Dieter Helm to head the UK’s new green accountant
Economist Dieter Helm is to head a new Natural Capital Committee (NCC), which will aim to value the UK’s natural resources, as part of a package of measures announced in the UK’s new budget today.
The appointment seems logical in that Helm has championed this kind of measure as key to sustainable global development, but he is also famously of the view that fossil fuels are still plentiful, renewables expensive, and shale gas an important future energy source in the UK that will drive gas prices down.
We first heard news of the committee in February: announced by environment secretary Caroline Spelman, the idea is to expand the accepted notion of wealth beyond the measure of gross domestic product by valuing our “air quality, fresh water, wildlife and other natural resources”. The move was trailed as a “step towards sustainable development”, according to the Telegraph, that the UK would use to encourage other countries to do the same.
Helm’s views on the potential for gas appear to tie closely with those of the Chancellor, George Osborne, who in his budget speech today announced tax breaks for North Sea oil and gas drilling, new gas power plants – saying gas is “cheap”. But what might that mean for his new role at the NCC?
A bit of background
Helm is a professor of energy policy at the University of Oxford. He teaches at Oxford University’s Blavatnik School of Government and Smith School of Environment and Enterprise.
Helm supports a free-market approach to improving the environment. Measures he advocates include reforming the energy market to remove government influence on the energy mix and allow market forces, with the addition of a carbon tax to ensure otherwise cheap sources like coal have to account for emissions, to decide the balance of energy sources instead.
Helm has advocated the premise behind the Natural Capital Committee in previous work. In the book he co-edited with Cameron Hepburn, The Economics and Politics of Climate Change, Helm explains he believes it is important to start assigning value to ecological assets so they’re not overlooked in assessing countries’ economic worth. Helm also says by assigning value, it’s possible to measure “depreciation of [natural] assets”.
As the creation of the NCC and the expectation that green accounting will be big news at Rio +20 next year show, these ideas have serious currency at present. Not everyone is happy about this, however, claiming the ” financialisation of nature” could expose vulnerable countries’ natural assets to the vagaries of the financial markets, leading to more volatile food markets and more potential for land grabs.
Views on the energy mix
An important starting point for exploring Helm’s views is that he doesn’t think we’re running out of fossil fuels, and is very critical of renewable energy – especially the UK government’s push to build on- and offshore wind. He says:
“The coming of shale gas has doubled the world’s gas reserves in a couple of years, the US has become an exporter and its shale gas production costs are such that it is competing on cost with natural gas.”
According to Helm, it is more cost-effective to replace coal with gas than renewables, which currently require government subsidies to operate. In the future, he says, new technology will emerge that, combined with energy efficiency, will replace gas, providing more effective ways to cut carbon than “picking winners”. He also says government has not been honest about how much renewable subsidies will really cost:
“Telling people something is going to be economic when it is unlikely to be is hardly the way to get carbon credibility. Better to face down the lobbyists and to tell the truth: offshore wind is very expensive and likely to remain so.”
He’s expressed this view on various media outlets including the infamous Panorama energy bills episode, which claimed ‘green taxes’ to support the renewables industry are pushing up peoples’ electricity costs, but omitted the role of rapidly rising gas prices.
Not everyone shares Helm’s view that shale gas is going to be transformative – for the UK at least. Both a UK Parliamentary Committee, which looked into the question, and a DeutscheBank report conclude unconventional gas isn’t likely to affect gas prices in the UK.
The NCC with Dieter at the Helm
On the other hand, Helm clearly thinks we need to reduce our carbon emissions, as his comments in the media make clear. Helm is a well-respected heavyweight so this and the fact that the NCC reports to the treasury means it has the potential to be a powerful force in the UK’s environmental policymaking if the record of it’s prominent counterpart the Committee on Climate Change is anything to go by.
But differences in approach mean that there is potential for conflict between the CCC and the newcomer. The CCC, under Lord Turner, has a formidable record of putting pressure on the government to enact climate change legislation. But Helm’s stated opposition to precisely the kind of measures the CCC proposes – including support for renewables – means there could be scope for future conflicts within the government.
Helm may also back Osborne’s apparent increased push for new gas over renewables, a path that other groups believe could lead to higher energy prices and increased carbon emissions. In this way, the NCC’s links to the treasury could add credence to concerns that Osborne is orchestrating a shift away from current green policy in the UK government.
It will also be interesting to see how the NCC approaches the valuation of the UK’s fossil fuel resources given Helm’s belief that shale gas is plentiful and therefore cheap, and how this belief informs the committee’s conclusions.