Scheer Solar Economy Renewable Energy for a Sustainable Global Future (Earthscan, 2005)

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exaggerated electricity prices. Surely this is a multi-billion- mark injury to the electricity consumer, for which there must be a case to answer? A case of serious fraud, complete with conspiracy on the part of some regulatory bodies, and a matter of grave concern for state prosecutors and the courts? This is no water under the bridge, no more than it was with the cable industry, but a present-day battle – a battle that is not being fought because the grid and power companies regard themselves as a state within a state, and have licence to conduct themselves accordingly.

The EU competition authorities have imposed a fine on Daimler-Chrysler, a powerful car manufacturer, for operating a deliberate policy of charging less for its cars in certain markets in order to secure a greater market share – a well-known cartel trick. Yet in the electricity market, the power companies have been able to follow the same policy with impunity. They publicly admit to varying prices locally in order to undercut the competition as if it were the most natural thing in the world. Referring the case to the competition authorities and prohibiting such unfair competition is also a battle that politicians must dare to fight.

Tax-exempt reserves for nuclear waste disposal, which in the case of the German nuclear industry amount to €36 billion ($32 billion), equip the industry with a unique competitive advantage over all other firms. How and where the reserves are invested is entirely up to the companies concerned. Operators of nuclear power stations must clearly be obliged to put these reserves into a fund to be used solely for disposing of nuclear waste, and I have submitted a draft bill to this effect. However, no government has yet mustered the political courage to make such measures law.

The public, of whatever nationality, should no longer put up with the wilful burning of fossil fuels, and the damage to human health thereby caused, when it can be demonstrated that renewable energy is a real alternative. Nor should they put up with the continued manufacture of petrochemical products with all their damaging consequences, when a comparable product can be produced from biological resources at no extra cost. They should not tolerate diesel-powered motorboats

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whose unavoidable leaks have serious detrimental effects on water quality, when those boats could just as easily be run on vegetable oil, in which case leaks would simply provide good fish fodder. Following the Belgian egg scandal, swine fever and bovine spongiform encephalopathy (BSE), action is now being taken against the marketing of agricultural produce dangerous to health, with products being completely withdrawn from sale. And not before time! But why not also take action in the energy and chemicals industries? The right response would be to face up to the conflict, and withdraw fossil energy from the market everywhere where emission-free and non-toxic alternatives are available – for example, through a ban on sales of hydrocarbon lubricants and detergents, or a ban on the use of non-recyclable oil-based packaging materials. In Neckarsulm, Germany, a new housing estate has recently been constructed with a solar distributed heating system, and it functions smoothly and costeffectively. In view of such exemplary proof that external environmental costs can be avoided, it is high time that comparable technology were made compulsory under building regulations everywhere.

With a litany of alternatives not taken up, although there is no further objective reason not to on grounds of quality, price or availability, there can be no more tolerance for those who flout the principle of tolerance in the face of society at large. If need be, lawsuits must be brought to take fossil fuel products from the market, just as happened time and again in the USA in the case of products damaging to the consumer. What the US consumer rights lawyer and presidential candidate Ralph Nader has achieved in court in numerous cases since the 1960s is also to be recommended in the energy and resource conflict. We should no longer brook the manufacture or regulatory approval of harmful products for which there are convincing and immediately accessible harmless alternatives of which the suppliers are aware. The damage done to humanity by non-solar energy supplies is greater than that caused by smoking, and the damage claims must be correspondingly higher. In the global struggle for resources, hard choices must be made for ‘soft’ resources. Whosoever ducks this fight has already lost.

C H A P T E R 10

Regionalization of the global economy through solar resources

THE CORRECT RESPONSE to the all-encompassing process of globalization, as most critics have realized, is to reconnect economic relationships with their regional basis. Most regionalization schemes attempt to either compensate for or work alongside the globalization process, or they consist of measures to make national economies more attractive locations from which to do business. Large – sometimes disproportionately so – quantities of public money are spent on such projects, including airports and facilities for trade fairs, without considering whether the new capacity is really needed. In many cases, it is regional economic policy designed to ensure global competitiveness that puts the regions at the mercy of globalization in the first place. If regionalization is to be an adequate response to globalization, it must take a completely different course: there must be a revitalized circular flow of goods and services at the local level, so that more activities can be taken out of increasingly global supply chains.

Just as vague as the concept of economic regionalization is the notion of what exactly constitutes a ‘region’. The term usually refers to geographical areas delimited by state-defined boundaries. In the broadest sense, a region is an area that is small in comparison to its larger geographical and political context: a continent in relation to the planet, a country in relation to a continent, a borough in relation to a county or province. On a global scale, the EU and other subcontinental economic organizations and free trade areas are regional associations. However,

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regions delineated by administrative boundaries are too formal to embrace the opportunities that an ecologically oriented economy would offer for regionalization.

Proposals for stimulating the regional economy always run into the question of the extent to which regionalization policy may be ‘protectionist’ within the terms of the WTO and the European single market. If successful, policies that focus on attracting industrial firms do so at the expense of other locations. Although regional politicians have a direct responsibility to seize any opportunities that may arise, such policies do not resolve the contradictions inherent in the direction the global economy is taking. Policies that focus on filling the niches which have either been left by supraregional firms or are currently of no interest to them do make good sense, but they cannot counteract the general dependency on developments in the global market as a whole. The aim of regional policy must be to bring the focus of economic relationships from the global market back to regional markets. The crucial questions are therefore: how can this shift take place organically? How can regional economies be given a lasting structure that does not degenerate into a Sisyphean struggle against the global market, in which the efforts of today will be relocated or displaced tomorrow?

To anybody with a basic appreciation of natural ecosystems, it must be obvious that the flow of goods and services in the economy conflicts with the flow of nutrients and energy in the natural world. It is only really possible to make proper allowance for ecological loops at the regional level; everything else is a more or less imperfect approximation. As the laws of nature have priority over all market rules – and over any doctrine of economic planning – it is regional market links that we should be improving, rather than expanding global free trade. This must take place without recourse to the old tactics of economic isolationism, which have all too often been used to prop up unproductive structures or to place one economy at an advantage over another. The way the EU market has been closed to banana imports in order to benefit French overseas dependent territories is one such negative example.

The smaller the scale at which economic loops can be realized, the greater the chances for achieving ecologically

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sustainable economic activity. The supply chains are shorter, the middlemen can be cut out and it is possible to return resources directly to the local ecosystems whence they were extracted. That said, it does not necessarily make better environmental sense to organize economic activity on a regional rather than a global level in every case. Supplying the German market with solar power from North Africa rather than locally produced electricity from coal and nuclear power stations meets environmental criteria; likewise, shipping German-made solar panels to Nigeria makes more sense than burning oil from local reserves. Obviously, however, those same criteria would be even better filled if German solar power were locally generated, and solar panels installed in Nigeria were to come from local production.

A return to old national trade boundaries is neither desirable nor achievable at either the national or the global level. The idea that national economies should not erect trade barriers at will is in principle correct. But it is also correct that environmental scandal and social disaster would be the inevitable result of subjecting all instruments for safeguarding regional economic structures and environmentally sustainable practices to the same prohibition. It is in any case naive to believe that it is only backward, unproductive and therefore poorly performing sectors that are displaced by global agents. The victims of unfettered competition all too often include ultramodern and productive firms, because market access is controlled by the ‘global players’. It is common knowledge that transnational corporations erect their own barriers to trade: statements to the effect that trade will be free if only the administrative barriers can be removed are absurd.

Neither undifferentiated regionalization nor undifferentiated globalization can yield long-term solutions. This begs the question: which economic activities should be fundamentally regional in scope, and for which activities is global free trade important? What generally applicable criteria and values make the case for regional markets? Supporters of globalization appeal to values like freedom, peace and the fight against nationalism, as if globalization were the modern expression of basic pacifist ideals. On the other side of the scales must be set social and

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environmental values. The standard demand is for social and environmental standards to be included within the remit of the WTO. Whether this can be achieved in a concise and consistent way, given the enormous variations in culture and levels of economic development from country to country, is, however, more than questionable. So what is to be done?

Regionalization effects through solar resources

The most important impulse towards regionalization would come from the transition to a solar resource basis. This is the lesson that the experience of conventional resource supply chains has to teach. The more thoroughgoing the transition to local renewable sources of energy, the stronger will be the regionalization effect that automatically results – right down to the smallest parish or ward. The process will take hold without any need for administrative boundaries, and the capital accumulated from energy cost savings remains within the local or regional economy. New and lasting jobs will result.

The extent to which renewable energy creates new jobs has not yet been quantified in any coherent way – ie, by comparing energy supply chains. It is probably possible to estimate the gross number of new jobs from renewable energy by deriving a figure for new jobs per unit of capital investment from comparable activity in other sectors. This method was employed by Wolfgang Palz at the EU Commission as part of the preliminary studies for the EU White Paper on renewable energy. According to his figures, trebling the contribution of renewable sources to EU energy supplies by 2010, from just under 7 to 20 per cent, would create two million new jobs, of which 800,000 would be in agriculture, 800,000 in the construction industry and the remaining 400,000 in the manufacture of technological equipment, solar technology services and consultancy.1

The real figure for additional new jobs will only be known once the number of jobs lost in the conventional energy sector during the transition has been subtracted. Calculating this net effect is far more difficult, as any serious study would need to take into account not only redundancies in power plants, refineries and traditional installation services, but also the

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entire workforce employed along the whole nuclear and fossil energy supply chain, from extraction of crude oil through to power station and pipeline construction. As 20 per cent production from renewable sources would leave the conventional energy supply chain largely intact, it can be assumed that initial job losses would be fairly small. Only conventional energy sales would fall, with concomitant increases in unit costs. But as soon as the demand for fossil energy fell to the point where no new contracts for extraction technology, power stations, replacement of ageing distribution infrastructure or conventional heating systems were being awarded, waves of redundancies would follow.

For this reason, it may be that the number of new jobs is lower in the long term than some optimistic estimates suggest. What is for certain, though, besides the creation of new industries on both the small and large scales, is that there would be considerably more employment in rural regions, in the construction industry, in the trades and in engineering consultancy, and that this would be widely and evenly distributed across all cities and regions. The new jobs would also be stable in the long term, as they would be tied to the locations of distributed energy production.

The manufacture of solar technology – solar cells, solar glass, fuel cells, wind turbines and small-scale hydro, Stirling engines, storage media, appliances with built-in solar panels, etc – will probably devolve to a few producers operating massproduction plants in just a few locations. The market for solar collectors and specialized PVs is more likely to develop a broader structure. Plant manufacture, however, will not bring as many new jobs as installation and maintenance services, or the forestry and agricultural enterprises that produce foodstuffs, energy and raw materials. Table 10.1 lists which renewable energy functions will be evenly distributed across regions, by comparison with the centralized organization that inevitably goes with nuclear and fossil supply structures. All energy functions, with the exception of the manufacture of generating plant, are overwhelmingly performed at local or regional level in the case of renewable energy, up to and including the financing of innumerable individual installations.

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Table 10.1 Regional distribution of economic activity: renewable and non-renewable resources compared

Heat and electricity		Biomass for	Nuclear power
production from		energy and	and fossil fuels
renewable sources,		raw materials
with energy storage
Extraction	None	Even	Uneven
Processing	None	Even	Uneven
Storage	Even	Even	Uneven
Distribution	Even	Even	Even
Installation of
generating plant	Even	Even	Uneven
Operation of
generating plant	Even	Even	Uneven
Maintenance of
generating plant	Even	Even	Uneven
Energy supply model	Even	Even	Uneven
Local/regional tax revenues	Even	Even	Uneven
Regional provision of finance	Even	Even	Uneven

It is possible to bring local and regional economic agents into a nuclear and fossil energy supply, but this is more a chance occurrence and is not intrinsic to the system. Exploiting renewable energy, by comparison, results in a redistribution of labour from large firms and their geographical locations to regional or local situations and small and medium-sized undertakings, agricultural and forestry enterprises, and to tradesmen and the professions in the case of engineering design and installation services for renewable energy systems. Whereas, in decades past, jobs in municipal power plants were replaced by jobs in large power stations, now the reverse will be the case. Biomass farmers and foresters replace jobs in oil and gas extraction in Saudi Arabia and Russia, or in coal mining. Those currently employed in the lignite mines of eastern Germany could find new work in the same region, cultivating and harvesting biomass; power station installation engineers could move into the installation of solar systems; refinery workers could find new work in regional oil mills, biofuel production or in the processing of plant-derived materials.

Local councils and regional bodies with an independently managed budget and the power to raise taxes on commercial

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activity, and which also receive a proportionate share of the revenue from general taxation in their area, ought to have strong interests in seeing a swift transition to renewable energy. Local tax revenues would rise not only because money formerly spent on imported energy would remain within the local economy, but also through the new jobs that would result. Pure self-interest ought logically to push regional authorities into driving forwards the uptake of renewable energy on a large scale. Such investment for the future would pay for itself through the boost it would give to renewables businesses – quite apart from the accompanying environmental benefits, which really speak for themselves. By creating new jobs, the commercial exploitation of renewable energy also contributes more than any other conceivable initiative to achieving the original goal of regional economic policy, namely tackling social inequality.

Another impetus towards regionalization will come from the demise of the monthly energy bill and an end to the concentration of capital in the hands of the energy suppliers. Revenue from conventional energy supplies accrues to large public companies and their shareholders, in whose hands it also further fuels the consolidation and globalization activities of the business world, loosening their ties to national economies. Although the regionalization of energy supply induced by the switch to renewable energy will also lead to a loss of income in regions where existing conventional energy extraction and processing industries will be forced to close down, at the same time these regions would not be placed at a disproportionate or unacceptable disadvantage, as they will have the same opportunities for exploiting renewable energy as anybody else. Renewable energy levels out the international playing field and helps to deliver equality of opportunity, no matter where people live.

Large cities will also see improvements in their economic situation as businesses return and energy costs fall. New rural opportunities will put the brakes on rural depopulation, thus also lessening the pressure of migration on the cities. Urban–rural trade links will be strengthened as biomass production from farming and forestry takes centre stage. Urban demand for renewable energy or growing demand for ever more varied raw materials will spark the foundation of new rural

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businesses, ultimately leading to a decentralization of the national economy.

‘Own implementation’ versus ‘joint implementation’: opportunities for the developing world

Through the mechanisms already described, renewable energy contributes to a more equal distribution of income on a global scale wherever the process of replacing conventional energy is put in train. Renewable energy is the ideal tool for bridging the global gulf between rich and poor. Blindness to the societal consequences, and the enduring mythology and supply-chain influence of the conventional energy industry, are the only factors that can explain why renewable energy does not have pride of place in national strategies for economic development.

Developing countries whose currency is not yet freely convertible and which therefore have direct control over their foreign currency reserves are in an entirely different position. The obvious strategy here would be to reallocate foreign currency reserves to renewable energy by steering investment flows. As there is virtually no lead time between installing and commissioning renewable energy generation plant, developing countries could invest their foreign currency directly in imports of renewable energy technology. The investment would need to be costed over several years for a sensible comparison. The expected price of the amount of energy produced over ten years could be offset against the one-off capital cost of the generation plant: energy contracting on the scale of an entire economy. The calculations would almost certainly favour renewable energy. Developing countries thus have a real opportunity to make the transition from conventional to renewable energy under their own steam.

The majority of developing countries currently import both supplies of primary energy and the generation technology required. Domestic manufacture of the much less complex technology needed to exploit renewable energy, however, would yield an economic benefit that the industrialized countries have hitherto reserved for themselves, to the detriment of develop-