When Mao Zedong
set national targets for steel production during the Great Leap Forward in late
1950s China, the end result was a massive misallocation of labour and resources,
inefficient steel production and ultimately the impoverishment of the
population.
It is surprising
then that the recent report from the Scottish Parliament Economy, Energy and
Tourism Committee into Scotland's renewable energy targets did not ask the
simple question - why is a state mandated target for the equivalent
of 100% of Scotland's electrical energy production to be generated from
renewable resources by 2020 actually necessary?
Clearly, with sufficient production subsidy, capital will be attracted to invest and the target will be met on schedule. But therein lies the problem. Capital from banks or elsewhere needs to be repaid, and with a suitable return on investment. What will no doubt be welcome investment for the renewable energy industry will in the end be a cost to be bourne by consumers and other industries. The key question is not whether arbitrary targets can be met, but if the associated investment is productive?
