“Even if you take everything into account, wind energy is not expensive. Take into account the hidden costs of fossil fuels. For example, transport of coal generates more carbon dioxide emissions and no-one calculates that into the electricity price.”
Hmm, if only there was a mechanism where carbon dioxide emissions could be assigned a monetary value that could be used to calculate their “real” costs…
The transport of coal is calculated into the electricity price because coal trains don’t run on fairy dust. The Dutch say they can’t afford to subsidize windfarms at 18 cents a kilowatt hour. Electricity from coal costs about 6 cents a kilowatt hour, and that’s after the EPA has in place every cost-inflating obstacle they can get away with.
“The Economist” had a debate and the importance of subsidizing green energy last week. The Economist was for it, of course, having gone off the rails of economic sanity about 20 years ago.
No matter how England chooses to subsidize green energy, it’s still three to four times more expensive than conventional sources. The same country that is paying three to four times more per kWh for green energy can pay it directly in higher rates, or pay it in higher taxes to subsidize green energy. The only way to save money is to use the cheaper conventional sources and stay away from green energy.
But there are some other effects to subsidizing green energy. When you do, you get more green energy plants (whose electricity costs more) and that raises the total amount the country has to pay for energy. The upfront costs are incurred as each plant is built, and those costs can’t be undone. The more green installations you build, the higher your energy costs will be. You can try to shift the costs to the tax code, but the country is still having to pay more.
If the increased costs reduce energy consumption, the same green energy policies causing the problem will also require that the cheaper, conventional plants be the ones taken offline, worsening the problem.
Then the secondary effects hit, as energy-intensive industries like steel, aluminum, glass, concrete, and brick production close down in the face of Chinse coal-fired competition, whose energy costs are going to be a third those in the green countries. Not only does cause massive economic damage directly, but it hands the Chinese nearly monopoly status on construction materials, and they’ll be sure to charge whatever the market will bear in the short term, and charge only slightly less than green-energy pricing in the long term, so as not to let an renewed competition take hold.
The tertiary effects will be reduced employment, reduced construction, aging infrastructure, aging housing, fewer business start-ups of any kind (because the costs of constructing a building just skyrocketed), and a vastly worse trade imbalance. CO2 emissions would perhaps even increase, because all of the bricks, steel, and concrete used in remaining construction will be getting shipped halfway around the world instead of made locally, and ships don’t run on fairy dust either.
You make some good points. Subsidizies are spread across all taxpayers. They encourage more “green” energy plants to be built but the electricity prices are kept artifically low. The low energy prices do nothing to discourage consumption so the demand for energy keeps rising. If they phased out the subsidizies over time and made up the difference in rising electricity costs, people and companies could make changes to reduce their consumption.
The problem with almost all forms of “green” enegy is that they’re too unreliable to provide base power. For that, you’ll always need things like nuclear or coal powered plants that produce steady energy 24/7. One of the problems here in the US is that in most places, the wind is highly variable. When the wind is blowing strong, windmills can produce quite a bit of electricity. However, much of the time, the wind isn’t blowing strong enough or steady enough, so you need variable sources of power to even things out. For that, probably the best technology uses gas turbines. Even solar power can be variable when cloud shadows pass over the arrays. Gas turbines tend to be more expensive to operate (but cleaner) than coal powered plants, so having to build a lot of them in addition to the “green” windfarms and solar arrays just drives up costs all the more.
That’s great, but the post immediately previous about Dennis Gartman’s response to a reporter on income inequality was better.
God Bless Income Disparity
Gartman was brilliant!
Hmm, if only there was a mechanism where carbon dioxide emissions could be assigned a monetary value that could be used to calculate their “real” costs…
The transport of coal is calculated into the electricity price because coal trains don’t run on fairy dust. The Dutch say they can’t afford to subsidize windfarms at 18 cents a kilowatt hour. Electricity from coal costs about 6 cents a kilowatt hour, and that’s after the EPA has in place every cost-inflating obstacle they can get away with.
“The Economist” had a debate and the importance of subsidizing green energy last week. The Economist was for it, of course, having gone off the rails of economic sanity about 20 years ago.
No matter how England chooses to subsidize green energy, it’s still three to four times more expensive than conventional sources. The same country that is paying three to four times more per kWh for green energy can pay it directly in higher rates, or pay it in higher taxes to subsidize green energy. The only way to save money is to use the cheaper conventional sources and stay away from green energy.
But there are some other effects to subsidizing green energy. When you do, you get more green energy plants (whose electricity costs more) and that raises the total amount the country has to pay for energy. The upfront costs are incurred as each plant is built, and those costs can’t be undone. The more green installations you build, the higher your energy costs will be. You can try to shift the costs to the tax code, but the country is still having to pay more.
If the increased costs reduce energy consumption, the same green energy policies causing the problem will also require that the cheaper, conventional plants be the ones taken offline, worsening the problem.
Then the secondary effects hit, as energy-intensive industries like steel, aluminum, glass, concrete, and brick production close down in the face of Chinse coal-fired competition, whose energy costs are going to be a third those in the green countries. Not only does cause massive economic damage directly, but it hands the Chinese nearly monopoly status on construction materials, and they’ll be sure to charge whatever the market will bear in the short term, and charge only slightly less than green-energy pricing in the long term, so as not to let an renewed competition take hold.
The tertiary effects will be reduced employment, reduced construction, aging infrastructure, aging housing, fewer business start-ups of any kind (because the costs of constructing a building just skyrocketed), and a vastly worse trade imbalance. CO2 emissions would perhaps even increase, because all of the bricks, steel, and concrete used in remaining construction will be getting shipped halfway around the world instead of made locally, and ships don’t run on fairy dust either.
You make some good points. Subsidizies are spread across all taxpayers. They encourage more “green” energy plants to be built but the electricity prices are kept artifically low. The low energy prices do nothing to discourage consumption so the demand for energy keeps rising. If they phased out the subsidizies over time and made up the difference in rising electricity costs, people and companies could make changes to reduce their consumption.
The problem with almost all forms of “green” enegy is that they’re too unreliable to provide base power. For that, you’ll always need things like nuclear or coal powered plants that produce steady energy 24/7. One of the problems here in the US is that in most places, the wind is highly variable. When the wind is blowing strong, windmills can produce quite a bit of electricity. However, much of the time, the wind isn’t blowing strong enough or steady enough, so you need variable sources of power to even things out. For that, probably the best technology uses gas turbines. Even solar power can be variable when cloud shadows pass over the arrays. Gas turbines tend to be more expensive to operate (but cleaner) than coal powered plants, so having to build a lot of them in addition to the “green” windfarms and solar arrays just drives up costs all the more.