Renewable energy isn’t a shortcut to reversing global warming

Denmark has distinguished itself as the country moving the fastest toward the eventual replacement of fossil fuels. Its goal of 100 percent renewable energy by 2050 is laudable, but the assumption that this path will reverse global warming while otherwise continuing business as usual, is unrealistic.

At first glance, Denmark has made remarkable strides. The country’s intention to totally eliminate fossil fuels by the midpoint of the 21st century appears to be realistic. Already, Denmark is the world leader in wind energy and it intends to also exclude all use of nuclear power. At the start of 2015, the country’s energy agency, Energistyrelsen, said renewable energy sources account for 25 percent of Denmark’s total energy consumption, and more than 40 percent of its electricity comes from renewable sources.

Danish countryside (photo by “Old Dane”)

The Danish government acknowledges that continuing consumption patterns based on “cheap and easy access to coal, oil and natural gas” is a “road [that] is not an option.” True enough. But the switch to renewable energy is promoted as cost-free. The Danish government says:

“Business … stands a great chance to move into the heavy league of successful super green companies. For instance, the energy efficiency measures a company makes are often paid back within [a] few years. Onwards, the savings on the energy bill can be unleashed to strengthen the core business of the company. Likewise, there is an enormous global market for green technology, services and systems. This market is only going to grow once more governments follow in the carbon-light footsteps of Denmark.

But of course such a strategy would come at a great cost to Danish society? The answer is a resounding no. … [T]he transition is relatively cheap, and business competitiveness not harmed. The government’s estimates are a price tag of approximately 10 euro pr. household pr. month at the highest (2020), a price tag that will only slowly increase to this level. In the opinion of the Danish government this is a reasonable insurance policy against unexpected increases in fossil fuel costs and a solid investment in Denmark’s future energy security.”

Enthusiasm for renewable commitment

An expected rising efficiency of renewable energy sources will ultimately lead to lower costs, more than offsetting the investments in renewable-energy infrastructure and reversing the present-day higher costs, the government says. So no change in consumption patterns after all. This enthusiasm is shared by environmental institutions that have become large nongovernmental organizations. Greenpeace, for example, issued a brief paper in October 2014 that reads like a press release. In this paper, “Denmark’s commitment to 100% renewable energy,” Greenpeace agreed that no changes in consumption will be required. It wrote:

“Denmark’s emissions reductions have not affected the economy negatively. The decoupling of economic growth from energy consumption is partially due to Danish companies being subsidised for using renewable energy and increasing energy efficiency, which in turn increases their creativity and prompts energy savings. Job creation is an explicit objective of the Danish Climate Plan, and because Denmark has invested heavily in research and promotion of renewable energy, energy-efficient technologies and renewable heat supply systems, the climate and energy system has already created thousands of jobs. The full transition to 100 per cent renewable energy is expected to generate at least 30[,000] to 40,000 new jobs in a country of 5.5 million people.”

Moreover, this will come easy, Greenpeace says:

“Although Denmark’s roadmap to fossil fuel independence and 100 per cent renewable energy is specific to the Danish context, many of the recommendations are relevant and applicable to other nations around the world. One finding may be of particular interest: The costs of phasing out fossil fuels are expected to be almost equivalent to or only marginally more expensive than a ‘business as usual’ scenario.”

Too good to be true? Unfortunately, yes. That global warming and the accelerating damage to the global environment can be reversed without cost — and without any alteration to the high-impact consumerism of the global North’s advanced capitalist countries — echoes the unrealistic conclusions of the Intergovernmental Panel on Climate Change report issued last year. The IPCC concluded the annual reduction in “consumption growth” on a global basis would be only 0.06 percent during the course of the 21st century. Nothing more than a statistical blip!

In actuality, the IPCC assertion that we can remain on the path of endless growth is a fantasy argument that we can have our cake and not only eat it but make more cakes and eat them, too.

Bioenergy not necessarily a savings on greenhouse gases

When we look past the cheerleading for a bright renewable future, two problems immediately pop up: Renewable energy is not necessarily clean nor without contributions to global warming, and the limits that living on a finite planet with finite resources presents are all the more acute in an economic system that requires endless growth.

Denmark’s phaseout of oil, gas and coal is dependent on wind power and biomass, and to a lesser degree on solar energy. But just because energy from biomass is classified as renewable, that doesn’t make it sustainable or environmentally friendly. Denmark is the biggest per capita user of bioenergy, with Germany and Britain significant users as well. But the primary source of bioenergy is wood, and much of this wood must be imported. British plans for expanding bioenergy, if brought to fruition, could consume nine times more wood than can be supplied internally. Denmark is already a heavy importer of wood pellets.

Increased logging is surely not a route to reducing global warming. A paper by the British watchdog group Biofuelwatch reports:

“Increased demand for bioenergy is already resulting in the more intensive logging including very destructive whole tree harvesting or brash removal and replacement of forest and other ecosystems with monocultures. Expansion of industrial tree plantations for bioenergy is expected to lead to further land grabbing and land conflicts. At the same time, communities affected by biomass power stations are exposed to increased air pollution (particulates, nitrogen dioxide, sulphur dioxide, dioxins etc.) and thus public health risks. Meanwhile, a growing number of scientific studies show that burning wood for energy commonly results in a carbon debt of decades or even centuries compared with fossil fuels that might otherwise have been burnt.”

A Partnership for Policy Integrity study published in April 2014 found that biomass electricity generation, which relies primarily on the burning of wood, is “more polluting and worse for the climate than coal, according to a new analysis of 88 pollution permits for biomass power plants in 25 [U.S.] states.” The partnership’s director, Mary Booth, wrote:

“The biomass power industry portrays their facilities as ‘clean.’ But we found that even the newest biomass plants are allowed to pollute more than modern coal- and gas-fired plants, and that pollution from bioenergy is increasingly unregulated.”

Even the wind (energy) has toxicity

Wind energy has its environmental issues as well. The turbines used to produce electricity from wind increasingly are built with the “rare earth” element neodymium, which requires a highly toxic process to produce. Turbine magnets using neodymium are more expensive than those using ceramic, but are also more efficient. The U.S. Geological Survey estimates that an additional 380 metric tons of neodymium would be necessary if the United States is to generate 20 percent of its electricity from wind by 2030. That’s just one country.

Most rare earths are mined in China because the mines are so environmentally destructive they had been shut down elsewhere. Production has been re-started in other countries, lessening demand on Chinese exports, but increasing rare earth mining means more pollution and toxic waste. Renee Cho, a blogger for Columbia University’s Earth Institute, provides a sobering picture of this:

“All rare earth metals contain radioactive elements such as uranium and thorium, which can contaminate air, water, soil and groundwater. Metals such as arsenic, barium, copper, aluminum, lead and beryllium may be released during mining into the air or water, and can be toxic to human health. Moreover, the refinement process for rare earth metals uses toxic acids and results in polluted wastewater that must be properly disposed of. The Chinese Society of Rare Earths estimated that the refinement of one ton of rare earth metals results in 75 cubic meters of acidic wastewater and one ton of radioactive residue.”

Just because it’s renewable, doesn’t mean its environmentally friendly. As Almuth Ernsting, a founder of Biofuelwatch, summarized in a Truthout article:

“Defining methane-spewing mega-dams, biofuels, which are accelerating deforestation and other ecosystem destruction, or logging forests for bioenergy as ‘renewable’ helps policy makers boost renewables statistics, while helping to further destabilize planetary support systems. As long as energy sources that are as carbon-intensive and destructive as fossil fuels are classed as ‘renewable,’ boosting renewable energy around the world risks doing more harm than good.”

Increased efficiency in energy usage hasn’t resulted in decreases in greenhouse-gas emissions. A study by 10 scientists led by Josep G. Canadell found that the growth rate of atmospheric carbon dioxide is increasing. The growth rate in anthropogenic carbon dioxide was higher in the 2000s than in the 1990s. Not only has economic growth contributed to this rate increase, but the carbon intensity of gross world product began to increase during the decade of the 2000s. Adding to this sobering picture, the efficiency of natural carbon sinks (such as forests and oceans that remove carbon dioxide from the atmosphere) is declining.

The study said a growing global economy, an increase in the carbon emissions required to produce each unit of economic activity, and a decreasing efficiency of carbon sinks on land and in oceans have combined to produce unprecedented increases in atmospheric carbon dioxide.

Beyond renewables, fundamental change is necessary

The conclusion necessary to be drawn isn’t that we shouldn’t switch from fossil fuels to renewable energy sources as quickly as reasonably possible. Of course that should be done. But it is a delusion to believe that doing so in itself is a magic wand to wish away the growing crises of global warming, environmental degradation and resource depletion. There is no alternative to drastically reducing consumption of energy and material goods, an impossibility under capitalism, and bringing into existence a sustainable economic system.

All incentives in capitalism are for endless growth; it can’t function without it. Because of this expansionary imperative, that production is for private profit rather than human need and that enterprises are able to externalize environmental costs, decreases in energy prices are an incentive to increase energy usage, which is what has been happening. An economy that must expand will do so — introducing efficiencies can slow down the increase in energy consumption and resource depletion, but an ever expanding economy will ultimately use more energy, more resources.

A former White House Council of Economic Advisers chair, Christina Romer, says that economic growth of 2.5 percent is necessary to maintain the unemployment rate where it is and “substantially stronger growth than that” is necessary for a rapid decrease. In addition, energy usage due to transportation is increased from the movement of production to countries around the globe. Raw materials and component parts are shipped from all over the world to an assembly point, then the finished products are transported back.

This enormous contribution to global warming is another product of capitalism, specifically the dynamic of relentless competition that induces corporations to move production to the places with the lowest wages and weakest regulation, and to stretch supply lines around the world. These competitive “innovations” must be copied by competitors, thus increasing this tendency. (And are a catalyst for “free trade” agreements that incentivize the expansion of trans-national rootlessness.) As the depletion of natural resources accelerates, an inevitable byproduct of competitive pressures and the never-ending scramble for bigger profits, more energy and capital will be required to extract resources more difficult to exploit.

Carrying on with business as usual, with changes to the mix of energy production, is an illusion that “green capitalism” will save the world. Liberals and social democrats, in their own way, can be as unrealistic as conservatives. Conservatives correctly see that measures to combat global warming will come with a cost, so they screech that global warming doesn’t exist, despite the enormity of the evidence all around us. Liberals and social democrats readily acknowledge the real danger of global warming but, no more willing to tamper with the machinery of capitalism than conservatives, promise that the changes will be cost-free.

The changes won’t be. But the cost of doing nothing, of letting a runaway global warming take hold — the very path humanity is treading — will be much higher. The limits of the planet, of nature, will assert themselves. Yielding to natural limits now will come with much disruption, but having limits imposed on us in the future will surely be much worse.

The logic of public services chips away at ideology of privatization

One should beware vampire squids bearing gifts. It would also be best to cover your ears when the siren songs of privatization are offered.

Even were Goldman Sachs not the buyer, the Danish government’s decision to sell a portion of the state-owned energy company Dong Energy A/S goes against the pattern of recent years of governments taking back control of utilities after having dropped them into the sweaty palms of investors. Shareholders expect maximum profits from investments, and utilities that provide basics like electricity and water are not excepted.

Pont Neuf in Paris

Many a local government has learned the hard way that even water is a commodity from which to squeeze a profit once privatized, with human need an afterthought. Decades of ideology have attempted to instill the idea that the private sector is always superior to government; that government can only mismanage what is in its hands.

Although attempting to flip this discredited, self-serving phantasmagoria by arguing the complete opposite would not stand up to scrutiny, either, the realm of facts and data firmly contradict the standard corporate ideology. Government after government has found that privatization was a mistake in what has become a wave of “re-municipalization” — the return of public services to public management.

Paris takes back its water

France had been a leader in privatizing water, leading to the rise of two of the world’s biggest water companies, Suez and Veolia. As recently as 2006, the private sector provided drinking water services to four-fifths of the French population. In parallel, starting in early 1990s, the European Union began issuing directives mandating that national governments implement legislation deregulating the electricity market. E.U. bureaucrats sought to separate (“unbundle”) generation, transmission and distribution of energy, supposedly to ensure price competition.

In France, according to a paper published in the March 2012 issue of Water International:

“This model was favoured by several factors, including strong fiscal centralization, the rigid character of public accounting, the creation of private water companies, and the establishment of a legal framework that protected the interests of the concessionaires.” [page 3]

The paper, “The remunicipalization of Parisian water services: new challenges for local authorities and policy implications,” written by Joyce Valdovinos, reports that a series of investigations found that there was no way to verify work that should have been long completed, a lack of transparency of technical and financial data, discrepancies between declared profits and actual profits, and the generation of extra profits by manipulating maintenance costs. When a Left coalition won the 2001 city election, it believed returning water services to public management would lead to better functioning, more transparency, greater public control, and the ability to stabilize prices.

Paris’ contracts with Suez and Veolia expired in 2010; during the preceding 25 years water prices there had doubled, after accounting for inflation, according to a paper prepared by David Hall, a University of Greenwich researcher. Professor Hall reports that the two companies had secret clauses in their contacts allowing automatic price increases. Despite the costs of taking back the water system, the city saved €35 million in the first year and was able to reduce water charges by eight percent.

About 40 other French cities intend to “re-municipalize” their water services. Higher prices and reduced services have been the norm for privatized systems, Professor Hall’s paper says:

“A report by the Cour des comptes in 1996 identified many problems with private water services in France, including lack of competition, corruption, and lack of transparency, but also price increases which it firmly concluded were linked to privatisation of water services. … The association of municipalities publishes each year price comparisons, which in 2009 showed that private water prices were on average 31% higher than in public water services.” [page 19]

Sellers’ remorse in Germany

A strong trend toward public provision of services is also under way in Germany, for many of the same reasons. A paper written by Hellmut Wollmann of Humboldt Universität zu Berlin found a similar dynamic east of the Rhine:

“Since the late 1990s, it has become more and more evident that the (high flying) neoliberal promises that (material or functional) privatization would usher in better quality of services at lower prices has not materialized. On the contrary, private service providers have often made use of the next possible opportunity to raise prices and tariffs while at the same time deteriorating the working conditions of their employees.” [page 15]

In response to that, 44 new local public utilities have been set up and more than 100 concessions for energy distribution networks and service delivery have returned to public hands in Germany since 2007, according to Professor Hall’s paper. Further, German goals of phasing out nuclear energy, increasing the use of renewable energy and cutting overall energy usage is impossible without a strong public role, he wrote:

“There is little economic incentive for the private companies to make these investments, and indeed the growing use of renewable electricity undermines the profitability of existing gas-fired power stations. As a result, municipalities and regions have to play a leading role, not only to meet the targets for renewable energy but also to secure sufficient capacity to protect against the effects of markets and the phasing-out of nuclear energy.” [page 12]

One example is the German city of Bergkamen (population about 50,000), which reversed its privatization of energy, water and other services. As a result of returning those to the public sector, the city now earns €3 million a year from the municipal companies set up to provide services, while reducing costs by as much as 30 percent.

Private versus public in the United States

Municipal-owned utilities aren’t magic wands because they can be subject to the hostility of local business leaders. Cleveland’s city-owned power company, then known as MUNY, became the object of a political tug-of-war in the 1970s in which “market forces” were unleashed to detrimental effect. Successful lobbying by the private energy corporation, CEI, that competed with MUNY caused the city government to neglect maintenance and investment in MUNY, leading to it having to buy power from CEI, which in turn provided inadequate connections that often led to outages.

Davita Silfen Glasberg, in her book The Power of Collective Purse Strings: The Effects of Bank Hegemony on Corporations and the State, argued that Cleveland’s default was the result of “control of the city’s critical capital flows by an organized banking community.” Legal maneuvering by CEI caused a city cash flow shortage because of what MUNY was forced to pay to CEI. In turn, Cleveland’s bond ratings were downgraded, rendering the city unable to sell bonds and intensifying its dependence on bank loans. As a result, Professor Glasberg wrote:

“The banking community, which had significant interests in CEI (including stock ownership, pension fund holdings, CEI deposits, voting rights on CEI stocks, loans, and interlocking directorates) refused to renew or renegotiate the city’s loans unless [Mayor Dennis] Kucinich agreed to sell MUNY to CEI. Such a sale … would have solidified the private utility’s control of the city’s electricity business. … For political reasons the financial community had cut Cleveland off. Indeed, the coffers opened once again when the business and banking communities unseated Kucinich, and [George] Voinovich took office.” [pages 139-140]

As part of the deal, MUNY’s rates rose (dampening competition with CEI), the city laid off hundreds of workers and wages of remaining city employees were cut — working people paid the price for corporate profit. Cleveland did withstand the pressure to sell its public utility. The utility, now known as Cleveland Public Power, provides low-cost electricity that saved the city an estimated $195 million between 1985 and 1995.

Absent such blatant interference, U.S. cities have often found that public utilities outperform privatized ones. In Atlanta, for example, the city signed a contract with Suez, which promised to reduce water and sewer costs. Instead, the web site Water Remunicipalisation Tracker reported, repairs were neglected, 400 jobs were lost and sewer rates increased 12 percent a year. After four years, the contract was canceled and the services returned to the public sector.

Denmark’s embrace of Goldman Sachs

The decision by Denmark’s social democratic government to sell a portion of the state-owned energy company flies in the face of considerable recent history, even without the added question of Goldman Sachs’ predatory behavior. The investment bank, which stands out even among its rapacious peers for its ability to extract money from an extraordinary assortment of human activity, is buying an 18 percent share, yet will be given a veto over strategic decisions, essentially handing it control.

In addition, according to the Financial Times, Goldman Sachs not only has the right to sell its share back to the government if the deal doesn’t go its way, but 60 percent of its share is required to be sold back at a guaranteed profit — the purchase price plus 2.25 percent annual interest. And that’s not all — Goldman is using affiliates in tax havens to own its share, leading to much speculation that it intends, like many companies, to avoid paying taxes.

Danes are heavily opposed to this deal. But rather than consider popular anger, the chief executive officer of Dong Energy is instead worried that “Denmark’s reputation as a destination for offshore investors” may be “damaged.” The move is the latest in a series of austerity measures by Denmark’s social democratic government that have included restricting eligibility for child care benefits and study grants, and increasing the retirement age.

The sale to Goldman has also caused one of the three parties in the coalition government to leave in protest, resulting in a minority government that will require support from other parties in crucial future parliamentary votes. It has also reportedly caused a rise in the polls for the conservative opposition. Replicating a pattern seen across Europe and elsewhere, social democratic governments impose austerity, and in the absence of a vigorous organized Left alternative, voters continue to alternate between the major parties or blocs.

The trend toward public provision of services is an as yet rare example of common-sense resistance to dominant capitalist ideology. Enterprises owned by the public or by a collective workforce don’t need to extract huge profits to pay swollen executive salaries or payoffs to speculators — an example that can be followed in many more businesses. With enough organization, it will.