Why the risk reducing aspects of wind energy are not more widely appreciated.

The electricity industry is a rum industry (to use an old fashioned adjective). It is the only one I know where an important, even dominant, risk as we understand it in business is mitigated by the electricity regulatory and competitive system.

When the price of fossil fuels goes up, all hell breaks loose in the airline industry. Companies go to the wall, average profits plummet, and customer service suffers. Every other private sector industry is impacted by volatility in the price of fossil fuels. Three of the last four recessions were caused by fossil fuel price hikes. (Maybe the last one was as well only it was masked by the banking collapse).

Here is the question. When did you hear of an electricity utility that stuck to its home market getting into financial trouble? As a model it works beautifully, most of the time. Pension funds invest in a low risk utility, the costs of capital are almost as low as sovereign debt. The concept of a customer exists only vaguely, nearly every consumer would not be able to tell the price they pay per unit of electricity. Although markets are opening slowly, and some customer churn is evident, by and large the utility remains monopolistic in practice. Some parts of a utility’s service are indeed logically monopolistic. The transmission grid is a singular industry, a natural monopoly. No one wants or needs two sets of power lines running across the state, competing with one another. The only question is whether this monopoly should be in private, part private or public ownership.

Electricity is quite cheap as an energy source. It is also incredibly flexible. It is convenient to a degree that no other energy source comes even close. It is so necessary that it is a huge political issue. I don’t believe that any government in a country, used to having it, could survive a serious and sustained lack of the basic electricity commodity.

Due to these considerations the average electricity utility is a protected species. Governments don’t let them fail. (We will deal with the exceptions below). When the price of fossil fuels goes up the price of electricity goes up to allow the utility to make the same economic returns. The Regulator, or the PUC, or the Government Department always allow the price increase. In this way the utility is insulated from fossil fired price risk.

I am not seeking to cast aspersions, to lay blame, or to denounce this behavior. We exist to describe the facts as they are. If I was in Government, and I had become accustomed to seeing a steady price for oil of between $12 and $18 per barrel for a period of 20 years, I’m sure I would have been happy to acquiesce in a situation where the utility became an integral part of the Government service. I would have been happy for the utility not to have taken any risks, not to have encouraged innovation, and to in fact see it as part of the civil service.

I mentioned exceptions above. Some countries encourage private sector behavior as an article of faith. The US has a largely privately owned utility sector. Many of these companies have ventured outside their home patch. The ones who came to the UK when it opened its electricity market, got wiped out financially when the British changed the system, from the pool to NETA.

However if the utility sticks to it’s last, it stays in business. It is not subject to what would normally be it’s biggest risk: fossil fuel price increases.

This fact gives a clue as to why the average utility has not embraced wind energy with any enthusiasm.

The greatest aspects of wind and solar is that the price is fixed, and that the marginal cost is zero.

Fixed price: the cost of wind or solar is the cost of developing and building the wind fired power station. It is predictable over any time horizon. It is completely un-correlated to the price of fossil fuels. If wind energy were a financial product it would resemble a Government bond. Low yield but absolutely reliable. And just as a government bond in a portfolio of stocks and shares enhances the yield by lowering the risk, wind energy reduces the cost of electricity by reducing the fossil fired price risks. This has been shown in study after study. The latest is in a study conducted by Dr. Shimon Awerbuch into the Scottish electricity system. There he showed that raising the wind energy contribution from 21% to 32% lowered the price by 6%.

Why do utilities not value this? Because they can pass on the risk of fossil fuel price increases to “consumers”.

Let me try and put this more graphically. Fossil prices double. The utility goes into the regulator and explains the price rise. The regulator sanctions a price rise in the cost of electricity. The regulator does not ask “how much wind or solar have you installed on the system to mitigate these price increases, which by the way you know are inevitable”?

Our next blog will show how Renewable Energy Feed In Tarriffs pay for themselves usually from year one.

Well folks, I have been out of the country on a world tour for the last four weeks, I welcome this opportunity to catch up on the latest big issues.

As far as renewable energy is concerned nothing could be bigger than almost the total failure of the US and Canadian markets throughout 2009. Anecdotally, announced sales of wind turbines in the first half of 2009 in North America have fallen to 3% of the 2008 levels. Although very extreme, this is not the first time we have seen such a sharp decline nor is America the only market to have experienced it.

The Danes abolished support programmes some years ago resulting in hardly any on land wind energy development in Denmark since.

Examination of the US market is instructive because of the way it is attempting to introduce a sustainable, native, free fuel source.

In the 80’s the US had an Investment Tax Credit, however the main shortfall with this programme was a lack of long-term incentive. If and when turbines suffered mechanical failure through ongoing wear and tear there was no incentive to get them running again; as the investors had received their payout and in many cases were now far removed from the projects.

Throughout the 90’s there was a prolonged slump. Since 2000 or thereabouts, onshore wind has been supported by the production tax credit (PTC) system. This system in essence is a transfer of resources from the American tax payer to the electricity industry. It lowers the overall cost of electricity. It has however some famous drawbacks. It required frequent renewals often by an Act of Congress, which led to booms and slumps in the industry. It has to be said it is a reasonably popular item and so it becomes a political football; a source of “pork” if you like.

The PTC has of course two further drawbacks which are:

1. The people who make use of the PTC must have a line of sight to long terms profits. They were generally the big banks, so the current banking crisis has done away with the PTC as a source of support for renewables.
2. Renewables are forced to compete with fossil fuels. They are subjected to a market regimen which sees them compete with the marginal cost of electricity. The marginal cost in most States is driven by gas. Gas has been selling for less than $4/million Btus. Even with the PTC scheme, wind is unable to compete. So renewables developers, manufactures, consultants and support service providers (building contractors, wind analysts, lawyers, financiers) are in effect forced to take fossil fuel risk.

This, we are uniquely unsuited to.

The whole renewable industry in the US is subjected to three levels of risk:

1. Political risk;
2. Banking health risk;
3. Fossil fired price risk.

In time renewable energy, mainly wind and solar will replace fossils as the primary energy input into making electricity. So severe is the crisis in fossil supply that we see the price move from $60 to $147 to $32, to $72 and back to $60 in the space of eighteen months.

This volatility is both the measure of the tight supply/demand situation and of the risks that are incurred by any industry that is linked to fossil fuels.

Of course, wind and solar, both in quantity and price are completely independent of fossil fuels. There is zero correlation between them. The lack of correlation leads to the following important result for the electricity industry.

Risk Reduction Effect of Wind:
In a generation portfolio that is comprised of mainly coal, oil, gas or nuclear, wind and solar act as strong risk mitigants. In a study carried out by the late Shimon Awerbuch in Scotland, he demonstrated that if the amount of wind on the system went from 21% to 32% and the systemic risk was held constant, then the price of electricity would have dropped by 6%.

Replacement Energy Effect:
In another study this time of the Mexican economy, Dr. Awerbuch showed how deploying 10% wind on the Mexican system would reduce the price of fossil fuels by 9%. This effect has been observed many times in Europe, particularly in Northern Europe where Germany has 22,000 MWs of wind plants installed and Denmark has 3,700. So in fact wind on the system reduces the price of electricity generated from fossil fuels.

Merit Order Effect:
There is a third effect called the merit order effect. The effect is caused by the variable price of wind being precisely zero. When wind is blowing it is dispatched first and it replaces the higher cost generating plants. Wind does not replace the average efficiency plant on the system but the least efficient highest cost generating units.

Carbon Reduction Effect:
Wind generated electricity is carbon free, no carbon fines will ever apply to wind energy.

Amounts of energy production and associated pricing for wind and solar generated electricity can be predicted with great accuracy over 6, 15, even 30 years; this provides a long term (and indeed short term) risk reducing effect. Predictable production gives us a clue as to what the most appropriate support mechanism for renewables: a fixed price feed in tariff or Renewable Energy Feed in Tariff (REFIT). In the three European countries which have made the greatest progress with onshore wind, Denmark, Germany and Spain, a REFIT system has been employed. Since initiation of the programmes it has been discovered that the REFIT programme is only required for ten years. Thereafter renewables can stand on their own and trade on the system at whatever price the market dictates.

A renewable energy feed in tariff – the “REFIT” is appropriate because it reflects two attributes of renewable energy:

· The price is fixed, in fact is set by the capital cost of installation,
· It reduces the overall electricity pricing risk on the system which is created by fossil fired price variability.

A REFIT system cuts out the booms and slumps that are experienced using tax based incentive programmes. It keeps the payment for renewable energy within the electricity system. The value of wind can be calculated without having to take into account wider aspects such as general taxation. It is safe to say that if a REFIT system had been introduced in the Year 2000, America could have between 5 and 10% of its electricity now coming from wind.

Every thousand MWs of wind on the electrical system would forego the importation of 3.9 million barrels of oil. At a price of $60 a barrel, this would forego spending of $235m per annum. The wind was, is, and always will be a free source of primary energy.

At these levels the US would probably be employing an extra 100,000 people and would be well on its way to energy independence. In effect the first tranche of MWs built in the year 2000 would be coming out of REFIT support in the year 2010 (next year).

Such wind fired generation would be used by a typical utility in one or both of two ways:

1. To outcompete the utility with less wind and,
2. To mitigate this fossil fired price variability and make more profits and higher value for its owner.

So what do energy consumers need? The same things that wind needs:

· A stable mechanism which will create pricing confidence and eliminate boom slump cycles in the industry;
· A stable mechanism that provides downward pressure on our electricity prices;
· A stable mechanism that encourages renewable developments which will reduce fossil fired generation and all of its associated problems
· We need Renewable Energy Feed in Tarriff programmes instituted in every jurisdiction.

One note of encouragement can be taken from the actions of the Province of Ontario, Canada. They are currently in the final stages of implementing a feed in tariff programme known as “the FIT Programme”, contained within their Green Energy Act. It is the first of its kind in North America, is modelled after successful European examples; we are watching its development quite closely and are very encouraged by the efforts of this government.

I read that Ernst & Young have brought out a carbon capture attractiveness storage index. I am surprised that a firm of its eminence (they are the auditors to Mainstream Renewable Power) would dignify carbon capture and storage with an “attractiveness index”.

E & Y’s attractiveness for renewables is a worthwhile venture and it fulfils a role for companies and Governments.

Firstly carbon capture and storage is not carbon capture and storage. It is CO2 (carbon dioxide) capture and storage. Carbon is solid at room temperature and as such is readily storable. Carbon dioxide on the other hand is a gas, it nearly always comes mixed with nitrogen and this is inherently virtually impossible to store using known technologies.

I always think it is important to examine where the idea for carbon capture and storage comes from. It emerged from the oil industry where carbon dioxide mixed with other gases is pumped into oil wells to extract more oil than would be otherwise available. It has been embraced by the coal industry and by foolish politicians. Coal industry magnates simply want to go on selling coal and so they point to the nirvana state of carbon dioxide, capture and storage as their get out of jail card.

I have heard politicians say that China needs to use carbon capture and storage because of its huge reliance on coal.

Here are just a few of the difficulties associated with trying to capture carbon dioxide. In all conventional power stations, coal is burnt in air. Air has three molecules of nitrogen for every molecule of oxygen so the gasses coming out from the back end of the counter contain three molecules of nitrogen for every one molecule of CO2.

The E & Y attractiveness index gives a list of three potential technologies that can be used to separate the CO2.

They are amine based chemical solvents, physical solvents or membrane technology. This is all very interesting. None of these exist as a large scale chemical process or as a diffusion process. They have to be yet invented. Nobody has any idea about the costs. What we can say is that if any of these processes are attached to the back end of a boiler the efficiency of the power station is reduced. That means you have to use more coal to get the same electricity out.

I have heard that one eminent company has suggested that pure oxygen be used in the power generation processes. They propose that air be separated into its elements, oxygen and nitrogen and that pure oxygen be taken from this process and that carbon is burned with pure oxygen in the boiler.

Of course this process can be done but it is incredibly expensive and you still lose efficiency because you have to take the gasses at the back of the boiler and pump them down a pipe.

The Ernst & Young index treats us to what happens next.

· Onshore Pipeline
· Offshore Pipeline
· Road/rail tankers
· Ships incl converted liquefied natural gas tankers.

I was thinking about what this would mean for the Moneypoint Station in Ireland.

We have no suitable holes in the ground here. So we would have to build a pipeline or have a ship call at Moneypoint and collect the CO2. The ship would then have to travel at least 600 miles around the North Sea to discharge its cargo. In addition to the shipping capital costs and the reduction of inefficiency in the boiler and the chemical reagent costs, you now have the diesel costs of running the ship.

The effect of all this would be, I suspect, to double the carbon burn of making a unit of electricity. In conversation with some of my Japanese friends, I was told that CO2 could be pumped down 3000 metres into the sea where it would turn into a liquid and blanket the seabed. Of course all life there would then be killed.

So in addition to not having done an energy balance over the entire capture and transport of CO2 nobody has done an ecological balance.

Finally we come to storage itself.

At the end of the great chain of events we are supposed to believe that the CO2 can be locked up indefinitely in the ground.

How real is this proposition?

As I write these words my amazement intensifies. I like reading science fiction and I love watching a well made science fiction movie. What I don’t like is when science fiction gets mixed up with research and commercial reality and when people start to spend hundreds of billions of euro or dollars at it.

This is all done to preserve the status quo.

Go ahead and burn coal to your hearts content and somebody somewhere will find a way of dealing with the carbon dioxide you produce. It is worse nonsense than the hydrogen economy which thankfully everybody is too embarrassed to mention these days.

The world is in a once off transition to sustainability. The liquid and gaseous fossil fuels have a finite life span of 20 – 40 years respectively. We should be spending the money on the electricity economy and on how to get the electricity from the places where the rich renewable resources exist sustainably in great abundance to where the people live.

In the second last blog we showed how the expectations of populations differed according to their size. In bigger populations the people expect their public representatives to deliver on policy issues whereas in small populations like Ireland there is a higher emphasis on service to the voter.

In places like Ireland, Switzerland and Norway there is a greater feeling of intimacy and referenda are used to decide on policy issues.

In Ireland public representatives deal with issues of local interest to their constituents. We also talked about the emergence of a stable trading Europe which provided for safety and security for all our families in a family of mutually respectful nations.

So why the Lisbon Treaty?

In a formal sense, Europe has no right to write Directives or law on matters concerning energy. Energy was the prerogative of individual member states and was more or less jealously guarded until quite recently. The reality of oil shortages and gas constraints began to bite about four or five years ago. The price of oil began to move from its steady twelve to eighteen dollars a barrel, a position it had adopted for eighteen years to a curve rising steadily upwards. It peaked at $147 a barrel in July 2008.

Other fossil energy prices moved in tandem with oil, i.e. coal and gas. The barrel of liquid oil is now used as the marker which sets the price for everything, including CO2 emissions.

Lest we forget just how precarious our supplies of energy were, Vladimir Putin arranged to have the gas turned off in two out of the last three Januaries, i.e. just at peak yearly gas demand.

Europe and the world have massive problems with over reliance on fossil fuels.

They are expensive, they are extremely volatile, they pollute the atmosphere and change the climate. They heighten tension between nations and trading blocks. On a lighter note the shortage of fossil fuels gives rise to science fiction like dreaming on the part of some energy policy makers.

The world has spent a fortune on taming nuclear fusion; fuel cells have come and are nearly gone. They hydrogen economy is still whispered about; the latest imposition by the coal and oil industry is carbon capture and storage (CCS). Vast sums of money will be wasted before the silver bullet of CCS is seen to be made of lead.

The Lisbon Treaty empowers the organs of Europe, the Parliament, the Commission and the Council of Ministers to draw up common legislation to allow Europe become energy independent as well as reducing our CO2 emission by 80% from their 1990 levels.

Using the Lisbon Treaty, Europe will be empowered to draw up legislation which will create a European wide market in electricity. Monopoly suppliers of electricity are still allowed to hide behind national and regional boundaries.

These utilities are not companies in the normal sense; the risks of escalating fossil fuels are passed on to the customer by regulators who are complicit. When British Energy got in trouble it was taken over by the British Government.

Our argument has constantly been that if the private sector is good enough to provide food for the world and to look after its housing and security needs, then it should also be entrusted with the job of supplying us with competitive electricity.

The Lisbon Treaty specifically gives the organs of power within the EU the ability to allow nations to come together in a friendly legal arrangement to deal with the energy crises.

Europe needs to go to sea to find the wind energy it needs to power its industries and its homes.

Europe needs vast new grids to carry offshore wind power from the periphery where the resources are to the centre where the people are. Europe needs a common regulatory framework to prevent local monopolies interfering with the free movement of electricity.

Europe needs to build the Supergrid and it also needs to provide a framework for its building. This framework includes an offshore transmission system operator and a common regulatory framework.

The Lisbon Treaty removes any doubt about Europe’s ability to intervene in the greatest crisis facing us.

Due to the purchasing power of 480m people we have probably been rendered immune from absolute fuel shortages.

I read that the people of Chad are not so lucky.

Without Lisbon we the nations of Europe are not empowered to deliver on the great promise of the previous 50 years.

The E.U. in concept is about safety. At the gut level before higher order considerations come into the reckoning the EU is about the safety and security of European families.

In the immediate history prior to the creation of a unified Europe we had two devastating world wars. Both wars, although European in origin went on to engulf the entire world. Few nations were left unscathed. Each war and all the previous wars in Europe created disputed borders which laid the basis of future wars.

The E.U. ensued in an era of peace. It also ensued in an era of prosperity. The main theory being proposed here is that at base the EU is about the safety of European families.

Safety in the first instance is about protection from death, disease and war. Safety on the other hard is about the creation of secure employment for families. This in turn is intimately bound up with profitable trading between nations. In this its secondary aim, Europe has been spectacularly successful. So successful has it been as a model in fact that the original six nations have now become twenty seven.

Barriers to the movement of goods, capital and labour have been removed. It is virtually impossible to go to war with profound trading partners. One simple incidence of this has been the development of the Mosel River in the 60’s. It was developed then to move French steel through the Mosel into the Rhine and so on to the international Port at Rotterdam. Here we had the French trusting the Germans in a manner undreamed of before the E.U.

When I was thinking about what Europe really meant to the bulk of its people, I thought that the following phrase captured what it was about:

"Safety for all European families in a voluntary family of European nations".

The development of Europe has created a 480m block of persons. Interestingly Europe has mirrored what has happened in China and India in that all three are giant trading blocks in the world. The missing one from the above is the United States. So as the world has, with technology, travel and the internet become a global village the big trading blocks look after the interests of their families in a new way never seen in history before. It is not that self interest has been replaced as a driving human trait, it is rather that the self interests of every block have been both given expression and been kept in check by the other blocks.

The reinvention of Europe over the last sixty years has had a dramatic effect on in particular a small nation like Ireland. Ireland is in many ways a symbol of what Europe can do for a small isolated resource poor country. Ireland exists by trading. The sum of its exports and imports amount to 140% of its GDP. This is in part due to the injection of 73Bn Euro in direct aid and CAP support. The wealth of the Irish people has been moved from 80% of the European average to 130%. Safety and security of Irish families now has a new meaning. In our next Blog, I intend to deal with the most important aspect of the Lisbon Treaty and that is how Europe deals with the biggest crisis facing humanity which is the energy one.

Over the next few blogs it will be my intention to deal with the issues of democracy in general and as it is applied in Europe, with world competitiveness in the context of the major world federations i.e. China, India, United States and Europe.  We will do all this in the context of the biggest issue facing our species, which is surviving and thriving and having enough energy in the post fossil fuel era.

Let me begin at a relatively strange place and that is democracy in Ireland.  Ireland is a relatively small island occupied by two different nations who seem to have recently come to some accord.   The Republic of Ireland has 167 members in the Dail. It is organised in multi-seat constituencies with at least three members in each constituency.   There is also a Seanad and a whole series of County Councils to which there are also elections.  The Irish have a great problem and that is that they are an island nation where roughly speaking everybody knows everybody else, class divisions are not quite the feature they are in other counties, although they do exist.  The Irish are fundamentally pre-occupied with what exists for them and for them alone.

The insular nature of Irish thinking has been tempered somewhat by our participation in the EU.

So although the florid narrow minded Irish catholic nationalism has been tempered and the constitution altered to give effect to this temporarily, Ireland is not a very cosmopolitan place.  The Irish are completely obsessed with the current recession as it affects them only.  Policy development in Ireland is an incomplete process.  We generally don’t have opposing think tanks with research based diversity of opinion.   It seems that Ireland picks up a little bit of every passing .......ism.

The Irish political system is fundamentally based on serving the representative needs in the constituencies.  It is a brave and very rare public representative who concentrates on policy development to the exclusion of his/her constituents.  Those representatives who delegate constituency work to a local office run great risks of not being elected.

Irish political history is littered with incidences of politicians who concentrated on their ministries and policy development work to find themselves turfed out at the next general election.

There is one representative for every 24,000 Irish people; there is one representative for every 90,000 in Britain.  There in one MEP for every 668,000 Europeans.

So democracy in Europe has to mean something different from democracy in Ireland.

There is little point trying to represent the better part of a million people individually.  So what members of the European Parliament try to do is to focus on some aspect of policy.  They sit on various committees, they engage in intense debate, they interact with the European Commission, they help formulate directives which are the precursors of law in every European State.  When it came for Europe to decide on whether to adopt the Treaty of Lisbon or not the Irish demanded a referendum.  Alone among the nations the Irish were not satisfied with big country democracy.  They brought Lisbon down to the constituencies.  European policy debate was subject to all manner of local considerations.  In Co. Roscommon for instance the posters proclaimed “Roscommon needs its hospital, Vote No”.

The Lisbon Treaty was subjected to the kinds of local populism smell tests.  The Irish were being asked to move from a personal, clientalist democratic format to a policy driven super nationalist standpoint.  In this context it was extremely easy to misrepresent the Treaty of Lisbon.  It was claimed that the sons of Ireland would be conscripted into a European army, that abortion would be foisted on the Irish people, that we would lose a commissioner (already ceded under the Nice Treaty) and that Ireland would lose its ability to maintain its 12.5% corporate tax rate.  Nowhere was the locality of the referendum better manifest than the rejection of the Treaty by the farmers.  They are kept in a reasonable standard of living by market restrictive practices with the Irish food sold at a subsidised high price in Europe.  The farmers have received €43 billion from the EU, yet they voted against Lisbon.  The reason they did so was because their leadership called for Europe to take a harder line against opening up world trade to the third world than they thought it was already doing.

By and large, narrow parochialism triumphed over pan-European good.  It will do so again if the same quality of leadership applies as was demonstrated last year.

Firstly do the right thing. What does this mean? It has two components. Strategy and ethics.

Strategy answers the questions what, where, when?

Ethics guides you as to why and answers this important question.

Strategy deals with the most profound questions, about the industry you are in, your competitive position within the industry, your channels of distribution, your products, and where you source your raw materials.

Ethics and values are in fact a bet on the future. I realise this is an odd way of looking at values. What has a bet on the future got to do with ethics?

At it’s most basic, history shows that those institutions that don’t respect human life are doomed to failure. The more disrespect, the quicker the failure.  Evil empires don’t last long.

Clever bankers who see immediate exploitative short-term profit and put it in front of long-term service to their customers are bound to fail.

I can absolutely guarantee that utilities that stand in the way of sustainable generation will not make it through the coming thirty years course of human and company history.

The value of respect, while not a guarantor of success, because there is no such guarantee to be had, is a huge enabler.

In  a development business, I have noticed that arrogance, that is the opposite of respect is a sure fire loser.

Once strategy and values or ethics are in place, the next most important thing is talent.

All my business life has been a search for great talent to work with.

The business leader should never be afraid to stand on the shoulders of giants.

It is argued by many that the single most important thing to do in business is to recruit great people.

Whereas I don’t entirely accept this, it is way up there as a historic enabler of business success.

If the strategy isn’t right and the ethics are dodgy, then great people won’t stay.

They will leave and ply their trade with a better company.

The third thing that is necessary for great business success is motivation.
This is now more commonly called leadership.

I would say the elements of leadership are to be found in a combination of authenticity on the part of the leader – that is never preach what you are not prepared to do yourself.

The leader needs to be the walking, running, jumping, standing still example of what the company claims to believe in.

Over the past number of years we have seen examples of where numerous self interests have cast aspersions on the science of global warming.

Over the past forty years in experiment after experiment, in model after model, and in observation after observation the fact that we humans are heating up the world is an established fact.

There is something distinctly uncivilised even luddite about those suppliers of fossil fuels aided and abetted by their legions of apologists who deny global warming. I use the word luddite at its most abusive.

They broke their machinery.

If their view had prevailed anarchy would have reigned and the historical human processes which have led to democracy and the value of human life would have stalled.   The modern day luddites are the group who deny global warming.  Only these luddites do much worse. They collude one with the other to break the thing necessary for all life and that is a suitable atmosphere.

It is now a fact that no matter what we do the average global atmosphere temperature will rise by 2oC.   Only this is an average, there will be no temperature rise at the equator, and there could be up to a rise of 7oC at the Poles.

Since the evolution of homosapiens some one hundred thousand years ago our species has lived in an atmosphere where the CO2 concentration was 280 parts per million by volume, it is now 450 and rising rapidly.

If we want to secure our future the current US per capita emission of 20 tonnes per annum of carbon dioxide will have to be reduced to 1 tonne at a maximum.

The current European per capita emission of 10 tonnes will have to be reduced to 1 tonne.

We have established very clearly that the market does not work when it comes to very long term ventures.  For instance, perhaps the clearest example is nuclear power stations, they create a tail of heavily radio-active pollution products whose long term storage is never paid for by the customer.  They are also largely uninsurable by anybody other than Government.

When faced with the greatest long term crisis of any era, i.e. global warming you can’t look to the market to find a solution. It has to be legislated for. The problem with legislation to date is that it hasn’t been sufficiently visionary.

Europe has to reach out into the North Sea, the North Atlantic and the Bay of Biscay as well as into the Sahara.  America has to reach inwards to the Great Plains to imagine a solution that sees the infinite bounty of wind energy there distributed to the populated periphery.

Mainstream Renewable Power intends to revert with proposals for solutions to both these issues which will be dealt with in subsequent blogs.  For now I would refer you to a lecture that I gave in London on 11th February where complete plans for the Supergrid are outlined.

In the last couple of blogs we talked about Europe.  We made the point that being in Europe allowed us all to have greater personal wealth, to have more choice in the products we buy, to have more personal freedom in our lives.  This, all in addition to the removal of the threat of war.

We went beyond this to talk about pooled sovereignty in the interest of having more influence on a world stage.

We didn’t talk about Europe as a civilizing influence. European unity is civilizing in many senses.  It enhances our individual freedoms.   It transfers wealth from the richer to the poorer states.  It sets high and modern standards of legislation, but all in the context of enjoying our own sense of nationality which we continue to celebrate in our unique way. 

In this way we are not a lot different from the United States.  There are almost as big cultural disparities between the Texan businessman and a New York lawyer as there is between an Irish farmer and a German individualist.  All four categories celebrate their own distinct cultural identities.  The Two Europeans might even be more united in their support for the Ryder cup team than would the two US citizens for their Ryder cup team.  Indeed the bad feeling that a Texan might have about a strong federal government would be mirrored in the rhetoric that would emanate from many States in the EU about the power of the EU Commission.

Without question every citizen of the US and every citizen of Europe is a tremendous beneficiary of the federal type arrangement that exists in both places.  Both cultures have as their central unit the family and all cultures wrestle with the same moral and ethical issues such as abortion, stem cell research and religious freedom.

Europe is in some ways less, ideologically polarised than the United States.  Perhaps over a long series of bitter wars we have learned to compromise more.  As an outsider it would appear that the power of the powerful lobbyist is less strong in Europe.

Even 20 years ago we could not have talked about Europe in this way.  The Euro currency has brought further stability to our continent.  Trade in everything except in electricity is completely open.  Respect for our European institutions has never been higher.  We need to move to the next stage now which is to make the European institutions more efficient, more visible and more powerful on a world stage.  It is shameful to think that we in Europe allowed the massacres in the Balkans and the genocide in Kosovo to happen on our doorsteps.  In that case it took the intervention of President Clinton to protect the people living there.  The appointment of the Foreign Policy co-ordinator as proposed in the Lisbon Treaty will surely have the power now to deal with issues such as this.

The person who is the Foreign Policy co-ordinator will have a hugely important role to play furthering energy security, negotiating with the powerful energy interests with the strength of 550 million people at his/her back and who will be empowered to continue Europe’s clear leadership in the struggle to halt and reverse global warming.

Continuing with the theme of freedom and Europe. 

Freedom as a concept is incredibly important to the human.  “The struggle for freedom begins in infancy, the urge behind the child striving to walk is an urge for freedom of movement.  Behind its efforts at articulation is the child’s urge for freedom of expression”.   From Manoj Das.

Freedom was one of the founding concepts of the democracy created in America.  But freedom is a relative concept, the freedom to bear arms as outlined in the American Constitution, is seen by many in the rest of the world as a distinct lack of freedom for those shot needlessly.

Freedom is a quintessentially political concept, it involves at its core a trade off between the limits imposed by society on its citizens in the interests of collective good and the freedom of the individual to do whatever he pleases.  For Vladimir Ilich Lenin “Freedom is such a precious item it has to be carefully rationed”.

Freedom has major technological components; the invention of the motor car freed up men, but in particular women, from the imprisonment of the home.  The contraceptive pill conferred on women the freedom to have the number of children that they chose to have.

National sovereignty is concerned with the freedom of Government from external control.  According to Wikipedia “sovereignty is the exclusive right to have control over an area of governance of people or oneself”.  Sovereignty concerns the ability of the state to make laws and control resources without any coercion from other nations.

Sovereignty can, according to Think Port, be thought of as “the supreme and absolute authority within the theoretical boundaries”. 

So what freedom is to the individual, sovereignty is to the Nation.

The anti European ones among us trumpet our loss of sovereignty as a telling reason to vote against Europe.  Let us examine this proposition.

There is no doubt that the personal freedom of every Irishman has been enhanced by the EU experience, for instance:

• Irish people are free to work anywhere in the EU;
• Irish goods and services can be sold anywhere in the EU without tariff barriers of any kind;
• The Irish customer of telecoms and electricity has seen their prices reduce and their green content increase on account of Europe;
• It now takes two and a half hours to drive to Sligo from Dublin over newly built bypasses and motorways (funded from Europe) when it used to take three and a half hours;
• Irish people no longer have to travel abroad for employment (at least for the last 20 years);
• Irish farmers have had their incomes dramatically increased by having direct access to the EU funded CAP ( they have received €40 bn in real terms since 1973);
• Irish workers have their rights protected by the social chapter;
• Irish women enjoy equality in the workplace, including equal pay as a result of EU law.

So, how can national sovereignty be compromised if the freedom of every individual has been enhanced?
When, with twenty six other member states of the EU, we make collective decisions that affect our future we pool rather than reduce our sovereignty.

In the energy field, this pooling is very like a collection of small retail outlets getting together to do joint purchasing.  Everybody knows that hundreds of little stores who appoint one purchasing manager will buy far cheaper products than what can be achieved by any one of those little stores acting by itself.

The pro-sovereignty camp would claim that each store had its freedom reduced.  What nonsense this is!  We need Europe, well organised with gross energy purchasing power, with a common positive attitude towards environmental sustainability and a single common voice representing all of us on a world stage.
The simple message is that the individual freedom of all is enhanced by pooling sovereignty.