Chris Huhne really is a liar, isn’t he?

A convicted one even:

If you were told that your house was virtually certain to burn down, you would think that an insurance premium costing 2% of your income in 2050 – Lord Stern’s economic estimate of the cost of sorting carbon emissions – looked like a steal.

I can’t speak for everyone else and we’ll ignore the specifics of how that number was reached. But 2% does sound OK: the problem is that you fuckers are spending vastly more than that.

For example:

Solar panels are a quarter of their cost in 2008. Industry estimates suggests that solar will be cheaper (without subsidy) than other ways of generating electricity almost everywhere by 2020, and onshore wind even earlier.

That’s the perfect argument for not subsidising the damn things now but for waiting until 2020 and people will then install them unsubsidised. So, why are you pissing away our money on them now?

24 comments on “Chris Huhne really is a liar, isn’t he?

  1. “If you were told that your house was virtually certain to burn down, you would think that an insurance premium costing 2% of your income in 2050 – Lord Stern’s economic estimate of the cost of sorting carbon emissions – looked like a steal.”

    If it was the insurance company telling me that my house was certain to burn down unless I took out insurance with them then I wouldn’t attach any credence to their words.

  2. Another argument is that if they will be profitable in 2020, then why are we subsidising them now? Won’t industry be falling over themselves to invest even without subsidies in this new tech that is guaranteed to return profits in the near future. All other tech is a lot more speculative in it’s profitability.

  3. “If it was the insurance company telling me that my house was certain to burn down unless I took out insurance with them then I wouldn’t attach any credence to their words.”

    I would. Sounds a lot like Sicilian Fire & Life Mutual to me.

    Not saying I’d want to imply criminal behavior to any politicians, of course..

  4. On the point about the insurance for your home burning down, its based on 98% of firemen telling you that you house will burn down, not on the actual risk of your house burning down.

  5. If an insurance salesman told me my house was almost certain to burn down but he would insure it for 2% (say £4,000) I would doubt the honesty of the salesman. That or find out if he had a criminal record and had been involved in running a protection racket.

    But since its Chris Huhne (& government is a protection racket) I already know.

  6. It’s a dreadful analogy.

    If there’s a 98% chance of your house burning down tomorrow, nobody is going to offer a 2% insurance premium. Instead you have to mitigate the risk: perhaps stop smoking in the house, get your gas boiler inspected by the queen’s dogs, or throw out your collection of vintage matchboxes.

    But the analogy fails further: it’s not a 98% chance of your house burning down tomorrow, but rather of individual rooms slowly crisping up, year by year. For 2% a year you can prevent that crisping; but you might well decide that you’d rather wait and see how bad it is first. Equally you might find that you can adapt to having slightly singed rooms, especially between now and 2050.

    Finally, you might decide that since you’ll be dead by 2050 anyway, you don’t care too much what happens to your house. That’s a perfectly rational (if somewhat selfish) view; and it aligns well with the political preferences of older voters.

  7. Surely the assertion about onshore wind is another lie.

    It will only ever be competitive without subsidy if you load up the price of the alternatives with extra taxes (ie a sort of anti-subsidy for the competition) AND if you assume that it produces the same sort of product – which, due to all the limitations we know about, it does not.

    So we can toss that statement on the pile too, I think.

  8. The 2% p.a. figure makes no sense in the absence of a discount rate. It only makes sense to pay it if the PV of a 2% 37 year annuity is less than or equal to the PV of whatever asset you’re insuring is.

    Conflating this single datum of a large typhoon with climate change (or whatever the term du jour is) is the mark of a scoundrel. Given this is the vile Huhne writing, that’s a pleonasm.

  9. The point is that the cost will come down in the future _if we invest in it_, but that it’s not in the interests of any one actor to invest that much in something that’s not profitable now. Therefore the state needs to support/create the market until it is self-supporting, by subdising it until that point. And then it can get out of the way.

  10. Andrew Drucker,

    Why is the unprofitable solar industry unable to find private investment, whereas unprofitable Twitter has no such problems?

    If the UK government stopped subsidies, would the Germans and others follow suit?

  11. @Andrew Ducker
    Are you sure the word invest is what you mean, rather than spend? At what point in the future will the value created by solar exceed the amount you’re advocating being spent now on introducing it?

  12. Incidentally, the above is a serious question, not just making a debating point. The expected service life to degrading of current solar panels isn’t much past a decade. For it to be an ‘investment’ they’d have to get profitable awfully fast or it really would make sense to wait for later generation kit.

  13. Rob is right as far as he goes. Stern said 2% of GDP – but that will be a far greater proportion of the amount available for investment to grow the economy, so economic growth will be only half or two-thirds as fast and we’re looking at a reduction of one-quarter to one-third of the size of the economy in 2050.
    So Huhne should be saying 2% of your income this year, 2.1% next year, … and 25% of your income in 2050.
    Doesn’t look quite such a steal now, does it? Bit more than the cost of your house.

  14. Appropos Bloke in Spain’s question about investment, if the government wants to invest tax-payer’s money into new technologies, why don’t they take equity in these companies?

    I’m not particularly keen on government’s taking in the role of venture capitalists, but it seems preferable to just giving away money.

  15. @ Andrew Ducker
    Fortunately your analysis fails to coincide with observed facts.
    The “Seven Sisters” aka the incomprehensibly evil oil companies were investing in developing solar and windpower more than a decade ago before Chris Huhne jumped on the bandwagon. BP was proud of providing villages in the Philippines that were many miles away from the grid with solar power systems.
    They’ve given up because government subsidies to favoured competitors has made the prospect of getting a return after the many years while they have funded research in a business segment that was not even expected to make a profit before 2012 has disappeared. [that date isn’t nonsense – they had predicted selling some stuff at a profit by which they could have done if they hadn’t had subsidised competitors]

  16. Blimy, lot’s of people here arguing for what?

    The government is “investing” in this technology, as ducker said, to make it so that at some point it will become competative with other forms of energy.

    It’s not investing it to make any financial return for itself, just to foster this technology for the future, so as to provide low carbon power.

    There is no buisiness case for for anyone to invest, there are no returns to be made, that’s why the government “invests”, they are not making a buisiness case, this is all about fostering low carbon tech.

    I thought it was self evidend that the cost projections are based upon said government “investments”.

    By all means, argue that it’s a load of bollux to do so, argue that we should leave it to other countries to “invest”, but at least argue about what is actually happening, rather than getting hung up on the word “investment” and acting like a load of silly beancounters.

  17. @fake
    Investing in solar power technology might make perfect sense. But in what sense is subsidising the installation of loss making solar power installations an investment? Better to direct the resources to actual development of viable solar kit. Then be able to install the kit without needing subsidy. There’s no need to fund enormous solar farms to provide proof of principle. We already know how source of power structures work from experience with other sources of power.

  18. A simile.
    It’s a bit like trying to bootstrap a mechanised road transport network in the mid 19th century using steam carriages. You’d end up with lots of coaling stations, water towers, very tall overpasses & be looking somewhat silly when the internal combustion engine comes along.

  19. @ fake
    In the absence of government subsidies there *was* a business case to invest in developing technologies. Go away and try reading BP’s, Shell’s – even Texaco’s R&A from the early noughties.
    You might even like to think occasionally about points based on hard facts others have made before categorically stating they are wrong

  20. Pay attention.

    I’m not defending what the government did/doing.

    I’m simply pointing out many of you (not all), are fighting the wrong battle.

  21. Pingback: Yes, Let’s All Become 18th Century Peasant Farmers! | Orphans of Liberty

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