Andrew Stuttaford of National Review Online explores a key problem with the government push toward “net zero” emissions.
Central planning is, by definition, a rejection of free markets. And that is as good an explanation as any as to why central planners’ projects so often end in miserable and, on occasion, catastrophic failure. The so-called race to Net Zero is shaping up as a classic example of the genre, a carnival of malinvestment that may well lead, if it’s taken far enough, to economic disaster, political upheaval and, for the West, geopolitical catastrophe.
In the meantime, here’s a bit of news from Britain that gives yet another example of how Net Zero will, if those steering its introduction are given the chance, distort the way in which markets operate. This particular example concerns the pricing of money.
The Daily Telegraph:
“Jeremy Hunt’s nominee to join the Bank of England’s rate-setting panel has called for the bank to create “preferential” interest rates to help speed up the push for net zero, despite acknowledging that such a move could threaten its independence. …
… The Telegraph quotes Conservative peer Lord Frost:
“The suggestion of lower interest rates for “green” projects does at least acknowledge that such projects are not viable on normal terms, something which their proponents are usually reluctant to recognise. So if implemented this proposal would take us a further step away from normal market economics, with the Government instead allocating investment capital to its favoured clients and projects.”
Frost is right. A central bank underpricing money, which is what this scheme would mean, leads (as we ought to know after the last decade or so) to malinvestment, something of which, as alluded to above, Net Zero is doing quite enough to encourage as it is. Not only that, the opportunities that schemes such as this will open up for cronyism are too obvious to need stating.
