Does going ‘green’ cost jobs

Posted on November 25, 2012

Steel maker Tata has recently announced the closure of some plants in the UK. A mailing I recently received from a green-sceptic think tank was headed: “First Casualty of Green Energy Bill: Tata to Cut 900 UK Jobs”. This places the job losses squarely at the feet of high energy costs consequent on the UK Government’s investment in renewable energy. Is this true? Does renewable energy result in job losses?

In April, the Financial Times published an article which started with these words: “Tata Steel one of Britain’s largest electricity users, says UK green policies are putting it at such a disadvantage to its rivals in Europe that its future operations are likely to be affected.” Now it’s November and the company announces the loss of 900 jobs.

In its own press release, Tata profiles these job losses as being part of a re-structuring “to improve competitiveness” – as bland a statement as a corporate press department can possibly engineer. In spite of its clear statements in April, it does not specifically mention energy costs as a driving factor. Trade unions, predictably, blame this on the general failure of the incumbent Conservative government. The conservative Daily Express links the jobs losses directly to climate change legislation (as well as somehow inflating the job losses to 1,500). The Guardian, ever the green newspaper, makes no mention whatsoever of energy costs in its own reporting – as though they did not exist for a high energy consumer like Tata. The only balanced report seems to come from the local Welsh newspaper whose report covers all the various contributing factors.

So which is it? Does green cost jobs or not? Do we believe the biased reporting of The Guardian that climate change legislation is not a factor and deserves no mention? Or the biased reporting of the Express that it’s all due to energy costs?

The reality is that corporations make decisions based on a multitude of interlinked factors. It is unlikely that energy costs were the sole drivers of the restructuring program as climate sceptics will claim. However, it is also unreasonable to claim that energy costs were not a relevant factor in making Tata’s UK operations less competitive. Competitiveness is complex and multifactorial. Higher energy costs can be acceptable if other factors in the business environment compensate for them. Energy policy,  like other areas of policy, cannot be developed in isolation. It is one part of the overall jigsaw that drives competitiveness and needs to be treated as such.

To me the Tata episode is not an indication that investment in renewable energy is misguided. It does, however, suggest that none of these issues can be addressed in isolation. If energy costs are to increase, then governments, unions, environmentalists and everyone else need to work to ensure that compensating factors in the overall business environment allow employers to maintain operations that are competitive.

Denying, or as per The Guardian, ignoring, the fact that a shift to renewables may increase energy costs and lower business competitiveness does not strengthen the environmental movement. It weakens it by sapping its credibility and by allowing it to avoid addressing some hard and challenging questions. If we want to encourage the shift to cleaner energy then we also have to help with the process of developing answers to the inevitable impact of such policies on competitiveness. Coming up with simplistic ideas such as compensating these corporations with taxpayers’ money will no longer cut it. Neither can we just sit back and not get involved in the broader debate under the heading of ‘it’s not my department’.

Environmental issues do not stand alone in isolation. They are part of the complex web of business and society and can only be successfully addressed within these broader contexts. Denialism or failure to get involved in finding solution to the broader issues will ensure that green initiatives will, in fact, end up costing jobs – a sure way of killing future green initiatives.