State-mandated energy targets have no place in modern economy

Tuesday 27 November 2012

When Mao Zedong set national targets for steel production during the Great Leap Forward in late 1950s China, the end result was a massive misallocation of labour and resources, inefficient steel production and ultimately the impoverishment of the population.

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It is surprising then that your Leader Comment on the report from the Scottish Parliament Economy, Energy and Tourism Committee into Scotland's renewable energy targets ("Lack of investment could jeopardise green targets", November 24) did not ask the simple and obvious question: why is a state-mandated target for the equivalent of 100% of Scotland's electrical energy production to be generated from renewable resources by 2020 actually necessary?

Clearly, with sufficient production subsidy, capital will be attracted to invest and the target will be met on schedule. But therein lies the problem. Capital from banks or elsewhere needs to be repaid, and with a suitable return on investment. What will no doubt be welcome investment for the renewable energy industry will in the end be a cost to be borne by consumers and other industries. The key question is not whether arbitrary targets can be met, but if the associated investment is productive?By analogy, if the state mandated that the equivalent of 100% of Scotland's biscuit production were to be in the form of caramel wafers, and a subsidy was paid equal to the price of each biscuit, Tunnock's would become a darling of goverment by creating plentiful employment and Uddingston would become a boom town. But it should be clear that such a boom would, of course, be an illusion, and would simply be due to the transfer of wealth from one sector of the economy to another. Genuine economic growth, on the other hand, and lasting jobs and prosperity are not a zero sum game. It is the process through which innovation is used to improve resource efficiency and labour productivity, thus reducing the cost of delivering socially progressive access to goods and services. And if carbon is the issue, a simple carbon tax is likely to be far more efficient. Rather than the Government attempting to pick winners, a flat carbon tax takes decisions out of the hands of the few and puts investment decisions into the hands of the many economists, engineers and project planners in the energy sector. State-mandated production targets, and the economic distortions they cause, should be consigned to 1950s China. They should have no place in a dynamic 21st-century Scotland.Colin R McInnes,23 Williamwood Park West,Netherlee,Glasgow.I congratulate Dave and Kathryn Gordon on their attempt to reduce their energy consumption (Letters, November 26). However their efforts highlight one very important fact: namely that there must be a desire to minimise energy usage.I have attempted to demonstrate proven technology to local authorities by inviting councillors and energy managers to see for themselves in a commercial environment what can be achieved. Though this was directly applicable to their own property estate their response was either to completely ignore the invitation or to claim they were too busy due to meetings they were attending. I, and I am certain, most council tax payers would have thought it was their duty to investigate technology which was saving 15-10% of energy used.Their lack of interest was mirrored by a senior executive of one of the major power companies who stated: "We are in the business of selling more energy, not less." While vested interests are making vast sums from wind farms there is little chance of any move to energy efficiency.David Stubley,22 Templeton Crescent,Prestwick.

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Local government

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State-mandated energy targets have no place in modern economy

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