Saturday, July 19, 2008

A green surge?

From PoliticalBetting.Com:

"The other striking feature is the massive growth in Green Party support - from 2% to 5% - which must attract questions as to what has prompted this."

Is it possible that Clegg's shift right, combined with an utterly discredited Labour Government, is leaving genuinely left wing voters with little idea where to go? The Green Party might be an answer for some of them.

Friday, July 18, 2008

Al Gore loses his mind

We already knew Al Gore was wrong. That pretty much everything that made his film distinctive and emotionally compelling couldn't be justified by the evidence.

Now, it appears he's lost touch with reality entirely. He has challenged Americans to entirely end the use of fossil fuels to generate electricity within a decade (without an expansion of nuclear power). This is utter insanity. The research of the excellent Renewable Energy Foundation shows pretty conclusively that large scale renewable energy is currently unrealistic. Wind power is far too unreliable and has a nasty tendency to cut out when you need it most. Other technologies just cost too much per KWh to be remotely practical as a large part of our energy mix.

Of course, that's not to say that massive adoption of renewable power won't happen. It is possible, though unlikely within a decade, that new technological developments will achieve something remarkable. Perhaps solar power really will become too cheap to meter. There are steps that can be taken to encourage technological advance in that direction. Jim Manzi, writing in the National Review, proposed prizes that could encourage technological advance at low cost and without too much risk of interest group capture.

However, to start trying to tax people into avoiding fossil fuels now, when there isn't a practical alternative, will just push up the cost of energy. It would cost ordinary families, and particularly the poor and vulnerable elderly, a fortune and do lasting damage to industry. To try and force a switch away from fossil fuels on the timescale and scale Gore is proposing would be insanity.

Cross-posted from CentreRight.Com.

Thursday, July 17, 2008

The OECD reveals the inefficiency of biofuel subsidies

A leaked World Bank report has alread alerted us to the fact that biofuels have pushed up food prices by 75 per cent. Now, the direct financial cost of biofuel subsidies is becoming clearer. Yesterday, the OECD released a study on biofuels showing just how expensive and ineffective the subsidies are.

Government support for the industry in the US, Canada and the EU was $11 billion in 2006 and is expected to rise to $25 billion by 2015. All that will achieve is a 0.8 per cent cut in greenhouse gas emissions from transport fuel by 2015. What's really incredible is the cost per tonne of greenhouse gas emissions saved, between $950 and $1,700. These costs can quite easily be compared with the benefits.

The benefits of saving a tonne of carbon dioxide are referred to as the "social cost" of a tonne of carbon dioxide emissions. For more information on this concept see Box 1.1 in this report (PDF). We last surveyed the major academic and official estimates of the social cost of carbon dioxide emissions for the report The Economic and Political Case Against Higher Fuel Duty (PDF). Nordhaus, who the Economist has called the father of climate change economics, puts the social cost at $7 per tonne. The IPCC and Tol, another respected climate economist, studied dozens of academic estimates of the social cost of carbon dioxide emissions and the averages they reported, at $12 and $6 respectively, were in the same ballpark as Nordhaus's estimate. Finally, the estimate reported in the Stern Review was $85 per tonne. Stern's result is very different to that obtained by Nordhaus, Tol and the IPCC for reasons discussed in Box 1.3 of this report (PDF).

If we compare the cost of subsidising biofuels with what we gain by saving a tonne of carbon dioxide emissions the results are pretty stark:

The costs of subsidising biofuels are between 11.3 and 229.7 times the social cost of just burning fossil fuels and not worrying about carbon dioxide emissions. Biofuel subsidies are a waste of money and should be abandoned.

There may be a day when technological advance delivers efficient biofuels. Just as there may be a day when wind and solar plants can deliver power at a low cost, reliably and in the quantities required to make a big contribution to our energy needs. At the moment, neither biofuels nor renewables are anywhere near efficient enough to replace fossil fuels. Pretending otherwise and throwing huge amounts of subsidy at technologies that just aren't ready for the big time is a ruinously bad idea.

Cross-posted from the TaxPayers' Alliance blog.

Wednesday, July 16, 2008

The case for a voluntary subscription funded BBC

Brilliant article by David Elstein over at Liberal Conspiracy making the case for a voluntary subscription funded BBC. Worth reading the whole thing but here are some good bits:

"There is a social cost to this process, as well as a financial cost. A large proportion of those prosecuted are single parents on low incomes, for whom the licence fee is a considerable burden. To add to this burden the court-imposed fines is effectively to criminalise poverty. Almost no-one now goes to jail for failing to pay the evasion fine, but the victims of the system are often dragged back to court soon after a conviction, having fallen behind again and now finding themselves on the enforcers’ radar.


As it happens, there is an abundance of evidence that very few people would choose to do without the BBC, at a given price. Moreover, a series of studies has shown that a large proportion of the population would willingly pay more for the BBC than the current level of the licence fee, strongly suggesting that if the BBC introduced a series of channel packages, from, say, just BBC One through to the full array of current channels plus HD options and perhaps a sports channel, take-up of one or other of these choices would be nearly universal, and BBC income would rise, rather than fall, especially as each TV set would need its own smart card, allowing the cost of the cheapest package for a single TV to be as low as £5 per month.

The paradox of the present situation is that people too poor or too unwilling to pay for the BBC are forced to subsidise those who value it well above the level of the licence fee, mostly because that level is a much lower proportion of their net income than it is for the poorest. A tax-based licence fee removes that inequity, but a layered consumer proposition which is entirely voluntary gives the BBC a much stronger connection with its viewers and listeners, real accountability for the first time, and the opportunity to continue developing new services that will appeal to subscribers.


First, there is a well-established public demand for high quality products: without it, publications like The Economist and the Financial Times could not exist, along with a huge array of other magazines.

Secondly, the research that has been done shows that the present balance of BBC output would deliver enough subscribers to maintain the present quality of service: and as the BBC is non-profit-making and publicly owned, there should be no pressure to dilute in order to maximize revenue."

If this policy were proposed it could do well electorally. TaxPayers' Alliance polling (PPT) suggests that the license fee is considered the second most unfair tax (after council tax) and is particularly disliked by the working class.

The turnaround in Iraq

The sheer scale of the turnaround in Iraq is incredible. Michael Yon has the statistics in a Power Point presentation (PPT) that shows a remarkable decline in incidents and casualties. Predictions about the future in such a dangerous part of the world are always fraught with risk but Yon is a sober reporter so this carries some weight:

"The war continues to abate in Iraq. Violence is still present, but, of course, Iraq was a relatively violent place long before Coalition forces moved in. I would go so far as to say that barring any major and unexpected developments (like an Israeli air strike on Iran and the retaliations that would follow), a fair-minded person could say with reasonable certainty that the war has ended. A new and better nation is growing legs. What's left is messy politics that likely will be punctuated by low-level violence and the occasional spectacular attack. Yet, the will of the Iraqi people has changed, and the Iraqi military has dramatically improved, so those spectacular attacks are diminishing along with the regular violence. Now it's time to rebuild the country, and create a pluralistic, stable and peaceful Iraq. That will be long, hard work. But by my estimation, the Iraq War is over. We won. Which means the Iraqi people won."

Frederick Kagan, who proposed the 'surge' at the American Enteprise Institute; John McCain, who supported the strategy when it was desperately unpopular, and most of all David Petraeus, who led the operation, and the soldiers risking their lives on the ground deserve all the credit in the world.

Monday, July 14, 2008

Politicians don't build nuclear power plants, builders do

Today we learned that:

"Ministers are to build eight new nuclear power stations across England, the Daily Telegraph can disclose."

I'm pretty confident that even if the entire 135-strong payroll vote (PDF) is mobilised that won't quite be enough to get eight nuclear power stations built. Beyond the obvious labour shortages I'm not sure that ministers' careers in the unions, journalism or the law have left them with the expertise to produce a functioning nuclear power plant.

Of course, in reality ministers are only providing planning permission but the underlying attitude, that things get done when ministers command that they be done, is dangerous. An attitude which expects Government to take action and interfere from the top in the day-to-day delivery of services is responsible for so much poor performance in the public services.

Energy policy, over the last decade, has been an utter disaster. John Constable, of the Renewable Energy Foundation, in an article for Power UK, Is the future of UK electricity dark, dirty and costly? (PDF), highlights how bad the situation has become. He suggests another approach, where ministers are far less interventionist:

This disingenuous inteventionism has combined with complacency towards the flaws in the electricity market system (BETTA) and resulted in a decade during which many billions of pounds of assets have been written down, the nuclear industry almost bankrupted, and an imprudent over-commitment to gas generation compounded.

In my view the only way of ensuring rapid remedial action is for government to actually rather than apparently withdraw from the system, so liberating energy market participants to respond commercially to the situation as it now stands. This opinion is not informed by doctrinal libertarian affection for the free market but rather a practical recognition that no government or any single market participant can gather and assimilate sufficient information to design and realise a satisfactory outcome. Only the intellectual action of the market in aggregate, and through competition, has a reasonable chance of producing an optimal result.

Cross-posted from the TaxPayers' Alliance blog.

Sunday, July 13, 2008

60, 80, -1.6

Ukco2emissionsThere was a surreal quality watching Hillary Benn being interviewed on the Politics Show this morning. The host was quizzing him on the Climate Change Bill, and the commitment to cut emissions by 60% from 1990 levels. She was asking why the Government weren't going further, and targetting an 80% reduction. What exactly a 60%, not to mention 80%, cut means in the real world was entirely ignored.

To the right is the pattern of UK carbon dioxide emissions since 1990 so far. Between 1990 and about 1993-94 there are significant cuts. This is almost certainly connected to the recession at the time. Carbon dioxide emissions are so intimately connected to economic growth that recessions often lead to reductions. The collapse of Eastern Europe's manufacturing base probably brought emissions down more than any other global phenomenon of the past few decades. We may see emissions reductions right now, when the data comes through in a couple of years time, connected to the current slowdown. The early nineties reduction was also, more importantly, driven by the shift to gas, something that can only be done once and might need to reversed if gas imports are imperilled. One more reason why ensuring energy security and cutting emissions don't necessarily go together.

We haven't cut emissions since 1995. Since 1997 emissions have actually increased by 1.6%. All this fuss over targets, whether binding or not, is pretty meaningless. The actual policies that have been put in place over the last ten years have increased the price of electricity (Ofgem estimate (PDF) that they make up 8% of the average household energy bill), pushed up the cost of motoring, increased the price of family holidays and otherwise cost taxpayers a fortune. Petrol prices have almost doubled since 1995 and, at the same time, emissions have kept on rising suggesting that the elasticities involved are incredibly low.

Despite all of the innumerable policy initiatives and market incentives to reduce energy use emissions have gone up over the last ten years. Clearly, there is some deeper difficulty to cutting emissions that the greens have not acknowledged. People really do need and/or value the activities that create emissions. Emissions probably will fall if fuel prices stay as high as they are but it'll be slow and steady. There is something deeply decadent in coming up with target after target while ignoring that basic issue.

Not to mention the G8's pride in setting targets without the developing economies. Even if the developed economies were to completely decarbonise then, to make a 50% global cut by 2050 from present levels the developing economies would need to make 46% cuts to their 2050 emissions. If the developed economies can only get a two thirds cut by 2050 (very, very ambitious as the graph above shows) then the developing world would need to cut their 2050 emissions by 74% (all these facts are from a White House Council on Environment Quality presentation). This would mean huge sacrifices in economic growth.

It's hard to escape the conclusion that these targets do not represent anything but meaningless moral preening.

On another note, over on my personal blog I discuss why the idea that an oil-money conspiracy is keeping the green 'truth' from the people is so deeply wrong.

Cross-posted from CentreRight.Com

Why “Big” Oil companies aren't the ones fighting eco-socialism

If there is one message that emerges loud and clear from environmentalist propaganda, whether Al Gore’s rhetoric, green protests or dramatisations like Burn Up, it is a clear idea of the enemy: Rich, slick oil executives who supposedly fund some vast conspiracy to prevent the emerge of a brave, green new world. They form a handy target for a movement that is deeply anti-capitalist. They’re often American, wealthy and clearly have some measure of power; fine bogeymen for the modern age.

There is no vast conspiracy to prevent the public accepting the green agenda. There are millions upon millions of pounds being spent in the UK alone attempting to convince the public that it should be a priority to cut carbon dioxide emissions. The Government’s Act on CO2 programme alone has cost £5.5 million in the last year. Government departments and NGOs run countless other programmes with large staffs and sizeable budgets. By contrast, I’m not sure there is anyone working full-time in the UK to argue the case against radical carbon dioxide emission cuts. A cursory examination of their advertising shows that Exxon Mobil, BP and the other energy majors are not working to combat the idea that we should take aggressive action to curb carbon dioxide emissions. Instead, they’re kowtowing to the greens.

There is, simply, a free-rider problem which means corporations will rarely resist significant political pressure. The benefits from fighting green alarmism are diluted across such a range of firms and interests while the costs, in terms of green opprobrium, are not. Exxon Mobil initially funded sceptical scientists to a certain degree but the amounts were small compared to the budgets the green movement are playing with and that effort is now largely over. Firms respond rationally and don’t defend the broad social benefits of, for example, affordable energy.

Beyond that “Big Oil” isn’t going to be the big loser – in absolute terms – if green policies are put in place. The crucial measure here is reserves. Green policies won’t bring down prices right now so current production isn’t the crucial variable. Reserves are the crucial measure of the potential impact of green policies, were they to be successful in reducing demand for hydrocarbon fuels, on a firm. On that score the Western oil companies are minnows. Measured by reserves, Exxon Mobil is the 14th largest firm, BP 17th largest and Shell 20th. The lion’s share of world reserves are held by nationalised companies, with Saudi Aramco at the top of the list. These are the firms who will really lose out if hydrocarbon demand falls.

Of course, the argument that comes up at this stage is that we have to cut hydrocarbon demand in order to stop Iran, Saudi Arabia and other unpleasant regimes enjoying buoyant revenues that allow them to spend on weapons, promoting radical Islam and other unpleasantness. This is an argument which receives far too little scrutiny. You don’t need to ask too many questions to see that it is full of holes. The argument relies on the idea that people are less dangerous when they’re poor; that poverty actively makes people less likely to engage in terrorism.

While I don’t subscribe to the argument that terrorism is some kind of cry for help from the world’s poor neither do I think that it is dependent on serious wealth. In a world where a state as poor as North Korea can develop nuclear weapons poverty is clearly little bar to an ability to inflict terrible carnage. Our enemies must be resisted and defeated and our potential enemies persuaded. Reducing our use of oil will do little to help and if we impoverish ourselves in the process it will make things more difficult.

Of course, all this assumes that green policies will succeed in significantly reducing hydrocarbon demand. In the meantime, the main effect of green policies, if they hope to have a significant effect, has to be higher energy prices. The real impact here won’t be on energy companies, who can generally pass such costs on, but on a broad range of Britons. Particularly the vulnerable elderly trying to heat their homes; manufacturing industries trying to compete with foreign industries that are less efficient but have lower energy costs; motorists in suburban and rural areas who need their cars to get around.

These aren’t the favoured rhetorical targets of the green movement. They’re rather harder to demonise. However, they, and not the Western oil executives portrayed in countless green caricatures, are the real losers when green policies push up energy prices.