Why Capitalism Cannot Solve Climate Change

When interest rates control the pace of wind turbine construction, the problem should be obvious.

Vattenfall, a Swedish energy company, has for years been doing preliminary work for what would be one of the world’s largest offshore wind complexes, in the North Sea off eastern England.

Now, there are questions about whether this project will ever be built. Last month, Vattenfall said it would halt the first of three phases of the wind farm complex, the Norfolk Offshore Wind Zone, which is projected to provide power for about four million homes in Britain.

Vattenfall blamed rapidly escalating costs for equipment and construction expenses, which it said had climbed as much as 40 percent over the past few quarters. The estimated price tag for the three phases has risen to 13 billion pounds, or about $16.6 billion, from £10 billion.

“With the new market conditions, it simply doesn’t make sense to continue the project,” Helene Bistrom, head of business area wind at Vattenfall, said during a video presentation. The decision led Vattenfall, which the Swedish government owns, to write down more than $500 million.

With interest rates shooting up, financing the billions of dollars in investment that go into these installations has also become far more expensive.

On Monday, the turbine maker Siemens Energy reported a net loss of 2.9 billion euros ($3.2 billion) for the April-to-June quarter, largely due to problems tied to “increased product costs and ramp-up challenges” in its offshore energy business.

“There’s very few projects that are immune to the inflationary impact,” said Finlay Clark, an analyst at Wood Mackenzie, a consulting firm.

I hate to tell this to the world, but……maybe “the market” shouldn’t be making the decisions about the future of the planet.