The answer isn’t blowing in the wind

Last week, EU leaders agreed to the next round of targets for reduction of carbon dioxide emissions: a headline target of a 40% reduction on 1990 by 2030. But rather than let the market decide how to reach this goal most efficiently, they also set a 27% target to add more renewable energy to the mix. In practice, this love affair with renewable energy means promoting wind and solar; there is little scope for new hydropower plants and large scale, practical wave and tidal power seems to be as far away as ever. There is no rational justification for this, but politicians seem to be incapable of fixing top level targets and providing a market framework to meet them.

Wind and solar power have been heavily promoted by the green lobby as the clean alternative to fossil fuels and policymakers have swallowed the bait enthusiastically. The more perceptive of them may already have realised that life is a lot more complicated than that but, for those who still need to see the light, I recommend they read a new report published by the Scientific Alliance and the Adam Smith Institute.

Wind Power Reassessed: A review of the UK wind resource for electricity generation will make uncomfortable reading for those who continue to put their faith in wind farms. The author, Dr Capell Aris, has analysed the data on wind speed and direction collected from a total of 43 sites across the UK (22), Ireland and northern Europe over a period of nine years. He then used this data to calculate the output of a fleet of wind farms.

The results will be no surprise to anyone who has looked at this topic in any detail: output is highly variable, and the entire fleet would only produce 80% or more of its rated output for about one week a year. The problem is that, however much we hear about wind being a free resource and the cost of equipment coming down, the effect of adding more and more wind turbines to the electricity grid is to push prices up with only a modest impact on carbon dioxide emissions (the whole reason for current policy) and no improvement in energy security.

If there were no arbitrary renewable energy target, governments would be free to focus on what most voters expect: providing a framework in which a secure and affordable energy supply can be delivered. If emissions are also to be reduced, the most effective measures currently would be a move from coal to gas and a programme of nuclear new build. In the meantime, the renewables industry continues to grow on a diet of subsidies, and we all pick up the tab. Getting out of this hole is not going to be easy, but it’s time the government started the process rather than continuing to dig deeper.

Martin Livermore is the Director of the Scientific Alliance.

There's a reason why we have farming you know

There are those out there who think that we should return rather to our hunter gatherer roots. Simply pick from nature's bounty rather than intensively farm the planet. There's really only one problem with this delightful idea: we'd all starve within months having stripped the Earth of everything edible:

Epping Forest, an ancient woodland straddling the border of greater London and Essex, is one of the best fungi sites in the country, with over 1,600 different species. But, like other fungi-rich sites such as the New Forest, it is being stripped out by illegal picking by gangs believed to sell the wild mushrooms to restaurants and markets.

“They leave a trail of destruction,” says Dagley, who has been head of conservation for 20 years at the 6,000 acres wood. “It has stepped up over the last five years. Sometimes people run away when they are challenged, but we have been threatened too. People pick using knives so they feel armed.”

He says pickers often take everything away and sort the edible from the poisonous later: “You can find people with 40kg of fungi, which is huge” but much is just thrown away.

Dagley says it is distressing to see the destruction, and it prevents the forest’s 4.5 million annual visitors enjoying the spectacular variety of fungi. The weird and wonderful shapes and colours of the fungi he points out revives his enthusiasm. “You have gills, frills and pores and the puffballs, they are like things from outer space,” he says.

The growing popularity of foraging for wild food may be part of the problem, says Sue Ireland, director of green spaces for the City of London Corporation, which manages Epping forest: “In rural areas, foraging is fine if you are picking for your own personal use.”

Quite: there's no problem at all with a couple of people going off for some ceps: nor with a bit of picking the hedgerow for some blackberries of the sloes for the Christmas Gin. But as soon as many people do it it becomes unsupportable. This is why we have mushroom farms of course. And farms for cows, because hunting the aurochs to extinction has already been done. And farms for what and so on. The truth is that, other than as a very marginal leisure activity, we just cannot live off nature's bounty. There's just too many of us to be able to do so.

The terrible error of Naomi Klein

Naomi Klein tells us that the polluter must pay. Something that is both logical and true. Then she tells us that the fossil fuel companies must be made to pay for the damage that they do. Also logical and true:

Up until the early 1980s, that was still a guiding principle of environmental law-making in North America. And the principle hasn’t totally disappeared – it’s the reason why Exxon and BP were forced to pick up large portions of the bills after the Valdez and Deepwater Horizon disasters.

We might quibble about whether the damage was quite what was described or paid for but the basic principle is entirely fair. However, here comes the error:

The astronomical profits these companies and their cohorts continue to earn from digging up and burning fossil fuels cannot continue to haemorrhage into private coffers. They must, instead, be harnessed to help roll out the clean technologies and infrastructure that will allow us to move beyond these dangerous energy sources, as well as to help us adapt to the heavy weather we have already locked in. A minimal carbon tax whose price tag can be passed on to consumers is no substitute for a real polluter-pays framework – not after decades of inaction has made the problem immeasurably worse (inaction secured, in part, by a climate denial movement funded by some of these same corporations).

Assume, for a moment, that CO2 emissions are indeed causing damage. So, who is responsible for those emissions? Who is the polluter here who must pay?

When I drive to the shops it is me making the decision to do so, me making the decision to emit CO2 in gaining my supply of comestibles. I am therefore the polluter. That's why, if there is to be a tax on polluters it should be upon me, the polluter. Which is the entire point of a carbon tax that can be passed on to the consumers. It is we consumers who are the polluters which is why we should have that tax which falls upon the polluters.

This is the most appalling and most basic error by Klein. We do not consume fossil fuels because Teh Eeevil Corporations force them upon us. We consume them because they provide us with things that we desire, transport, heat, light and so on. The fault, as it were, is not in our suppliers but in ourselves.

Of course, as many do around here, it's entirely possible to reject the entire thesis. But working within the logical structure of the IPCC we still end up with the result that a tax which falls upon consumers is the correct action: as every single economic report about the problem, from Stern through Nordhaus and the IPCC itself, has pointed out. Because it's the consumers who are the polluters and yes, the polluters should pay.

Amazingly, fossil fuel reserves are different from fossil fuel resources

Bloomberg has shocking news for us. When fossil fuel companies report their reserves they give us different numbers from when they report their resources. They why seems to have escaped the news organisation:

Lee Tillman, chief executive officer of Marathon Oil Corp., told investors last month that the company was potentially sitting on the equivalent of 4.3 billion barrels in its U.S. shale acreage. That number was 5.5 times higher than the proved reserves Marathon reported to federal regulators. Such discrepancies are rife in the U.S. shale industry. Drillers use bigger forecasts to sell the hydraulic fracturing boom to investors and to persuade lawmakers to lift the 39-year-old ban on crude exports. Sixty-two of 73 U.S. shale drillers reported one estimate in mandatory filings with the Securities and Exchange Commission while citing higher potential figures to the public, according to data compiled by Bloomberg. Pioneer Natural Resources (PXD) Co.’s estimate was 13 times higher. Goodrich Petroleum Corp.’s was 19 times. For Rice Energy Inc., it was almost 27-fold.

That why being that reserves and resources are different things. This being the way that language tends to work: when we want to describe something that is different we use a different word to do so. Thus helps us distinguish between those different things we're talking about. In general for minerals and fossil fuels a reserve is something that we've proven is there, we've proven that we can extract it, in the volume we say we can, using current technology and also we can make a profit doing so at current prices. Resource is a looser concept: we've good evidence that there's what we say is there there, that we can extract it, using current technology, at current prices, and make that profit. But there's only good to reasonable evidence, we've not spent the money to prove this as yet. There's also a gradation: proven reserves, probable reserves, inferred resources and so on but that's the general structure. So why do companies talk about the different numbers? Because different people are interested in different things. The SEC (and other regulators, the LSE is pretty similar) wants investors to have access to the best hard numbers there are. Great, so, report reserves according to the rules they insist upon. But investors are also interested in what might happen, what could happen and what's likely to happen. After all, if we've two companies, one with 1 billion barrels of reserves and no resources and one with one billion of reserves and 2 billion of resources then that second is logically worth more than that first. So, that's why the use of the different numbers. Because they're referring to different concepts, each useful in a different manner. And that, of course, is why we use different words to describe them, so that we can distinguish between those different concepts. Seriously, it's not that difficult to understand, this is only geology, it's not rocket science or anything.

Surprise! If you set a target then people will game that target

This shouldn't come as the greatest surprise to anyone ever but sadly it does to those who would plan our lives. If you set people a target for something then they will game that target. This is true whether it's of bankers vying for bonuses and pushing losses outside the bonus period, people making tractors where if you measure them by the tonnage they'll make heavy tractors and, in today's example, if you set car manufacturers mpg targets for their vehicles then they'll game the measurement of mpg:

Motorists are usually advised that smaller cars can travel more miles per gallon (mpg) than those with larger engines, making them cheaper and more environmentally friendly to run.

But manufacturers’ estimates of fuel economy, based on official laboratory tests, may not reflect the reality when the vehicles are driven on the road.

Tests on 500 vehicles, half petrol, half diesel, each driven for three hours on roads in Britain, found that the cars travelled on average 18 per cent fewer miles per gallon than stated in manufacturers’ specifications.

Emissions Analytics, a data company which measured the cars’ fuel consumption and emissions, explained that this was due to cars accelerating more and travelling at higher speeds on the road than in official testing regimes.

The test drivers are of course all practicing perfect economical driving while, and this problem is worse for very small engines, we real drivers give it a bit of welly to compensate for those very small engines. And of course this is a general fault with any and every target of this type. Showing, once again, that if you want to ration something (here the desire is to ration fuel consumption) the best way to do your rationing is by price. For price is the one thing that doesn't lie in these circumstances.

It's such a simple concept that it really is amazing that those who would plan our lives still don't get it.

Well of course the 2 degrees climate change target should be ditched

The reason that 2 degree climate change target should be ditched being that it was always an entirely economically illiterate target to set in the first place. Sadly, that's not the point being made in Nature on it. As The Guardian reports:

But two academics in the prestigious journal Nature now argue that the 2C target has outlived its usefulness. They say it should be abandoned and replaced with a series of measures – “vital signs” of the planet’s health.

Under the headline, “Ditch the 2C warming goal”, they argue the 2C limit is “politically and scientifically ... wrong-headed”, it is “effectively unachievable” and it has let politicians off the hook, allowing them to “pretend that they are organising for action when, in fact, most have done little.”

The reason it should be ditched is that it should never have been a target in the first place. For we should not be trying to target a particular change in temperature: we should be trying to target a certain cost of action.

Think back to what every economic report on this issue has said. That there will be costs associated with allowing climate change to happen. Also that there will be costs with preventing climate change from happening. And in such circumstances the correct answer is that we should spend up to the price of those costs on trying to prevent it happening. But we should not spend more than those costs: nor, obviously, should we spend less.

Thus whatever climate change target is set (for those who want to set one at all) it always has to be set in terms of the costs of the actions we are going to take. And this does have very important effects. For example, if we attack the problem in the most efficient manner possible (say, a carbon tax) then we can avert more climate change by doing so than if we try to avert it in less efficient manners (say, regulation or legislation). And that's why we really do want to always keep the costs in mind. Because if we set a temperature target, as we have, then people will say that we should do anything at all to meet that temperature target. But that's the very thing that we've already proven is not true: we should not do anything at all to avert warming. We should only do however much is economically rational: which brings us back to the costs of action as against the benefits of it.

So ditch the two degrees by all means. Then concentrate on what actually matters: the costs of whatever actions are taken.

Greenpeace really is getting desperate here

Desperate in the sense that they're now claiming that if the people whose lives get disrupted by fracking get a share of the money from fracking then this would be bribery. Rather than what we might normally call it, compensation:

Jim Ratcliffe, the 61-year-old industrialist who founded the chemical giant Ineos, is promising to hand more than 6% of future shale gas revenues to those sitting on the reserves or affected by their extraction, in an effort to replicate efforts in the US where shale gas has created scores of new millionaires. The situation in America contrasts starkly with that of the UK, where efforts to develop the controversial new energy source have been delayed by landowners, environmental groups and the planning system.

Simon Clydesdale, UK energy campaigner at Greenpeace, said: “This is just more of the same bribes and bulldozers approach that has already proved a failure. With one hand the fracking industry goads the government into steamrolling people’s right to oppose fracking under their homes, with the other it offers cash incentives.

“The industry forgets people have legitimate concerns about fracking that won’t be easily assuaged by cash sweeteners."

It's all very Dave Spart isn't it?

Leaving the Trotskyist Hippies aside the interesting part of this is that we seem to have reversed, to some extent, the nationalisation of fossil fuel reserves that happened many decades ago. It's a standard of landowning law that the landowner owns the minerals underneath it. Except for gold and solver and then later we added fossil fuels to the list nationalised. Given that there would therefore be no benefit to landowners of fracking under their land there's been a certain resistance to allowing it.

However, the government has lowered the tax rate on gas and oil brought up through fracking: allowing that Coasean bargain to be struck again between the drillers and the landowners. There's now room in the sums for compensation to be offered: and thus compensation is being offered.

Why Miliband is wrong on energy policy

This article was originally published in the Young Fabian’s quarterly magazine, Anticipations (Volume 18, Issue 1 | Autumn 2014). On this we will agree: the corporate monopoly dominating the UK energy market needs to come to an end. Currently, British customers have a total of six firms to choose from in the energy market, all of which offer very limited price distinctions.

And those prices keep going up. Since 2010, gas and electricity rates have risen by three times the rate of inflation (10.2% between 2010-2013). Quite rightly, the Big Six are constantly under attack from very political party in the UK for over-charging customers and raising retail prices, even when wholesale costs fall. With such little competition in the energy market, mega-firms can charge extortionate prices, and customers have no choice but to pay the bill.

Another point of agreement: a change in government regulation is key to breaking up this monopoly. Both Labour and Conservatives acknowledge that government regulations, like Ofgem, aren’t holding the Big Six accountable for what they charge customers. Over the past few years, party leaders have come up with new variants of the Regulatory State to combat the problem. Most recently (and most misguidedly) Ed Miliband has advocated for a government-mandated freeze on energy prices, which would force firms to fix their prices for 20 months, regardless of future changes in market conditions.

Why is this misguided? Let’s put aside Miliband’s refusal to acknowledge the costs that are loaded on to energy companies by the state (ie: requirements to source energy from renewables), which in turn, gets pushed onto the customer and focus on a second, more important point: Miliband’s policy proposals reinforce the energy monopoly.

It’s near impossible to create a market monopoly without help from the ultimate monopoly; that is, competition in the market place is so often drowned out, not by competitors, but by the state.

The energy sector is a prime example of well-intentioned government regulation gone awry. The sector is regulated so heavily, through both onerous compliance requirements and heavy taxation, that it is near impossible for any budding energy firm to compete with the Big Six. In its effort to stop energy firms from over-charging customers, the state has effectively regulated all competitors out of the market, re-enforcing the monopoly it was trying to prevent.

The bureaucratic, slow-moving nature of government bodies means that they are not equipped to understand or anticipate the unpredictability of market prices on energy. The security of energy supplies, complexities of long-term contracts, and real commodity costs are often dismissed by politicians who have made unsustainable, politically motivated promises to voters. Whilst the Big Six have no incentive to bring energy prices down when they can, a Labour prime minister would have no incentive to bring the prices up even when he must.

Britain needs appropriate, scaled back monitoring of the energy market that removes ‘safeguards’ for the Big Six’s market share and introduces healthy competition in the market place. A less-regulated system where consumer choice dictates the real price of energy would see monthly bills drop. But piling price fixation on top of bad regulations will produce a lot of heat and very little light.

Quelle Surprise: Nick Stern wrong again

We've yet another attempt from Nicholas Stern to persuade us all that beating climate change would actually be good for the economy. Fortunately we've also got Richard Tol around to tell us what's really going on here:

The original Stern Review argued that it would cost about 1% of global GDP to stabilise the atmospheric concentrations of greenhouse gases around 525ppm CO2e. In its report last year the Intergovernmental Panel on Climate Change (IPCC) put the costs twice as high. The latest Stern report advocates a more stringent target of 450 ppm and finds that achieving this target would accelerate economic growth.

This is implausible. Renewable energy is more expensive than fossil fuels, and their rapid expansion is because they are heavily subsidised rather than because they are commercially attractive. The renewables industry collapsed in countries where subsidies were withdrawn, as in Spain and Portugal. Raising the price of energy does not make people better off and higher taxes, to pay for subsidies, are a drag on the economy.

Just not impressed there is he?

There are some eminently sensible things that could be done, things that would have the effect of reducing climate change into the future. Poor and oil producing nations throw $600 billion a year in subsidies at fossil fuel use for example. Stopping that would be a sensible thing to do: but it would be a sensible thing to do simply because it's a sensible thing to do. The effect on climate change is just an added benefit.

But the most important part of this latest report is this:

“Well-designed policies … can make growth and climate objectives mutually reinforcing,” the report claims.

Yes, that's entirely true. But as Tol also points out:

But low-cost climate policy is far from guaranteed – it can also be very, very expensive. Europe has adopted a jumble of regulations that pose real costs for companies and households without doing much to reduce emissions. What is the point of the UK carbon price floor, for instance? Emissions are not affected because they are capped by the EU Emissions Trading Systems, but the price of electricity has gone up.

There's an awful lot of weight resting on that "well-designed" there. In fact, absolutely every report, yea every single one, that has concluded that we'd be better off trying to avert climate change than to go through it has been running the numbers on the politicians using sensible methods of aversion rather than not sensible ones. And yet when we see what those same politicians actually enact on that evidence base they're not sensible policies. Thus the justification they're relying upon doesn't in fact exist.

Friends of the Earth takes a baby step forward: when will they take the big one?

Tears in heaven etc as Friends of the Earth finally agrees with scientific opinion on nuclear power. Yes, they've admitted that actually it's rather safe. Which it is: deaths caused by power generation per terrawatt produced are lower than any other method of electricity generation. Yes, really, more people fall of roofs installing solar than die from radiation from power plants. Which is good, that's a baby step forward. Even George Monbiot changed his mind on this when Fukushima showed that no one at all is killed by radiation even when three plants meltdown after a very large earthquake indeed and the associated tsunami (which in itself killed tens of thousands).

So, what's the remaining problem?

When the presenter asked him to explain the group’s opposition to nuclear power stations he got this reply: “The biggest risk of nuclear power is that it takes far too long to build, it’s far too costly, and distorts the national grid by creating an old model of centralised power generation.”

Well, certain of us think that centralised power generation is just fine: we might even say that we're rather fond of the idea of being able to turn the lights on without having to check our watch to see if we're able to.

But the next, and larger, step in this is that we need to examine why nuclear is so expensive, takes so long to build?

That would be because the hippies have been screaming blue bloody murder about the radiation problem all these decades. So, now that we can all agree that the radiation isn't a problem the hippies will, at least we can hope they will, stop that screaming and we can dial back the public inquiries, the planning appeals and the monstrously overdone safety regulations so that we can have cheap, as well as that safe, nuclear power generation.

Well, in a rational world we would but that ain't our one, is it?