Turbines: just so much wind 

Environmental activists, turbine lobbyists and wind power professors are angry with the government’s macro-economic think tank CPB. The CPB stated at the beginning of this month that building big offshore wind farms would cost more than it would bring in, even when factoring in the effects on the environment and health. The loss would be around the €5bn mark, the CPB said.

The organisation also maintained that the effect on the environment would be negligible. As a result of the current EU emissions trading system the amount of C02 would remain the same, no matter how many turbines are built.

It is not just the CPB. Objections against wind farms on land and sea have been rife for years. And what is more, these parks are largely financed with public money. Economic affairs minister Henk Kamp said last year that offshore wind farms were subsidised to the tune of around €18bn.  

 Energy bill

This huge amount of money is spread out over 15 years and will cause an increase in people’s energy bills of €200 a year. Low incomes will be hit hardest. The minister recently decided to build more cheaply but this still puts the final cost at around €15bn.

But cheaper or not, the fact remains that the wind farms are financed by subsidies which end up mainly in the pockets of foreign manufacturers. We’ve said it before: bin the ‘old technology’ of wind turbines and start putting an adequate price on C02 emissions.

Tax

The best way to do this would be by means of a tax. The emissions market is less efficient and susceptible to lobbies and subsidy seeking. Pricing CO2 is technology-neutral: it challenges the market to come up with the most effective way of tackling C02 emissions.

We are in favour of sustainable energy sources but they must be efficient and effective. The way forward for many countries, including the Netherlands, is solar energy using technologically advanced storage systems and electric energy transportation.

Saving energy

Energy saving measures are another imperative. Making homes, factories and offices energy efficient will also generate jobs. A number of international studies have predicted that solar power will become the number one energy source in the world and will be able to compete, unassisted by subsidies, with fossil fuels in the next decade. If we ditch the subsidies for wind farms the process could be speeded up even more.  

Subsidies harm the economy

There’s another reason why we should stop doling out inefficient climate and environment subsidies. In order to award subsidies we first have to increase the tax burden for citizens and businesses. The system of pumping around money in this way is harmful to the economy and another good reason to abolish it.

The cabinet doesn’t need an energy accord in order to achieve an effective climate and energy policy. By abolishing all direct and indirect subsidies both for fossil fuels and climate and environment policies the Netherlands would save billions of euros. Taxes can come down and economic growth and employment can go up.

Polluter pays

The cabinet should also implement the rule of ‘the polluter pays’ for the full 100%. Energy from fossil fuels can be taxed with a carbon tax while other types of pollution have their own taxes. This will be vastly more effective than the complicated bureaucratic and very expensive energy accord and will also lead to sustainable economic growth.

As far as the EU emissions trading system is concerned, we can bin that straight away. It doesn’t work and no amount of tinkering will ever make it work. Even at the time of its introduction many said a straightforward carbon tax would be a much better alternative.

Rick van der Ploeg is a professor of economics at the University of Oxford and adjunct professor of economics at VU University.

Willem Vermeend is an entrepreneur and professor of economics and e-business at the Maastricht School of Management (MSM).

This article was published earlier in the Financiële Telegraaf