One excellent economist reviewing another

Here.

Paul Krugman reviews William Nordhaus on climate change.

Can’t really see anything that I disagree with: but then that’s because my views on the subject have been formed by having read Nordhaus in the first place. As Krugman notes, it really is all Econ 101. Carbon tax or cap and trade and we’re done.

The one area where I do disagree (not so much with this piece, but with the generally held views) is that I think that it’s all going to cost a great deal less to deal with than people think. Assuming one thing: that we try to do this over 30-50 years, not in a decade. There’s nothing I could point to to prove this, it’s just a side effect of my being rather Julian Simonesque about technological advance. Added to a bit of my worm’s eye view of the renewables business through the lens of the weird metals used to build such renewables.

I really do think that we’re not that far away from renewables which are cheaper than coal fired ‘leccie. And at that point the whole damn problem simply goes away. For we’ll naturally and happily install these new cheaper energy sources and drop the older more expensive ones.

As I say, I cannot prove this although I could put forward some pretty decent arguments at length*.

I end up thinking that it’s all going to turn out like Y2k. We’ll have done vast amounts of expensive things for no good reason.

(* OK, not at length, apply the same cost curve to 40% efficient multi-junction solar cells and solid oxide fuel cells as has happened to silicon PV over the past 30 years and we’re there, with electrolysis of water for H2 as the storage method. Done and dusted.)

16 thoughts on “One excellent economist reviewing another”

  1. I think your basic error here, and that of famous economists all, is looking at this as if it was an economic issue, or a power generation issue, or even a technology issue. You need to look at the politics.
    The current situation of taxing the hell out of fossil fuels to subsidise renewables suits the politicians just fine. There’s a great river of money flowing past them, which they can dip their beaks in to their hearts content. The last thing they need is economically viable solar that is truly competitive with coal/gas. The river runs dry. So, some way, they have to close the door that leads to cheap, distributed solar power generation & usage. To the political class, it’d be a disaster.
    Watch this space.

  2. Firstly, no politician* could keep the discovery of cheap, clean energy quiet.

    Secondly, sure they would lose the tax from one place but they would either add it to the new renewables under the pretext of needing the cash to pay for essential goods and services (and there will be plenty of political support for that), or they would just leave more money in our pockets, which we spend, which gets taxed. Not so much support for that, sadly.

    *Assuming we don’t go all North Korea, which is I suppose a distant possibility.

  3. I do not know how well designed green measures we are currently paying for in our energy bills are, but suppose you are somebody who thinks the government ought to be doing something about climate change, which rather suggests you think governments are capable of reasonably well designed green measures, and you are a left-winger who has been making a noise about energy poverty … how pleased are you that the government is going to try to cut energy bills by cutting funding for green investment?

  4. Grrr. That misconception again.

    Y2K was not a problem *because* we spent so much on it. The legacy system I was working on at the time would have gone down in flames if we hadn’t fixed it the year before. It *did* actually fall over due to the 2000 leap year/not a leap year thing two months later, because we didn’t apply the same diligence to that little nugget.

    It’s like saying that vaccinations are a waste of money because nobody’s getting sick…

  5. A couple of points come to mind…

    First, just because all the computer models that are used to “justify” all the hype about CO2 are based upon the presumption (not fact) that all warming is caused by the stuff, doesn’t necessarily mean that it’s true. As an old-fashioned empirical physicist I’d suggest that as global temps haven’t budged for the last 17 years despite the steady increase of atmospheric CO2, that this hypothesis is on very shaky ground. I’m sure that little Willie ConnollEy will be along in a minute to tell me I’m a drivelling idiot and not a “climate scientist” (to quote Prof John Brignell, putting “climate” before “scientist” is the same as putting “witch” before “doctor”) but as he’s just a jumped-up code-jockey I’ll not be too offended.

    Second.. In your proposed PV -> H2 electrolysis and storage scenario… I’ve taken a close look at one or two of the existing systems. Electrolysis is about 65% efficient when producing H2 – which is a nasty beast to store as a gas and needs a lot of energy to cool and liquify it, and then it’s still a nasty beast. Some H2 can be mixed into the gas network, but it can only be about 2% by volume as hydrogen, because it’s a tiny atom, goes through many substances, like gas seals for instance, as if they’re not there. The alternative is to convert H2 to methane, which can be mixed safely into the gas network. However, this process is less than 60% efficient. To get the original electricty back you have to burn the gas and even the best CCGT sets are only arounf 60% efficient… So, from your nice solar PV system you’re going to recover 60% of perhaps 60% of 65%, which, if the envelope doesn’t lie, is at best 23.4% – not exactly cost-effective unless the PV system is producing at virtually zero cost.

    That’s the problem with academic economists – they forget about engineering limitations.

  6. Re the efficiency…..an H2 economy would have to be local for the efficiency reasons you mention. We’d be talking about storing a few days worth locally, not using the gas network. And the conversion back, CHP through solid oxide fuel cells, perhaps 75, 80%.

    And I have pointed this out a number of times before. Even a system as inefficient as you’ve mapped out would still be delightful if those solar cells are cheap enough. And I don’t really see any reason why they won’t become so.

  7. That’s the problem with academic economists – they forget about engineering limitations.

    please read first two para of Krugman review.

  8. Hur, hur

    I hope you’ve read Niall Ferguson’s essay on Paul Krugman. It is side-splitting in its invective.

    I guess that this is a good example of what old Niall is on about.

    Comments about “stabilizing temperature rise” are egregious unscientific claptrap. It is based on the fiction of a global “average temperature” and treats the climate as if it were a tap, it also completely fails to acknowledge how CO2 absorbs radiation. Why do we want to stabilise the temperature anyway? What is the optimum ?

    Y2K was a clear and present (albeit overhyped) danger. This global warming nonsense is just overhyped. We have literally no idea what is good or what is bad with the climate, because we only have 2-300 years of empirical observations of a chaotic and unpredictable system that has oscillations within oscillations.

    Krugman, Nordhaus, Stern etc etc are talking crap and you should have more sense than to listen to them.

  9. @Louis.. Review, para 2:- The resource and engineering data for Nordhaus’s paper were for the most part compiled by his research assistant, a twenty-year-old undergraduate, who spent long hours immured in Yale’s Geology Library, poring over Bureau of Mines circulars and the like. It was an invaluable apprenticeship.

    A 20 year old, presumably, economics undergrad is NOT an engineer or scientist, therefore I think my criticism is not just valid but reinforced.

    @Tim… A couple of days’ energy, in the form of hydrogen under pressure is dangerous in the quantites necessary to supply a reasonable size locality, it leaks like hell for a start and does all sorts of unpleasant things to the containment vessels. If you’re going to espouse llocal generation personally I’d rather have nuclear submarine style plants, at least they wouldn’t grind to a halt in midwinter after a string of dark and cloudy days. Solar PV really is a ludicrous idea for northern Europe.

  10. I don’t think the great leap forward will come from more efficient energy collection, more from more efficient energy storage and distribution. Some kind of revolutionary “battery” will be the renewable energy messiah because the basic problem is that the energy source is not “turn off and on -able”.

    Fossil fuel rules because it can be controlled easily, an efficiency advantage that trumps everything. Once renewables gain the same functionality, then the game changes.

  11. ”I think your basic error here, and that of famous economists all, is looking at this as if it was an economic issue, or a power generation issue, or even a technology issue. You need to look at the politics.”

    Spot on, bloke in spain. I think our host knows this but can’t bring himself to admit it due to his warm and fuzzy feelings about the economic logic of a carbon tax.

    For another brand of economic logic (about which he is less warm and fuzzy),

    https://www.timworstall.com/2012/05/06/why-keynesianism-doesnt-work-part-dxiv/

    Tim is able to state the obvious:

    “Quite: it’s the politics of Keynesianism that clearly does not work. Doesn’t in fact matter whether it actually works as economics, the incentives to politicians mean that it never will work in practice.”

    Why Tim thinks that a tax on our entire civilisation, which is what a tax on its energy source is, will not be abused by politicians (and friends) is something he needs to explain.

    Statist leftie liars and cheats like Paul Krugman and Al Gore are desperate to bring in a global carbon tax. Tim should feel uncomfortable in such company.

  12. The answer’s quite simple. By supporting the economically correct carbon tax, as floated by Nordhaus, Stern etc, then I have a very strong argument against all of the other damn tomfoolery that politicians are actually doing.

  13. May I second the comment from InfoholicUK about Y2K.
    I was a developer team lead at the time, working on a live Telco Customer Care and Billing System. It had code up to 20 years old, and would have completely fallen apart without the large project to make it work from 01/01/2000.
    The myth that Y2K wasn’t a real problem has grown because the IT industry did a very good job of fixing it. I don’t need gratitude; I got paid. But I take huge exception to the suggestion that it was a non-problem.

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