Andrew McKillop: Energy Security and Climate Change

State legislation, deficit-based financing and political intervention to accelerate transition to the Low Carbon economy will be further raised on the stage of the December 2009 Copenhagen Climate Change summit. This is not taking place in a vacuum, due to recent and ongoing, massive deficit spending by G20 government to fight economic recession.

For climate change protection and energy transition away from the fossil fuels, amounts demanded or recommended by a spiraling number of interest groups, including state and international agencies, have grown into the range of hundreds of billions of dollars per year, from 2010 through 2020.

Reasons for this ever-rising state intervention and spending on the fight against climate change include the simple need to reduce dependence on declining fossil fuels, led by oil. Shifting the economy away from oil to provide more economic stability during oil price surges is, however, a long-term, high cost and complex project.

The shorter the timeframe for reducing fossil fuel dependence of the economy and society, the higher the costs and greater the complexity. Large spending on energy transition, added to current and massive deficit spending to bail out the bank, finance and insurance sector (and other industries), appears convergent, and coherent to political deciders.

High oil prices are held to be bad for inflation and economic growth; the fossil fuels are not only declining and higher cost, but also high carbon; renewable and alternate energy sources and systems are local, more secure, and in some cases may be less expensive than fossil energy; the green economy may be able to generate more jobs than are destroyed by winding down the fossil-based economy, and so on.

Raise the Hammer