Jobs are a cost not a …..

But Dr Gordon Edge, Director of policy at the lobby group RenewableUK, said much of the information was gathered from “anti-wind farm cranks”.

He explained that modern gas plants are not required to provide back-up for wind. Instead, wind is \”integrated\” into the existing system to act as a fuel saver, enabling the UK harness a free electricity source from the weather when it’s available. Some additional investment is required, but Dr Edge said “credible analysis” makes clear it will cost less for consumers than relying on fossil fuels, that are rising in price all the time.

“It is surprising that a think tank such as Civitas has published a report based on the work of anti-wind cranks, repeating the same discredited assertions. The UK’s energy policy over the next ten years will play a critical part in our economic success – offshore wind in particular has the potential to revitalise our manufacturing sector, with the promise of over 70,000 jobs,\” he said. \”This report, based on outdated and inaccurate information, does nothing to advance the debate.”

That\’s how we know it\’s expensive, see?

Because you\’re \”creating \” lots of jobs and jobs are a cost of a project, not a benefit.

78 comments on “Jobs are a cost not a …..

  1. But is this cost (plus capital) cheaper or more expensive than the alternative way of getting the same thing? Do you get more or fewer megawatt hours for 1 hour of someone pulling levers at a fossil power station, or for 1 hour of someone putting WD40 on windmill bearings?

    And you still don’t get this human thing – jobs are absolutely a benefit to those in them. They represent greater benefit than cost to the worker, and will only continue to exist if they likewise represent greater benefit than cost to the employer (ultimately the consumer). In a competitive marketplace they will further only continue to exist to the extent that they provide at least equal benefit per cost to the next organisation carrying out whatever activity it is.

    A job in which someone does stuff is therefore no more a cost than is having capital and material inputs sat around doing stuff.

  2. “A job in which someone does stuff is therefore no more a cost than is having capital and material inputs sat around doing stuff.”

    Actually they are all costs to the ‘doing stuff’. Whenever one talks about price, cost and revenues one must remember that there are always two sides to the story. To the buyer of said input they are costs to the seller they are revenues.

  3. OK, James, let’s assume that you have two possible ways of achieving precisely the same result. One of them involves employing ten people and the other involves employing two people. Which is more efficient?

  4. @Ian, the low-labour variant is likely to be more capital intensive – it would depend on whether that cost was outweighed by the reduction in labour costs.

  5. “@Ian, the low-labour variant is likely to be more capital intensive – it would depend on whether that cost was outweighed by the reduction in labour costs.”

    Yes, so both are a cost which was exactly the point.

  6. So, the correct way to build an office block is by using tens of thousands of people over twenty years, because it keeps tens of thousands busy, rather then use machinery, 200 people, and do it in a year, thereby freeing the same resources to build a school, a hospital and another couple of office blocks?

  7. “free electricity source”
    Totally free apart from the millions of kilowatt-hours used up in smelting the aluminium and manufacturing the nachinery and constructing the windmill.
    Yes, absolutely free, for a Newspeak definition of “free”.

  8. The cost of renewables is £400 per year each. Meanwhile in USA energy costs are declining with shale gas entering the mix.
    So renewables are more costly, and less efficient than conventional alternatives. Which means that renewables are wasteful.
    And I thought we were supposed to avoid waste?

  9. I think you’re missing the point, and JamesV is correct.

    Tim’s claim is the number of jobs a project uses is how you measure the cost (“That’s how we know it’s expensive, see?”) when it’s obvious you need to look at the other factors of production as well.

  10. On the wider issue, it is important to note that fewer jobs is often a benefit, but we do need to take into account the fact that unused labour still needs to eat and live etc, whereas unused machines don’t.

  11. “Tim’s claim is the number of jobs a project uses is how you measure the cost (“That’s how we know it’s expensive, see?”) when it’s obvious you need to look at the other factors of production as well.”

    The fact that there are lots of jobs does mean that it is expensive even without looking at other factors. It may not mean that it is more expensive than the alternatives.

  12. @Emil,

    I am not sure which part of either of my comments even remotely suggested that employment does not represent a cost to the employer.

    I did say that jobs will only continue to exist while they bring more benefit than cost to the employer (i.e. having certain employees means more money in the bank at the end of the year than not having certain employees).

    I also said that other input costs also need to be considered. To the extent that these other inputs can be directly substituted by labour (or vice versa) the most cost-efficient manner of doing something will depend on the relative prices of those inputs. I am sure Tim will correct me if I have this completely wrong.

    Of course, current ultra-low interest rates rather push the calculation for labour/capital substitutable activities towards more capital and less labour. Chalk that one up to the law of unintended consequences of political actions.

  13. “…it’s obvious you need to look at the other factors of production as well.”

    But unnecessary labour is usually the most expensive item on a bill.

    Next most expensive is whether there is any point to the job in the first place (expensive solutions to problems that don’t exist category).

    Both categories are popular with govts as:
    1. They appear to be doing something about a ‘problem’.
    2. They make ‘jobs’ (except they don’t).
    3. They provide largesse (contracts, consultancy, legal work, bureaucracy for supporters) that can be spread around.

    Anything that is popular with the Guardian usually falls into these three areas.

  14. “Tim’s claim is the number of jobs a project uses is how you measure the cos”

    No, the claim was “jobs are a cost of a project, “. “A” not “the”.

  15. The problem, surely, is not that “jobs are a cost and not a benefit,” but that jobs are both an economic cost and a political benefit?

  16. Almost true sconzey; VISIBLE jobs are a political benefit. For example x jobs created by a particular policy are a political benefit even if >x jobs fail to be created because of that same policy.

  17. Surely any job is an economic benefit if it produces more than the cost of the job. But we can let the economy work out whether any particular job produces more than it costs. If the government has to get involved, you can be reasonably confident that cost exceeds production. The political reasons for doing this have already been mentioned.

  18. And yes, I mean all costs – the cost of persuading someone to forego gazing at a sunset with a beer, the foregoing of that gazing at a sunset with beer, and so on. Does the job produce more than those costs? If so it is economically beneficial to have that job. And if it is economically beneficial someone will try and make money out of it meaning you don’t need the government to spend money on it.

  19. Lower job numbers in a particular field is always a good thing.

    Having 70K people just producing energy means that there are 70K people less able to use that energy in productive work.

  20. I’m starting to wonder if the phrase “anti-wind farm cranks” might give a clue to resolving the above debate.
    That is of course presuming that the said unpopular cranks are those to be fitted to the sides of the windmills so that the 70,000 workers can turn them in times of nil wind.
    Seems an eminently sensible solution to me, or at least by renewable energy standards it does.

  21. Sadbutmadlad: “Lower job numbers in a particular field is always a good thing.
    Having 70K people just producing energy means that there are 70K people less able to use that energy in productive work.”

    This is not true – you are assuming that the reduction in production due to one activity from having fewer labourers is more than offest by those labourers instead doing something else – i.e. that something else has to be something more productive.

    Of course, if you can use fewer ([pedant]not less[/pedant]) workers for the same output, that is economically rational. But definitely not the same thing as using fewer workers and accepting lower production as a result.

    After all, I doubt even the government is proposing using more workers than necessary.

  22. “After all, I doubt even the government is proposing using more workers than necessary.”

    If the job doesn’t need to be done in the first place, i.e. most green power generation schemes, then they are, by definition, using more workers than necessary.

    And are also squandering resources that could otherwise be used producing cheap, relatively (equally?) clean energy.

  23. After all, I doubt even the government is proposing using more workers than necessary.

    Of course it is. HMG will require diversity co-ordinators, FOIA request deniers, EU target compliance monitoring departments and the other appurtenances of civil service existence. All of these are arguably production-negative, even before the resources expended in their roles are considered.

  24. Is there any meaningful distinction between costs to a company due to jobs, and costs due to other inputs? If a company learns to produce the same output with fewer people, jobs are lost – from that company. If a company learns to produce the same output with fewer inputs (other than workers), then jobs are lost elsewhere, eg from the company that provides those inputs.

    Yet if a company learns to produce more goods with few non-people resources they are generally applauded, but if they learn to produce more goods with fewer people they are often condemned notwithstanding, both forms of efficiency saving come from fewer people having jobs.

  25. Once again we have Guardian entry level ‘sentimenenomics’ on show. Wind power is profoundly cost ineffective. How do we know? Because all wind power requires a tax payer subsidy. Therefore ANY jobs created by wind power projects are tax-payer funded make-jobs.
    If wind power was, per se, effective every power company, and uncle Tom Cobbleigh ‘n all, would be putting their own money into it, there would be genuine profits to be made, as opposed to subsidy farming. The ONLY free ride with wind power is the motive force, and that only sporadically (see damage done during the last blowy spell), every thing else is a non profit making waste of capital and labour simply to farm the subsidy.

  26. ChrisM – it’s the ‘know it’s expensive bit’ not the bit you’re looking at that says it’s the only cost one needs to look at.

  27. Matthew, I suppose I can see what you mean, but I did not take it to mean that Number of Jobs is the way that costs are measured. I took it as a given that – in the UK at least – costs are actually measured in Pound Sterling. However, if a process requires more jobs, it will require more pound sterling.

  28. “Jobs are a cost…” is not a brilliant meme because it makes you sound like an antisocial econosadist, and disgusted readers seem determined to miss the point in the angriest way possible. (I recall a Forbes piece Tim wrote on this, that ended up on Yahoo and got absolutely panned by the readership, to the tune of basic economics whistling over their heads.)

    Perhaps “labour hours are a cost…” works a bit better.

    Dead obvious why labour hours are a cost to the person doing the hiring – and to anyone who’s ever had a car serviced, for example, why this may be detrimental to the ultimate consumer of the product. Enough labour hours to provide 70,000 full-time jobs isn’t something I’d be in any hurry for my ‘leccy bill to have to cover…

    But in addition, rare is the worker who’s never wished they didn’t have to work so many hours – particularly if they could still achieve as much in the reduced time (an inkling of productivity arises), and could take home the same paycheque for it. Heck, just think of the things I’d rather do in the extra time, even if it was just to get some other work done and make more money!

    Et voilà, one has glimpsed the fundamental ideas of productivity and opportunity cost. Once armed with this insight, that Guardian agrarian who a few days was suggesting 10% of the populace should be put to work on the land doing primitive agriculture, looks like a Luddite numpty rather than a prophet whose ideas could singlehandedly solve unemployment and obesity. And the idea wind energy is so cheap it’s basically free no longer sits so easily with it creating enough jobs for the adult population of Blackburn.

    I hope nobody suggests the idea of generating all our electricity by a legion of dynamo cyclists. This is essentially free power, requiring nothing more than enough jobs to employ half the country and a small investment in infrastructure – which will be small-scale and localised, so perfect for community regeneration and self-sufficiency. Half of us can pedal the generators while the other half of us watch TV, and no fossil fuels in sight!

  29. @MyBurningEars, I seem to recall reading somewhere that every calorie a person eats, requires about 9 calories to be produced, so the dynamo cyclists idea would not work. (Yes I do realise it was said tongue in cheek).

  30. @SE: most of those non-jobs are foisted upon private enterprise now anyway.

    I am not ignoring the opportunity cost – there is also opportunity cost involved in using more capital and less labour – less capital to do other things with. We still have to work out which is best to do without – an extra 70,000 labourers or the money invested in whatever enables us to do away with (some of) those labourers.

  31. “We still have to work out which is best to do without – an extra 70,000 labourers or the money invested in whatever enables us to do away with (some of) those labourers.”

    Sounds like we we need some sort of pricing system and a market.

  32. most things have costs and benefits and “jobs” are no exception.

    Elsewhere Tim has agreed that “job creation” is (can be) a benefit to the extent it reduces involuntary unemployment. If more labour intensive green technologies had the peculiar feature of only drawing workers from the pool of the long-term unemployed, it would make sense to celebrate their job creation. Even lacking that, to the extent that growing labour intensive industries achieve some reduction in unemployment, that may rightly be seen as delivering some benefit (offsetting some cost).

    Maximum benefit is to be found by combining technologies that require the smallest number of workers to produce the most output, with full employment – if we don’t have full employment, it might make sense to compromise a little on the most manpower efficient technologies.

    As technology advances, and we need fewer workers to produce existing products and services, we do need some job creation to avoid “technological unemployment”

  33. In regard in Luis Enrique’s point, it’s worth mentioning that most of the sites proposed for offshore wind turbine manufacturing facilities are in old industrial areas with high levels of unemployment, such as Hull.

  34. “Instead, wind is “integrated” into the existing system to act as a fuel saver, enabling the UK harness a free electricity source from the weather”

    Assuming for the moment that that is how this system is intended, primarily FF power generation using wind to lower fuel consumption – he’s still ignoring the fact that the break-even point for the cost is measured in multiple decades.

    By the time you pay off the windfarm with money for your fuel savings it’ll be past time to rebuild the damn thing anyway.

  35. Looking back over the costs/jobs debate, can’t help noticing that there seems little attention to what the actual jobs are.
    If you’re building windmills you’re talking engineers. Highly skilled people. There’s hardly any requirements for non or semi-skilled in the entire project from manufacture right through installation to maintenance. Certainly few openings for artists, media studies graduates, creative writers let alone our old friends Wayne & Tracy who can’t count past ten with their shoes still on.
    Be interesting to know where exactly 70,000 skilled engineers are to be found currently languishing on sofas watching daytime TV. Last I heard we’re so short of people like that we’re importing them

  36. Dunno ’bout that, Bloke in Spain.
    The North Sea went from nearly noone to about 70,000 jobs in a decade. And in my experience most of them were remarkably thick.
    On the other hand, you’re right, these jobs won’t actually exist. At £8 million per job (compare your average capital intensity of about £250K per job) we simply won’t afford it.
    And think what we could do, if left to our own devices, with that £400 per household per year of savings. We could blow it on dentistry, or champagne… or even figuring out how to combat global warming.

  37. The aim is not job creation but wealth creation. A new industry that creates more wealth, pays for more jobs – which is good because of the greater wealth, some of which the workers get. A situation where you create jobs without creating wealth requires that workers each get lower pay. The trivial example is to employ two people to do each job, each getting half the money.

    The trick is always to create new wealth with which to pay the people doing the jobs, and for that, greater efficiency is better. People don’t really want jobs, they want wages – which is a very different thing. If you say instead you are trying to create more wages to go round, it makes it a little clearer when new industry is good news or bad.

    Employees are a cost to the employer, work is a cost to the employee. Products to sell are a benefit to the employer, wages a benefit to the employee. More product/employee means more profit/worker and more wage/work. The number of employees does go up, but it’s only really good news because of the total wages going up.

    The idea that with less than full employment you should compromise on manpower efficiency is correct – with the understanding that it implies lower wages. Lower efficiency creates less wealth to be shared with the employees. At some point, people find it a better deal financially to go on the dole, or minimum wage legislation prevents it.

  38. SteveB goes from trying to argue that jobs in tax-payer subsidised jobs are wealth creating (they’re not: they’re wealth destroying) to creating new wealth to pay people to do jobs (!!), through the good old trade union argument that people don’t want jobs, just more money. He then argues (?) that the more employees there are the better because the wage bill is bigger and to have partial employment is best because it holds down wages,to such an extent that it is better for the work force to go on benefits. And there was I thinking this was a rational forum….

  39. Well bloke the other side of the Pyrenees, I’d say I’ve known a lot of guys off the rigs, worked with them, drunk with them, came close to joining them except a better prospect came along. Or maybe I wasn’t thick enough. Thing they most had in common was they were competent, hard working people. Very efficient asshole sieve the rigs. The liggers, the tossers, they don’t last long. If the company doesn’t sling them out the guys do. When the drinks are flowing, you hear the stories. Everyone trusts their lives to everyone else. Someone fucks up, people can die out there & do.
    Occasionally I bump into ex-rig guys. They’re usually running their own businesses. Car repairs, building, a yacht chandler….mostly successfully. That’s where all those high earnings were invested. Why they went & did the job in the first place. If they hadn’t gone on the rigs they’d probably be doing the same jobs but working for someone else. They’d have ended up with their own show a bit later, that’s all.
    You’re not going to find a guy who’ll plant a turbine out in the North Sea hanging around waiting for a benefit check to hit the mat. If he isn’t in a job this week he’ll be in one next.
    As Tim always reminds us. Opportunity costs. If those guys are pissing around with windmills they aren’t erecting steel for an office block. Drilling for shale gas. Building a high speed rail line.

  40. Surely (as blokeinfrance says) if the capital intensity of these jobs is 30 times the average, the labour costs are a really trivial part of the cost and therefore the last thing we should be worrying about.

  41. offshore wind in particular has the potential to revitalise our manufacturing sector

    Manufacturing suffers from electricity shortages? Where is this, Nigeria?

  42. Oh dear, JamesV (45) you’ve missed the point quite spectacularly.
    Try it another way. Save £60 billion in capital cost, hold a lottery with 70,000 winners.

  43. <emOf course, current ultra-low interest rates rather push the calculation for labour/capital substitutable activities towards more capital and less labour. Chalk that one up to the law of unintended consequences of political actions.

    Hang on a minute! It is not low interest rates which have driven the substitution of labour for capital, but the increasing costs of maintaining a labour force. Now that is one you can chalk up to the law of unintended consequences of political actions.

  44. “the labour costs are a really trivial part of the cost and therefore the last thing we should be worrying about.”

    If true, that is still not the point; the point is that jobs are being touted as a benefit rather than what they are, which is a cost.

    It also shows how bloody expensive this wind power is that it will cost 70K jobs, and yet this is trivial compared with the other costs.

  45. The North Sea went from nearly noone to about 70,000 jobs in a decade. And in my experience most of them were remarkably thick.

    Ha ha! Exactly: a whole load of milkmen, farm hands, truck drivers, etc. from Geordieland, Humberside, and Glasgow suddenly turned into “skilled workers” overnight and were shipped off onto the rigs. Worringly, some of these even attained senior management positions in which they remain.

  46. “the labour costs are a really trivial part of the cost and therefore the last thing we should be worrying about.”

    They are the largest part of any project I’ve been involved in. If you want to make money on an oil and gas project, supply labour, not materials.

  47. One point – he dismisses the need for back-up generators as an invention by “anti wind cranks”.

    I was under the impression it was true. Am I right or am I also a crank?

  48. @Rob – both apparently. The line being taken here is that renewables don’t need ‘backups’ built to cope with times when wind or sunshine are pumping insufficient juice, rather the renewables should be considered as ‘bolted on’ to the usual network and allow it to stop burning through fossil fuels at the usual rate if ‘free’ alternatives are available. It’s a shift in philosophy really – the renewables aren’t seen as additional generating capacity (which would need backing up to be reliable) but as an alternative source that can, weather permitting, ease the load on the ‘main’ power plants.

    The phrase ‘distinction without a difference’ comes to mind here, but it might be there are genuine technical implications I’m missing…

  49. @MyBurningEars (53)

    IIRC, on a coal-fired plant building the thing accounts for ~10% of the lifetime cost, and buying coal to put in it accounts for ~90%.

    So if you build a set of windmills of similar capacity, and they produce 30% of rated output over their lifetime, then you burn correspondingly less fuel.

    You save 30% of 90% = 27% of the fuel cost, or 24% of the build+burn lifetime cost.

    So whether it’s a good idea comes down to whether you can build and operate the windmills for more or less than that figure.

    The “ha ha it’s really cold today and there’s no wind” argument is rubbish, because they’re not intended for that- they’re intended to offset consumption of fuel over their lifetimes.

  50. MyBurningEars (53) PS

    And, by the way, the suggestion that renewables are aimed at reducing fuel burn, rather than as 24-7 baseline capacity, isn’t a “shift in philosophy”- as far as I’m aware people who know what they’re talking about have always seen it this way. I looked at joining the CEGB back in the 1980s, and I seem to recall it was well understood then.

    The idea that the lights go out when the wind stops is a polemical straw-man thing that’s arisen in the last few years.

    No-one serious (NB from this I exclude most Greens) would suggest depending on intermittent capacity for baseline.

  51. “Ha ha! Exactly: a whole load of milkmen, farm hands, truck drivers, etc. from Geordieland, Humberside, and Glasgow suddenly turned into “skilled workers” overnight and were shipped off onto the rigs. ”

    Just out of interest, have you ever tried to back 50 foot of artic through a gateway 3 foot wider than the vehicle, combined a field? Done a job that requires you’re out of bed at 3am every morning to go out whatever the weather?

    “Worringly, some of these even attained senior management positions”
    More worrying, we seem to have an inexhaustible supply of senior managers, bean counters, supervisors, experts at designing IT systems that do fuck all, lawyers, designers of things that look pretty but do nothing vaguely useful, public relations consultants, planners, time & oxygen wasters of every description.

    What we do have a remarkable shortage of is folk who can go out there & make shit happen. Particularly, make shit happen when it’s dirty & difficult & sometimes dangerous. Make shit happen when the shit doesn’t want to happen because one of the former, sitting in the their warm snug offices with their computer screens & their meetings & their memos & their e-mails have fucked up as they inevitably do. Make it happen when they have to file & hammer & bend because no matter how wonderful it looks on paper it doesn’t fucking fit!

    Excuse me if I seem a tad exercised. I spent a great deal of yesterday locating, assembling & dispatching information urgently requested by one of our wonderful public servants. Requested on penalty of penalties. I stopped everything to comply with her wishes. I just received a generated response from the IT system of this wonderful, invaluable, hard working public servant. It informs me that said public servant will be on maternity leave until some date late in the year. There is of course no indication on who might be performing her vitally important tasks in the interval.

  52. Just out of interest, have you ever tried to back 50 foot of artic through a gateway 3 foot wider than the vehicle, combined a field? Done a job that requires you’re out of bed at 3am every morning to go out whatever the weather?

    Yes, I grew up on a farm and worked a summer on the UK’s biggest vegetable farm in Pershore, Worcs. Being handy on a farm or being able to reverse a trailer through a gateway is of little use on an oil and gas facility.

    More worrying, we seem to have an inexhaustible supply of senior managers, bean counters, supervisors, experts at designing IT systems that do fuck all, lawyers, designers of things that look pretty but do nothing vaguely useful, public relations consultants, planners, time & oxygen wasters of every description.

    Indeed we do. But people who weren’t even tradesmen cannot, solely by virtue of being long enough in the tooth, cannot do the job of an engineering, maintenance, or operations manager in the oil and gas business. Sadly, the industry has paid a high price whilst figuring this out.

    What we do have a remarkable shortage of is folk who can go out there & make shit happen. Particularly, make shit happen when it’s dirty & difficult & sometimes dangerous.

    Agreed, and the oil business is full of them. But it is also full of Brits, Yanks, and Aussies who were fucking useless in whatever they did before who have rocked up with an elaborated CV attracted by the money and, usually, the loose pussy in the developing world, and bullshitted their way into positions they should never be considered for.

    Make shit happen when the shit doesn’t want to happen because one of the former, sitting in the their warm snug offices with their computer screens & their meetings & their memos & their e-mails have fucked up as they inevitably do. Make it happen when they have to file & hammer & bend because no matter how wonderful it looks on paper it doesn’t fucking fit!

    Which is the worst thing you can do on an oil platform, and happens to be one of the biggest problems I face in my current job: people offshore deciding that what has been engineered and presented on drawings is wrong, and they are qualified to make the necessary modifications on the spot. That’s how people get killed. If something doesn’t fit as it is presented on the drawing, you go back to the engineers and say this doesn’t fit. Sure, on a farm you just botch it, but where hydrocarbons are concerned, you follow the engineering to the letter. And that’s half the problem, people come into the oil and gas business from other industries which don’t deal with volatile hydrocarbons on a tiny platform in the middle of the sea, and assume their former practices apply. They don’t, it is an entirely different set of rules.

  53. @ C J Nerd 55
    The straw man arose when the lights in Denmark did just that. It turned out they had been relying on nuclear-generated electricity from Sweden as their backstop and when the submarine cable was damaged the Danes found that wind power was unreliable.
    @ C J Nerd 54
    You also need to look at the massive amount of energy needed to build and maintain a windmill – and their lifespan before they break down. Go out and count the number of non-functioning windmills and work out whether they actually generate more power than they have consumed (I hope so, but when the windies asked for a bigger subsidy because the price of oil had gone up I got really suspicious).

  54. @CJ Nerd – ta for that. I meant shift in philosophy from the way round that Rob was describing. The media often state these things in terms of some generating capacity – mostly gas IIRC – being there as a backup to renewables, rather than renewables being there to reduce fuel burn (which is a perfectly sensible way of looking at it), and I think that’s where Rob got his perception from. Similarly one often hears ‘x% of electricity capacity should be renewable by 20XX’. Hence Rob’s surprise at seeing things put the way around that you’re more used to.

    Since you can give an informed opinion – aside from changing how we define things like national generating capacity, does it make a practical difference whether we class renewables as fuel burn reduction or whether we count some FF as backup for renewables?

  55. The Verso Economics report “Worth a Candle” states that for every “green job” created some 3.7 jobs are lost in other parts of the economy. Similar studies in Spain have drawn similar conclusions.

    The Henry Hub price for gas in the US is about $5 per million BTU (obviously goes up and down but around there) whereas we are paying about $15 plus transport costs, so about $18 per million BTU in the contracts we have signed.

    So how come so cheap in the US ? Shale Gas is the answer. Oh and by the way we have around 200 Trillion cubic feet of it under Blackpool which Huhne is doing his best, along with his friends in the renewable sector, to piss all over.

    This gas in one field (and there are others waiting for exploration) could keep the UK in gas for decades – at least 30 years some estimates put it much longer, perhaps a century.

    So when you get your next energy bill with about 15-20% going to those dreaded windmills, dont forget to contact your MP.

  56. @ ChrisM
    NO, I mean subsidy – a payment related to the amount of electricity that they produce on top of anything they get from the electricity distribution companies.
    If they had wanted greater capital investment to enable them to build more windfarms, that would not have triggered alarm bells but an increase in payment by the government for the same of windmills when the cost of electricity generated by their competitors increased …

  57. @John77 (58)

    Re my 55:

    OK, so the Danes had two sub-systems.

    One gave them power whenever they wanted, at high incremental cost.

    The other gave them power when the wind blew, with minimal incremental cost, and was known to be intermittent.

    So when they needed the costly whenever-you-want system, it didn’t work. They paid more per kWh for as a tradeoff for its availability, but it wasn’t available,

    It wasn’t the wind subsystem that let them down- that worked as designed. It was the nuclear-plus-cable subsystem that let them down.

    Obviously if you have two sub-systems related to each other like that, it’s pretty pointless having an expensive whenever-you-want setup that doesn’t work when you want it.

    Re my 54:

    “You also need to look at the massive amount of energy needed to build and maintain a windmill”

    When I wrote “whether you can build and operate the windmills for more or less” I considered that as part of the cost, as I doubt that anyone is providing that energy for free.

    I was focusing narrowly on financial cost for the sake of clarity, but maybe I should expand somewhat.

    The whole picture is complicated by externalities and subsidies. Obviously if you need to smelt X tons of aluminium to make a turbine which in its lifetime offsets the CO2 emissions from burning Y tons of coal, then there’s a calculation to be done as to which is more damaging.

    (But remember aluminium is largely smelted by hydroelectricty, anyway, because it’s cheaper that way.)

    I do rather like our esteemed host’s way of thinking, that the whole thing should be sorted out by a Pigou/Stern tax of 80USD per ton of CO2, and the invisible hand of the market.

    “and their lifespan before they break down.
    Go out and count the number of non-functioning windmills”
    and work out whether they actually generate more power than they have consumed”

    You’re right in that I assumed, but didn’t state, the lifetimes of the turbines would match the lifetime of the coal station they were paired with. I’m not doing a business plan to take to the bank, I’m doing a back-of-the envelope illustration of how renewable and fossil fuel fit together. Over the sort of timescales these things take, it might be that you run the coal thing for 40 years and the turbines for ~20 years each before replacing them, or whatever- I would count that as part of what it costs to, as I said, “build and operate” the windmills.

    “(I hope so, but when the windies asked for a bigger subsidy
    because the price of oil had gone up I got really suspicious).”

    *BOGGLE* I didn’t know that happened. However, for receivers of subsidy to ask for more subsidy is hardly remarkable! Full marks to them for chutzpah, though.

    In my remarks above I was simplifying somewhat by treating all as an energy production business. The whole thing is, of course, massively distorted because a lot of it is actually subsidy farming.

    @MyBurningEars (60)

    The problem is that the media are largely run by innumerate arts graduates, who don’t understand what they’re reporting on. Even worse, some similar types get into the government and actually start making decisions.

    Capacity is only half the story. XX% of capacity renewable- fine. Whoopy doo. But the other half of the story is how much energy is actually produced, and without understanding both, one doesn’t have a complete picture.

    To give you a practical concrete example: I recall a story last year about an island off Scotland somewhere that had diesel generators, hydro, and wind. In about August, when the streams ran dry, they had to start using diesel for the first time that year.

    Some peoples reaction was “HA HA! They’ve got all that renewable stuff and they’re having to use fossil fuels!”

    My reaction was: “They’ve got nearly two-thirds of the year without having to pay for any diesel”.

    Did they get a good deal? Well, that depends on the details. How much did they pay for the renewable-energy plant? How much did they save by not burning diesel in the first ~7 months of the year? Given those numbers, one could work it out- perhaps on the back of a large envelope. If subsidies and externalities have to be factored in, maybe two or three large envelopes.

    But to jump up and down, as the media (and many bloggers) tend to do, when the renewable part of the system stops producing and the fossil fuel bit cuts in, is crazy. It’s comparing apples and oranges, and complaining that the oranges make crap cider.

    Now, turning to your question in your final paragraph:

    “does it make a practical difference whether we class renewables as fuel burn reduction
    or whether we count some FF as backup for renewables?”

    I’d say they’re two sides of the same coin. It strikes me that, in practical terms, it’s like asking if my left leg is there to support me while my right leg walks forward, or vice-versa.

    What I would say, though, is that the point about fuel burn reduction is something that’s widely misunderstood or not realised. That’s why you get people poo-poohing renewables on the grounds that equivalent FF backup CAPACITY is needed, as if that were a conclusive argument against it. The reduced fuel burn is the clinching argument in favour, but I suspect many of those who report or comment don’t take any account of it.

    So…
    FF as backup for renewables- BAD! BOO! HISS!
    renewables as fuel burn reduction- YAY! WE SAVE THE COST OF FUEL!
    but you can’t have one without the other- and you can’t understand the issue without understanding both.

    (Disclaimer: I don’t work in the energy industry, and wouldn’t; claim to be an expert. But I do understand the difference between power and energy, which puts me ahead of most journalists; and I do understand that input of fuel is something that can’t be disregarded, which puts me ahead of nearly all the rest!)

  58. @Rob 52, MyBurningEars 53

    Actually, there are technical implications, and on several levels. One, of course, is the international cross-connection of windfarms. The probability that there isn’t the slightest breeze anywhere in the North Sea area is pretty much nil. But that’s a rather small issue.
    A second level is buffering the power generate, e.g. through compressors – windmills compress some gas when they work and the expansion of the gas provides a much more constant source of power. While this is simply mechanical, another option exists in using the power to hydrolyse water into hydrogen and oxygen and use the hydrogen to generate methane out of CO2. When said methane is then used to power gas plants, the CO2 released by the burning process alone is simply the CO2 that went into the process before. As the Methane can simply be used like normal gas, it provides a continuous source of power.
    A third option in this vein is to use the power to drive heat pumps, which can then serve as a continuous source of energy.

    Lastly, going away from studies to available products and into electronics, solar power technology providers are already now providing inverters with a built-in battery for house-sized installations.

  59. @ C J Nerd 64
    Thanks – that’s a better, more thorough, response than any I can remember.
    However, since the average cost of nuclear power is less than half that of wind-power (according to the last advocate of wind power who lectured me on why we should finance it), your opening paragraphs do not fit with my understanding.
    Yes, the cable let them down, once – but the government had been telling everyone that the windmills and the indigenous power generators were adequate and hiding the fact that they relied on the back-up from Sweden. They had an expensive “green” system with a low-cost back-up, not vice-versa.
    Going off on a tangent, the Dutch know how to use windmills, which is for non-time-sensitive power generation, not for keeping on the lights on Christmas trees.
    On manufacturing cost – you can only attribute the CO2 from hydroelectricity if the nation producing the aluminium does not use any fossil fuel. Maybe not obvious but the use of hydroelectricity to produce aluminium displaces its use for tube trains or central heating or … so its carbon cost is that of the marginal electricity generator.
    The lifetime of windmills before breakdown is a big worry. I have seen windfarms where roughly half the turbines weren’t working. If the average lifetime of a windmill is nearer 5 years than 20, it’s going to mess up your sums.
    Now there are two points where I do jump up and down. The first is that renewables advocates like Dr Edge claim simultaneously that they reduce the need for investment in conventional power stations and that they are integrated into the system so that when the wind blows you reduce fossil fuel consumption – yeah, that “integration” means that you build the same number of fossil fuel power stations but use fewer of them when the wind blows.
    The second is the junk claim that wind power reduces coal burn – NO it reduces the use of gas, the most environmentally-friendly fuel because only the gas-powered stations can switch from stand-by to generation quickly enough to cope with the rise an fall in wind-powered generation.
    PS I’m not a total Luddite – I’ve had solar-powered water heating since a few moths after I first acquired a house with a south-facing roof. I just can read the data and do the sums. I like solar power where it’s used properly and would *love* Obama to mandate that all air-conditioning systems in the southern states were powered by solar cells on the roof.

  60. Sorry, that should read “months” not “moths” and even if Tim used spellcheck it wouldn’t help.

  61. Just as a matter of interest Tim, but have you ever had so many replies to a post before? (68 when I posted this.)

  62. @john77 and others

    I’d love to reply, but I have a commitment elsewhere this evening. I will get back to you, but not for a day ior two.

  63. Gene-
    Can’t do that-the camo netting really cuts down on the incident sunlight. And most of the heating takes place at night, anyway.

  64. In response to Tim Newman, I do seem to have touched a nerve & can only defer to his immensely greater knowledge of his own industry but I have to thank him for proving the point I’ve been trying to make all along.
    For some reason we only seem to be producing a limited number of people who can *successfully* go out & get things done. If they’re employed building windmills they’re not doing something else. That something else may not get done. If windmills are a waste of resources then it’s not simply their wages that are the cost but, to the country as a whole, the value of what they could be usefully employed upon is lost as well.

  65. No BenM, jobs are NOT an asset. Because you do not own your job, and you can’t convert yours into hard cash by selling it…

  66. For some reason we only seem to be producing a limited number of people who can *successfully* go out & get things done.

    Agreed, I agree with your overall point. An offshore wind farm industry will simply pinch people from other industries, mainly oil and gas. The 70,000 jobs to be created will not be filled by unemployed and media students.

  67. Nick Luke (43), That was quite a remarkable. You appear to be claiming I made an argument almost diametrically opposed to the one I actually made. It’s been ages since anyone did that to me in so spectacular a fashion.

    BenM (75), I know what you’re trying to say, but you’re missing the distinction between ‘jobs’ and what it is people really want. There is always an infinite supply of jobs, so long as you don’t require being paid for doing them. When people say ‘jobs’, what they really mean is a market for the product of skilled labour that can generate the wealth to pay the wages.

    In this case, the point is that electricity is electricity, and there’s only so much demand for it. There’s only so much money going for electricity at a given price. So if you’re generating the same amount of electricity, and employing a lot more people to do it, then there’s less money per person available to pay them with. Jobs without pay are not an asset.

    The way they get round this is by making people buy stuff they don’t want at the price, who therefore lose, so that you can give the money to other people in these jobs you’ve ‘created’, who gain. You effectively lower the net pay of those who are made to give, and defund all the jobs they would have created spending it, to provide a less valuable service. On average, society loses. Society in total is poorer. You destroy more jobs (in the sense of not being able to pay for them) than you create. The people in the new jobs may indeed gain – one reason why the practice is so common – but all the people paying for it lose more.

    Lower efficiency implies lower pay. The mathematics of that is inescapable. But it’s not always the ones who are less efficient who get the lower pay.

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