Market Inspired Environmentalism in the UK

China is making headlines for its renewable energy development and its carbon-saving technology. But there is another country lowering its carbon emissions: the United Kingdom.

Britain has a self-imposed target of decreasing emissions by 80 percent by 2050, an aggressive goal in light of what other leaders are proposing. In the U.S., for example, the Obama Administration is proposing offshore drilling. Why have the British managed to summon the will when most can't? The first issue may be need: with North Sea oil reserves past their peak and on the decline, the country needs energy autonomy from non-fossil sources. There is also public sentiment in Britain's favor. Courts in 2009 even pardoned six Greenpeace activists for damaging a coal-burning power plant.

Whatever the reason, the UK seems to be cooling on fossil fuels and finding alternatives in Schumpeterian "animal spirits" of competition. As part of its efforts, the UK Department of Energy and Climate Change last year launched the Low Carbon Community Challenge, which awarded cash to 22 communities in England, Scotland and Wales for viable ideas to fight climate change. Most of the ideas involve community-supported renewable energy projects, such as turbine or solar panel installation. Excess power generated will be passed back to the grid to earn cash.

Contests like these have become popular of late, and it is not hard to see why--the prize money is a lot less than what it would cost the sponsor to seed all the innovations that come out of it. And sponsoring a community contest also brings the added benefit of getting group buy-in before the turbines go up, offsetting the NIMBY-ism seen in places like Nantucket and Long Island.

The UK government is also stepping up its efforts to harness the power of the tides--The Guardian reports that Scotland is launching a £4 billion project (more than $6 billion) to establish tidal power sites in the rough seas surrounding the Orkney Islands. The project could power 750,000 homes. Scotland's will be the world's first large-scale project in tidal energy, a huge scale up from the few experiments that have taken place in the East River of New York City, for example, or off the coast of Portugal. Scotland's project is contest-like in that it involves a number of different companies, each of which takes a different technological approach to capturing wave energy. As such, it offers an opportunity to compare the results from competing approaches.

Contests. Competition. Britain's "market environmentalism" is showing promise.