The EU’s post-industrial revolution

José Manuel Barroso’s new energy policy represents a retreat from development driven by fear.

For the increasingly discredited European Union (EU), climate change has been the main game in town for some time. Few other issues seem to contain any potential for rallying public opinion or providing officialdom with legitimacy – especially among youth. Now, however, the European Commission has taken a further step. Technological advance itself is now cast as ‘the fight against climate change’.

The Commission’s new Energy Policy for Europe is, it says, about ‘catalysing a new industrial revolution’. (1) And, tentatively catching up with the 1973 concept of Cold War American sociologist Daniel Bell, EU president José Manuel Barroso, himself a Maoist in Bell’s heyday, is more radical still (2). After the first meeting of the enlarged, 27-member EU, Barroso insisted that Europe must ‘lead the world into a new, or maybe one should say post-industrial revolution’ (3).

But what is this revolution, which the Commission variously describes as ‘challenging’, a ‘step-change’, ‘truly ambitious’, and to do with ‘solidarity’ between member states? It is

1. to perfect the work of market forces by separating energy production from distribution;
2. to follow Denmark’s windmills, Sweden’s 185,000 installed geothermal heat pumps and German’s fondness for bio-diesel, so as to raise the level of renewable energy in the EU’s overall mix from less than seven per cent today to 20 per cent by 2020. As a proportion of vehicle fuels, biofuels to rise to 10 per cent by the same date;
3. not just to lower EU greenhouse gas emissions by 20 per cent, 1990-2020, but also to lower the use of energy in the EU by 13 per cent. (4)

Yet if there is a revolution going on here, it is one of falling expectations. What appears to impress itself on the EU’s chiefs is not the uptake and independent development of every kind of technology in China and India, but fear: fear of climate catastrophe, fear of dependence on energy imports in general and those from Russia in particular, and fear of the fact that, as Barroso puts it, ‘Oil prices have raised six fold (sic) in the past seven years’ (5).

When fear is the main force of propulsion, the scope of political and economic goals can only diminish. Before assessing the historic significance of the Commission’s way of interpreting innovation and competitiveness on the world economy, let’s look at how narrow, even on their own terms, the three ‘central pillars’ of its energy package turn out to be.

For the EU, innovation now means regulation

Typically enough, the longest section of Energy Policy for Europe is on the EU’s internal market for energy. At first sight, there appear to be some positive proposals here. Mention is made of four priority projects for the internationalisation of EU energy infrastructure: Power-Link between Germany, Poland and Lithuania; connections to offshore wind power in Northern Europe; electricity interconnections between France and Spain; and the Nabucco pipeline, bringing gas from the Caspian to central Europe (6). There’s no doubt that this trend for cross-border energy supply is on the increase, as any Briton who has received a bill from Electricité de France will know.

In the round, though, the Commission wants to turn the clock back on one of better achievements of capitalism in the twentieth century – the vertical integration of energy production and distribution. Just as there are fears that Russia’s Gazprom could one day take over Britain’s Centrica, so competition commissioner Neelie Kroes, a noted Dutch capitalist, would like to liberalise energy markets and make producers stay out of the pipes and wires business. But it is not necessary to agree with France, Germany and Italy’s policy of protecting national energy champions to see that this anti-trust approach to what is lightly termed ‘market failure’ has nothing progressive about it. The Commission itself notes that, over the next 25 years, Europe will need to invest €900 billion on new electricity generation.  Yet for it, ‘the overriding priority’ in terms of securing that scale of investment is not political resolve to find the money, but:

‘a properly functioning Internal Energy Market, providing the correct investment signals. In addition, close monitoring of the demand/supply balance is also needed, to identify any potential shortfall. This will be a key role for the new Office of the Energy Observatory.’ (7)

So: what will make nearly a trillion Euros head for electricity plants is merely the right market signals, plus, to bring this about, not just a new Office of the Energy Observatory, but also ‘ERGEG+’, or a tougher version of the existing European Regulators’ Group for Electricity and Gas. In short, while Barroso says – rather oddly, as we shall see – that he wants to ‘provide abundant energy’ to Europe, the way he wants to deliver on this is to fragment energy firms and expand regulation; perhaps going further than ERGEG+ and arranging for a new, single body to regulate energy across 27 member states (8).

This is no new, industrial or post-industrial revolution. This is another layer of regulation. To get massive, innovatory investment in European energy, one must fund more bureaucrats in Brussels, charged with sending out the right semaphore to Europe’s stock markets. Brilliant!

Renewable but not very available, reliable or research-intensive energy

The Commission is proud that, in wind energy, EU companies have 60 per cent world market share. And as we have seen in its treatment of cross-border connections, the Commission also favours offshore wind power – which at least has the potential to be delivered at scale. But for our expert policymakers what matters about renewables is that they improve the EU’s security of energy supply and emit few or no greenhouse gases. What goes unmentioned is the fact that ‘offshore’ wind farms can help landlocked Hungary only at a distance, or that windmills will always remain only an intermittent source of energy.

While the irrational is talked up, the rational is talked down. So if the Commission looks forward to a biofuels future, it insists that those used

‘are sustainable in nature, inside and outside the EU. The EU should engage third countries and their producers to achieve this’. (9)

In other words, the EU will prevail upon biofuel-capable countries such as Brazil, as well as its own farmers, to grow the right amount and kind of bio-crops in the right way. Cars and lorries must travel sustainably; the fuel that helps in this must itself be grown and transported sustainably. EU trade commissioner Peter Mandelson will tell the government in São Paulo how to develop its agriculture in the proper manner.

No doubt he will want to point to the great achievements of the EU’s Common Agricultural Policy (CAP) in this. Yet, the insouciance with which the EU both commits to renewables and demurs from large-scale risk-taking in them is confirmed in two other regards. First, after all the hopes in supranational measures, it wants to leave politically tricky decisions on zero-carbon, nearly-renewable nuclear fission plants to individual nations: ‘It is for each Member State to decide whether or not to rely on nuclear electricity.’ Here it takes a leaf from the UK government’s Energy Review, which left decisions on nuclear power to the private sector (10). Similarly, the Commission postpones the advent of ‘Generation IV’ fission plants, and nuclear fusion, to 2050 (11).

Second, a substantive laboratory programme to make renewable energy technologies serious contenders on price is merely flirted with.  On the one hand, ‘Under the 7th Framework Research Programme, annual spending on energy research over the next seven years at EU level will increase by 50 per cent, but even this will not provide the progress needed’. But on the other hand ‘the Commission’s view is that the increased budgets for energy research and innovation of the 7th Framework Programmes (50 per cent, from €574m per year to €886m per year), as well as of the Intelligent Energy-Europe Programme (100 per cent, from €50m per year to €100m per year) for the period 2007-2013, are a first step in the right direction that Member States and industry should at least match’ (12).

Well, a second Flood and a Mediterranean drought may both be approaching, but 27 member states should apparently be satisfied with an annual Brussels budget for energy R&D of less than €1billion – that is, less than 0.01 per cent of the EU’s GDP of more than €10 trillion, or less than two per cent of the Brussels budget of roughly €50 billion for the CAP. This really is thinking big! As it makes clear in a wistful moment, the Commission would rather hope that, by 2020, the price of oil rose to $78 per barrel and carbon to more than €20 a tonne (current levels: $55 and €3.85) than subject energy technology to a revolution that made its renewable versions inherently cheap.

Ratcheting energy use back

The clearest evidence of the EU’s desire to turn the clock back on progress is its ideal of using improvements in energy efficiency to reduce not just carbon emissions, but energy use.

As two American free-market energy specialists put it, ‘Cornucopians maintain that through improved efficiency we can have it all – less energy but more light, refrigerated food, warm homes and safe miles on the highway’ (13). However the European Commission could never be accused of such optimism: while it wants more efficient vehicles, homes and power plants, it says it wants not just investment here, but also ‘significant efforts’ in ‘behavioural change’ – including the ‘coherent use of taxation’ (14) and, according to an EU Green paper, motorists ‘driving in a more ecological way’ (15).

In fact Joe Kaplinsky has made the proper point on the relationship between energy efficiency and energy demand. He writes:

‘The historical trend has been that as we have become more efficient, so we have used more energy. As efficiency has increased we have not chosen to do what we did before with less energy. Instead we have chosen to use our energy to do more. With improved efficiency the price of energy falls and we use more of it.’ (16)

The Commission seems to live in cloud-cuckoo land. The EU gains new immigrants every day. After a long period in the doldrums, economic growth has begun to pick up in the EU. By 2020, the EU just might be enlarged again, and the countries that have recently joined it from Eastern Europe might be a bit more prosperous. Yet in the face of all this, the Commission believes that demand for energy in the EU can actually be made to drop by 13 per cent in 13 years.

This really is revolutionary. It can only amount to a call for the kind of behavioural change in Europe that would mean a qualitative drop in everyday convenience, general living standards and mass comfort. Now that really would be ‘post-industrial’.

The historical significance of the EU’s ‘revolution’

When we look at the original industrial revolution in Britain, we see a lot of poverty and mortality, but we also see inspiring technologies across a wide spectrum of economic sectors and processes.

In the account of David Landes, the classic post-war historian of technological change, the early origins of the industrial revolution lay with the manufacture of wool, involving the invention of the fly-shuttle (Kay, 1733) and the spinning frame (Wyatt and Paul, 1738). Applied more successfully to the spinning of cotton, these were followed by the draw-then-twist jenny (Hargreaves, 1765) and the simultaneous draw-and-twist water frame (Arkwright, 1769). Significantly, even early jennies had a mechanical advantage over hand spinning of up to 24 to one, while that conferred by water frames ran to several hundred to one. The mule (Crompton, 1779) improved yarn quality; the power loom for weaving (Cartwright, 1787) brought productivity to garment manufacture. Pre-spinning machines cleaned and more generally prepared fibre better than in the past, while finished cloth found itself bleached with sulphuric acid and chlorine – the first in a series of breakthroughs in industrial chemistry – and patterned with cylindrical printing.  Downtimes in mills decreased as components and frames were made of iron, pulley-ropes gave way to leather belts, and gearing and shafting were rationalised (17).

Improvements were, of course, not confined to textiles or even to the advent of the steam engine. Blast furnaces grew in size and sophistication, turning out iron at high levels of purity. The steam engine itself facilitated coal mining and, as Landes laconically notes, differed from wind and water power in that it ‘could be relied on in all seasons’ (p99). After 1776, and the commercial application of James Watt’s improvement on Thomas Newcomen’s steam engine, the science of thermodynamics improved dramatically, as did the design, precision and smooth working of metal-working tools and, with that, the standardisation of bolts and screws. (18)

In Britain, James Brindley (1716-72) pioneered canal-building or ‘navigation’; his inability to spell the word ‘navigator’, indeed, gave the English language the term ‘navvies’ (19). But in America, Benjamin Franklin hit upon the wood-burning stove and lightning conductor: tellingly, his recent biographer observes that ‘he declined to patent his famous inventions, and took pleasure in freely sharing his findings’. (20) And in Lyons, France, Joseph Marie Jacquard devised, about 1800, punched cards to control the weaving of silk. In its different ramifications, the industrial revolution was international in scope, and contained, too, the embryo of what too many are today pleased to discover as the information society, knowledge economy, digital decade and all that.

In 2007, it is embarrassing to have to point out these basics. But what grandeur is obvious here – and how much does it contrast with the European Commission’s straitened concept of a post-industrial revolution! There is no spirit of the Enlightenment driving leaps in economic competitiveness over a wide swathe of technologies and sciences. Instead, the EU’s all-conquering ‘revolution’ amounts to autarchy in energy supply and poverty in energy demand. While the mill and factory owners of yesteryear repressed the masses with the blackleg and the police truncheon, the EU now wants to do the same with measures that are more subtle, but no less authoritarian: energy ‘information and education’, it holds, are ‘two under-used tools’, for ‘while it is regarded as normal to launch public information campaigns to encourage people to drink less alcohol, less attention has hitherto been given to publicity campaigns on energy efficiency’. (21)

The revolution that the EU envisages is of the mind more than of the economy. To the extent that it is about the economy, it is a revolution that confines itself to the energy sector, and then wants to confine the use of energy – by fiat from Brussels. It is an insult to national sovereignty in the Third World today, and insult to the historical achievements of the original industrial revolution. ‘This is’, the Commission tells us,

‘a vision of Europe with a thriving and sustainable energy economy, that has grasped the opportunities behind the threats of climate change and globalisation, gained world leadership in a diverse portfolio of clean, efficient and low-emission energy technologies and become a motor for prosperity and a key contributor to growth and jobs.’ (22)

Energy Policy for Europe is also, therefore, an insult to the very idea of ‘vision’. If prosperity, growth and jobs in the EU depend on motionless windmills and minuscule programmes of energy R&D, it should dignify its revolution with the adjective pre-industrial, and have done with it.

Footnotes and references

(1) European Commission, Energy Policy for Europe, 10 January 2007, p5

(2) See Daniel Bell, The Coming of Post-Industrial Society, 1973

(3) Barroso, Energy for a changing world, Speaking Points, Press Conference, 10 January 2007

(4) Energy Policy for Europe, op cit, pp13, 11

(5) Barroso, ‘Energy for a changing world’, op cit.

(6) Energy Policy for Europe, op cit, p9

(7) Ibid, p10

(8) Ibid, p8

(9) Ibid, p14

(10) See Joe Kaplinsky and James Woudhuysen, A self-defeating argument for nuclear power

(11) Energy Policy for Europe, op cit, p14

(12) Energy Policy for Europe, op cit, p15; Energy Technology for cheaper renewables, greater efficiency and global leadership of the European industry’, press release

(13) Peter W Huber and Mark P Mills, 2005. The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy, Basic Books, p xvi.

(14) Energy Policy for Europe, op cit, p11.

(15) European Commission, Doing more with less: Green Paper on energy efficiency, 22 June 2005, p26

(16) Joe Kaplinsky, The world needs more energy

(17) David Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present, Cambridge University Press, 1969, pp84-85, 87

(18) Ibid, pp 90-91, 95, 99, 101-2, 104-5.

(19) J Bronowski, The Ascent of Man (1973), BBC, 1976, p262.

(20) Walter Isaacson, Benjamin Franklin: An American Life (2003), Simon & Schuster, 2004, p130

(21) European Commission, Doing more with less, op cit, p13

(22) Energy Policy for Europe, op cit, p14.