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One of the most destructive examples of manufactured scarcity is 'clean
energy' and California's 'Negawatt Revolution'.

In 1997 the Club of Rome collaborated with Amory Lovins of the Rocky
Mountain Institute to launch a new report Factor Four that promised to
'halve resource use' while doubling wealth. The message was that you
could get rich saving the planet. A privileged few did indeed double
their wealth; but for the rest it was just a case of halving resources.

Immodestly, Lovins made his own California energy scheme the main
example of savings in Factor Four. His well-paid advice to the state of
California was that it was a big mistake to adopt a system that rewarded
increased electricity output with increased profits. Such a system would
naturally tend to boost output. Instead rewards for cutting energy use
were needed. Rather than getting paid for additional megawatts the
utility companies should be rewarded for saving power use: negawatts.

The impact of Lovins' model on energy generation in California was
decisive. 'Around 1980, Pacific Gas and Electricity Company was planning
to build some ten to twenty power stations', according to Lovins.

But by 1992, PG&E was planning to build no more power stations, and in
1993, it permanently dissolved its engineering and construction
division. Instead as its 1992 Annual Report pronounced, it planned to
get at least three quarters of its new power needs in the 1990s from
more efficient use by its customers.

Of course the PG&E was not getting three quarters of its new power needs
from anywhere: it had just reduced its output. But manufacturing energy
scarcity did indeed grow somebody's cash wealth: Enron's. With these
artificial caps on energy production the generating companies could
start to hike up the charges to utility companies, including PG&E, now
unable to meet its own customers' demands. Those energy companies were
owned by Enron.

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BOX: Enron: Environmental Champion

'One US energy giant, Enron, has emerged as the world leader in
renewable energy investment', said Climate Institute President John
Topping. 'Enron has significantly lowered the cost of renewable energy,
and triggered energy industry investment in both solar and wind power.
Ken Lay has spearheaded this effort by Enron'. In 2001 Enron led
corporations in the Pew Centre on Global Climate Change lobbying for the
US to sign the Kyoto agreement.

BOX: EPA Climate Protection Award, 1998

Enron received this award in recognition of its 'exemplary efforts and
achievements in protecting the global climate'. Enron was one of
nineteen individuals and organisations chosen from an international
field and judged by an international panel selected from industry,
government and international non-governmental organisations.
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Chief Executive Kenneth Lay turned Enron from a company that made its
money generating power into one that made its money trading finance.
Whatever else it was doing, there was no denying that Enron was cutting
back its own carbon dioxide emissions and getting rich doing it. One
company memo stated that the Kyoto treaty 'would do more to promote
Enron's business than will almost any other regulatory initiative'.

Amory Lovins' negawatt revolution in California was Enron's wet dream.
Having shut down its own generation capacity, PG&E was at the mercy of
Enron's market manipulation. Buying surplus electricity on the open
market PG&E was royally fleeced, losing $12 billion. Utility bills rose
by nine times. Enron took advantage of the restricted market and cut
electricity to California. They even invented reasons to take power
plants offline while California was blacked out. Enron official joked
that they were stealing one million dollars a day from California.  The
PG&E that Lovins held up as a model went bankrupt and had to be bailed
out by the state of California.

The negawatt revolution in California was supposed to reward savings and
alternative energy generation. In the event manufacturing scarcity only
rewarded Enron's crooked speculators, while penalising consumers.

Sadly, the lessons of the 'negawatt revolution' have been buried in the
outrage about Enron's fraudulent market manipulation. Few people noticed
that Enron's executives were taking advantage of an artificial scarcity
in energy supply engineered by Amory Lovins and the PG&E all the time in
close association with Enron's favourite green lobby, the National
Resources Defence Council.

Few of Enron's critics noticed that it was the very model of an
environmentally friendly, post-industrial company and one that had taken
Amory Lovins' goal of doubling wealth by halving resource use to heart.

Saving energy is of course good sense - as long as that is done by
resource efficiency. The Club of Rome's claim that manipulating market
prices to create incentives for reducing energy output can create
efficiency is confused. All that achieved was an artificial shortage -
the condition for ramping up utility bills. The market incentive for
energy efficiency comes with reduced bills from savings in raw materials
and generation. Normal prices would give customers the incentive to
reduce their electricity consumption in turn.

But amazingly the Enron-Lovins model of restricting supply is the one
that is being adopted around the world. Utility companies are rewarding
consumers for reducing their consumption from central power stations and
encouraging domestic-sited energy generation, through windmills and
solar panels. Playing on Californians' distrust of the power companies
the Environmental Protection Agency is planning to add solar power to
one million new homes - paid for by another surcharge on utility bills.
 In Britain, the government is introducing regulations to make all new
homes carbon-neutral. The current goal of carbon-neutral homes reverses
the division of labour that saw specialised energy producers distribute
electricity, turning it into an 18th-century cottage industry. The
simple economic lesson that mass production avoids reproduction of
effort has been lost. Nothing could be more wasteful, or more guaranteed
to create new scarcity.

California's 'negawatt revolution' is only one of the more extreme
versions of the way that green priorities work in tandem with profiting
by manufacturing scarcity. South African radical Dominic Tweedie argues
that recent electricity blackouts there happened because of 'a campaign
to impose artificial scarcity'. The failure to build power stations to
meet the growing demand from South Africa's black townships was not
recognised as a problem by activists there because they bought into the
green prejudice that social aspirations could be met by redistribution
alone, at the expense of increased output. Now supply companies are
hiking up prices to the people who can least afford them.