California Crisis Hurting Renewables; UK Tax Puts Jobs at Risk

California Crisis Hurting Renewables

Producers of so-called renewable energy are concerned that the California power crisis may put them out of business. To ameliorate possible bankruptcy among Californias major power utilities, the state government has agreed to enter into long-term power contracts on behalf of the beleaguered utility industry. These long-term contracts could squeeze renewables out of the market. "Until this law gets changed, we're out of business in California, period," said Rick Counihan, spokesman for Green Mountain Energy Co., once the largest  "green energy" provider in the state.

According to a Los Angeles Times poll (February 18, 2001), Californians overwhelmingly favor the construction of new power plants in that state. Seventy five percent support construction of new power plants even within their own communities, although two-thirds oppose loosening environmental standards (Greenwire, February 20, 2001).

UK Tax Puts Jobs at Risk

The UK government is set to implement its climate change levy in April despite complaints from smaller companies that it could hurt jobs and profits. Large, politically powerful industries have been able to secure concessions to lessen the blow of the levy. The steel industry, for instance, has received an 80 percent discount. Smaller companies, on the other hand, will be required to shoulder the full burden of the levy.

Hector Burdwisa, Vice-president of Koyo Bearings, a Japanese-owned firm, told BBC News (February 15, 2001) that his company has made every effort to use as little energy as possible in its production line. "All companies which use a lot of energy have over the last ten years been driving costs down, and trying to optimize the use of energy all the time," said Burdwisa. This tax will not make one bit of difference to our effective use of energy. What it will do is put jobs at risk." Koyo Bearings would face a levy of 100,000 per year when the levy comes into force.

The Engineering Employers Federation says that the levy could lead to a loss of more than a million jobs and that employees of small companies would be disproportionately hurt. "By doing it this way, companies are not going to have the money available to make the investments necessary, so the effect is that its going to put them under pressure as to whether they can continue in existence at all," said EEFs Director-General Martin Temple.

Environmental Minister Michael Meacher is unmoved, however. He claims, according to BBC News, that "virtually all firms should be able to find ways to save energy and it was in their long-term interests to do so."

Energy Taxes Inevitable Says EU Minister If the European Union is going to tackle global warming, then it must raise energy prices, according to the EUs Environment Commissioner Margot Wallstrom. "Increasing energy prices is of course something that we should not leave to the oil producing countries. A well planned policy for energy taxation is the way forward," she said.

Wallstrom is worried that the EUs power market deregulation policies are lowering Europes energy bills. "How can we expect electricity users to invest in more efficient machines, appliances or lighting systems when electricity is getting cheaper?" she asked. To offset the reduction in electricity prices caused by deregulation the EU should raise energy prices through taxes. This should be done through harmonization of energy taxes among the 15 EU members. "Those member states that currently resist higher energy taxes may soon come to understand that without them they will have difficulties to achieve their Kyoto targets," she said (Reuters, February 4, 2001).

Get the report