Quotulatiousness

July 7, 2012

Deregulating a “natural monopoly”

Filed under: Economics, USA — Tags: , , — Nicholas @ 09:44

Arnold Kling is a Pepco customer. Pepco is one of the regulated electricity providers in Washington DC and surrounding area. He suggests that there may be a better way to deliver electricity to customers:

A recent storm in the Washington, D.C. area left many households without power for days. Customers served by one company, Pepco, appeared to suffer the worst. Pepco had the slowest rate of power restoration of all the area’s electricity suppliers.

As an economist and a Pepco customer, I am concerned by two factors that insulate Pepco from facing market discipline concerning reliability. The first is that Pepco is a regulated monopoly. The second is that there is no price indicating the benefits of reliability.

The fact that Pepco is a monopoly means that its incentive to improve its operations is limited. Regulators may cajole and threaten, but ultimately Pepco is like an employee with tenure — no matter how badly it performs, it can never be fired.

The fact that there is no market price for reliability makes matters even worse. The amount that Pepco invests in ensuring reliable provision of electricity does not have to bear any relationship whatsoever to the value that consumers place on reliability.

Update: Oops, forgot the hat-tip:

June 16, 2012

James Lovelock interviewed in the Guardian

James Lovelock, who is perhaps best known for his “Gaia” theory, gives a somewhat surprising interview to the Guardian:

“Adapt and survive,” he says, when asked why he has decided to move. After more than three decades living amid acres of trees he planted himself by hand, he and his wife Sandy have decided to downsize and move to an old lifeguard’s cottage by the beach in Dorset. “I’m not worried about sea-level rises,” he laughs. “At worst, I think it will be 2ft a century.”

Given that Lovelock predicted in 2006 that by this century’s end “billions of us will die and the few breeding pairs of people that survive will be in the Arctic where the climate remains tolerable”, this new laissez-faire attitude to our environmental fate smells and sounds like of a screeching handbrake turn.

Indeed, earlier this year he admitted to MSNBC in an interview reported around the world with somewhat mocking headlines along the lines of “Doom-monger recants”, that he had been “extrapolating too far” in reaching such a conclusion and had made a “mistake” in claiming to know with such certainty what will happen to the climate.

[. . .]

Having already upset many environmentalists — for whom he is something of a guru — with his long-time support for nuclear power and his hatred of wind power (he has a picture of a wind turbine on the wall of his study to remind him how “ugly and useless they are”), he is now coming out in favour of “fracking”, the controversial technique for extracting natural gas from the ground. He argues that, while not perfect, it produces far less CO2 than burning coal: “Gas is almost a give-away in the US at the moment. They’ve gone for fracking in a big way. Let’s be pragmatic and sensible and get Britain to switch everything to methane. We should be going mad on it.”

Lovelock says the political fallout from the Fukushima disaster in Japan last year means that the chances of a surge in nuclear power generation are dramatically reduced. “The fear of nuclear is too great after Fukushima and the cost of building plants is very expensive and impractical. And it takes a long time to get them running. It is very obvious in America that fracking took almost no time to get going. There’s only a finite amount of it [in the UK] so before it runs out, we should really be thinking sensibly about what to do next. We rushed into renewable energy without any thought. The schemes are largely hopelessly inefficient and unpleasant. Fracking buys us some time, and we can learn to adapt.”

The reaction in Germany to Fukushima — which announced within weeks of the disaster that it was to shut down all its nuclear power plants by 2022 — particularly infuriates Lovelock: “Germany is a great country and has always been a natural leader of Europe, and so many great ideas, music, art, etc, come out of it, but they have this fatal flaw that they always fall for an ideologue, and Europe has suffered intensely from the last two episodes of that. It looks to me as if the green ideas they have picked up now could be just as damaging. They are burning lignite now to try to make up for switching off nuclear. They call themselves green, but to me this is utter madness.”

Nestled deep into an armchair, Lovelock brushes a biscuit crumb from his lips, and lowers his cup of tea on to the table: “I’m neither strongly left nor right, but I detest the Liberal Democrats.”

[. . .]

Lovelock does not miss a chance to criticise the green movement that has long paid heed to his views. “It’s just the way the humans are that if there’s a cause of some sort, a religion starts forming around it. It just so happens that the green religion is now taking over from the Christian religion. I don’t think people have noticed that, but it’s got all the sort of terms that religions use. The greens use guilt. You can’t win people round by saying they are guilty for putting CO2 in the air.”

May 23, 2012

British government energy policies are “befuddled and beset by lobbyists”

Simon Jenkins in the Guardian:

Anyone who claims to understand energy policy is either mad or subsidised. Last week I wrote that politics is seldom rational. It is more often based on intuition and tribal prejudice. This week we have a thundering example: the government’s new policy on nuclear energy.

Do not read on if you want a conclusion on this subject. For years I have read papers, books, surveys and news stories, and am little wiser. I trust to science and am ready to believe there is some great mathematician, some Fermat’s last theorem, who can write an equation showing where energy policy should turn. I have never met him.

The equation would start with the current market price of coal, gas, oil, nuclear and so-called “renewables”. That would give simple primacy to coal and gas. The equation would then factor in such variables as security of supply, which — being imponderable — can be argued from commercial interest and prejudice. Then it would have to take account of global warming and the virtue of lower carbon emissions. At this point the demons enter.

We must consider CO2 reduction through substituting gas for coal, carbon capture, nuclear investment, biomass, wind, wave, solar and tidal generation. We must consider the application of fiscal policy to gas and petrol use, to energy efficiency and house insulation. Each has a quantity attached to it and each a fanatical lobby drooling for subsidies. As for achieving a remotely significant degree of global cooling, that requires world diplomacy — which has, as yet, proved wholly elusive.

Britain’s contribution to cooling can only be so infinitesimal as to be little more than gesture politics, yet it is a gesture that is massively expensive. Meeting the current EU renewables directive, largely from wind, would cost some £15bn a year, or £670 a household, and involve the spoliation of swaths of upland, countryside and coast. It is calculated to save a mere 0.2% of global emissions, with negligible impact on the Earth’s sea level.

April 19, 2012

“Ontario is on track to have the highest electricity prices … in North America”

Scott Stinson explains why Ontario consumers are facing huge price hikes for electricity over the next 18 months:

It’s no secret that Dalton McGuinty’s Liberals have placed a huge bet on growing a green-energy sector by subsidizing the production of renewable energy. Although energy bills have been steadily rising since the party took power in 2003 — the average cost of a kilowatt of electricity was more than 30% higher last year than it was five years ago — the Liberals have somewhat masked this fact by handing a 10% rebate back to consumers with the euphemistically named Clean Energy Benefit, which also happens to utterly contradict the conservation incentive that should be part of a switch to a greener grid.

Electricity costs, though, are set to spike.

“Ontario’s power system is fuelled by consumers to the tune of about $16-billion a year,” says Tom Adams, an energy consultant who has written extensively on electricity and environmental issues. “That number is headed for $23-billion or $24-billion soon, by 2016,” he says in an interview.

[. . .]

Mr. Adams notes that when the Green Energy Act, with its guarantees of above-market rates for wind and solar electricity known as feed-in-tariffs (FIT), was introduced in 2009, the Liberals said electricity costs would only be impacted by about 1% annually. We now know that rates for consumers are rising by 9% a year. “The government says about half of that is due to Green Energy, but if they were being honest it would be more than that,” Mr. Adams says.

The coming increases, meanwhile, which can partly be attributed to locked-in contracts for renewable energy, are also a result of a host of other factors, from new generation capacity being introduced to phase-out costs of existing facilities to new transmission capacity being added to the energy grid.

March 31, 2012

Ross McKitrick: Earth Hour, a dissent

Filed under: Cancon, Economics, Environment, History — Tags: , — Nicholas @ 09:26

I don’t observe Earth Hour, and Ross McKitrick explains some of the reasons far more eloquently than I can:

In 2009 I was asked by a journalist for my thoughts on the importance of Earth Hour.

Here is my response.

I abhor Earth Hour. Abundant, cheap electricity has been the greatest source of human liberation in the 20th century. Every material social advance in the 20th century depended on the proliferation of inexpensive and reliable electricity.

Giving women the freedom to work outside the home depended on the availability of electrical appliances that free up time from domestic chores. Getting children out of menial labour and into schools depended on the same thing, as well as the ability to provide safe indoor lighting for reading.

Development and provision of modern health care without electricity is absolutely impossible. The expansion of our food supply, and the promotion of hygiene and nutrition, depended on being able to irrigate fields, cook and refrigerate foods, and have a steady indoor supply of hot water.

Many of the world’s poor suffer brutal environmental conditions in their own homes because of the necessity of cooking over indoor fires that burn twigs and dung. This causes local deforestation and the proliferation of smoke- and parasite-related lung diseases.

Anyone who wants to see local conditions improve in the third world should realize the importance of access to cheap electricity from fossil-fuel based power generating stations. After all, that’s how the west developed.

The whole mentality around Earth Hour demonizes electricity. I cannot do that, instead I celebrate it and all that it has provided for humanity.

Earth Hour celebrates ignorance, poverty and backwardness. By repudiating the greatest engine of liberation it becomes an hour devoted to anti-humanism. It encourages the sanctimonious gesture of turning off trivial appliances for a trivial amount of time, in deference to some ill-defined abstraction called “the Earth,” all the while hypocritically retaining the real benefits of continuous, reliable electricity.

People who see virtue in doing without electricity should shut off their fridge, stove, microwave, computer, water heater, lights, TV and all other appliances for a month, not an hour. And pop down to the cardiac unit at the hospital and shut the power off there too.

I don’t want to go back to nature. Travel to a zone hit by earthquakes, floods and hurricanes to see what it’s like to go back to nature. For humans, living in “nature” meant a short life span marked by violence, disease and ignorance. People who work for the end of poverty and relief from disease are fighting against nature. I hope they leave their lights on.

Here in Ontario, through the use of pollution control technology and advanced engineering, our air quality has dramatically improved since the 1960s, despite the expansion of industry and the power supply.

If, after all this, we are going to take the view that the remaining air emissions outweigh all the benefits of electricity, and that we ought to be shamed into sitting in darkness for an hour, like naughty children who have been caught doing something bad, then we are setting up unspoiled nature as an absolute, transcendent ideal that obliterates all other ethical and humane obligations.

No thanks.

I like visiting nature but I don’t want to live there, and I refuse to accept the idea that civilization with all its tradeoffs is something to be ashamed of.

Ross McKitrick
Professor of Economics
University of Guelph

March 7, 2012

Wind turbines are “a technology that isn’t ready for prime time”

Filed under: Britain, Economics, Environment, Technology — Tags: , — Nicholas @ 10:20

Andrew Orlowski on the bad economic and technological decision by the British government to put so much reliance on wind power:

Two studies published this week calculate the astounding cost of Britain’s go-it-alone obsession with using wind turbines to generate so much of the electricity the nation needs.

Both studies make remarkably generous concessions that favour wind technology; the true cost, critics could argue, will be higher in each set of calculations. One study reckons that the UK can still meet its carbon dioxide emissions targets and save £140bn — but only if it dumps today’s inefficient hippie technology. The other puts the potential saving at £120bn — pointing out that the same amount of electricity could be generated using open cycle gas plants at one-tenth the cost of using wind turbines.

“There is nothing inherently good or bad about investing in renewable energy and green technology,” writes economist Professor Gordon Hughes — formerly of the World Bank and now at the University of Edinburgh. “The problem is that the government has decided to back a technology that isn’t ready for prime time, thus distorting the market.”

Hughes’ study — Why is Wind power so expensive? An economic analysis — is published by the Global Warming Policy Foundation today, and simply looks at the costs. The other study, by technical consulting group AF-Mercados, specifically looks at how to reduce CO2 in the cheapest manner — by incurring the least collateral economic damage. It’s called Powerful Targets: Exploring the relative cost of meeting decarbonisation and renewables targets in the British power sector. KPMG originally commissioned the study, but then got cold feet. Both come to similar conclusions: wind is astronomically expensive compared to other sources of energy — and consumers and businesses must pay a high price for the privilege of subsidising such an inefficient technology.

Update, 10 March: A lovely little cartoon from Watts Up With That on this topic:

February 22, 2012

“More Americans fall off the roof installing solar panels each year than have ever been kiled by civilian nuclear power in the US”

Filed under: Environment, Japan, Media, Technology — Tags: , , , — Nicholas @ 08:45

Tim Worstall responds to a Naomi Wolf panic-piece about the evils of nuclear power:

    Although there is a scientific consensus that no exposure is safe, no matter how brief,

No love, there isn’t a scientific consensus that says that there is no safe level of radioactivity. Forget hormesis for a moment and just concentrate on the obvious fallacy of the statement. We’re all bombarded with radiation all the time. Everything from cosmic rays through to uranium in the soil to bananas and Brazil nuts. And while we do all fall down dead eventually we’re not all falling down dead from the radiation from these sources.

[. . .]

And then we get the great one:

    Then, Japan was hit by a tsunami, and the cooling systems of the Fukushima nuclear reactor were overwhelmed, giving the world apocalyptic images of toxic floods and floating cars, of whole provinces made uninhabitable.

Well, yes, the tsunami killed lots of people, indeed. And the failure of the nuclear plant has killed no one. So we’d better abolish tsunamis then, eh?

Finally, what’s wrong with the whole piece, indeed, the basic mode of thinking behind it, is that it is looking only at absolute risk, taking no account whatsoever or relative risk. If we decide that we actually do want to have electricity then we need to look at which system of producing the electricity we desire kills the fewest of us. And in that nuclear wins hands down. More Americans fall off the roof installing solar panels each year than have ever been kiled by civilian nuclear power in the US.

Oh, and coal fired power stations distribute more radiation around the world than nuclear power plants do as well.

February 6, 2012

Battery sizes: AAA, AA, C, plus S, M, L, and XL

Filed under: Technology — Tags: , , , , — Nicholas @ 12:02

Coming to a boutique near you soon: wearable battery clothing.

Scientists charged into the fashion industry this week, unveiling a flexible battery that can be woven into fabric and used to boost the juice of everyday gadgets.

The lithium-ion cells were produced by a group of boffins from the Polytechnic School of Montreal. The team claims their bendy power cells are the first wearable battery that uses no liquid electrolytes, New Scientist reports.

The team sandwiched a solid polyethylene oxide electrolyte between a lithium iron phosphate cathode and lithium titanate anode. These are thermoplastic materials which, when gently heated, can be stretched into a thread.

There is a short-term restriction, however:

The next step is to waterproof the technology before attempts to implement it in future clothing and accessories can go ahead. Backpacks and medical-monitoring garments are said to be the first items the team is planning to add the tech to.

It’d be a bit unpleasant to have your shirt packing “hundreds of volts” discharge unexpectedly just because you broke a sweat …

Brazil fights back against celebrity oppression

Filed under: Americas, Economics, Media — Tags: , , , — Nicholas @ 11:25

John Conroy on the recent backlash in Brazil against foreign celebrities using domestic issues as platforms for moralizing:

Film director James Cameron, responsible for Terminator, Titanic and, more recently, Avatar, has been working on a considerable side-project for a few years now. Cameron film fans shouldn’t get their hopes up, however. This side-project is more political than filmic. He has been trying to prevent the Brazilian government from constructing Belo Monte, the world’s third-largest hydroelectric dam, on the Xingu river which runs through the Amazonian rainforest.

[. . .]

But then something very curious happened. Another tribe of Brazilians, normally so fearful of being seen outside of their natural habitat, fought back. Geeky university students and their professors made a film with zero production values undermining every argument used by Cameron, the NGOs, the Kayapo and TV Globo. These are the myths they challenged:

  • The Indians will have nowhere to live. Actually, a student from Brasilia University who has done little else but study the impact of the project on indigenous lands responded that not one of the indigenous lands in the region will be flooded. There are 12 indigenous territories near the project in an area of 56,000 square kilometres with 2,200 indigenous people living on them. That’s two-and-a-half times the size of Wales. Thirty consultative meetings were held in tribal villages and recorded on video.
  • The dam and its reservoirs will flood and destroy 640 square kilometres of rainforest. Not exactly. The reservoirs will cover an area of 502.8 square kilometres of which 228 square kilometres are already within the body of the river itself.
  • The dam will starve the Xingu National Park of water. This is not true. The students displayed a map revealing that the park is in fact 1,300 kilometres up river of the dam.
  • For eight months of the year the region above the dam is nearly a desert making the dam inefficient and only capable of generating a third of its installed capacity. The implication here is that there is insufficient water to drive the turbines at full power. However, during the high-water period of the year, the river empties 28 million litres of water per second at the point of the turbines, creating an extraordinary potential energy generation of 11,233 megawatts (MW). Even at the river’s lowest levels in the month of October, it delivers 800,000 litres per second. The annual average energy production of Belo Monte will be 4,571MW, or 41 per cent of the potential generating capacity, not one third. This will power 40 per cent of Brazil’s entire residential energy consumption.

January 20, 2012

Renewable energy: the ethanol scam writ even larger

Filed under: Economics, Politics, Technology — Tags: , , , — Nicholas @ 11:24

Patrick J. Michaels looks at what he calls the “Great Renewable Energy Scam” and shows what happened with the ethanol fuel program which preceded the current programs:

… here in the U.S. there are some 30 different statewide “renewable portfolio standards” (RPSs) that also mandate pricey power, usually under the guise of fighting dreaded global warming.

RPSs command that a certain percentage of electricity has to come from wind, solar, geothermal, or biomass. Given that this power generally costs a lot more than what comes from a modern coal or gas plant, your local utility passes the cost on in the form of higher bills, which the various state utility commissions are only too happy to approve in the name of saving the planet.

[. . .]

One needs to look no further than ethanol as a motor fuel, mandated by the feds. Sold as “renewable” and reducing pernicious carbon dioxide emissions, it actually produces more in its life cycle than simply burning an equivalent amount of gasoline. It also — unconscionably — consumes 40% of U.S. corn production, and we are the by far the world’s largest producer of this important basic food.

The popular revulsion against ethanol has succeeded in cutting its massive federal subsidy, of $0.54 per gallon, which ran out on Dec. 31. But that doesn’t stop the federal mandate. Last year it was for roughly 14 billion gallons from corn and it will be nearly 15 billion in 2012. By 2022, up to 20 billion gallons will be required — all from corn — unless there is a breakthrough in so-called “cellulosic” ethanol, which, no matter how much money the government throws at it, hasn’t happened. Indeed, the largest cellulosic plant, Range Fuels, in Camilla, Ga., just went bankrupt. The loss to American taxpayers appears to be about $120 million, or about 25% of a Solyndra.

[. . .]

Having seen the ethanol debacle, will the states put solar and wind in their rightful (small) niches by repealing the RPSs? Increasing utility bills with renewable mandates is politically dangerous, and there is less and less political will to subsidize and otherwise prop up energy sources and technologies that cost too much.

January 12, 2012

Toronto Hydro takes hostages, threatens eternal darkness if demands not met

Filed under: Cancon, Politics — Tags: , , , — Nicholas @ 12:05

Ah, it must be the time of year for Toronto Hydro to lose its collective shit and start the crazy talk:

Last week, the Ontario Energy Board denied Toronto Hydro’s request for a rate hike for homes within the city limits. The hike, which would have meant a monthly increase of five dollars for a typical household, was necessary, Toronto Hydro said, to renew the city’s electrical transmission grid. Failure to do so, they warned, could result in more, and longer, blackouts.

Not so, the Energy Board ruled. They said that Toronto Hydro had not demonstrated that Toronto’s power grid needed the kind of urgent repairs that were being proposed, and also chided Toronto Hydro for failing to make necessary productivity gains, implying that the requested money was not so much about urgent repairs as needing more cash. Toronto Hydro’s response has been swift: 700 contractors have been let go, and 20% of its workforce is being told that they’re next — that’s another 350 or so jobs. Oh, and without the cash, the city is probably going to go dark.

Do these guys know how to play hardball or what?

January 11, 2012

Pro-nuclear power opinion piece on the BBC

December 17, 2011

The traditional lightbulb may be safe for a bit longer

Filed under: Bureaucracy, Law, Liberty, Technology — Tags: , , , — Nicholas @ 10:29

From the Washington Times:

Congressional negotiators struck a deal Thursday that overturns the new rules that were to have banned sales of traditional incandescent light bulbs beginning next year.

That agreement is tucked inside the massive 1,200-page spending bill that funds the government through the rest of this fiscal year, and which both houses of Congress will vote on Friday. Mr. Obama is expected to sign the bill, which heads off a looming government shutdown.

Congressional Republicans dropped almost all of the policy restrictions they tried to attach to the bill, but won inclusion of the light bulb provision, which prevents the Obama administration from carrying through a 2007 law that would have set energy efficiency standards that effectively made the traditional light bulb obsolete.

H/T to Virginia Postrel for the link.

December 5, 2011

Why GM is very worried about the reported battery fire risk in the Chevy Volt

Filed under: Economics, Technology, USA — Tags: , , , — Nicholas @ 12:13

If you’ve been following the blog for a while, you’ll know I’m not over-optimistic about electric cars in the short-to-medium term (for example, here, here, here, and here) and I’m especially underwhelmed with GM’s most recent offering, the Chevy Volt:

Let’s talk economics first. Electric and hybrid-electric vehicles are more expensive to make and bring in less profit than other cars. They cost more to finance, more to repair, and more to insure. Their sales depend heavily on tax incentives, which means that selling more of them will require more taxpayer dollars. The National Renewable Energy Laboratory (NREL) estimates that plug-in hybrid vehicles cost $3,000 to $7,000 more than regular hybrids, even though the performance differences between the two models are slight, and the really fuel-efficient hybrids cost $12,000 to $18,000 more than the conventional brand. Consider the GM Volt. When it was first announced, the price estimate from General Motors (GM) was $30,000. That soon jumped to $35,000. Today, they sell for nearly $40,000.

Hybrids are also more expensive to insure, which has been known for some time. Back in 2008, online insurance broker Insure.com showed that it cost $1,374 to insure a Honda Civic but $1,427 to insure a Honda Civic Hybrid. Similarly, it cost $1,304 to insure a Toyota Camry but $1,628 to insure a Toyota Camry Hybrid. According to State Farm, hybrids cost more to insure because their parts are more expensive and repairing them requires specialized labor, thus boosting the after-accident payout.

And that, of course, presumes they don’t burst into flames, which brings us to today’s not-so-“ideal” headlines. Several crash tests have suggested that the plug-in hybrid Volt, the flagship vehicle at Government Motors, has a bit of a problem: when hit or badly disturbed in accident tests, the Volt’s Lithium-Ion (Li-ion) battery packs have been seen to spark, or burst into flames afterward.

H/T to Monty.

October 12, 2011

Britain decides not to follow German lead on nuclear power

Filed under: Britain, Environment, Technology — Tags: , — Nicholas @ 07:55

Unlike their European partners, Britain will continue to depend on nuclear power to provide a large part of their electricity needs:

Britain breathed a collective sigh of relief yesterday. The question on everyone’s lips had been answered. Following the Fukushima accident in Japan, was it safe to continue using nuclear power here in the UK? The answer from chief nuclear inspector Mike Weightman and his team, who had spent months undertaking research, was ‘yes’.

Of course, that finding didn’t actually come as a shock to anyone. And not just because the interim report, published earlier in the year, had already made it clear that the UK nuclear-power industry could learn few new lessons from the accident in Japan — but also because you didn’t need a PhD in nuclear-reactor design to recognise the Fukushima disaster was a unique situation that arose in an area of the world prone to earthquakes and tsunamis with a different, older model of nuclear-power station than that used in the UK. A similar event would be highly unlikely here, or anywhere in Europe, and existing safety regulations are extremely tight. Furthermore, despite the full force of nature being thrown at the outdated Fukushima plant — an earthquake measuring 9.0 on the Richter scale leading to tsunami waves up to 40.5 metres high — the disaster was largely contained and, to date, not a single individual has died from the radiation that leaked out.

[. . .]

Despite their best attempts to win over new recruits, the tiny handful of aging anti-nuclear protesters saw no swell in numbers, no matter how they tried to draw comparisons between the European situation and the disaster in Japan. Despite holding vigils and undertaking stunts, such as releasing balloons outside a nuclear-power plant symbolising how many days it had been since the disaster, hardly any of their planned ‘wave of protests’ were deemed newsworthy or interesting.

Actually, UK public opinion has shifted in favour of nuclear power. The results of a Populus poll published last month revealed that 41 per cent of the population believed the benefits outweigh the risks, a three per cent increase on the previous year; 54 per cent wanted more nuclear-power stations or at least the replacement of existing stations with new ones. There was, in fact, an eight per cent drop (to 28 per cent) in people opposing nuclear power, compared to 2010.

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