Governments set out to confiscate and redistribute wealth according to policies mandated by the electorate. This has to be managed very sensitively, not only because people are quick to perceive injustice, but also because the balance has to be right and because too much confiscation can put the brakes on economic progress. Modern governments have become more creative with confiscation and redistribution, initially by using the smokescreen of indirect taxation, and, more recently, by means of sophisticated stratagems such as the Renewables Obligation (RO).
Administered by the regulator OFGEM, RO is a complex system of indirect subsidy. It obliges suppliers to sell their customers a defined proportion of electricity generated from licensed ‘renewable’ sources such as wind farms. The suppliers demonstrate compliance by obtaining Renewable Obligation Certificates from the licensed generator each time they purchase green energy. These certificates are also a tradeable commodity. Failure to comply results in a fine paid into a fund managed by OFGEM. Suppliers who cooperate with the green agenda by avoiding the fines benefit further as the OFGEM fund is redistributed proportionally to all those who have demonstrated compliance. However, the cost of the green energy is not cheap. The government’s incentive mechanism ensures a premium is payable above the market price for fossil fuels. So, of course, the suppliers simply pass the cost of RO to consumers in the form of higher bills.
Wind farms have to be subsidised to operate profitably. Where I live in Reading, the annual subsidy awarded to the owners of the colossal 350ft wind turbine towering over the M4 was £130,000 last year. It produced just £100,000 worth of electricity. The total annual cost of RO is expected to reach £5 billion by 2020.
Dependence on foreign oil and gas places us at the mercy of despots seeking to maximise their leverage over us. It’s clearly right for our government to steer us away from fossil-based energy. So why must they resort to such devious subterfuge?
That’s easy. It would be frankly embarrassing for the government to be open and transparent about spending vast sums of money on wind and solar energy sources which are unpredictable, uncontrollable, unreliable and economically unsustainable alternatives. Especially when we could be investing in thorium nuclear energy. It’s relatively safe, clean, abundant and cheaper than coal. Radioactive materials are recycled, so there is little waste left behind. Known thorium reserves could provide the world with power for thousands of years. We should switch our focus to (thorium) nuclear energy now and be up front about it.
As energy consumers, we’re all contributing to the RO subsidies. It’s a waste of money that could be better spent elsewhere. And it’s hurting the economy.
“We are not going to save the planet by putting our country out of business.” – George Osborne