals might get behind, think again.
Donald Trump may be an avowed supporter of fossil fuels, but his Democratic opponent in the November presidential election is not.
Joe Biden is reckoned to be planning a similarly huge green stimulus package for the US.
https://www.bbc.co.uk/news/science-environment-52848184
Evidently Justin Rowlatt is just as deluded as Roger Harrabin.
His almost religious faith in the green deal starts with the rotting corpse, otherwise known as the EU.
The €750bn EU bailout is actually tiny in comparison with both the money needed for green deals and the black holes already caused by coronavirus, particularly as it is spread over five years.
In relative GDP terms, it is equivalent to about £60bn in the UK. Yet we already know that public sector borrowing will rise to well over £200bn this year alone.
At the same time, the cost of Net Zero is estimated at £50bn a year.
And as Rowlatt points out, the EU bailout will be funded by debt. In other words, it will have to be paid back sooner or later out of taxation, depressing future economic growth.
And what will this money be spent on to “turbo charge growth”?
There will be tens of billions of euros to make homes more energy efficient, to decarbonise electricity and phase out petrol and diesel vehicles.
I would suggest countries like Italy need that like a hole in the head!
Their industries, including car manufacturers, are already nursing huge losses this year, and are likely to collapse without bailout aid. Providing subsidies for EVs won’t help Fiat if they have already gone bust.
Economic losses will accelerate this summer if tourism does not quickly return to normal. And all the time Italy’s public debt continues to rocket upwards.
Throughout the EU, countries are experiencing the same problems. Von der Leyen’s promised bailout is no more than a sticking plaster anyway, but the idea of spending it on “fighting climate change” is tantamount to pouring it down the drain.
Rowlatt’s little dream then moves to the US, where he hopes that Slow Joe will win the upcoming election and implement his own green deal. However, he shows his ignorance of US politics, as any such programme would need to be approved by Congress, an unlikely event if the GOP retain their Senate majority as expected.
Even then, such a deal would be fraught with legal problems, as Obama found when he tried to implement his Clean Power Plan, which was blocked by the Supreme Court as infringing State rights.
Rowlatt does acknowledge that China is currently headed in the opposite direction, increasing the use of fossil fuels. But then his naivety takes control again:
The countries that decarbonise first could lead by example. Remember, the more renewables you produce, the cheaper they get.
As low carbon technologies increasingly undercut the fossil fuel alternatives, you won’t need a stick to beat other countries into changing their ways – they will just follow the money.
You see where this is headed.? Maybe we are not as far away from widespread coordinated action on climate change as many people fear.
He repeats the commonly made claim that renewables are cheaper than conventional energy, but fails to explain why bailout money should be spent developing them.
In the real world, of course, the opposite is true. With ultra low oil prices likely to persist for some time to come, it is fossil fuel energy which will power economic growth.
The real risk to economies is the broken balance sheets of otherwise perfectly viable companies. If bailout money is not used to address this, no amount of green deal spending will avoid a catastrophic worldwide recession.
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June 1, 2020 at 07:51AM
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