Support grows for wind energy jobs and power


10:55 am - December 15th 2011

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contribution by Philip Pearson

The wind industry is enjoying a period of employment growth and public support.

Siemens will create 700 jobs at a new wind turbine plant planned for Hull docks, with many more jobs likely in supply chains. It’s part of a plan to develop a renewable energy hub at Green Port Hull in the Alexandra Dock area of the city, with Siemens investing £80m and ABP £130m.

Meanwhile, Mabey Bridge the UK’s only indigenous manufacturer of wind turbine towers, is expanding to a 24-hour operation to meet growing demand, creating 45 new jobs.

It’s also transferring 50 workers from its bridge-building operation, to join the 102 staff already on site, almost doubling the workforce.

RenewableUK reckons there will be nearly 90,000 jobs in wind energy industry over next decade. The National Infrastructure Plan, unveiled in the Autumn Statement, committed the Government to developing five Centres for Offshore Renewable Engineering in Humber, Tees, Tyne, Lowestoft/Great Yarmouth and Sheerness.

In 3 of these 5 locations (Humber, Tees and Tyne), offshore renewables projects will form part of an enterprise zone development strategy and will benefit from enhanced capital allowances. The plan also restates government support for investing up to £60 million over the next four years to develop offshore wind manufacturing facilities at UK ports.

Meanwhile, a Sunday Times YouGov poll shows 56% of public support expansion of wind power, with only 19% against.

Some 60% of respondents support Government investment in wind energy, and threequarters want more solar power investment.


cross-posted from Touchstone blog

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“RenewableUK reckons there will be nearly 90,000 jobs in wind energy industry over next decade.”

Jobs are a cost, not a benefit.

Jeez, how long is it going to take before youi people understand that?

Jobs are a cost, not a benefit.

No wonder Cameron is so reticent about dealing with unemployment eh?

1
Jobs might be a cost but isn’t the spending power they create a benefit?

They are a cost to the organisation employing them, they are a net benefit to society as it is better to have employment than not. Good luck finding a wealthy society with employment rates that are low.

New industry creates jobs. I’m failing to see the problem here.

Wind power is an ecological vanity project and will be responsible for the deaths of many poor and elderly people because of the premium it adds to fuel costs. Furthermore, the subsidies involved in creating the jobs in this ridiculous phantom technology could create ten times more in the real economy.

All the government needs to do is to leave it in taxpayers pockets rather than hand it to foreign multinationals and wealthy landowners.

New industry creates jobs. I’m failing to see the problem here.

Saying that solar or wind energy is better than gas/coal/nuclear because it employs more people is like saying that peasant farming is better than industrial farming because it employs more people.

What we actually want to get out of these wind farms is energy. In order to get that energy, we have to spend capital and labour. Ideally, we want to keep our inputs as low as possible – talking up the jobs created is just a way of boasting about how much more expensive wind power is to produce than the alternatives.

Tim J gets it.

In more detail: we don’t actually want jobs at all. Horrible, nasty, things which take us away from the enjoyment of our families, stop us from leisure.

What we do want is the ability to consume though. Having stuff that it is possible to consume requires that somehow things get made for us to consume.

But, in order to have the maximum available to consume we want to reduce to the minimum the scarce resources required to produce what can then be consumed. Yes, labour is a scarce resource, as is the atmosphere, clean water, land and everything else.

Thus we want to perform any production with the least amount of labour possiblem, just as we want to use the least amount possible of any other scarce resource.

Thus, when evaluating different ways of doing things we want to make sure that we consider jobs as a cost, not a benefit, of that method of produiction.

”Wind power is an ecological vanity project and will be responsible for the deaths of many poor and elderly people because of the premium it adds to fuel costs”

Evidence , yeaterday the select commitee report rejected that assertion.

Not oublished yet

Sorry – not published yet

I have to go to work to run my business unlike Tory bloggers who do nothing but sit around and quaff champers all day.

@4 – utter rubbish, energy prices have risen due to supply issues, mainly the fact we now import energy. Investing in new sources of energy is a way of getting long term prices down. Part of the money you spend on any consumer good whatsoever gets alloacted to R+D and new investments by the company you buy the product of.

First of all Libertarians pretended fuel poverty wasn’t an issue that caused excess deaths, now they are pretending it’s all the fault of the government for requiring energy companies to invest in insulation and micro-generation. A conclusion supported by precisely nobody in the industry.

A real shame, if you could be arsed to do actual research and spend time looking at the problem you’d realise that libertarian philosophy has a great deal to offer the issue of fuel poverty. But instead you just really hate the idea that left wingers have identified an issue that needs addressing; so far better to pretend that cold houses are good things.

@7 – So are you seriously saying high unemployment is a good thing?

“So are you seriously saying high unemployment is a good thing?”

Imagine that Marx’s true communism had arrived. Technological development has become so advanced that we can all be whatever we wish to be, that there is no allocation problem for there is a cornucopia of everything that we could possibly desire.

At this point none of us have jobs, do we? We’re all unemployed,. We have hobbies, arts, to occupy our time, but not jobs.

So, yes, not having to be employed is a good thing. As will anyone who is rich enough not to have to work (which is the same thing Marx was talking about) will tell you.

Involuntary unemployment is not a good thing, voluntary such is just great.

No surprised seimans think it’s great with the profits they make from wind turbines and of course we who have to buy the power will pay for it, boy will we pay for it.

@Tim W – Right, ok then once we reach this fantasy utopia we’ll stop supporting schemes that create jobs, and perhaps pass a law against private companies investing in schemes that require employees….

In the meantime, whilst there are literally millions of people in the UK who would quite like to earn some money and have a job, we should continue to support companies who invest in schemes that require employees, particularly if such schemes also make a contribution to tackling another social and economic problem – high energy prices.

14. Robin Levett

@ Tim W #11:

Been reading too much Iain M Banks?

@ Planeshift

energy prices have risen due to supply issues, mainly the fact we now import energy. Investing in new sources of energy is a way of getting long term prices down.

The hidden levy is part of a Government scheme to force energy companies to fund green energy. The companies bear the cost but pass it on to consumers in the form of higher bills. The amount raised has climbed steeply since the introduction of the levy in 2002.

Next month’s annual report from Ofgem, the energy regulator, will show that it has risen above £1 billion for the first time, according to analysts at the Renewable Energy Foundation (REF), a green energy think-tank.

It means that renewable energy added an an estimated £13.50 to the average household electricity bill last year. An additional burden fell on industrial users of electricity, who in turn passed on costs to their customers.

http://www.telegraph.co.uk/earth/energy/windpower/7061552/Wind-farm-subsidies-top-1-billion-a-year.html

16. Robin Levett

More generally, to those crying about the capital cost of installation of renewables:

How much does the fuel for a wind-turbine cost, compared with the fuel for a gas-turbine? What proportion of the overall costs of energy from fossil fuel plant is currently accounted for by fuel, and how much by the capital cost? As fossil-fuel becomes scarcer, and energy demand becomes greater what happens to your answer to those questions?

There is a very good reason why both tar sand extraction, and gas fracking, have come to prominence recently. It’s not because they’ve just been discovered, it’s because it’s only high energy prices that make them economical. Tar sand extraction particularly isn’t very efficient; using gas, it requires the enrgy in more than a barrel of oil in energy for each 6 barrels produced. Using the bitumen itself as a fuel, the proportion is worse at around 1 to 3.

17. gastro george

@Tim

“Jobs are a cost, not a benefit.”

At last I understand Tory economic policy.

There is a very good reason why both tar sand extraction, and gas fracking, have come to prominence recently. It’s not because they’ve just been discovered, it’s because it’s only high energy prices that make them economical.

Hurrah!!! You’ve got it.

Energy is sold in a market, and, as fossil fuels are used up, the price will likely rise and new technologies will respond to the higher price by becoming economical for the first time.

Who knows, at some time the price of energy might even rise to a level where windmills are viable……

But government intervention to rig the market by subsidising renewable technology is unhelpful and threatens both the operation of the market itself and all of our economic welfare.

Yay, Tim, you’re right on that – work stinks, doing tedious and futile tasks, being bossed around by thick managers is a waste indeed. It would be a wonderful world where everyone could be free of that wage slavery. Not “unemployed”, what a negative term, but free. What a great goal to aim for.

Unfortunately many people are like prisoners who are institutionalised and do not know how to live without those work structures. At the extreme you meet people who work 2 or 3 jobs, 7 days a week, out of choice, because they get “bored” without employment to organise their life for them.

And then there’s the belief that “the devil finds work for idle hands”. We would have to completely re-organise youth provision so that it became e-ducation in the genuine sense of the word, rather than the mere mass production of “work-ready” units that we have at the moment.

But the main trouble though, is that there seems no sign whatever that the wealthy minority in this country want to see the rest of us being free to do as we like. They will continue to monopolise the lion’s share of productive capacity and make sure that the majority continue having to do as we’re told under the threat of homelessness and starvation.

How do you solve that, Tim?

“How do you solve that, Tim?”

The way we have for the last couple of centuries. As we get richer, that 1-2 % each year (that is the historical average of capitalism) then quite naturally we take some of our new wealth in increased leisure.

Total working hours have been dropping for two centuries now.

“It means that renewable energy added an an estimated £13.50 to the average household electricity bill last year.”

Seeing as the average electricity bill (stats below are for wales 2010) is around £450 this is not a big deal. Particularly when you factor in the cost of electricity rose 67% between 2004 and 2009. Things get worse when you consider that gas bills rose 106% in the same period, and have subsequently risen even more. The average energy bill now being around £1,300 for standard tarrif – although you can shave £300 by moving to this online. Moaning about £13.50 really demonstrates you don’t understand the industry – there is the issue about whether it is fair that the burden is shared equally amongst all consumers – but the poorest are eligible for social tarrifs from energy companies, and insulation grants from various government schemes that will more than offset this £13.50. Its also very hypocritical for a libertarian to be against regressive pricing – if we left it to you energy companies would still be charging poor households more for use pre-payment meters.

The fact is reliance on traditional sources of energy means a long term rise in prices. Recent price rises are down to this, not minimal enegry charges laid before consumers. This is the standard ill informed anti-government nonsense that assumes price rices are down to regulation, and rejects the idea that the market could possibly be simply reflecting energy scarcity.

We can leave dealing with energy scarcity up to the market and note that high prices will in themselves cause an incentive for investment, which is a fair enough view. But the idea that the measures energy companies are now required to take to invest in renewables is largely responsible for the rise in fuel poverty is absurd and not a view held by any of the people who specialise in the subject, although have provided an excuse for anti-environmentalist movement to object to even minimal measures. Energy prices have risen due to market factors, and once some of the new technology has come on stream by 2020, then prices will come down. Removing the regulations on energy companies will delay that date by a few years, and for the sake of £13.50 in a climate where energy prices are rising by multiples of that amount every year is just barmy.

The real tragedy is that a thoughtful libertarian who examined the issue would be able to come up with a far better critique of government policy. But that individual would not conclude these measures were of any significance.

22. gastro george

@18 pagar

“But government intervention to rig the market by subsidising renewable technology is unhelpful and threatens both the operation of the market itself and all of our economic welfare.”

Wrong conclusion. Energy prices will be going up whatever as oil and gas runs out – so at some stage shortly renewables will be viable without subsidy. So why not apply a short-term subsidy in order to kick-start an industry that we could be a world leader in? That’s exactly what the Germans have done. Are they stupid? Looking at the respective records of UK and German governments (of whatever colour) you would think not.

This is what we do so badly. Our “light-touch” dogma insists that “we can’t pick winners” (except when it comes to the City). So we end up with an erratic business environment that changes from budget to budget. Which is no way to build the next generation of businesses.

“Energy prices will be going up whatever as oil and gas runs out – so at some stage shortly renewables will be viable without subsidy. So why not apply a short-term subsidy in order to kick-start an industry that we could be a world leader in? That’s exactly what the Germans have done. Are they stupid? Looking at the respective records of UK and German governments (of whatever colour) you would think not.”

Well, yes, the German govt was stupid here. The subsidy to solar PV was $1070 per tonne CO2 not emitted. Stern thinks the damage done is $80 per tonne. So the subsidy was about $99-0 per tonne over the top.

Which is why they’ve cut the subsidy. Why one large German solar company went bust yesterady (no, really) and the stock prices of the entire sector are wilting.

The thing is, I agree that solar will get there: but it’s not going to be as a result of fossil getting more expensive. Solar PV is falling in price by 4% a quarter. That’s 20% a year. That’s far faster than fossils are getting more expensive (espeically gas, what with shale coming on stream).

The real truth about solar is that we’re still a couple of generations short of truly viable technology. Another 5-8 years I would think (a guess but an informed one). That’s the point at which we should all start installing it: but of course, when it’s a truly viable technology, we don’t need a subsidy, do we?

And yes, that in 5-8 years we’ll have a truly viable technology does indeed mean that all of the subsidies we’re promising now for the next 25 years will be money just pissed away.

Tim W @ 11

Involuntary unemployment is not a good thing, voluntary such is just great.

Put aside any moral/political objections for a second.

So that guy down the road who ‘doesn’t want to work’ and live of the dole instead is actually doing us all a favour? After all, he is reducing the costs of production. So we (28 million of us) should all give him one qurter of a pence a year as a bribe to keep out the labour market?

So that guy down the road who ‘doesn’t want to work’

Fine by me, his life, his choice.

and live of the dole instead is actually doing us all a favour? After all, he is reducing the costs of production.

No, he’s not producing anything is he, so no claim on my output as I’ve no claim on his.

Support for involuntary unemp[loyment, sure, bit of social insurance is a fine idea. Who knows when but for the grace of God etc it will be us. But voluntary? Naaah.

“And yes, that in 5-8 years we’ll have a truly viable technology does indeed mean that all of the subsidies we’re promising now for the next 25 years will be money just pissed away.”

It depends whether the subsidy has meant we get the viable stuff sooner rather than later.

27. gastro george

And it depends if we’re getting the economic benefit of being the market leader in manufacturing it or not.

@OP, Philip Pearson: “Siemens will create 700 jobs at a new wind turbine plant…”

I am not entirely negative about this post; if there is a wind energy market, it makes sense for turbine manufacturers to consolidate the manufacturing process.

But Siemens is not creating 700 jobs. Siemens is employing 700 people for a short term project. When the project ends, 700 people will be looking for another job.

@7. Tim Worstall: “In more detail: we don’t actually want jobs at all. Horrible, nasty, things which take us away from the enjoyment of our families, stop us from leisure.”

Tim is so old that he remembers television programmes of the 1970s that informed us that automation would liberate us all. No longer would we work for 40 hours a week, but we would check in occasionally to look at the robot. The dilemma was what to do with all of the free time. Tim would have used his time to learn Portuguese fruitlessly; Tim’s language skills would be insignificant in a world where everyone understood English.

However, Tim’s argument may have merit. Karl Marx did not say that the proletariat work for the fun of it (to live to work, or the converse?). Somebody else made that point.

Tim W @ 25

As I said, leave all the idealistic stuff aside for second, let us explore what you have written.

You were saying jobs are a cost, not a benefit and that unemployment (unless it is imposed unilaterally on someone) is actually a good thing. You also say that as we get richer as a society, the amount of leisure time will increase. Surely by not imposing another cost onto production he is actually, by your own logic, contributing to society?

The alternative being that that we create another job, with the associated cost to the rest of us.

“It depends whether the subsidy has meant we get the viable stuff sooner rather than later.”

Later: pissing away tens of billions on current shite instead of a few hundred million in the lab is a very bad deal indeed.

“And it depends if we’re getting the economic benefit of being the market leader in manufacturing it or not.”

Not heard of anyone offering to open a silicon fab in the UK. Have you?

And I know you’ll find this hard to believe but I really am against these absurd subsidies even though I personally benefit from them. The rush for wind has meant people desperate to make the blades out of an alloy that I supply the vital ingredient for. So much so that I’m being paid to go off and look for a new supply of that vital ingredient.

Yes, lovely fun and I’ll take the money. But I still think the policy is insane.

“Tim is so old that he remembers television programmes of the 1970s that informed us that automation would liberate us all.”

Tim is so old that he’s even read Keynes’ essay on the point, “Economic opportunities for our grandchildren”. Damn, so old that I’ve even spotted the bits that he missed.

Salmond is ahead of the curve by enticing most of the good R&D jobs to Scotland. He is winning some of the battles for the less lucrative renewables manufacturing jobs to Nigg in the Highlands and a potentially huge Gamesa facility at Leith outside Edinburgh. It shows the benefit of decentralising the UK, and much of northern England would benefit from a less London-centric England.
http://www.economist.com/node/18178477

I think onshore wind is already pretty much competitive with nuclear when one takes all the nuclear costs into account. Offshore wind is still quite expensive. However, companies who have been traditionally involved in the offshore oil industry are starting to get involved in partnerships with the offshore wind industry. They reckon that they could reduce costs by 20% just through applying existing technologies and expertise developed in the oil industry.

Nuclear will always be able to produce electricity cheaply. Build a new nuclear power station and only around 15% of the electricity bill for the consumer will be for the cost of producing the energy. All the rest is to repay the huge upfront capital costs to build the plant. That is one of the reasons why private sector investors are reluctant to invest in nuclear without the state standing behind it. Huge upfront sunk capital that takes decades to recoup the investment and as a consequence that increases the risk i.e. different governments can change the rules, a new energy source could appear over the decades of the investment destroying the value of the long-term investment.

It is certainly not impossible to get the private sector to invest in nuclear. However, it is a bit naive to believe that the free market will invest in nuclear without explicit and implicit state guarantees. Not impossible to get the private sector to insure a nuclear plant, but with the potential costs being almost incalculable there is usually some implicit state guarantee. Decommissioning costs is another thing that need to be factored into nuclear prices. I don’t mean that to be anti-nuclear as I think nuclear must be part of a diversified energy sector. However, a totally unhindered free market in energy would not choose nuclear.

Renewable subsidies undoubtedly add to energy bills. However, the subsidies are a minor factor in the rise of energy prices. The days of cheap oil are well and truly over and the gas price is correlated to the crude oil price. I hate subsidies as they are by definition distortionary. However, it is naive to think that all other energy sources are not also subsidised in one way or another. It is unfair to think that it is only renewable energy that enjoys subsidies. We just need to make sure that we minimise the distortions and remove them as soon as possible. The market will innovate to reduce prices and the higher that energy prices go will increase the innovation incentive.

Innovations such as biocoal.
http://www.scotsman.com/business/food-drink-and-agriculture/wood_chip_firm_wins_13m_us_deal_1_1990132

32. Bring on the Revolution

Shit Tim W, looking at what you say about work, all I can say is that you are a REAL marxist. You believe in a real evolutionary progression of society toward a utopian future. None of this Leninist bollocks for you mate, no fighting the revolution to spend 10 hours a day smelting pig iron, you’ve figured what Marx was really on about – he did after all say that he was building on the previous work of Adam Smith and Ricardo. Oh yeah, when the world’s first “marxist” party was established in France, he also famously said “if that’s a marxist, then I’m not one”.

Sod the rest of you fake lefties with your right to work crap, I want to play my guitar.You can keep your crappy jobs, I want freedom from the tyranny of work.

31. Bring on the Revolution: “…no fighting the revolution to spend 10 hours a day smelting pig iron…”

Pig iron (potentially high carbon steel) is what you get from smelting.

@ Planeshift

the idea that the measures energy companies are now required to take to invest in renewables is largely responsible for the rise in fuel poverty is absurd and not a view held by any of the people who specialise in the subject, although have provided an excuse for anti-environmentalist movement to object to even minimal measures.

@ George

Energy prices will be going up whatever as oil and gas runs out – so at some stage shortly renewables will be viable without subsidy. So why not apply a short-term subsidy in order to kick-start an industry that we could be a world leader in?

Both the above are reasonable points and I do accept that the subsidy on renewables has only a marginal effect on total prices. The allegation that wind turbines kill OAPs is probably hyperbolic- perhaps I have been hanging around this site for too long.

But the idea that we could be world leaders in a failed technology is not comforting- the replacement technology for fossil fuel generation might be solar, nuclear, fracking, tidal, wind, cold fusion or something else not yet envisaged. Only the market, and the parameters of technological development, can decide.

There is a role for governments in taxing the externalities of the above, but none in picking winners (or even in picking losers) based on the chimera of climate change determinants.

Pig iron (potentially high carbon steel) is what you get from smelting.

Err, yes, so you smelt in order to get pig iron.

36. gastro george

@34 pagar

“Only the market … can decide.”

I get really fed up with this dogma. It is, to paraphrase, bollocks.

Did the market create the Internet – no? The US Department of Defense did. Did the market create the WWW? No, it was created in CERN.

The “market” gave us Windows – which was a dog until recently. The “market” in healthcare in the US gives us an expensive, poorly-performing, system.

I’ve now lost the will to live.

Pagar says

the replacement technology for fossil fuel generation might be solar, nuclear, fracking, tidal, wind, cold fusion or something else not yet envisaged. Only the market, and the parameters of technological development, can decide.

George says

I get really fed up with this dogma. It is, to paraphrase, bollocks.

OK, so if we don’t rely on market forces which one is it?

Choose George, and then explain why you know better than everyone else.

Tim: “Total working hours have been dropping for two centuries now.”

Well, worktime does go up as well as down over the centuries. I’m not so old that I remember it, but working hours for the average person became a lot longer – and harder – in those societies which, perhaps foolishly, took up agriculture and developed elites. Marx has his own teleological take on this too, of course. But that looks more like Whig history to me.

Tim: “… for the last couple of centuries. As we get richer, that 1-2 % each year … then quite naturally we take some of our new wealth in increased leisure.”

The past is not an infallible guide to the future, unless you’re a hardline determinist. The past two centuries cover the period of the industrial revolution and the increasing exploitation of fossil fuels, so it is no coincidence that wealth has increased over that time. Indeed, how could it fail to? But those easy times may be gone soon. We will certainly go through a bottleneck of some kind over the next decades as the human population goes on increasing while the resources available to service that expanding population diminish and degrade ever further.

You must also be an incredible optimist about human nature, Tim, as you seem to think that the increase in wealth and leisure will somehow distribute itself around at the individual scale, or at the community or global scale. To me that appears highly unlikely. Apart from anything else, too many people actively want to keep others poor because they like to feel superior and to dominate and control others. A large gap in wealth gives those with the money almost unlimited power over those without.

The record on this in the last 30 years is not good, in much of the Anglo-Saxon world at least. Branko Milanovic, a lead economist in the World Bank’s research department points out that in the world’s leading superpower (as was):

“Real median wage in the United States has been stagnant for twenty five years, despite an almost doubling of GDP per capita. About one-half of all real income gains between 1976 and 2006 accrued to the richest 5 percent of households. The new “gilded age” was understandably not very popular among the middle classes that saw their purchasing power not budge for years. Middle class income stagnation became a recurrent theme in the American political life, and an insoluble political problem for both Democrats and Republicans. Politicians obviously had an interest to make their constituents happy for otherwise they may not vote for them. Yet they could not just raise their wages. A way to make it seem that the middle class was earning more than it did was to increase its purchasing power through broader and more accessible credit …”

Which is what has led to the current ongoing crisis, in his view.

“The political problem of insufficient economic growth of the middle class was then “solved” by opening the floodgates of the cheap credit. And the opening of the credit floodgates, to placate the middle class, was needed because in a democratic system, an excessively unequal model of development cannot coexist with political stability.” [My emphasis]

.http://dmarionuti.blogspot.com/2011/03/inequality-and-global-crisis.html

So your solution seems to be based on three shaky assumptions; 1, that there is an infinite source of wealth for humanity to draw upon; 2, that this wealth will not be simply hoarded by a few, but will distribute itself at the individual, community and international scale; and 3, that this limitless wealth can distribute itself fast and efficiently enough to prevent major dislocations and wars.

Unfortunately support doesn’t make wind power any better. Some jobs (in a poor choice of power generation) are better than no jobs at all, though, and at least renewable subsidies have been a source of money in the economy. Just a shame it’s highly misguided.

40. So Much For Subtlety

3. Planeshift

They are a cost to the organisation employing them, they are a net benefit to society as it is better to have employment than not. Good luck finding a wealthy society with employment rates that are low. New industry creates jobs. I’m failing to see the problem here.

New industries also destroy jobs. If I start an open cut coal mine, I could produce more coal than a hundred or so of the older deep cut pits. But I would only employ a few hundred people. Potentially putting tens of thousands out of work. Society as a whole would be better off – cheaper coal, fewer people producing more. But those older workers would be out of work. Of course they would find other jobs, producing even more and making society even richer, but their old jobs would be gone.

Japan is rich. Income is some $45,000 a year. Their unemployment rate is about 4% – the frictional rate. Singapore is rich. Over $60,000 by PPP. Their unemployment rate is 2%. Hong Kong is not a country but it is also rich – and their unemployment rate is just over 4%. The problem is the welfare state. If you pay people to be idle, they will be idle. Still, it is not just the welfare state. As Australia’s unemployment rate is climbing but is still only 5%.

41. So Much For Subtlety

38. birdie

Well, worktime does go up as well as down over the centuries. I’m not so old that I remember it, but working hours for the average person became a lot longer – and harder – in those societies which, perhaps foolishly, took up agriculture and developed elites.

You have to go a long way back to find that example – even if it is true and it is not likely to be.

We will certainly go through a bottleneck of some kind over the next decades as the human population goes on increasing while the resources available to service that expanding population diminish and degrade ever further.

Resources are not diminishing. There is no sign they are diminishing. There is no reason to think they ever will either. At least not in a human time frame. As for population, the world is going to hit a problem with population decline, not population growth. We can foresee some countries having serious problems in a few years and that is the real issue.

You must also be an incredible optimist about human nature, Tim, as you seem to think that the increase in wealth and leisure will somehow distribute itself around at the individual scale, or at the community or global scale. To me that appears highly unlikely. Apart from anything else, too many people actively want to keep others poor because they like to feel superior and to dominate and control others. A large gap in wealth gives those with the money almost unlimited power over those without.

That is one of the great things about freedom and free markets. It does not matter a damn what they want. They can try to oppose it if they like, but it will not get them anywhere. Not unless they start imposing government regulation and compel the rest of us to respect their wealth. Left to itself, the market will distribute that wealth around.

So your solution seems to be based on three shaky assumptions; 1, that there is an infinite source of wealth for humanity to draw upon;

Growth comes from innovation. There is no limit to that.

2, that this wealth will not be simply hoarded by a few, but will distribute itself at the individual, community and international scale;

As all the empirical evidence suggests it will.

and 3, that this limitless wealth can distribute itself fast and efficiently enough to prevent major dislocations and wars.

Seems a pointless complaint to me. Why do you bother to bring ti up?

@Richard W – thats pretty much spot on.

“OK, so if we don’t rely on market forces which one is it?”

Well in medicine we use double blind control trials to determine what treatments work, if we left it to market forces to determine what cures diseases then homeopathy would be the most effective drug available.

In other words we base our decisions on science

As Richard explains, if you leave it to pure market forces you simply won’t get nuclear. However I think most of us accept nuclear is going to be part of the mix. Market forces are one part of finding the solution, provided we ensue prices reflect the different externalities (which is far easier said than done). But we need planning policies changed and strategic efforts – based on the best evidence available as to what will work- to attract the kind of projects that only occur with state backing to a particular area. If we say ‘leave it entirely to the market’ then other european countries will become the leaders in the new technology and gain the economic benefits of doing so. Salmond understands this, but the rest of the UK has yet to catch up. I know the standard libertarian objection is that governments are bad at picking winners, but if everyone else is backing a horse, then not backing one guarentees you won’t win.

“If we say ‘leave it entirely to the market’ then other european countries will become the leaders in the new technology and gain the economic benefits of doing so. Salmond understands this, but the rest of the UK has yet to catch up. I know the standard libertarian objection is that governments are bad at picking winners, but if everyone else is backing a horse, then not backing one guarentees you won’t win.”

That may be the libertarian one but the classical liberal one is that we don’t actually care about energy production. What we do care about is the ability to consume energy. If someone else spends the taxpayers’ fortunes, some other taxpayers than us, in subsidising a technology through to market success, great, we’ll go buy it when it is a market success.

Thanks guys, you’ve just subsidised our lifestyles.

Do note that if the profits to be gained from the technology being market successful are greater than the subsidies required then there’s no need for the taxpayer subsidies. For it would be something the private sector would be happy to finance (profits are going to be greater in the future than costs now? Yup, I’ll invest in that).

The very fact that public subsidies are being called for insists that future profits are not going to be greater, at net present value, than current needed subsidies.

And no, we cannot call the externalities of carbon emissions into play here. For we solve that problem whoever we buy the lovely new technology from, our own tax pockets or French or German tax pockets.

” great, we’ll go buy it when it is a market success. ”

Assuming we can afford it and the economy hasn’t tanked.

I’m still trying to work out how people think subsidising an industry to produce something using its present level of technology will provide any incentive to that industry to produce better technology to produce things more efficiently (efficiency here could be expressed in terms of any output – profit, carbon, how well it works…).

Subsidising research is fine (if still a bit pointless – if there is a need it will be developed) – and best done through institutions without a stake in the market (hence the need for universities etc) – but subsidising production just means there is no reason to make that production better.

“subsidising production just means there is no reason to make that production better”

Not really. The process of competition between organisations is the mechanism in which production gets better. If all firms in a market recieve the same subsidy then there is no harm. Take agriculture – it isn’t as if decades of CAP* have prevented new techniques is it?

* I’m aware CAP is a pretty crap scheme overall, but it’s a well known scheme to illustrate the point.

47. Robin Levett

@SMFS #41:

Resources are not diminishing. There is no sign they are diminishing. There is no reason to think they ever will either. At least not in a human time frame. As for population, the world is going to hit a problem with population decline, not population growth.

Paging SMFS; Marion King Hubbert and Thomas Malthus on lines 1 and 2 respectively.

@35. Tim Worstall: “Err, yes, so you smelt in order to get pig iron.”

I should have been clearer. You smelt the constituents (iron ore and limestone) to make pig iron. You do not (intentionally) smelt the result.

“I should have been clearer. You smelt the constituents (iron ore and limestone) to make pig iron. You do not (intentionally) smelt the result.”

Well, no. You smelt iron ore and some form of carbon to make pig iron. The limestone, the flux, makes it more efficient, yes, it gets rid of the gangue, but it’s not really part of “to smelt”.

And while it is undoubtedly correct to “smelt for pig iron” or to “smelt for copper” (insert lead, zinc, whatever, to choice) that’s not actually what almost everyone says. We say we “smelt pig iron” or “smelt copper”.

N’ language is what people say and all that, not what they ought to say.

@ Planeshift

we need planning policies changed and strategic efforts – based on the best evidence available as to what will work- to attract the kind of projects that only occur with state backing to a particular area. If we say ‘leave it entirely to the market’ then other european countries will become the leaders in the new technology and gain the economic benefits of doing so.

You are conflating two different issues here.

On the one hand, you are talking about state backing for nuclear projects because the return for private investors is, because of the nature of the technology, too long term to be viable. (I still believe those investments would happen when the scarcity of fossil fuels means the price is right).

On the other hand, you are suggesting government subsidy is valuable in giving UK companies a strategic advantage in a future, money spinning technology. Yet the wind turbines are virtually all German. We are subsidising German companies!!!!

Lets get real.

The only reason there are renewables subsidies is to let the government appear to try to reach an arbitrary climate change target they signed up to. They are imposing energy costs on UK citizens on the basis that they believe, in the long run, that it will be good for us.

And, as so often, they are quite wrong.

By the way, I would have no objection whatever to the climate change subsidy if it were voluntary.

“If you believe in climate change and are worried about the polar bears please add £32.50 onto this bill and we’ll pass it on to a builder of windmills or bribe one of your neighbours to put up solar panels.”

How many do you think would choose to pay for theses subsidies?

“Yet the wind turbines are virtually all German”

You realise that renewables and micro-generation are not just wind turbines?

There is a start up company literally 2 mins walk from my office that specialises in home insulation using technology they’ve patented. How? because they had a grant to do the research from an energy company (who are now shareholders) using exactly the kind of charges you are opposed to, and some of their customers can only afford their services due to government funding of retrofitting. A mix of private sector creativity and motivation combined with a subsidy. Net result – 7 jobs in a deprived area of Wales plus a few hundred houses saving considerably more than £13.50 on their fuel bills.

Explain how that is a bad thing?

“Explain how that is a bad thing?”

Becasue everything in, about, from or to do with Wales is a bad thing?

@ Planeshift

Explain how that is a bad thing?

It is a bad thing because government subsidy distorts the market and creates bubbles of extraneous economic activity where, rightly, none should exist.

It is dispiriting to see all types of private sector companies, from large monopolising corporations to brand new companies all scrabbling to suck on the teat of public money. More than half of the start ups in my area are “training companies” who survive on delivering state sponsored initiatives.

Nobody, if they had to spend their own money, would pay these people for their services and their contribution to wealth creation is nil.

Incidentally, you didn’t answer my question.

How many do you think would pay the renewables levy if payment were voluntary rather than compulsory?

everything in, about, from or to do with Wales is a bad thing?

Just a minute,Tim, my wife is from Cardiff and…. er….what was my point again…??….

55. Robin Levett

@pagar #51:

It is a bad thing because government subsidy distorts the market and creates bubbles of extraneous economic activity where, rightly, none should exist.

And, in a perfectly-functioning market, that might both actually happen and be a bad thing. The premise being faulty, so is the conclusion.

56. Robin Levett

Oops – @pagar #53:

And, in a perfectly-functioning market, that might both actually happen and be a bad thing. The premise being faulty, so is the conclusion.

The premise being that a free market would be a goold thing and that the government keeps coming along and pissing about with it. The conclusion therefore being correct, that we should stop the government pissing about iwth it in order to have a free market.

58. gastro george

@37 pagar

Late nights and alcohol don’t necessarily make for the most coherent blogging …

But to outline my frustration – I get fed up with “market fundamentalists” – who say that only “the market” can make a judgement. There are plenty of examples of market failure – there are plenty of examples of market distortion. All markets are subject to regulation in some form (largely because of market failures and distortions) so are distorted by those regulations. The corollary of that is that the “decisions” of the market are dependent on that distortion. So there is no magical hand that gives an infallible judgement – there are always regulations (or investment) that can be made.

That should be pretty uncontroversial. But the point that is often missed is that, because of the inevitable regulatory framework, governments are already making decisions – it’s unavoidable and it’s called politics. “Non-interventionism” or “light-touch” is a political decision. It sets the regulatory environment – and a lot of good it’s done us. Intervening and investing are also a political decision. Government’s can’t avoid “picking winners”. I’d sooner invest more of my time ensuring that the process was geared for the maximum benefit and the maximum democracy – and improving the decision making process.

A couple of examples.

For some people Tesco is a marvellous company that ensures that everybody can get cheap food and goods so, for example, would clear our planning legislation to enable them to grow bigger and provide more benefit. Others think that Tesco is not that cheap, squeezes profit out of their suppliers, and drives competitors out of business so, for example, should be broken up. Government needs to make a decision either way. That, inevitably, is backing winners.

And regarding the development of high speed train lines. How would you propose that a free market can decide whether it should go ahead or not? The only decision made would be a non-decision – it would never happen. So what if high-speed train lines were of general benefit? It’s the government that would have to decide that, not the market.

59. Robin Levett

@Tim W #57:

The premise being that a free market would be a goold thing and that the government keeps coming along and pissing about with it.

No; the premise being that Goverrnment intervention always and by definition distorts the market away from perfection.

The energy market is so far from being a perfect market that that premise is seriously questionable.

60. So Much For Subtlety

47. Robin Levett

Paging SMFS; Marion King Hubbert and Thomas Malthus on lines 1 and 2 respectively.

You may have noticed America becoming an oil exporter this year. That is because while crude oil is peaking, or may it isn’t, who knows, unconventional oils are coming on stream. We will have enough of those for the next 100 years or so. So Hubbert is irrelevant. Malthus? Oh come on, stop wasting my time.

61. Robin Levett

@SMFS #60:

You may have noticed America becoming an oil exporter this year.

I didn’t; more importantly, nor did the US Energy Information Administration, who seem to think that the USA remains a net oil importer to the tune of 8,000,000-plus barrels a day – down from its peak in 2006-8 admittedly, but that’s what recession does for you. See this page:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wttntus2&f=4

That is because while crude oil is peaking, or may it isn’t, who knows, unconventional oils are coming on stream. We will have enough of those for the next 100 years or so. So Hubbert is irrelevant.

Mr Newell, the EIA administrator, told Congress in March this year that “EIA projects total U.S. crude oil production will remain above the 2009 level of 5.4 million barrels per day through 2035, increasing to 6.0 million barrels per day by 2017 and remaining near that level throughout the rest of the projection period.”

He also says that “Total U.S. technically recoverable crude oil resources are estimated to be 219 billion barrels”; which nicely equates to production of 6m barrels per day for 100 years. Unfortunately, unless the US reduces its oil consumption by roughly 60%, it will remain a net oil importer throughout that period. Put another way; US reserves are enough to last it for 40 years, but they can’t produce it in less than 100 years. Looks slightly different now, surely?

His speech to the House’s Natural Resources Committee is at:

http://www.eia.gov/neic/speeches/newell_03172011.pdf

Malthus? Oh come on, stop wasting my time.

Can you point me at the groundbreaking work that demonstrates that limited resources can continue to sustain an indefinitely growing population?

We can sustain the current population because we learned how to convert petroleum into digestible calories. We’re running out of petroleum, we’re increasing our population, and we’re degrading our farmland.

62. Robin Levett

@SMFS #60 (contd):

…and US crude production peaked at c3.5bn barrels pa in 1970:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus1&f=a

Note from that page that US production for the last complete year (2010) was just shy of 2bn barrels pa.

Do you remember Hubbert’s prediction for the peak? Early 1970s. Most would say that was “on the nose”.

I think it is important not to think about peak oil in terms of oil running out. The earth will never run out of oil before it eventually succumbs to being destroyed by the sun. There will not be a time when we wake up to find that there is no oil left. Technically it is not true to say that the ‘ earth is no longer making oil ‘. Oil is being created all the time by the earth. Unfortunately, we use it faster than the earth can create new oil. What peak oil and our increasing demand will do is make oil progressively more expensive. We can alleviate those price pressures by reducing our demand on oil use in public and goods transport.

The main problem with oil that we will increasing face is energy returned on energy invested EROEI. Over a century ago we only had to use one barrel of oil to produce 100 barrels. Globally we now only get three barrels from every one we use producing the oil. That inevitably leads to more expensive oil.
http://en.wikipedia.org/wiki/Energy_returned_on_energy_invested

The size of the new finds that we have been making have been declining for around 40 years. Rising prices does send useful price signals and expensive oil will eventually lead to demand destruction and innovation in alternatives. Although, a higher price can make marginal and smaller fields economic at the higher price. EROEI is a constraint no matter what the price. Some oil will just never be energy efficient to extract with current technology.

Oil is not a complicated substance, it is just organic material, heat and pressure. Therefore, making synthetic oil is not that difficult for the boffins. The contents of your bin can be turned into oil. We could turn deceased humans into oil rather than burning them in crematoriums or burying them. However, quite a number of the synthetic oil processes are energy sinks that do not produce net energy.
http://en.wikipedia.org/wiki/Fischer%E2%80%93Tropsch_process

Good to see more evidence that the relentless lies of the fossil / nuke-sponsored rightwing UK press are not fooling most people about the benefits and need for renewable energy.

Sadly the Tory cnuts are doing everything they can to sabotage progress to benefit their banker chums who own the fossil / nuke corporations. At least they are consistent.

P.S. Is there anyone who epitomises more “He has mistaken having an opinion for having a clue” than wee Timmy Worstall? What a tedious, reality-detached buffoon. The perfect libertarian, in other words.

65. Robin Levett

@DougieMcD #64:

Is there anyone who epitomises more “He has mistaken having an opinion for having a clue” than wee Timmy Worstall?

That’s an easy one: SMFS.


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