The most important investment that we aren’t making to mitigate the climate crisis

Another crisp piece from Steve Kirsch on HuffPo that I’d like to reproduce on BNC, for completeness. (For his other posts on the IFR, click here).

If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose.

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The US is making a huge mistake in the way we are dealing with global warming. Instead of following the old adage, “an ounce of prevention is worth a pound of cure,” we are doing the opposite: committing massive dollars for mitigation strategies while at the same time refusing to build the most promising new clean base-load power generation technologies developed by our nation’s top energy scientists.

The International Energy Agency tells us that every year of delay in action to tackle global warming costs $500 billion.

So what are doing about it?

U.S. Secretary of State Hillary Clinton announced that the U.S. would join others in securing a $100 billion annual fund by 2020 to help developing countries cope with climate change.

Pouring money into token mitigation strategies is a non-sustainable way to deal with climate change. That number will keep rising and rising every year without bound.

The most effective way to deal with climate change is to seriously reduce our carbon emissions. We’ll never get the enormous emission reductions we need by treaty. Been there, done that. It’s not going to happen.

If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose.

We don’t have to look very far to find the best area to invest in. Nuclear is the elephant of clean power technologies. It’s also very efficient in terms of the natural resources that are required to construct these power plants (less than a tenth of what it takes for the same amount of energy from renewables).

But this isn’t necessarily about nuclear. Perhaps there are other areas that I don’t know about that are also viable. The main point is this: We need to be investing billions of dollars right now in perfecting and cost reducing any technology that we know about today that has the potential to generate reliable baseload electric power at any site in the world at a cost less than a coal plant.

In the opinion of the energy experts I know, the Integral Fast Reactor (IFR) would be on anyone’s “short list” of technologies that for sure we’d want to invest in now for the long term. The Gen IV International Forum (an independent international group of nuclear experts) did an extensive study of all nuclear designs and rated the IFR the best nuclear design overall. GE-Hitachi has all the plans completed is ready to build the needed commercial-scale demonstration. Unlike conventional nuclear, IFRs can replace the burner in a coal plant, making it very cost effective to switch to the lower cost, clean alternative. The fuel to run these plants for thousands of years has already been mined and is just sitting there collecting dust. We solve our nuclear waste problem at the same time. What could be better than that?

The fact that we aren’t investing even a nickel to prove the IFR is the “canary in the coal mine.” It’s telling me that our current strategy is defective.

It makes no sense to commit $100 billion every year to mitigate the effects of climate change while at the same time refuse to invest even a nickel in one of the most promising technologies (developed at our own national labs by our nation’s smartest energy experts) that could prevent the problem from getting any worse.

The billions we invest in R&D now in building a clean and cheaper alternative to coal power will pay off in spades later.We have a really great option now — the IFR is on the verge of commercial readiness — and potential competitors such as the Liquid Fluoride Thorium Reactor (LFTR) are in the wings. But the US government isn’t investing in developing any of these breakthrough new base-load power generation technologies. Not a single one.

We are investing in third-generation nuclear which is a good short-term strategy.

But completely ignoring fourth generation nuclear (such as the IFR), is a very bad idea. Fourth generation reactors are over 100 times more efficient than existing reactors, they generate little waste, consume existing nuclear waste for fuel, and can help bring the spread of nuclear weapons under control.

We cannot be leaders in clean power by leaving our best technology on the shelf.

We need to move the world off of coal as soon as possible. Copenhagen has proven yet again that agreements to reduce emission won’t work. Therefore, an economic solution is the only option left. The best way to develop a cheaper alternative to coal is to place a few big strategic bets now on our best technologies that can do that. We have no time to waste.

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108 Comments

  1. Two very clear points:

    * must make the alternatives for electric
    * power generation cheaper than coal

    The simplest way to do this is to tax coal. A cartel of coal producing countries perhaps?

    * The fact that we aren’t investing even a nickel to prove
    * the IFR is the “canary in the coal mine.” It’s telling me
    * that our current strategy is defective

    What this says to me is that the hard heads are not sold on the alarmist end of AGW. But, sooner or later, increasing our contribution to the carbon cycle up through 5% and, presumably, onto 10%, and then 15%, and… will eventually ?inevitably cause problems. Is it just a matter of the democratic unpopularity of things nuclear?

  2. Steve, I do not take the Gen IV International Forum ratings to seriously, especially if it was based on information that came from the US Department of Energy. The United States Department of Energy still appears to be attempting to justify the killing off of the MSR in the 1970′s and still evaluates MSR technology using an inaccurate report that was generated in 1972. The gist of that report was still the MSR should not be developed, because it needed to be developed. The same report, written seven years before Three Mile Island suggested that Light Water Reactor technology was mater. The same report also suggested that the LMFBR was a mature technology. In fact the US AEC and the Department of Energy spent $25 billion on LMFBR development, without producing a single commercial prototype. In contrast, a detailed report from ORNL estimated that required developments for the MSR would run to 2.5 billion 2009 dollars. ORNL spent all in all under 1 billion 2009 dollars on MSR development.

    It is an open question how much more IFR development will cost, and given the lack of public discussion by the IFR community of potential problems to be faced it is not at all clear that the IFR can be brought to commercial status at a lower cost than the LFTR can be. It is very doubtful, given the state of what we now know, that the IFR would be cost competitive with factory produced LFTRs. Given the limited availability of fissionable material, the ability to rapidly scale up IFR production is open to question.

    The IFR was designed as a plutonium burner, not a plutonium breeder. The IFR core will have to be redesigned to increase plutonium breeding rates. In addition the Indians have determined that fast reactor performance is enhanced by including thorium in the core. Currently GE-Hitachi is investigating the use of thorium in the IFR core. If that decision is made, even more R&D would have to be conducted before the IFR reaches commercial production.

    I have other comments, but they are better stated in private.

  3. Look what we need to break is the political influence Big Carbon has in every capitol in the world. One that is done, every other thing will fall into place, but as long as the own large portions of the wold’s governments it will be business as usual.

    The only tool we have is to frighten politicians by threatening to take their jobs from them in elections, we just don’t have anything else available as leverage. It is going to take a grassroots movement to push for nuclear energy so loudly that they cannot be ignored.

  4. Small centrally mass produced third generation nuclear reactors are going to dramatically lower the capital cost of nuclear plants. Small offshore floating nuclear reactors from Russia are probably going to be the first small reactors to enter the third world markets to produce electricity, freshwater from seawater, and possibly even carbon neutral synfuels using off peak hydrogen production and waste CO2 from biowaste power plants (the type of power plants that every nation on Earth should be utilizing).

    If the uranium from spent fuel was re-enriched and recycled into LWRs and the plutonium from spent fuel was utilized in small CANDU reactors, then the amount of residual nuclear waste (already extremely tiny) would be dramatically reduced and the uranium fuel demand would probably be reduced by 70%.

  5. There is a big assumption here- that it is technically possible to make alternatives (such as nuclear) cheaper than coal-fired power, absent pricing emissions.

    Like I said – a big assumption!

    Most of the cost of a coal-fired power station is apparently in the steam turbine and the generator, not the bit that burns the coal. It’s going to be very hard to build an alternative heat source that’s cheaper than that. So, particularly in places like Victoria where the power stations are built pretty much on top of coal mines and the coal is available for the cost of digging it up and crushing it, coal is going to be hard to undercut unless you’re pricing in the cost of the emissions one way or another.

    The second thing to note is that nuclear power will always have a higher regulatory burden than the alternatives, which makes it costlier.

  6. “There is a big assumption here- that it is technically possible to make alternatives (such as nuclear) cheaper than coal-fired power, absent pricing emissions.

    Like I said – a big assumption!

    The cost of a reactor is not any more than the cost of a contemporary coal fired supercritical steam generators. The level of sophistication is in many cases lower. In fact a nuclear plants costs need be no more those of any thermal power plant if it wasn’t for the extremes in licensing and the cost of the inevitable barratry that attend every nuclear project.

  7. None of the elected governments will ever do anything to tackle AGW seriously – since tackling AGW will involve giving up business as usual.

    Humans are incapable of tackling long term serious risks.

    I just hope peak oil will aid in reducing emissions … like it did in 2009.

  8. This isn’t meant to be a cost effective solution for combating climate change. It’s meant to create jobs while this administration is in office. Nuclear just doesn’t create enough jobs and the US government probably isn’t as concerned about decreasing CO2 emissions as they publicly say they are.

  9. @ Gordon,
    http://bravenewclimate.com/2010/01/02/investment-we-arent-making/#comment-41499

    on January 3rd, 2010 at 0.07 Said:

    Question: Why should we believe the International Energy Agency?

    The IEA said in their Nov 2008 report the production of crude oil from the 800 largest conventional fields (a pretty good proxy for all conventional crude i.e. 6/7 of all oil production) can be expected to fall at a rate of 6.7%pa from that date on.

    Is this what you question? Maybe you should look up what Jeffrey Brown has to say about the consequences of this, in his Export Land Model – the exporting nations of the world will cease exporting crude within 10 years.

    What do you think will happen then? I predict an adoption of the Hirsch Report strategems, chiefly the coal-to-liquid and gas-to-liquid approaches, along with all-out efforts to ramp up production of oil from unconventional sources i.e. tar-sands.

    The environmental destruction, including massive increase in CO2 emissions, will be widespread, expensive, and probably terminal for the possibility that our current climate can continue – we will have what James Lovelock predicts – a 5C jump, soon enough for those under 50 to see in the remains of their lifetimes a revocation of life as it was during the Holocene, with extinction of species such that it will not be possible to retrieve the ecology we depend on.

    It makes me sick to see people actually state otherwise, who I’m sure cannot possibly hold a candle to the capability of those who make these predictions. Let alone the unbelievably reckless disregard for the precautionary principle contained in refusing to see the obvious application of basic risk management involved – a serious risk requires taking serious caution.

    As far as I can see, for all possible reasons, including those given by the IEA, we must implement a full-scale nuclear development and implementation program, immediately. Anything less is wanton disregard for the future of humanity and our role as the main affectors of the total environment and ecology of this planet earth.

  10. Steve says:

    If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose.

    I agree. We must focus on reducing the cost of the low emissions generators, not on raising the cost of the high emissions generators. Raising the cost of energy will be fought at every election in every democratic country for ever.

    What can be achieved with regard to costs? Consider:

    1. Nuclear: Korea has just contracted to build four 1350 GW reactors for UAE for US$20 billion. That is US$3800/kW. But that is for first of a kind in UAE, first of a kind export from Korea, first of a kind power plants (none have been commissioned yet in Korea). It is reasonable to expect a significant cost reduction as experience grows. Could US$2000/kW be achieved within a decade?

    2. Coal: Current cost for new coal without carbon capture and storage in Australia is A$2450/kW (Black coal unltra super critical) and A$2700kW (Brown coal unltra super critical).

    3. Solar Thermal: US$8000/kW projected by 2025

    4. Wind: Current average is A$2611/kW. To that we must add back up generators at A$1175/kW and extra transmission at $1000/kW for a total of A$4786/kW

    Wind and solar are out of the question; they will be dropped once the public gets to understand how it have been misled. The task is clearly to get the cost of electricity from nuclear to be less than coal. To achieve this in Australia the main emphasis needs to be on the social engineering, not the technical. We need:

    1 Education facilities in every state

    2 A national body that is chartered to implement nuclear energy in Australia with the goal of providing electricity at least cost and with acceptable safety.

    The question of acceptable safety is where the social engineering is needed. The community needs to address the fundamental question: why do we need far higher safety standards for nuclear energy than for other industries? What is the cost and benefit of trying to reduce risks for nuclear to far below what we accept for other industrial plants?

  11. I wanted to respond to Peter’s supposition/question here:

    1. Nuclear: Korea has just contracted to build four 1350 GW reactors for UAE for US$20 billion. That is US$3800/kW. But that is for first of a kind in UAE, first of a kind export from Korea, first of a kind power plants (none have been commissioned yet in Korea). It is reasonable to expect a significant cost reduction as experience grows. Could US$2000/kW be achieved within a decade?

    First, as Dan Yurman pointed out on his blog, this is a real ‘total’ turn-key price, including all Balance of Plant costs. Everywhere else most of the BOP is not included so this price is VERY cheap. It is actually MORE than what the Koreans expect to build IN Korea but I suspect transportation and training from Korean to English to Arabic is going to be a major cost at every level.

    Secondly, and more importantly, to answer the issue of lowering of costs over time: I say absolutely. Most of us only think in terms of inflationary aspect of new builds given US and general world history. But if we pay attention to the actual standardized reactor design and new modular builds for that same standard component manufacturing and assembly, I would BET costs come down for not just the APR-1400 from the ROK but also the AP1000 as the learning curve at every level gets better and better. For once costs CAN come down for nuclear because of Gen III.

    I’ve noted on blogs all over the place that the antis are deathly afraid of this. This is why the only time “they” ever talk about the AP1000 or other deisgns is he ONE unit they like to point to: FPL’s proposal for a two unit plant in south Florida which is up to 14 billion or more. Why? Because it’s the most expensive. They don’t look world wide, they dont’ even look to other cheaper US proposals.

    The UAE, China, Japan and India are scarring the crap out of NIRS and the Greenpeace types because as the new Chinese units come on line, pro-nuclear advocates will have a new slogan:
    “¡Sî Se Puede!”

    -DW

  12. More thinking on why we have to decarbonise regardless is in this Richard Heinberg essay http://www.energybulletin.net/node/51112 The article suggests that all fossil fuels (coal, oil, gas, tar sands) will run far short of energy demand within a generation. Interestingly Australia will be unable to meet China’s looming coal deficit.

    With or without climate constraints the world is heading to an energy supply cliff within 20 years . I suggest during that time politicians will spend much of the available funds on wars and vote buying not installing adequate amounts of low carbon energy. Urgency and lack of cash will rule out high cost options.

  13. In the USA the EPA is in the process of killing off coal. The emission control requirements for reliciensing are sufficiently onerous that coal burners are (largely but not entirely) going to be shut down or else turned into wood burners.

    Natgas does not face such burdens.

  14. There are obviously two ways of making alternatives to coal cheaper — one way involves making coal more expensive and the other is to provide some sort of subsidy that exceeds the value of the environmental externality (subsidy) that freedom to pollute amounts to.

    It seems obvious that matching an undesirable subsidy with a countercyclical subsidy is going to be less efficient than simply removing the undesired subsidy by forcing the people using it to fully internalise the costs including the longterm risks.

    I don’t agree that you will never get people to accept paying more for energy in real terms. Once upon a time in Australia, the idea of making people pay for phone calls by timed charging was a radical idea that nobody would have proposed for fear of being howled down. Now, even though landlines for local calls are still untimed, most people have at least one mobile phone which times calls.

    It’s the same with water. Slowly, real increases in the price of water usage are being forced through and people are accepting it, because we know it’s scarce stuff.

    What the politicans have top do is to show people the costs to them of allowing pollution to be free, so that they aren’t allowed to think that somehow they are paying less for energy now. In the end, you always pay. All that matters is who, how, when and with what currency. The currency with which we are currently subsidising coal burning is short term human health and longterm life chances. We are saying that we are willing to reduce the usefulness of future coastal property. We are saying that diminishing the health of the oceans is a price worth paying so that we can save a few dollars today running our plasma TVs and SUVs. We are accepting long term debt to have immediate consumption. By offering another subsidy, Steve Kirsch proposes adding a further debt burden merely so we can keep subsidising people who are curently profiting from our current patterns of consumption.

    That’s just potty. It’s perfectly simple. We should say .. nope, we don’t want to store your coal and petroleum waste in our bodies and in our food sources even if you’re willing to give us a discount. We are willing if it comes to that to pay more so that we can have clean air and healthy food. We’d also like to hang onto our port infrastructure and keep coastal land available for human use and we like the idea of the seas continuing to support biodiversity and if that means paying a bit more now, so be it. We want our offspring to live at least as well as we do, which is why we also give up other comforts on that basis.

  15. Lawrence: The question I posed was “can we trust the IEA’s calculations of $500 bn for each year of delay?”. If, as you state that in the IEA’s Nov 08 report that we have hit peak oil – then I think the answer to my question is NO.

  16. Hi Ewen,

    You say

    There are obviously two ways of making alternatives to coal cheaper — one way involves making coal more expensive and the other is to provide some sort of subsidy that exceeds the value of the environmental externality (subsidy) that freedom to pollute amounts to.

    There is a third way. Remove the blocks that are making nuclear more expensive than coal. Allow a genuine level playing field so that nuclear can compete with coal and gas on an equal footing

    You say: “I don’t agree that you will never get people to accept paying more for energy in real terms.”

    I understand the point you are making with this statement and your supporting points. However, we need to look beyond the developed world and beyond the current consumers of electricity. The massive growth for electricity over the next 50 years or so will be in the developing nations and from electricity displacing natural gas for heat in stationary energy and electricity displacing oil for land transport (either directly in electric vehicles or through synthetic fuels produced using electrcity).

    If we can get the cost of non-fossil electricity below the cost of fossil electricity then clean electricity will be built more quickly in the developing countries and will more quickly displace oil in the developed countries.

    The developing countries are going to develop; there can be no avoiding that. They will either go through the fossil electrcity stage or a clean alternative. The lower the cost of non-fossil electrcity (world wide) the faster will be their development and the less fossil fuel will be burnt (in total).

    From my perspective it is essential we, in Australia and the developing countries, turn our full attention to bringing down the cost of non-fossil fuel electricity as quickly as possible. That means nuclear, because renewables have no realistic chance of making any significant contribution.

  17. I don’t at all disagree with the thrust of your claim Peter — but I’m against “leveling down” compliance costs. What we ought to be arguing essentially is that the standards set by nuclear over hazmat should apply generally.

    That’s not to say that there isn’t scope for getting rid of some of the tangle of bureaucratic nonsense attending proposals to site plants. Why it should take more than three years to do the due diligence and EIS stuff — particularly if we are talking of brownfield sites is beyond me. It seems to me that you could get a basic number of designs registered and approved in exactly the same way that various car designs are approved and while that was happening you could do the required EIS and due diligence. Within three years you ought to have an answer. The proceedings should put a bar on spending more than 0.1% of the eventual installed plant costs in legal expenses by any party to the dispute. And once a ruling had been made, grounds for appeal should be very narrow — errors of fact or clear legal error with a presumption that the ruling would stand unless clearly wrong. There ought to be a finite timeline along which the interlocutory or procedural matters would take place and if you missed your deadlines, tough.

    That ought to put a serious dent in costs, but apart from these matters, it seems to me that most of the current standards are reasonable.

  18. Ewen,

    Likewise, I don’t disagree with much of what you say. I agree that externalities should be internalised to the extent practicable. But the fact that we have not managed to do so for all generator systems except nuclear over a period of at least 30 years shows that it is not easy. If it was, we would have done it long ago.

    Where I think we disagree is on whether we should raise the safety standards of all generators to the level of nuclear, or reduce our requirements for nuclear. Raising the safety standards would be enormously onerous and could not be achieved in the developing world until they reach the equivalent of our current level of development (roughly speaking). It would add significantly to the cost of electricity in the developed world. And for what benefit? There is a trade-off between safety and cost. Nuclear is already some 10 to 100 times safer than the fossil fuel generators (LCA basis, see the second and third charts here: http://bravenewclimate.com/2009/08/13/wind-and-carbon-emissions-peter-lang-responds/ ). The community accepts the level of risk of the fossil fuel plants, so why are we pushing for safety some 10 to 100 times greater than what the community accepts?

    The cost to reach this level of safety is enormous. The cost is displayed in, for example, forgone hospitals, schools and infrastructure, less services such as health, education and Murray Darling expenditure, in lower life expectancy, higher greenhouse emissions and many other such effects. This is what needs to be balanced against raising the cost of electricity generation, as opposed to lowering the cost of clean electricity (i.e. nuclear) to compete with coal.

    Furthermore, why should we raise the safety of electricity generation to higher than is generally accepted for other industries? We accept chemical plants throughout our cities. Bopal, which killed 6000 people almost instantaneously; this is an example of what chemical plants can do. We accept the risk. So why demand far greater standards from electricity generation. The cost of excessive safety affects everyone, but few realise the true cost.

    If we hadn’t demanded excessive safety of nuclear power over the past 40 odd years, nuclear would be far cheaper now, and GHG emissions would be substantially lower. Yes there would have been more nuclear related industrial accidents, but the risk needs to be assessed rationally. We do not do that because the community evaluates the consequences of nuclear accidents differently from other accidents.

    Excessive safety and bureaucracy costs us all. We just do not realise how much.

    I advocate focusing on lowering the cost of nuclear, not raising the cost of other electricity generators. If we were rational, we could have electricity from nuclear at less than the cost of coal. That is what should be our goal, not raising the cost of electricity, in my opinion.

  19. Ewen,
    Further to my several previous posts, I strongly agree with the quote at the head of the thread:

    If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose.

    I would like to explain in more detail the reason for my strong support of this statement.

    My underlying assumption is that, if we reduce electricity costs, world wide, electricity consumption will increase and electricity will displace other forms of energy (such as gas for heating and oil for land transport). Furthermore, if clean electrcity is lower cost that fossil fuel generated electricity, the displacement will be faster. This is good.

    Now I present the evidence that more electricity is good for humanity.

    Go to http://www.gapminder.org/ and click on “Explore the world”.

    On the x-Axis select Energy/Electricity/Electricity Consumption (kWh per person). Select ‘log’ scale.

    On the y-Axis select Life expectancy at Birht (years). Use ‘linear’ scale.

    Now run play.

    Points to note: 1) life expectancy increases as electrcity consumptions increases, and 2) all countries and regions are moving from bottom left towards top right as time progresses – meaning electrcity consumption and life expectancy are both increasing with time. Put another way, the world is becoming a better place, and electricity consumption is an important driver of this (correlation does not prove causation, but this correlation is persuasive).

    Now try changing the Y axis but leave the X-axis. On the y-axis try the following:
    1. Infant mortality,
    2. Health,
    3. Poverty and inequality / Extreme poverty
    4. Children per woman (total fertility)

    Points to note: in all cases, more electricity correlates with better outcomes. The total fertility is interesting. More electricity correlates with lower fertility. That is women are moving from having many children to more time in work, education and other more fullfilling persuits. As a result, the world’s population will peak earlier and and at a lower total population. Surely this is one of the key goals.

    Raising the cost of electricity in the developed countries also means raising the cost in the developing countries.

    In my opinion, raising the cost of electricity is bad, short-sited policy.

  20. Peter, you strike me as a person of impressive insight, and I always feel nervous differing with someone who, like you is impressive, but I feel I must differ.

    You ask:

    why should we raise the safety of electricity generation to higher than is generally accepted for other industries? We accept chemical plants through ot our cities. Bopal, which killed 600 people almost instantaneously, is an example of what chemical plants can do. We accept the risk. So why demand far greater standards from electricity generation.

    You worried about cost as a facotor and yet wuibble over safety, even though this is the biggest hot button issue in resisting nukes and nuclear power’s biggest selling point if we can make the hgeneral discussion about safety. I know you don’t mean it this way but can you imagine what someone doing disinformation would deal with your remarks above? An advocate for nuclear power cites the Bhopal standard as apt for nuclear power stations in third wortld countries

    It wouldn’t play well. You can argue that the standard set for nuclear power was too high, but having set it, nuclear power is orders of magnitude safer than its competition and they simply can’t compete on that basis. That’s a slam dunk win against anyone who says “but what of safety?’

    You try to say that increasing electricity usage causes human welfare improvements but this is fallacious. As you note but then dismiss cum hoc ergo propter hoc … correlation is not causation. Improved human welfare is correlated with lots of things — access to clean water, shelter, good governance, paved streets, railways, refrigeration, a functioning health care system, a welfare safety net etc.

    Many of these things depend one way or another on electricity of course but merely using more electricity doesn’t cause human welfare to improve any more than an increase in private motor vehicle usage causes more people to be rich enough to operate them. And of course, while highly developed societies use more energy per capita than less developed ones, it’s not true that if these highly developed societies used more energy per capita they’d all be better off.

    Doubtless, burning cow dung in a hut to keep warm is much worse than having an electric oil heater. Having potable water pumped to you is better than pot luck at the water hole near the midden. But does having a plasma TV and a Hummer make you better off than having an energy efficient small screen TV and an Ford Econetic? Would I be worse off if I rode my bike to work or car pooled? If I replace all the cracked window panes in my house each year, am I better off or not? I’d say no.

    Now personally, I’d prefer that electricity be allowed to cost what it costs to deliver at acceptable quality and with all externalities internalised, including safety and contingent liability in the price.

    Let the first world then make whatever transfer payments are necessary to ensure that those who need it can buy it at the market price.

  21. @ Gordon, on January 4th, 2010 at 11.10 Said:

    Lawrence: The question I posed was “can we trust the IEA’s calculations of $500 bn for each year of delay?”. If, as you state that in the IEA’s Nov 08 report that we have hit peak oil – then I think the answer to my question is NO.

    I am not sure if you mean you believe the 6.7% decline prediction or not.
    If you can show me how/why the IEA is wrong on either of these points, especially the 6.7% decline figure, I’d be very interested.

  22. I think oil depletion will soon grab the public’s attention more than climate change. The double whammy will come from expensive food when water issues (flood, drought) interact with high fuel prices. More people will question whether natural gas can be the great white hope for both transport fuel and lower CO2 electricity.

    While imposed carbon pricing of fossil fuelled electricity seems like the right way to go there are still several sticking points. Pensioners may not know how to reduce their energy use so limited compensation or gadgets to ease higher power bills may not work. The build time of nuclear remains outside the electoral cycle time of the political system. Some groups will undermine carbon pricing by blackmailing their way into special deals. Nonetheless I think imposed carbon pricing is the necessary first step.

  23. Lawrence: Even with the IEA’s dreaded 6.7% prediction they do not anticipate that Peak Oil will occur until around 2030. Personally I’m still not sold on the whole jellyfish theory of oil generation and lean more towards the thories of Thomas Gold. I find the explaination that earth is the only planet whereby methane production is a biotic process hard to believe. When the price of oil shoots over $100bl again I am sure a suitable number of new discoveries will be made.

  24. Ewen,

    You make some excellent points. I agree with most of what you say. I agree with what you pointed out about how my comments on safety could be spun, and that was careless of me.

    I am short of time right now, and will have to give a more detailed reply later. For now, I’ll respond to a few of your points.

    I agree with your second last paragraph:

    Now personally, I’d prefer that electricity be allowed to cost what it costs to deliver at acceptable quality and with all externalities internalised, including safety and contingent liability in the price.

    But I do strongly believe we should strive for a level playing field for safety across all industries. I do not believe the public, once aware, would support paying for near-infinite safety for one energy generation option, if they knew the true cost of doing so. I mean cost to society as a whole, not just $ cost.

    You quote me and say:

    You try to say that increasing electricity usage causes human welfare improvements but this is fallacious. As you note but then dismiss cum hoc ergo propter hoc … correlation is not causation. Improved human welfare is correlated with lots of things — access to clean water, shelter, good governance, paved streets, railways, refrigeration, a functioning health care system, a welfare safety net etc.

    I agree the correlation argument is falacious in that it doesn’t prove cause. But consider the opposite of your argument. Could we improve human welfare without electricity? Could we improve the items you chose as examples (such as clean water, good healthcare, refrigation, etc) without consuming more electricity? I’d argue we cannot. So I believe that if we want better outcomes we must be prepared to consume more electricity. Furthermore, to achieve better outcomes as fast as practicable, we need to increase electricity consumption. And to do that we need to reduce electricity cost not, increase it. If we want low GHG emissions as well, then we need to reduce the cost of low emission electrcity generation technologies to below that of coal.

    So I still strongly agree with the quote at the top of this thread.

  25. Could we improve human welfare without electricity? Could we improve the items you chose as examples (such as clean water, good healthcare, refrigation, etc) without consuming more electricity? I’d argue we cannot.

    It’s hard to see how in practice we could, and if this were all you were claiming, then I’d not have remarked upon it. I remarked because there is a tendency amongst those who oppose action to mitigate GHGs to make a fetish out of electricity so they can creep closer to an argument for unconstrained resort to fossil thermal power, which remains the dominate source of electricity and of course in transport. It’s a variant of “greenies want everyone to live in caves”.

    The fallacy you wink at by inviting me to consider the reverse claim is affirming the consequent. The fact that countries in which most of the citizens have relatively poor life chances would have better life chances if they did useful things that entailed using more electricity doesn’t mean that electricity delivery causes goodness. If some bunch of robber-baron capitalists set up shop on a third world bauxite mine and built an aluminium smelter and coal fired generator to produce aluminium for export using cheap labour from some local refugee camp the country’s electricity usage would increase but it’s doubtful if any significant number would benefit. Indeed, they might be worse off if they were poisoned by the mess.

    But I’m no advocate of lower energy usage for its own sake. Subject to the energy being used as sustainably and equitably as possible I’m all for more energy usage.

    And to do that we need to reduce electricity cost not, increase it.

    What we need to do is to ensure that electricity is delivered at the right price, the right quality and the right quantity, whatever that is. To do that we need to improve labour productivity not slash safety standards or wages or any of the other salient and important factors in the cost. That’s neither politically nor economically sensible.

    But I do strongly believe we should strive for a level playing field for safety across all industries.

    I do not believe the public, once aware, would support paying for near-infinite safety for one energy
    generation option, if they knew the true cost of doing so.

    Nor I and I don’t propose it. On the other hand the reality, especially with nuclear power is that we must give its opponents no room at all to make the claim that what we really want to do is to irradiate large swathes of humanity for private profit because that is precisely what will be claimed if we propose lower standards. It won’t matter a damn that the actual standards for coal would still be far lower. And as a matter of practice, the standards for nuclear allow electricity at a price we can easily live with. We should insist that coal meet the nuclear standard.

    I was reading the other day that if the subsidy the Canadians give to power were removed then the people in the lowest two deciles would see their power bills rise by less than the money they spend on takeaway food and cable TV. Most people spend a lot more on mobile phones and any number of other frivolities.

    Now I have no problem with compensating people who are of limited means for buying cleaner but mroe expensive power, but one should retain perspective on this.

  26. “I was reading the other day that if the subsidy the Canadians give to power were removed then the people in the lowest two deciles would see their power bills rise by less than the money they spend on takeaway food and cable TV.”

    This is not strictly true, and varies from Provence to Provence. However Canadian power companies are major net exporters of electricity to the States and to some extent the lower rate is the profit realized by these mostly state-owned companies, to the ultimate owners of the exploited resource.

    The other major beneficiary of these low rates are industries like smelters where instead of exporting the power, metals are exported as
    value-added commodities.

    Those that blithely talk of raising rates to drive ether reductions in usage, or to encourage the development of green generation, never seem to look at the larger picture of how and where electric power is used, focusing most of their attention on dwellings. The fact is like any major source of energy used by industrialized countries, huge increases in price can have equally huge impacts beyond the sort of simplistic social engineering effects those that call for this think they will get.

  27. Gordon the point is the IEA prediction that the peak is not until 2030 is clearly bogus because the IEA is really saying that most oil production is past peak now. Conventional oil production is 6/7 of all oil production and conventional oil production is declining at 6.7% pa. The IEA actually only says they checked 800 big fields and these are declining at that rate, but I’m pretty sure what those 800 fields do is what all existing conventional production will do, and there really are not many more fields to find. And it would take finding multiple Saudi Arabia’s to push the peak back by more than a few years.
    What I believe the IEA says is that new oil will be found and/or produced if enough money is invested to do so. But that’s rubbish. The oil cannot be found and non-conventional oil production cannot be increased that much. I think the IEA knows it’s rubbish, and they also know that investors know it’s rubbish, so the investors are not going to spend the amount of money the IEA says must be spent, so the IEA can then say, well you didn’t spend enough money and so the peak will be sooner, possibly the peak is now, since not enough money was spent to move it to the future.
    No-one in their right mind thinks abiotic oil is anything more than inconsequential.
    You certainly have not shown that the 6.7% figure is incorrect, and I guess you equally cannot show the 500bn figure is incorrect.
    As much as I don’t want the extra CO2 in the atmosphere nor do I want the economic repercussions of peak oil. I can only hope we will collectively act in a constructive fashion and urgently build nuclear power before there is the kind of loss of ecology and human cost that I fear.

  28. That’s all very well DV82XL but amidst all of that you don’t address why there should be a subsidy to price. Really one should leave prices as much as one reasonably can, to find their ideal level based on all the factors of production being properly internalised. That way, production will go where it is most efficient. If that puts people working in aluminium out of work it remains the case that they will find employment elsewhere. If they can’t afford to do retraining and there is something training could help them with then let the state provide them with the support they need to get the retraining and meet their costs. But subsidising electricity costs in order to get an edge in exports is simply snake oil, especiually since it is far from clear that withdrawing the subsidy would materially affect where production was carried on.

    Perhaps an increase in energy costs would rive producers of aluminium to produce more efficiently or make better use of co-gen or reorganise production to make better use of changes in load curve or develop new less energy-intensive technology, and perhaps some of this would open new job opportunities elsewhere in the local market.

    We are actually having this argument in Australia since a fair slice of our dirtiest stationary energy usage is in aluminium smelting — where in Victoria we use brown coal — the dirtiest form of power — to keep our “edge”. And every time someone says “shut down Hazelwood” people say “yea … and then our jobs will go offshore to even dirtier places” (even though there are none)

    I find it interesting that so many people claim to favour “market forces” as rational except when they see a parochial downside.
    .

  29. Ewen,

    Again I am short of time, so I can’t reply in full. So I’ll be selective and reply to your points that most caught my eye.

    You said

    “If some bunch of robber-baron capitalists set up shop on a third world bauxite mine and built an aluminium smelter and coal fired generator to produce aluminium for export using cheap labour from some local refugee camp the country’s electricity usage would increase but it’s doubtful if any significant number would benefit. Indeed, they might be worse off if they were poisoned by the mess.”

    I tend not to blame the ‘robber-baron capitalists’ for the mess in Africa. I blame their governments, and especially the EU (mostly) for blocking free trade at every attempt to bring down protection. If free trade had developed faster, the poorest would have emerged from poverty more quickly. Trade would educate and provide infrastructure. I also blame the UN. They prefer handouts that they can control (and spend on their own bureaucracy) rather than free trade. I don’t think the poor countries would be better off if we banned the ‘robber-barron capitalists’. I think they’d be worse off.

    You say:

    “What we need to do is to ensure that electricity is delivered at the right price, the right quality and the right quantity, whatever that is.

    Of course, I agree with this statement. But I expect we would disagree as to what we mean by the ‘right price’. Is it a rational ‘right price’ or an emotive ‘right price’? I’d argue for a rational right price. That would be set by market forces. It would not be distorted by dogma or political beliefs. So it would not have unequal taxes loaded on it. It would not have mandatory requirements imposed unequally on some generators (and buyers) and not on others. It would not have greater safety requirements on one industry as opposed to another. It would have all externalities included to the extent that is practicable, but this must be done equally for all the alternatives.

    I should say that I recognise that I am arguing from a theoretical perspective. I do understand the problem of arguing to reduce safety on nuclear power. But I do strongly beieve we have grossly over done the safety of nuclear power when comapered with all other industries. This is costing humanity dearly. The benefits of reducing the cost of clean energy outweighs the cost of the consequences by, I believe, several orders of magnitude. I am arguing from what I believe is a purely rational perspective, not an emotive perspective. I do recognise that the emotive perspective is very important. I’d argue it has got us into the mess we are in today.

  30. Ewen,

    Having just read your reply to DV82XL, I realise I need to add a clarification to my post.

    I said

    ” I’d argue for a rational right price. That would be set by market forces. It would not be distorted by dogma or political beliefs. So it would not have unequal taxes loaded on it.”

    I should have added: “nor would it have unequal subsidies”. Preferably no subsidies for production. Subsidies for RD&D are good but should not be apportioned according to ideology and political beliefs.

  31. Ewen,

    One more short statement:

    If we don’t get low emissions electricity generation to less than the cost of coal, there will be an enormous amount more GHG’s produced over the next 50 odd years. We can imposes higher costs on carbon emissions in Australia and a few other developed countries, but it will always be a problem, there will always be cheating, and there is no wy it will be applied in the developing nations. Once again, I strongly agree with the quote at the top of this thread:

    “If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose.”

  32. Ewen Laver – I am not sure how the electricity market works in your country, but in Canada most providers are crown corporations that were created and funded by taxpayers money. It was understood that developing our hydro resources for our own use alone would not be cost effective, thus they were built with export to the States in mind almost from the outset.

    What you and others now refer to as a subsidy, is in fact a dividend being paid back to tax base that bankrolled these projects. That is the justification.

    Furthermore, Canada is unabashedly a mixed economy, that keeps a balance between both capitalist and socialist features, based on pragmatism rather than ideology. The point here being that broad proscriptions to deal with the energy/carbon issues are generally worthless – a more nuanced approach needs to be developed.

  33. Ewen Laver,
    Really one should leave prices as much as one reasonably can, to find their ideal level based on all the factors of production being properly internalised. That way, production will go where it is most efficient. If that puts people working in aluminium out of work it remains the case that they will find employment elsewhere.
    Ewen, your views are idealistic and dead wrong. The prices in electricity are not finding their ideal efficient level due to political interference against nuclear power because of various anti nuclear bias. If the solar proponents had their way the electricity cost would find it’s ideal price level so high it would wipe out all energy intensive industries or the prices of their product would be too costly to afford.
    May I ask you where would you place all those displaced workers by your retraining idea? Most likely they would all end up as an additional bureaucratic burden to society, shuffling useless paper, gabbing useless talk and producing zero value. There is already too many of this kind.

    I agree with Peter Lang. Low cost electricity is the only key to prosperity and solving many problems humanity faces.
    As I said before. “ There is no substitute for nuclear power”
    The environmentalists and politicians can dance their way around avoidance of nuclear power as much as they want. In the end, all their effort to suppress nuclear power will not lead to utopia paradise but to more misery on earth.
    One has to laugh at those lunatics running around with green hard hats in Germany and Copenhagen with no practical solution under their green hat. Their effort resulted in two notable accomplishments. More dirt thrown into the atmosphere by burning fossil fuels and more expensive electricity. Copenhagen failure point to their unworkable policy.

  34. Peter/Ewen

    Awesomely good discussion.

    I’m a huge fan of gapminder too. Further to Ewen’s point about correlation not equalling causation wrt electricity consumption and development, an interesting exercise is to have HDI (human development index, aggregate of health, living standards etc) on the y axis, leaving electricity consumption pp on the x with a linear (NOT log) scale. This nicely demonstrates that beyond a certain level (around 2000kwh/p) there are dimisnishing returns on extra electricity consumption and no real benefit beyond about 6000kwh/p.

    Of course, this doesn’t change the thrust of Peter’s argument- the developing world still needs lots more electricity as part of a more complex pattern of development. But it doesn’t need an infinite amount of extra electricity- just enough will do. The least developed countries realise they’re going to suffer the worst climate change effects, and have a strong motivation to go for low carbon energy first time round.

    If nuclear can provide some/all of this electricity that’s great. Those countries that can afford it, like China, India, South Africa, seem to be taking steps already regardless of our handwringing in the developed world.

    I think there’s still a big problem with the least developed countries.

    In the developed world, acceptance of nuclear has a lot to do with risk perception:
    ‘Familiar risks are more acceptable than unfamiliar risks;
    Health consequences which are particularly feared are less acceptable;
    Man made risks are less acceptable than natural risks’
    (Slovic 1993)

    These kind of responses might not be ‘right’ but they are understandable and even rational (up to a point), writing them off as simply ‘emotion’ is more likely to get peoples’ backs up than win any arguments!

    Matt

  35. Lawrence: Just for the record, the IEA’s most recent claim is that Peak Oil will happen sometime before 2030.

    Quote: Despite repeated downward revisions in recent years in its forecasts of global oil supply in 2030, the IEA has not until now committed itself to a firm prediction for when oil supplies might cease to grow. Its latest energy outlook, released last month, says only that conventional oil (as opposed to hard-to-extract sources like Canada’s tar sands) is “projected to reach a plateau sometime before” 2030.

    http://www.economist.com/businessfinance/displaystory.cfm?story_id=15065719

  36. Peter,
    I have to disagree with you about “Free Trade”. Free Trade in agriculture has virtually ruined Mexico’s indingous corn yields and causes *millions* to go in effect bankrupt, and have to emigrate to the United States under terrible conditions.

    India, which once had a thriving National Grain Board to maintain prices and a standard of living for hundreds of millions of Indian peasants, under pressure from international grain traders, dissolved these boards and thrown prices…and lives…to the anarchy of “The Market”. Peasant standard of living is now back to about where it was when India achieved independence.

    The international backlash against the “Free Marketeers” has resulted in a sharpening of the class struggle in places like Peru, Ecuador, Bolivia and Venezuela and caused huge social disruptions. How gets ‘better off’ in these situation? the a-moral middle classes grow some and get wealthy at the expense of society as a whole.

    We need to end free trade and restore national soverightry to the workers and peasants around the world.

    ’nuff said for me on that.

    David

  37. Matt (geodoc),

    I agree. I agree that writing off the human reaction to, and evaluation of the consequences of, different types of risks is not helpful. I did overstate the point somewhat. I was talking about what is best for humanity from a purely numeric risk / reward perspective. I still believe I am correct, but acknowledge it is a totally impractical position. It will never gain acceptance. So I concede this point – but I wont shut up because I want to bring nuclear power to Australia at the least practicable cost, not at the cost it is under European and US type regulations.

    I also agree with this point, but with a caveat:

    beyond a certain level (around 2000kwh/p) there are dimisnishing returns on extra electricity consumption and no real benefit beyond about 6000kwh/p

    The caveat is: “at this point in time”. Electricity consumptions in the developed countries will continue to increase at some 1% to 3% per year unless we stop GDP growth and population growth. The rate of electricity consumption growth could double if we start moving to reduce GHG emissions! Reducing GHG emissions will require replacing oil for land transport and gas for other fixed energy. Electricity will be the main replacement for oil and gas, one way or another.

    Furthermore, if we have to start geoengineering (eg to suck CO2 out of the atmosphere) we will need a lot more electricity.

  38. yes we probably agree. I’m wedded to what is good for people, not profit, Peter. If that means certain kinds of ‘free trade’ I have no problem. I just see the problems inherent in it, especially in agriculture where I cite some examples on the most recent thread here.

    I believe in regards to pollution, carbon, nuclear energy, probably the ideology of ‘Free Trade’ has little place to develop. As I’ve noted here many times in the past, nuclear energy, specifically, and energy in general, is best served by strong national and governmental intervention.

    I agree with you points above, BTW…I think it’s very true. What we consume ‘now’ versus ‘later’ remains to be seen! Jeveron’s paradox plays into this, of course. But also…technology. The wide spread acceptance of energy efficient light bulbs has not resulted in more, but less, residential consumption. I think what we see is that as energy consumption initially goes down by the introduction of energy efficient techniques, some/most/all of it is replaced by other forms of consumption…say a bigger TV set (this is exactly what my family did when the price of our power fell because we changed out all the light bulbs in our house).

    David

  39. Hi David Walters,

    I have great difficulty taking comments seriously that argue for trade protecionism. Similarly, I do not give much weight to arguments that bureaucrats and politicians, directed by the pubilc (which basically means by special interest groups trying to force their ideology on the rest of us), can manage the economy better than a free market economy with rational, light, and appropriate regulation.

    To me. profit is good. It is good for people.. It is good for humanity. It pays for everything we want. Without profit there are no investors, no jobs, no taxes, and therefore no public funding for health, education, infrastructure, environment or anything else society needs.

    If we want to nationalise industries in developing countries because we do not like the way the companies are poluting, or whatever else they are doing wrong in our eyes, then next time someone wants to build a plant in one of these developing countries the investors will require a much higher return on their investment to cover for the risk. The plant we are now complaining about was probably set up under the rules of that country at the time. It was probably set up with a 20 to 40 year expectancy of how the dividends would be paid out to the shareholders. I get very frustreated with the left-wing advocates who want to steal from investors and haven’t a clue what the consequences are. Currently we have advisors to government in Australia recommending that power stations be shut down and we (the public and tax payer) should not have to pay fair and just compensation to the investors. To me that is stealing. If we push that line, then the potential investors in nuclear power stations in Australia (with its 60 year life) will want an enormous premium on their return. How does that help humanity?

    I get pretty frustrated with what I consider the naievety of those who argue that the state should steal from the very investors who, only a few years ago, we encouraged to invest in our economy .

  40. Peter, it is nice to find something we actually disagree about! Ha! All this time…

    So…my comments earlier was because I take a more historical approach, I believe, than you do. I don’t think socialists come along and just nationalize, willy-nilly. I think its FAR more complex that. Thus…history.

    I’ve made the point here and on most other places I write that the libertarian approach to energy simply doesn’t work. Partly because there really is no such thing as a free market in energy since it can’t really be stored, one can’t go shopping like one does for bacon or tires. Not really. Maybe smart meters will change that, I don’t know.

    As you know California tried it’s free market approach to energy and, as often happened in other parts of the country it was an unmitigated disaster. It became a speculators paradise and, as typical when you turn anything into a commodity, we had a typical historical bout of ‘over production’, bankruptcies, chaos, etc. But that’s not my mine gripe.

    Peter, in energy, historically, there really is very little true free entry, free exit-into/from-the-market. If you look at where nationalizations took place in most countries, say, after WWII in France, Germany and Britain, people were reacting to several real world realities: The large private corporations represented a real threat to people’s freedoms. The Nazis were put in power by big industrialists (Benz, Krupp, etc), or they were collaborators (Renault, etc) and these included the energy barons of the 1900s. As punishment, and as the case in Britiain, for the long historical program of Labour, they nationalized the various energy companies. Almost everyone of these companies had made their “investments” many times over so nothing truly was lost in that respect. They remained nationalized until very recently.

    Britain privatized it’s rail roads and it appears to have been a disaster with prices going up, investment *down*, and safety gone out the window. There is now a movement to Re-nationalize the railroads. Any investor who thought they could make a long term investment was simply foolish. In Britain nothing, BTW, is truly expropriated, investors ARE compensated (to much opposition by people, unions, etc). So ‘theft’ is somewhat of strong word.

    Nationalized energy systems around the world ARE the investment vehicle. It was state run energy corps that are now building nuclear plants. Not private ones. Well, only half true, usually you have combines of private and state, like we see with the S. Koreans. But the point is that most people don’t feel safe, nor should they, allowing “profit” to be the motive forces behind running an energy company, something so vital for human life and civilization. When I turn on my tap at my sink, I *always* get good clean water, thanks to one of the few truly public services in the U.S. today. No one even thinks about that in the mad rush to accuse politicians, falsely, I might add, of being “socialists”.

    Peter, as to Leftists nationalizing stuff. First, we have to distinguish between developed and developing worlds. It is true that the EU is a free trade zone. So is, closely, the US and Canada. This is different than what I’m talking about. Quite honestly, so much so-called investment in 3rd Word Countries is just that: pure theft. The theft by transnational corporation to steal the natural resources of the people of the countries, usually with an OK from the corrupt gov’ts in power, in the pay of Shell, ADM, Cheveron, etc.

    The Arabs nationalized THEIR oil in 1973. Venezuela did it in 1974. Mexico did it in 1938 after Rockefeller refused to grant wage increases ordered by the Mexican courts to workers on strike. Mexican oil belongs to *Mexicans* Peter. It’s part of their political DNA now. So who “lost” in any of these countries? “Investors”, all universally residing in advanced industrialized countries. No one is crying for these former robber barons, Peter. No one. These industries are for the most part well run. Not always (PEMEX, for example). But overall it’s for the peoples of these countries to determine what happens to their natural resources. I think that’s a good thing. This is who is building nuclear power plants, not private corporations.

    If Australia is going build nukes, the idea that private companies are going to risk anything is really unlikely (unless we get mass produced smaller nukes going, then I’ll reexamine my views).

    Regards,
    David

  41. The issues of nationalisation and energy sovereignty are tricky, but to return to the principal focus here, surely one has to reconcile a whole range of competing claims.

    On the one hand, one certainly wants the benefits that go with low cost FDI and that certainly involves keeping risk premiums to a minimum. On the other hand, an open slather approach and poor administrative controls will probably not lead to good, much less equitable outcomes.

    Clearly, if one opts for an absoilutely unmitigated flow of goods and services acorss frontiers, then the way is open to massive exploitation and a race to the bottom, not merely on labour standards but on environmental strandards as wel. Nor can it be right that one state can bind its sucessors in perpetuity or even for the full period when the sunk cost of an asset would be pertinent. It’s notable that even the WTO recognises that there can be legitimate reasons for intereing with the general “free trade” principle.

    That’s not an argument for swingeing protectionism either. Clearly, what one wants is an opportunity for every community to produce the goods and services they are best at and to trade this with others doing the same thing with other goods and services. Properly administered, everyone would win.

    Nor is it an argument for expropriation without compensation. Who one really wants in charge of the production of any given good are those who are best at it and ideal volumes at optimal quality. If they take a suitable “commission” in the form of return on capital then there is no problem. State enterprises face considerable transaction costs and if these exceed to dividends from profits one would get from a private concern then the configuration can begin to look like doubtful public utility, especially if one’s administration can regulate the private concern to operate at acceptable labour and environmental standards within the jurisdiction.

  42. As some mention was made of Mexican Oil belonging to Mexicans in an earlier post & we are seeing some discussion of the rights of the people who own the resources, I would draw peoples attention to the current plight of Mexican farmers in terms of their wind resources. Have a look at this recent short film made in Mexico ->

    http://www.windaction.org/videos/24862

    & a short text piece about it

    http://www.windaction.org/opinions/24863

    The text summary :

    “There were contracts drawn up for the farmers so they could lease their land for transmission, wiring, generators and windmills to provide. The contracts were in Spanish, but the wind company “forgot” that the majority of the population could not read or write. Those that could, conversed in Zapotecs, a pre-Hispanic language. Many farmers signed, trusting in the promises of the government and the Spanish companies. The farmers gave away use of their land for next to nothing so the wind farm could be constructed. For the La Ventosa wind farm, which were inaugurated in early 2009, farmers received between 25 and 100 pesos per hectare. The company had promised 30,000 pesos a year.”

  43. I am of the opinion that privately owned transportation just doesn’t work and that privately owned utilities only work when highly regulated. The latter are then somehow only semiprivate with regards to decisions.

  44. Ewen,

    Your post seems very sane and balanced. Unfortunately it is the sort of beautifully ‘balanced’ diplomatic and politically correct position statement that blocks progress. It is the sort of statement that people have been saying for 20 years. T

    The position we are in now with nuclear energy in Australia is similar to where we were in the early 1990’s. At that time the government of the day was advocating Ecologically Sustainable Development (but no nuclear). The ‘Toronto Targets’ were the goal in those days (Toronto Targets: we shall reduce CO2 emissions by 20% below 1990 levels by 2005 !!). Great! How? Wind farms solar farms etc but no nuclear !! Just like now.

    The critical point I want to make (I know I am repeating it) is that the quote at the top of this thread is exactly correct. We need to understand its truth and relevance and accept it. If we don’t there will be no genuine move to implement nuclear energy in Australia and there will be no significant reduction in GHG emissions. We do need to realise the significance this statement:

    If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose.

    Having recognised how significant it is, we then need to work out how to reduce the cost of implementating nuclear energy in Australia. If we recognise that EU and US politics and public mischief has caused nuclear to be 10 to 100 times safer than fossil fuel generation, and we recognise the cost of this, then surely it is not too hard to join the dots. We need to get on with informing the public about the costs and benefits of nuclear energy and with the costs and benefoits of excessivly onerous regulation. Once informed the public will make better decisions.

    Ewen, in my opinion, your posts do not help us achieve this. They simply encourage more delay. The consequences are a long delay in implementing nuclear energy in Australia, extra costs on the economy as a result, and minimal impact of greenhouse gas emission.

    I’m going to back out of the free trade debate (other than to reply to David Walters). I notice it is being covered on a late thread. It is a tangent to my main point.

  45. Hi David,

    I agree that we agree on much. But we are poles apart on the matter of free trade and planned economies. I notice this discussion has been taken up on the latest thread, so I’ll pretty much leave it to others (most of the time). But here is a short reply to some of your points.

    You look to history for your supporting arguments. I agree with that approach. I’d argue that throughout the time man has been on the Planet, he has benefited from trade. The free-er it is the greater the benefit to all parties. You can go back as far as you like, 10,000 years if you want. Trade has always benefited peoples.

    California’s electricity problems are due to nonsense regulation and because any group can gather a group of celebrities and lawyers (with little better to do) and block any rational development on the basis of emotive issues. California is the last place I’d look to as an example of free trade or free market for energy.

    Having said all this, I do recognise that energy is ‘different’ in some ways and that the transmission system is a natural monopoly. But I find it very difficult to believe that the public sector would manage energy better (and, yes, I do know about the comparisons and arguments for it. I am not persuaded). When a company is badly managed it is taken over or goes bust. That is not the case with public ownership. The organisation stays for ever, changes ministers (from one incompetent minister to another) for decade after decade. All you have to do is compare what Telstra was like, and would still be like now, if we hadn’t corporatised it and opened it up to competition. You can see many examples of the inefficiency and lack of responsiveness of public sector organisations compared with the far better performing private sector organisations. Compare the banks, Woolworths, airlines with the Sydney Harbour Ferries, NSW trains and trying to sort out a dog licence in a government shop front.

    I often like to ‘book end’ an issue as a first step. In the case of free market versus directed economies consider Russia (before Boris Yeltsin) with western Europe and North Korea with South Korea. Or you can compare the inefficiencies of the Russian planned economy with the market economies in the west. I gree the best position is between the ends, but far towards the free market end and with light approporate regulation. EU is far too regulated as far as I am concerned. It is run bu bureaucrats and the squeaky-wheel NGO’s. I don not want a bar of that.

    From my perspective, this discussion is not central to my point so I’d like to leave this discussion at thjis point. My main point is to find contributing to get nuclear power in Australia as soon as practicable, and supplying electricity at a cost that is competitive or less than coal fired power. To achieve this, I suggest we need to focus on several key issues, one of which is what is the appropriate way to regulate the industry and what level of safety is appropriate. These are linked.

    I’ll leave this post by reitterating the qote at the top of this thread:

    If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose,

  46. Thank you for your polite response Peter, but I suppose we are just going to have to agree to disagree on this one. I’m for leveling up and you are for leveling down.

    Personally, I don’t think your approach would be remotely saleable politically, but you’re entitled to hold your view.
    .

  47. David,

    You make a lot of good points in your post and I am listening. I will copy this post and consider it some more. (but tplease no more, I want to put my effotrt into other areas). I have some firends in the NSW electrcity supply industry who strongly agree with you and have been feeding me the supporting arguments and material for some time. I agree nuclear in Australia will bneed strong government invcolvement for probably 15 years or so.

    What i strongly disagree with is this argument:

    Quite honestly, so much so-called investment in 3rd Word Countries is just that: pure theft. The theft by transnational corporation to steal the natural resources of the people of the countries, usually with an OK from the corrupt gov’ts in power, in the pay of Shell, ADM, Cheveron, etc.

    I could go on about that, but it is not the main agenda for me at the moment.

  48. David Walters,

    I will say a little more so you understand where I am coming from. Among other things, two experiences are influencing my thinking on this matter.

    At one stage I was working with a utility trying to provide water and sewage infrastructure for Indonesia. We had some Australian government aid funding but also had to get some private finance. I understand how difficult it is to get private finance when there is high sovereign risk. So I understand that investors need a high and secure return if they are to invest in projects in developing countries. That is why Shell and Chevron need to extract a lot to give their investors sufficient and also to pay the local government the taxes and royalties they demand. It is a balance and a negotiation. If there is not enough for investors then the project does not proceed. Then the local government gets nothing. The locals do ot get their infrastructure. The alternative is handouts from developed nations. That is equivalent to paying the dole to a person rather than giving them a real job.

    The second experience involved a short international aid job I worked on in Guyana. I was sent to three small potential hydro electric sites to gather pre-feasibility investigation information. The last site I went to was an unforgettable experience. I and one other Canadian engineer were flow intro the site by a German who owned an ‘aeroplane’ (at least, some might call it that!). He was supposed to pick us up two days later but actually came back a week later. We camped in a town that had been built by ALCAN or ALCOA (I don’t remember which). It was a bauxite mine. It had been a rich town once and provided a large proportion of Guyana’s income. The socialist government nationalised it in the 1970’s along with most other profitable industries. The country was now a basket case. The town, which was obviously once a really well constructed and maintained town, was now in total disrepair. The railway was no longer useable. Everything had to be flown in. Even diesel to run the town generator; the generator could only be run from 7 pm to 9 pm each night because of the shortage of fuel. So no refrigeration. Each time the ‘aeroplane’ came they unloaded stacks of crates with live chickens. They could not keep meat because of the heat and no refrigeration.

    When you and Ewen talk about the “Robber Barron Capitalists”, I don’t give it much credence. By the way, there are many other such experiences. We’ve all had them. They underpin our way of thinking.

  49. Ewen,

    Thank you too. I agree we will have to agree to diasagree. I agree with you that my approach is not “remotely saleable politically” in the current political climate, nor given where the level of the debate is at in Australia. But that is what I think we should be trying to change.

    You said”

    I’m for leveling up and you are for leveling down.

    But that is only half the story. Equally important is that you are for levelling up and I am for levelling down the costs. You are for raising the cost of electricity and I am for lowering it. It is the balance between costs and safety that is important. From my perspective I think we ar e raising the cost oef electricty of nuclear power (the only real low emissions alternative to coal) by a large margin for a small benefit. And the higher cost prevents us getting the benefits of low emisisons electricity.

    On the other hand, my interpretation of your position is that you feel the cost of the impositions on nuclear power are relatively small and the benefits are large. I agree the perceived benefits are large. I don’t think the real benefits are large. This is why I referred, in an earlier post, to emotive rather than rational decision making on this issue.

    I’d like to see the debate opened up in Australia so the risks and rewards are better understood by the general public. I am all for the public deciding what they want, through the ballot box, but I do not like the fact we are poorly informed on these matters and scare campaigns about nuclear power are run at every election instead of providing information.

  50. A bit OT but just reading about 21 dead in a China gas leak at some industrial operation.

    Am I the only one worried that when 21 die in a run of the mill industry, and you see coal mines collapsing all the time, that we are primed for some sort of nuclear incident related essentially to sloppy OHS in the coming years in China that will completely remove any political momentum for nuclear?

  51. Matt, yes, I agree it seems a concern, but in reality not much of one. When you consider the science and engineering underpinning this, the new Chinese nuclear plants are inherently safe, as are all Western reactors. The Russians had to go to extraordinary extremes of criminal neglect, incompetence and flawed design to kill 55 people at Chernobyl. The best (worst) effort the Americans could muster was to destroy a reactor core and cost a company a lot of money. I honestly believe Bernard Cohen has it right when he says this:

    It is very difficult to predict the future of scientific developments, and few would even dare to make predictions extending beyond the next 50 years. However, based on everything we know now, one can make a strong case for the thesis that nuclear fission reactors will be providing a large fraction of our energy needs for the next million years. If that should come to pass, a history of energy production written at that remote date may well record that the worst reactor accident of all time occurred at Chernobyl, USSR, in April of 1986…

    …There has been substantial contact between Soviet and American reactor safety experts, including many visits in both directions, personal friendships, and lots of informal discussions over cocktails. The above question has been asked and discussed many times, and the Soviet reply runs along the following lines.

    The extreme concern about reactor safety in the United States has gone far beyond the bounds of rationality. It is difficult to argue with the Soviets on this point. In Chapter 8 we will show that our reactor safety programs have spent billions of dollars per expected life saved. This is irrational for two reasons. First there are many opportunities for saving lives with medical screening programs, highway safety measures, and the like, at a cost of about $100,000 per life saved, so the money spent to save one life from a nuclear reactor accident could save over 10,000 lives if spent in these other areas. Second, as a result of the cost increase for nuclear power plants, utilities are forced to build coal-fired power plants instead of nuclear plants, and the air pollution from a coal-fired plant is estimated to cause several thousand deaths over its operating lifetime. This irrational attitude toward nuclear reactor safety in the United States is, therefore, leading to thousands of unnecessary deaths every year, and wasting billions of dollars that could be used to save thousands of other lives. Why should the Soviet Union repeat our insanity?

    It is difficult to argue with this logic of the Soviet reactor safety experts, but they carried things too far. The Chernobyl-type reactor is very much more dangerous than U.S. power reactors ever were. All the differences we have pointed out apply equally to even the earliest American power reactors. The United States has erred in one direction, but the Soviets erred in the other. They truly gambled, and they lost.

  52. Barry

    The argument from opportunity cost, while appealing, is not as impressive as it appears at first blush, because nobody can really put a precise and uncontroversial value on “quality life years” including intangible goods like “feeling safe”. Nor can one exactly assess risk (probability and likely cost), particularly for events that aren’t regular.

    So while I agree with the form in which the argument takes place, (opportunity cost, general utility etc) it’s reasonably to err, if one must, on the high side of preventing the possibility of accident. One can argue about how extravagant one should get, because in extremis you are compelled by opportunity cost considerations. To take the Chernobyl example, it’s said that instances of thyrooid and throat cancer have risen, but it would make more sense to spend money on robust epidemiology to identify those at elevated risk and to ensure they got good treatment and that ongoing research programs helped devise better treatment regimes, since these would not only help victims of Chernobyl but others with these conditions. Spending extra billions to ensure a one-in 4,000,000 reactor year risk was a one in 40,000,000 reactor year risk wouldn’t be money well spent.

    It is interesting though that despite the professed concern for human life of most governments, other activities, including non-essential ones, are permitted which pose far greater levels of risk than nuclear plant operation. Operating commercial aircraft are far less safe, and yet they are not only permitted, but people continue to use them (and suffer elevated radiation exposure in the process). People sunbathe knowing full well that they increase their risk of melanoma.

    Isn’t cognitive dissonance wonderful?

  53. Ewen Laver,

    I agree with most of what you say.

    I am thinking about your question: “Isn’t cognitive dissonance wonderful?’

    In a way it is, as a human protection mechanism. But I find it frustrating that the ‘squeaky wheel’ manages to block what is good by using emotive arguments. I wonder why is it good to block nuclear and cause it to be twice as costly as coal yet it is 10 to 100 times safer. Why is that good? And the higher cost of electricity caused by these imposts on nuclear or by a carbon price on fossil fuel electricity mean that the community has less to spend on Health, Education, infrastructure, environment, etc. Why is this smart?

    I disagree that it is appropriate to ‘bend’ the consequence values in numerical risk analysis for irrational arguments. If we start doing this, where do we finish? We get to the point where the risk analysis is compromised and unreliable because the results are distorted to satisfy those who have the loudest voice, the biggest advertising budget, the best media contacts, or who can spin their propoganda the best.

  54. Peter asked:

    I disagree that it is appropriate to ‘bend’ the consequence values in numerical risk analysis for irrational arguments. If we start doing this, where do we finish?

    I don’t so much favour bending them as prefrring the risk of one kind of error over another. We shouldn’t pretend that cost-risk-benefit assumptions are more than well-tutored guesswork. Nobody can say they are certain, especially when we have imponderables to throw into the mix. How does one value “quality of life years”? Are 500 people (average age 30) maimed in horrible car accidents as horrible a result as 29 child victims of leukaemia? Lots of assumptions there, with a lot of playing god.

    And much as we don’t like it culture does play a part in decision making. We are humans rather than machines after all. Logically, every time three people compete for a resource two people should keep all of it because their happiness will be greater than if they exclude the third and they are stronger.

    Yet we mostly don’t do that. Civilised societies look after the claims of minorities, even at our own expense because we put a value on being … err … civilised.

    As you know, I’m against putting ridiculous premiums on nuclear safety. I happen to think the standards we have now are about right, and to the extent they can be improved, this will come with the rollout of new and better technology. I like it that nuclear power is a lot safer than coal and gas and even hydro.

    If our difference comes down merely to where the plants are sited, then personally I don’t think it’s important. I’d be happy to have such a plant within a city like Sydney, but if you are saying you’d like to loosen other safety standards I’d be against that. Let coal and gas come up to the same standarfd as nuclear.

    I also can’t see how you will achieve nuclear power in practice on a large scale without a serious price on CO2 and other emissions.

  55. Ewen Laver,

    I’ll respond in two posts; This is the first.

    You say:

    I don’t so much favour bending them as preferring the risk of one kind of error over another.

    Later you say:

    Lots of assumptions there, with a lot of playing god.

    The combination of these two sentences is what concerns me.

    How do you prefer “the risk of one kind of error over another” if not on an impartial, numerical basis?

    Who chooses which kind of errorr is preferable? Should the the decision based on ideology? Who chooses that we should prefer coal over nuclear, despite the risk figures being so strongly favourable to nuclear, just because that is ‘my belief’. Who decides whtether Jim Green’s beliefs are better than mine? Who says that a projected 4000 latent fatalities over 70 years in a population of 200 million once in 10,000 GW-years of electrcity generation from nuclear is worse than 10 to 100 times more deaths in the same population over the same time from coal generation (for example).

    I expect we would agree that any comparison must be made on a properly comparable basis, (e.g. immediate fatalities, latent fatalities, work-days lost, total health costs, etc).

    For those reading here who want a short introduction to how these risk analyses are done, this may be of interest.

    This is the cover page and short intoroduction:
    http://www.ier.uni-stuttgart.de/forschung/projektwebsites/newext/

    This is the short (abridged) report:
    http://www.ier.uni-stuttgart.de/forschung/projektwebsites/newext/newext_publishable.pdf

  56. Ewen Laver

    You say:

    I like it that nuclear power is a lot safer than coal and gas and even hydro.

    Everyone would agree with your statement the way it is worded. But they might have a very different answer if you gave them the option:

    The choice is between

    1. nuclear at 5 times safer then coal, or
    2. coal at 10 times more dangerous than nuclear.

    The third option, which I think is what you want is: nuclear at 10 times safer than coal for twice the cost of coal.

    The third is not going to happen.

    We may start mucking around with raising the cost of carbon, but that is going to be fraut with problems. And why, when we could have nuclear at the same cost as coal for around the same cost and far safer?

  57. Ewen Laver,

    In my post at 17:48pm I promised two responses. But I know you want more  So here is another.

    You said:

    If our difference comes down merely to where the plants are sited, then personally I don’t think it’s important. I’d be happy to have such a plant within a city like Sydney, but if you are saying you’d like to loosen other safety standards I’d be against that. Let coal and gas come up to the same standard as nuclear.

    No; our difference is much greater than this.

    I arguing for a level playing field. I want unbiased regulations that require fossil fuel and nuclear (and all other generators) to meet the same requirements for safety, emissions, damages, etc on a full life cycle basis.

    I want a system where any generator can challenge anything that they perceive gives another generator an unfair advantage. And then a method to sort it out. This will of course mean that we will remove all subsidies, all mandatory requirements (for example the Mandatory Renewable Energy Targets), all tax incentives, all other incentives and disencintives that favour one technology over another.

    In the case of nuclear, we will comply with IAEA standards and regulations, not USA or EU standards and regulations. (just as we comply with international good practive regulations for all other technologies)

    The community should accept risks that are best accepted by them, on the same basis as for all generators. The community accepts the health risks of the ongoing polution ,and associated health effects, from coal and gas fired generation. Similarly the community should accept the risks for health risks from nuclear generation (which, on the basis of Gen II NPPs, are 10 to 100 times less than from coal). Furthermore, the political parties need to make it absolutely clear that nuclear is the way ahead, we must get behind it to get the cost down. Only when investors are confident that nuclear will be treated equally for the 40+ years of their investment, will the cost of nuclear come down to be equivalent or less then coal. It is achievable if we want to. It is simply a matter of educating the public and the politicians. If we don’t cut through on this, we’ll be mucking around for another 20 years. (as I said in previous posts, we were in an almost identical positon in the early 1990’s when “Ecologically Sustainable Development” was the government’s policy, the CO2 targets were thre ‘Toronto Targets’ and nuclear was banned. Just like now!)

    You say:

    Let coal and gas come up to the same standarfd as nuclear

    It is totally impossible for the safety standards of coal and gas generation to come up to that of nuclear. Totally impossible at any cost.

    I also can’t see how you will achieve nuclear power in practice on a large scale without a serious price on CO2 and other emissions.

    You may be correct, but if we have to have a price on carbon, I believe implementing low emissions electrcity generation will take much longer. It will be fraught with problems until every country is doing it. I just can’t see it achieving the desired outcome. Not only that but higher cost electricity will mean slower reduction of emissions from land transport and heat. (see previous posts on this).

    There is a better alternative. Remove the imposts on nuclear that are causing it to be far higher costs than it needs to be. Why do you want an uneven playing field where you demand that nuclear be some 10 to 100 times safer then coal, and then argue to increase the cost of electrcity?

  58. Ewen Laver,

    You said:

    How does one value “quality of life years”? Are 500 people (average age 30) maimed in horrible car accidents as horrible a result as 29 child victims of leukaemia? Lots of assumptions there, with a lot of playing god.

    True, but why raise this as an argument to favour one generator technology over another? The regulations on health and safety of power stations should be the same for all technologies. No bias.

    I’d also point out that we cannot resolve this issue for our Health system, so it should not be brought into a decision between types of electrcity generation systems.

  59. Pingback: Tom Blees in Australia « BraveNewClimate

  60. Peter asked:

    How do you prefer “the risk of one kind of error over another” if not on an impartial, numerical basis?

    Some errors are plainly easier to live with than others. If you err on the side of too much safety in a system, then you pay more than you need. An example of this would be taking out insurance when you don’t need it, which most people do so as to have the intangible benefit of know they are protected against the worst losses. Although one cannot ignore opportunity costs entirely, we humans (both at individual level and public policy level waste enough noney to ensure that (unless we go completely nuts on one thing) whatrver premium we pay wan’t cost us anything too important. Is every dollar of public or private spending creating valuable utility right now? I’d say no.

    Who chooses which kind of error is preferable?

    Government, in a broad sense, responding to the public or the stakeholders in a legitimate way, ideally.

    Should the the decision be based on ideology?

    In a broad sense, all public pollicy and private investment decisions are based on ideology. My ‘ideology’ is my sense of public utility, and the weight I attach to the value of human life and issues lke “what does fair dealing look like?’ and ‘what do we owe those yet to be born?’

    I expect we would agree that any comparison must be made on a properly comparable basis, (e.g. immediate fatalities, latent fatalities, work-days lost, total health costs, etc

    Certianly these and one or two others similar are fundamental if one is not to be arbitrary, but one must bear in mind that risk trading is an imprecise business, at best and that intangibles are a part of every system attempting to give human what they want.

    We may start mucking around with raising the cost of carbon, but that is going to be fraught with problems. And why, when we could have nuclear at the same cost as coal for around the same cost and far safer

    Maybe I think paying more to double the safety (in the broadest sense) of an energy system such as coal is money well spent, relative to spending the same money and getting only a substantial improvement.

    I’m also not sure what you mean in practice by making nuclear less safe than now to as to lower its costs to that of coal.

    I want unbiased regulations that require fossil fuel and nuclear (and all other generators) to meet the same requirements for safety, emissions, damages, etc on a full life cycle basis

    So do I, but I’d like equality to be at the level nuclear is now, or at worst, much closer to nuclear power than coal.

    It is totally impossible for the safety standards of coal and gas generation to come up to that of nuclear. Totally impossible at any cost

    I’m not clear why that is a problem. Let them pay an indemnity against the damage they cause, realtive to nuclear power, and let that be paid to a fund independently and competently administered by relevant experts and then disbursed as needed to mitigate the losses that arise or to create some compensating benefit and if that prejudices them out of business or forces them to improve to save indemnity, then this is a good thing. It could be that in some cases, the funds are sufficient to retool the worst offenders with nuclear power, for example.

    Not only that but higher cost electricity will mean slower reduction of emissions from land transport and heat

    Not if we also impose on land transport energy costs, as we should. Liquid fuels too ought to be treated the same way as electricity.

    More later … work is calling …

  61. Ewen Laver,

    My concerns with what you are arguing for are:

    1. The decisions to “err on the side of more safety” are overly influenced by irrational, emotive responses by the likes of Jim Green, Helen Caldecott, Ian Lowe, Amory Lovins and organisations such as FoE, WWF, Greenpeace and ACF. The result is nothing happens – again. Just like the last 20 years (or last 37 years since the plug was pulled on our first NPP at Jervis Bay).

    2. I think the argument that we want orders of magnitude higher safety for one generator technology than another is completely nuts (your word).

    3. It would be very costly to raise the safety of the coal generation (full life cycle) by even 10%, let alone 1000% to 10,000% as you seem to think is desirable. It is totally impractical, and nonsensical in my opinion. It is purely an emotive response that we ask for orders of magnitude higher levels of safety for nuclear over coal, and many orders of magnitude greater safety of nuclear relative to other industrial processes, transport and living at home. The argument that says we want to bring the safety of coal up to the level of nuclear, to be consistent, would need to be extended to say we must bring all industries and personal activities up to the same level of safety as nuclear before we will allow nuclear. The argument is totally nuts in my opinion. Why are we demanding far higher levels of safety for nuclear than for anything else?

    4. I agree risk analysis and risk trading is imprecise. But so are all the analyses on which we make decisions. That is no excuse to say we’ll override it and use emotive beliefs to make our decisions instead. And this is exactly what we are doing when we require nuclear to be far safer than anything else. The additional cost of this safety, then prevents it being implemented at all. So we don’t get the benefits of the greater safety. This is nuts.

    5. You say: “Maybe I think paying more to double the safety (in the broadest sense) of an energy system such as coal is money well spent, …” This is the sort of misleading statement that causes us to make no progress. Firstly, it would be impossible to double the safety of coal generation (have a look at the NewExt link I provided). But we are not talking aboiu doubling coal’s safety. To be equivalent to nuclear, we need to increase coals safety by a factor of 10 to 100. Let’s try to keep some perspective on what we are talking about here. It is this sort of innnumetrate argument that allows the highly litterate but innumerate to drive us to make such irrational decions as we have been doing with nuclear for 40 odd years.

    6. You ask “I’m also not sure what you mean in practice by making nuclear less safe than now to as to lower its costs to that of coal.” Nuclear safety will not decrease. It will increase as we build Gen III’s and it will continue to improve its safety as time progresses, just as aircraft safety has continually improved over the past 50 years. The more we build nuclear the more the safety will improve. Sitting on our hands waiting for the perfect NPP is not doing anyone any good. So I am not saying nuclear will be less safe than now. But I am saying, strongly, we do need to cut out the over regulation, and the enormous bureautic imposts on nuclear. And the ability of the special interest groups and NGO’s such as FeO, WWF, Greenpeace, etc. to delay construction and continually cause problems for the NPP owners aand investors. Why should such ongoing disruption be allowed against nuclear but not against other much more hazardous industries? Why not against hospitals? It is simply emotive nonsense. And we pay for this because the investors need a higher premium to offset the risk we, the community, impose on nculear but not on other industries. Its preventing us having far safer and cleaner electricity. Its nuts (your words).

    7. Regarding a price on carbon, I agree, conceptually, with properly incorporating the cost of externalities in the cost of energy. However, this is difficult. A price on carbon would be just another example of picking winners (like Mandatory Renewable Energy Targets). Adding a price on carbon is simply adding one more band-aid on top of many others. It would be far better to remove all the unequal imposts that are applied to nuclear. This is where the focus should be, IMO.

    8. Regarding energy efficiency. Sure. But we’ve been there before. Some is achievable but most is not, and any gains will be totally overrun by growth in consumption. Energy efficiency improvement is small bickies. Not the main game, except as a diversion from tackling the real problems. It plays well politically and is emotive. It’s a great way to stall doing anything much for another decade or so.

  62. Peter said:

    The decisions to “err on the side of more safety” are overly influenced by irrational, emotive responses by the likes of Jim Green, Helen Caldecott [...]

    I’m somewhat troubled Peter that you bracket me with such people on the basis of what I have said. I’m not asking for more safety than we have, but about the safety we have now from nuclear, from all generators. If you are merely talking about, as you imply below, removing surpefluous but expensive auditing requirements, then I’m with you.

    Regarding Point 2. I agree. We ought not to have big differences. We should require others to come up to the standard of nuclear or pay a suitable indemnity, as I suggested. We can let them figure out which combination of responses its optimal.

    The indemnity money could then be used to underwrite new nuclear capacity, or to retire old dirty capacity, or to do epidemiological work on people within the coal and gas footprint. We might help people affected by mercury fallout move some place else, for example. Perhaps we would publicise those coal plants that are failing to comply with existing regulations — in the US this is a big problem. In places like Nigeria, where they use mainly oil to fire their plants we could make a real impact by switching to nuclear, for example. Their earnings in foreign exchange would probably pay for the new capacity.

    The argument that says we want to bring the safety of coal up to the level of nuclear, to be consistent, would need to be extended to say we must bring all industries and personal activities up to the same level of safety as nuclear before we will allow nuclear.

    No it doesn’t. Energy generation is an essential activity. I can’t choose not to use coal-fired electricity and thus to play a part in poisioning the children of the Hunter Valley with mercury and other combustion effluent. I can however choose not to drive a car, or drive it more safely, and I would favour better internalising the community costs of driving, for example.

    I do accept your argument that there are some costs and risks that ought to be borne by the whole community if the public benefit is sufficiently general. What we are haggling over is the nature and scope of the risk trade.

    I support nuclear power and if other generators can’t match its safety at acceptable cost then over time they need to indemnify fully those they harm by their failure. to the extent of their failure. If that makes them uneconomic against nuclear power, then the case is clear. We will have a debate about how much of a subsidy we want to give coal and gas and others in actual and prospective free harm.

    A price on carbon would be just another example of picking winners (like Mandatory Renewable Energy Targets).

    No it wouldn’t. MRET certainly are but a price on carbon-based effluent dumping (and the dumping of mercury, actinides, PM etc) is outcome driven rather than technology driven. I can’t see why you don’t see the enormous advantages for nuclear in this. No other technology can compete with nuclear on cost if dumping costs are internalised. In that settying there would be no argument at all for MRET.

    Some is achievable but most is not, and any gains will be totally overrun by growth in consumption. Energy efficiency improvement is small bickies.

    Much too sweeping. In some sectors it will be substantial, especially given that the growth of nuclear power is likely to be exceeded by growth in demand and then create sunk cost obstacles to market penetration. Slower growth in demand and public buy in to lower emissions creates a hostile climate for new coal and even new gas when nuclear is available.

  63. Ewen Laver,

    Woops, my appologies. I didn’t mean to bracket you with Jim Green, Helen Caldecott, etc. I was typing quickly and insufficently careful. Bo offence meant. I really enjoy the discussion and hope that it is helping others too. I hope I am not hogging the floor.

  64. Ewen Laver,

    I’m not asking for more safety than we have, but about the safety we have now from nuclear, from all generators.

    It is totally impossible to achieve this. Just think about the quantities of material involved. The ratio of materials that must be moved for coal compared with nuclear is some 10,000:1. The ratio of toxic materials released to air, water and land is even greater than this ratio. The toxicity of the materials is higher. Whereas nearly all the toxic materials from nuclear are contained, they are not from other technologies. Most of the toxic materials released by coal have no half life – they last for ever in the environment.

    It is not economically feasible to raise the safety of other plants much faster than we are doing and have been doing for ever. They improve progressively and slowly, but to think that we can suddenly raise the safety up to that of nuclear is an off-the-planet-idea.

    The important issue for people to get to understand is that nuclear is some 1000% to 10,000% safer than coal. Not just 10%. It’s like paying $1000 or $10,000 for an item instead of the normal price pf $10. That’s the sort of difference we are talking about.

    If you suggest raising the safety of coal by 10% we have an issue and we couild discuss the cost. Whe you say raise the cost of coal by 1000% or 10,000%, I can’t engage in the discussion.

    So the choice is between:

    1. coal with the safety we have now (and improving slowly);
    2. nuclear at say 5 times safer than coal and electrcity at the same cost as coal;
    3. nuclear at say 10 times the safety of coal and electricity at twice the price of coal.

    To me option 2 is the clear winnner.

    If you want option 3 implementation will be delayed …. Probably forever!

  65. Ewen Laver:

    I support nuclear power and if other generators can’t match its safety at acceptable cost then over time they need to indemnify fully those they harm by their failure. to the extent of their failure.

    Great in theory. We haven’t managed to do this is 40 years of discussing it. If no one else can do it how can we. CO2 is not a proxy for the toxic emissions. You may remove the CO2 but not stop the toxic emissions and the land area distroyed by coal mining.

    How do you propose to price this indemnity. Who collects the money? The government? If so, it goes into general revenue and gets wasted. As well, we reduce Australia’s international competiveness. The downward spiral of falling behind begins. That makes us worse off. The whole idea of big government making us better off is a separate issue, but I basically don’t agree that we are better off with more government, more taxes, more bureaucrats and politicians trying to micro manage the economy and give out the money at elections to bribe the constituents to vote for them..

    What I don’t understand is why you are arguing for this highly complex solution whil leaving in place the massive distortion that are causing nuclear to be too expensive. Why not, instead, focus on removing the unequal imposts?

    In response to my sentence:

    A price on carbon would be just another example of picking winners (like Mandatory Renewable Energy Targets). .

    You replied:

    No it wouldn’t. MRET certainly are but a price on carbon-based effluent dumping (and the dumping of mercury, actinides, PM etc) is outcome driven rather than technology driven. I can’t see why you don’t see the enormous advantages for nuclear in this. No other technology can compete with nuclear on cost if dumping costs are internalised. In that settying there would be no argument at all for MRET.

    I disagree. Carbon price is not a price on dumping of mercury, actinides, PM, etc. If you want to achieve the outcome you need to address the correct problem, not some other problem.

    I explained in my post http://bravenewclimate.com/2010/01/09/emission-cuts-realities/#comment-44149 why I don’t believe a price on carbon is the preferred approach. There is much more I could say about this but perhaps in a separate discussion. Main points are:

    1. Raises the cost of electricity
    2. Slows the rate that electrcity will be adopted
    3. Slows the rate that people will emerge from poverty
    4. Slows the rate that people get better health and education
    5. Slows the rate that clean electricity replaces gas for heat and oil for land transport
    6. Massive profits for traders, finance industry, gas industry and others, but at the expense of ordinary people (the pretence that government can tax and spend to remove inequities is just a socialist nonsense)
    7. Massive fraud
    8. Massive bureaucracy to manage the schemes
    9. Massive compliance cost
    10. Massive costs of trying to minimise fraud
    11. The rules will change at every change of government and every budget
    12. Spendthrift governments will always be seaking mor revenue to prop up their budget deficits.

    And all this for an measureable comodity that cannot be measured sufficiently for trade.

  66. I agree with most of what Peter states above. I think Pt. 6 basically is in contradiction to the parenthetical remarks that follow it.

    But the point is that it is *envisioned* as a speculation. It allows people to *profit* on carbon and allows those rich enough, be they utilities, states or nations that are rich enough to simply go ahead and emit CO2. It *envisions* a future for carbon emissions.

    The only basis to get rid of carbon emissions is to make a clear regulated plan to get rid of them. You say “You, Utility X, you have 5 years to to build x-% of carbon free/pollution free generation. If you don’t, you go to jail. Or, you get nationalized. End discussion” You make it a *law*. Or something like that. This ‘goal’ nonsense is just that, nonsense.

    The Chinese and Indians and Koreans have a *national* plan that does make sense: they are “simply” going to build more and more nuclear to mitigate CO2, save their people from breathing in the crap from coal and natural gas. And that, is a start.

    David

  67. Speaking of coal Peter said:

    The ratio of materials that must be moved for coal compared with nuclear is some 10,000:1. The ratio of toxic materials released to air, water and land is even greater than this ratio. The toxicity of the materials is higher. Whereas nearly all the toxic materials from nuclear are contained, they are not from other technologies. Most of the toxic materials released by coal have no half life – they last for ever in the environment.

    Which is of course the beginnings of the rationale you and I use for preferring nuclear power.

    Carbon price is not a price on dumping of mercury, actinides, PM, etc

    No, it isn’t but it is clear that if less coal is burned there will be less related poisoning and harm. Ideally, we’d put a separate price on dumping these things so that there are costs associated with poisoning people.

    I disagree that there will be massive profits for traders but even if there are, traders are part of the functioning of our system. The question remains, do traders serve any useful function? If they don’t then they will be bypassed or make piffling profits.

    I’d favour the funds being at arms’ length from government. A charter for the body would be set up. It would be independently managed and audited and act on expert advice to serve its charter.

  68. Hi Ewen,

    But my main question to you is:

    What I don’t understand is why you are arguing for this highly complex solution while leaving in place the distortions that are causing nuclear to be too expensive. Why not, instead, focus on removing the unequal imposts?

  69. Ewen Laver,

    I think you may have missed my point where I said:

    The ratio of materials that must be moved for coal compared with nuclear is some 10,000:1. The ratio of toxic materials released to air, water and land is even greater than this ratio. The toxicity of the materials is higher. Whereas nearly all the toxic materials from nuclear are contained, they are not from other technologies. Most of the toxic materials released by coal have no half life – they last for ever in the environment.

    and you replied:

    Which is of course the beginnings of the rationale you and I use for preferring nuclear power.

    The point I was making is that this explains why it is totally unrealistic to try to being the safety of coal up to the same level of safety as nuclear. It was in answer to the point you’d made several times: let’s bring the safety of coal up to that of nuclear (or force coal to indemnify itself against the damage it does, which is great in theory but impractical).

  70. Peter asked:

    What I don’t understand is why you are arguing for this highly complex solution while leaving in place the distortions that are causing nuclear to be too expensive. Why not, instead, focus on removing the unequal imposts?

    I’ve no problem at all with removing “distortions” if there are any causing nuclear to be too expensive. But whether such distortions can be found or not and regardless of the exctent to which they prejudice the commercial roll-out of nuclear power, a suitable price on coal and other fuels based on their actual and prospective harm must attach. They shouldn’t get a free pass, or even the aged energy source concession.

    The point I was making is that this explains why it is totally unrealistic to try to being the safety of coal up to the same level of safety as nuclear. It was in answer to the point you’d made several times: let’s bring the safety of coal up to that of nuclear (or force coal to indemnify itself against the damage it does, which is great in theory but impractical).

    I’m at a loss to wonder why this is an issue. Either you are right, and it’s unrealistic to bring coal up to this standard, in which case the pay up or shut down or you’re wrong and they can do it and can compete. If they can, then no problem and if they can’t (as I strongly suspect) I’m very happy to wave them goodbye.

    I also don’t see what basis you anticipate fraud or why the compliance should be particularly hard to do.

    I might add that your objections 6-12 are taken from the catechism of the opponents of action on climate change. Arguably, all the others with the possible exception of 5 are too. This is a rather odd platform for proposing nuclear power here.

    I’m not suggesting anything at all but you ought to be mindful of the atmospherics. I have no particular doctrionaire view about whether the state of the private sector should do things. I don’t hate banks or traders in commodities or governments. I don’t assume the state is less or more efficient than the private sector.

    Sometimes governments are a lot better at doing things and sometimes they aren’t. I doubt their will to act on climate change which is why I believe a cost on carbon combustion effluent — especially one that usues tradeable certificates will be the most robust cross-jurisdictional tool available. We need business to be wedged enough not to be able to obstruct this. That in turn will clear the way for nuclear power.

  71. Ewen Laver,

    My thinking aligns with yours in the second last paragraph. I have some issues with the others.

    I’ve no problem at all with removing “distortions” if there are any causing nuclear to be too expensive.

    We know they are because investors are demanding 27% risk premium to investment in nuclear compared with coal. This is a clear indication of the investment risk. Yet the technology is safer than coal so why the investment risk premium? It is because of the unfavourable politics, regulations, bureaucracies and compliance costs. It is also clear that new nuclear in Russia is sufficiently low cost that they are building them to smelt aluminium to sell on the world market. A clear indication that nuclear can be cost competitive with even our cheapest old coal power.

    But whether such distortions can be found or not and regardless of the extent to which they prejudice the commercial roll-out of nuclear power,

    I am surprised that anyone would doubt this.

    a suitable price on coal and other fuels based on their actual and prospective harm must attach. They shouldn’t get a free pass, or even the aged energy source concession.

    I’ve said all along that I agree with internalising the external costs of fossil fuel use. But if it was practicable to do so we’d have done it long ago. I have major concerns about the ETS unless it is an international ETS. I’d agree with an International ETS that is administered by the World Trade Organisation as part of the International Agreement on Tariffs and Trade. However, that is a long way off. I’ve stated some of my concerns with an Australian ETS/CPRS. I’ve stated my concerns with raising the cost of electricity anywhere and my concerns are eve greater with applying an ETS in an individual country like Australia. And to add an ETS while at the same time leaving in place the policies such as banning nuclear and, if the ban is lifted, then finding some other way to make nuclear uncompetitive – such as with unequal regulations. I haven’t mentioned previously my concern with the carbon price volatility and, therefore, the uncertainty the ETS will bring to energy supply. Investing in energy systems is a 40 to 60 year investment. How does an ETS help improve energy security under such a situation. All it does is make investors choose the systems with the least capital investment, i.e. gas. Everyone know that every change of government will fiddle with the rules. The rules will be changes as frequently as the Superannuation Rules are changed. How will that encourage investors to invest in something with a 40 to 60 year life. By the way, you advocacy that the people can suddenly change the rules and impose a new cost on an investment with a 40 year life (coal) to make the return tom the investors less, certainly won’t help to make investors feel more secure in investing in nuclear. The money collected by government will go into general revenue and be used to pay for whatever will get governments re-elected. Sorry, I am far from persuaded that Australia is wise to try to set an example to the world with an Australian ETS (especially given what the EU system has demonstrated).

    The point I was making is that this explains why it is totally unrealistic to try to being the safety of coal up to the same level of safety as nuclear. It was in answer to the point you’d made several times: let’s bring the safety of coal up to that of nuclear (or force coal to indemnify itself against the damage it does, which is great in theory but impractical).

    I’m at a loss to wonder why this is an issue. Either you are right, and it’s unrealistic to bring coal up to this standard, in which case the pay up or shut down or you’re wrong and they can do it and can compete. If they can, then no problem and if they can’t (as I strongly suspect) I’m very happy to wave them goodbye.

    And I am at a loss to see why you can’t understand that if it was as simple as you think we’d have done it four decades ago. Try to work out how you price the mechanism you want to impose.

    I also don’t see what basis you anticipate fraud or why the compliance should be particularly hard to do.

    CO2 is an unmeasurable substance. The fraud in the EU system is large already. Just think about how you are going to police all the scams for carbon trading. Look what is going on with the plantations already. We can’t control internet fraud now, imagine trying to control this with an un measureable commodity. And then try policing it between countries.

    I might add that your objections 6-12 are taken from the catechism of the opponents of action on climate change. Arguably, all the others with the possible exception of 5 are too. This is a rather odd platform for proposing nuclear power here.

    We’ll that is your take. I think to be arguing to preserve the regulatory imbalance, and then imposing a “Picking Winners” policy that will raise the cost of electricity, in an attempt to make renewables competitive with coal is what is odd platform. If we raise the cost of electricity artificially as you want to do, rather than lower the clean alternatives to the same cost as coal (which is feasible), we lock in that distortion forever. In my opinion ETS/CPRS as it is proposed now and at this time is not in Australia’s interest, nor the world’s best interest. ETS/CPRS is bad policy at this time.

    I’m not suggesting anything at all but you ought to be mindful of the atmospherics. I have no particular doctrinaire view about whether the state of the private sector should do things. I don’t hate banks or traders in commodities or governments. I don’t assume the state is less or more efficient than the private sector.

    I agree we need to be mindful of the atmospherics. But we also have to speak up to change bad policy. The ETS/CPRS will not overturn bad policy. It will entrench it. I am pleased to hear we agree on the rest of what you say in this paragraph.

    Sometimes governments are a lot better at doing things and sometimes they aren’t. I doubt their will to act on climate change which is why I believe a cost on carbon combustion effluent — especially one that uses tradeable certificates will be the most robust cross-jurisdictional tool available. We need business to be wedged enough not to be able to obstruct this. That in turn will clear the way for nuclear power

    I understand what you are trying to do. But I do not think it is the best approach. I do not agree with an ETS while at the same time saying, in effect: “we ban nuclear but if we change our mind and allow nuclear we will only do so if it is the safest in the world and we will never allow it because we will regulate it into being totally uncompetitive.” Your approach, in my opinion is focusing on the wrong solution. I have an alternative, but it is too long to put in a comment. I’ll send it to Barry and see if he is interested in posting it as an article.

    Ewen, thank you for the discussion. We are in agreement on the outcome we want to achieve but we differ on what is the best way to achieve it. By the way, I have been following the ETS debate since ABARE worked on it in the early 1990’s. I have ABARE Research Report 93.5 Tradable Emissions Permit Scheme on my desk as I write. I also have Peter Shergold’s 2007 “Report of the Task Group on Emissions Trading”.

  72. Ewen Laver,

    Referring to my comment on energy efficiency you said: “In some sectors it will be substantial”.

    Perhaps you are referring to the McKinsey report http://www.mckinsey.com/clientservice/ccsi/pdf/Australian_Cost_Curve_for_GHG_Reduction.pdf and others that reach similar conclusions.

    Australia did similar studies in the early 1990’s and the optimists reached similar conclusions then as they are now. The hard-heads said most of what was proposed was overly simplistic and not practicable.

    I expect a small percentage of what the McKinsey report is proposing will be practicable, but most wont.

    I expect the promotion of energy efficiency will be like the promotion of wind farms. Greenies and do-gooders will convince the population they are “good”, nuclear power is ‘evil’, renewables and energy efficiency can solve our energy and environmental problems. Enormous amounts of public money, and our wealth, will be squandered just as it has been on renewable energy.

    David Walters gave as a great example yesterday of a potential energy efficiency opportunity that makes sense in theory but not necessarily in practice. http://bravenewclimate.com/2010/01/28/tom-blees-in-australia/#comment-44207 The UAE nuclear plants will not be built to use their waste heat for desalination. These nuclear power plants are greenfield sites using the latest technology, and even in this case it is not economic to harness the potential energy efficiencies. To do so would require a redesign of the whole plant. This is a good example showing why so many of the energy efficiency improvements pointed out by the McKinsey report and others will simply not work out in practice.

    There are many other examples. Older buildings had heating and air conditioning operating at the same time. It seemed logical to fix this on these older buildings. But the problems it caused and the cost to implement the improvements were far greater than anyone envisaged. Most of the theoretical opportunities were not implemented.

    The pink bats insulation programs going on now is another example of what I expect will be largely a waste of money. Similar to wind farms. Another example of a government picking winners and simply wasting money for negligible gain.

  73. What we need to see come together, even with Generation III reactors, or, for that matter, new “Generation II+” are several things for for desal based on turbine cooling (which is what we are talking about).

    The customer…that is: the utility, merchant plant, city water works, county, state and/or federal or, in the US, regional water and irrigation districts and authorities approaching the vendors (the makers of these large suckers) with the request that we want to convert steam condensing into flash distillers.

    A consortium could come together made up of the of these “stake holders” (I love Corp. Speak!) with the mission of working together to realize the “Market” for these co-generation facilities with committed buy in from same stakeholders and vendors.

    This could be initiated, I would think, by governments that have a serious stake in this technology (if they even knew about it) such as the UAE, the Saudis, Egypt, The State of California (only kidding, not about to happen here) and so on.

    The other way is for these large companies and state/private entities such as the Chinese and S. Koreans have going to *create* a market for this at least on paper and then push it to the same stakeholders.

    Just my three kepeks on Peter’s excellent reply.

    David

  74. Peter said:

    I’ve said all along that I agree with internalising the external costs of fossil fuel use. But if it was practicable to do so we’d have done it long ago.

    Not at all. Of course, the value of the asset (in this case coal, gas, crude oil) is negatively impacted if you can’t externalise the combustion effluent stewardship costs. That’s why it hasn’t been done. States are in thrall to powerful commercial interests. That’s also why we have to drive a wedge into them, not by imposing a tax but by creating new forms of property that stand as bulwarks against backsliding.

    I’d agree with an International ETS that is administered by the World Trade Organisation as part of the International Agreement on Tariffs and Trade

    You don’t need that. You only need a significant trading bloc to agree and then the others will progressively join. Why are Euros and US dollars such an international currency? Because they are used in major markets. They are the currency of oil. The WTO didn’t force people to regard these as sovereign.

    If the major polluters took this on board, perhaps as a result of some limited multilateral agreements, others would buy in. Indeed, if you achieved no more than to get China, Japan and the Pacific Rim substantially engaged the others would follow.

    And to add an ETS while at the same time leaving in place the policies such as banning nuclear and, if the ban is lifted, then finding some other way to make nuclear uncompetitive – such as with unequal regulations.

    Your text makes little sense in the real world. Given that there is a ban here, it would only be lifted if there was an intent to go forward. A significant carbon price would make nuclear competitive. Indeed, I would argue that agitation for full cost internalisation for coal, gas and liquid fuels would force the discussion of nuclear power onto the agenda. Right now, there’s a debate about fugitive emissions but clearly, if our neighbours continue building nuclear power, then the objections would fall to the ground. Indonesia is going this way. PNG might. How silly would it be for us to aid PNG to build this power source while claiming it was too dangerous here?

    I like the idea because once we underline the real costs of pouring toxins into the air (as well as GHGs) the whole debate about nuclear power would be transformed from one about how ugly and evil it was to one about how impossible and costly it would be to make our dominant sources of energy — coal and gas — as safe as nuclear power and how this cost is actually a subsidy paid in human health from the public to owners of coal and gas. We could stop playing silly buggers with CC&S and stop demonizing nuclear power.

    What could the coal folks say? It’s unfair because we can’t compete? Nuclear has an unfair advantage?

  75. David Walters,

    What better place than Australia to bring these ‘stakeholders’ together. We need fresh water more than any other country. This is bigger than greenfields opportunty. It is bigger than a greencountry opportunity. It is a greencontinent opportunity to provide clean electricity and desalination together at low cost.

    Here is my schedule for Australia’s federal Government, noting that our next Federal budget is in May 2010.

    May 2010 – budget contains line items for funds for the following to be implemented during 2010-2011:

    1. Establishment of a modern version of the Snowy Mountains Authority with Terms of Reference: to implement low emissions electricity generation in Australia such the electricity cost is less than fossil fuel generation.

    2. Funding for nuclear engineering faculites in at least one university in every mainland State

    3. Funding of research will be largely for the social engineering aspects of implementing nuclear energy in Australia at least cost.

    2010 – Government announces policies:

    1. to allow nuclear energy to be one of the options for electricity generation;

    2. to remove all the impediments that favour or discriminate one generator system or technology over another;

    3. That 20% of emissions wil be from low emissions generator mix by 2020 and 80% by 2050. a ‘low emission generator mix’ is a mix of generators that can provide power on demand and meet the emissions limits that will be phased in and become more stringent over time. For example, the limit might be 200 kg CO2-e/MWh in 2020 and 10 kg CO2-e/MWh in 2050. The rate would decrease progressively over time – but not necessarily linearly. The rate does not apply to a single generator. It applies to a company’s mix of generators. The 2020 limit could be achieved by a mix of 50% high efficiency CCGT combined with 50% of one of the following: nuclear, hydo, biomass, geothermal, solar thermal with its own energy storage. Wind cannot meet the 200 kg CO2-e/MWh for the reasons explained here: http://bravenewclimate.com/2010/01/09/emission-cuts-realities/

    4. to buy back some old coal generators at a fair price in a “cash for clunkers” scheme

    5. to conduct first public awareness forums throughout Australia.

    2012 – Government announces policies to:

    1. allow nuclear power plants to be established in Australia and under what conditions;

    2. allow States to bid to host the first reactor and the conditions for selection of the state (this will include a time frame for site selection to be complete by 2013 (I know its fast, but if its urgent we need to get on with it!). In the absence of states bidding and agreeing to meet the schedule the first NPP will be build on Commonwealth owned and controlled land.

    3. Establish arrangements with IAEA to act as our Nuclear Regulatory Authority until we are ready to take over.

    2013 – Call tenders for our first four or five NPPs

    2014: Contract awarded for first four or five NPPs

    2015: Construction begins

    2019: First NPP commissioned.

    2020: Second NPP commissioned, and so on.

  76. Before anyone throws too many rocks at me, they might like to remember that Hanford B was built in 15 months from first breaking of ground until the plant went critical. That was in 1944. Admittedly this was not an electricity generating plant, but it was the first ever large nuclear plant. If we could do that 65 years ago with the first ever, why can’t we build the damned things now??

  77. Ewen Laver,

    I am getting the impression you think it is OK to cheat investors. The investors invested in the essential service, electrcity generation. Now you think it is OK to change the rules and rob them. If government doe this, what do you think the risk premium will need to be for someone to invest in a nuclear power plant?

  78. Ewen,

    I’d say the same to you regarding your comment

    Your text makes little sense in the real world.

    You say:

    Given that there is a ban here, it would only be lifted if there was an intent to go forward. A significant carbon price would make nuclear competitive.

    No. It will only be lifted if Labor is serious about reducing GHG emissions.

    A significant carbon price will give momentum to all those saying renewable can be competitive, It wil stall progress on nuclear for another decade or three. We’ll have another decade of spin that solar and wind and energy efficiency can solve all our problems. ETS/CPRS is avoidance of tackling the real issue – Labor’s anti-nuclear stance.

  79. Peter said:

    I am getting the impression you think it is OK to cheat investors. The investors invested in the essential service, electrcity generation. Now you think it is OK to change the rules and rob them. If government doe this, what do you think the risk premium will need to be for someone to invest in a nuclear power plant?

    The claim is not made out. From 1992 it was clear that at some time in the foreseeable future there would be restrictions on emissions of GHGs. They have been talking abour CC&S for at least that long. Peabody in the US was running campaigns in favour of 1000PPMV from 1993.

    Nobody can claim they didn’t know.

    Perhaps you think they were counting on being able to poison people with impunity? What would the tobacco people say to that, do you suppose?

    Cheating investors? You jest, surely.

    You don’t like traders but do like coal investors and their financial backers?

    A significant carbon price will give momentum to all those saying renewable can be competitive,

    I can’t see how. About ten minutes after that claim was made it would collapse on closer inspection. You couldn’t fund renewables on any scale out of an impost of about $100 per tonne.

  80. PS … I don’t think there would be any risk premium if Australia decided to lift the ban. It would have to be debated at length precisely on that basis. Both parties would be behind it, necessarily.

  81. Ewen,

    I think I understand now where you are coming from. It is deep left. The opinion of those that believe their opinion of what is best for the commons is more relevant than those that have invested.

    No I don’t jext about this. I’ve heard people saying the investors should have known as you have stated. What you are proposing is cloce to deceiptive conduct as far as I am concerned. The investors should be compensated at a fair price if we want to devalue the asset they invested in.

    There are many reasons why I am not supportinve of the ETS. I”ve explained them. I think it would be another really bad mistake for Australia to go this rout at this time. If USA does so, then that may change my opinion and I would be looking for an ETS that protected Australia’s industries and consumers in an equivalent manner to what the USA implements.

    I believe there is no point in use disadvbantaging ourselves while Labor sticks with its anti nuclear policies. The first step is to change that. Otherwise we are just committing to waste the countiy’s wealth for no benefit.

  82. Ewen Laver,

    You said:

    You don’t like traders but do like coal investors and their financial backers?

    No. This is not what I meant. I recognise that traders play an important role in our market and finance systems. What I am against is the government creating a policy to assist financial institutions, traders and fraudsters to make enormous profits trading an unmeasureable substance where fraud and cheating is impossible to control and for what I believe is no real gain.

    I don’t think there would be any risk premium if Australia decided to lift the ban.

    That statement is niave in the extreme.

    It would have to be debated at length precisely on that basis. Both parties would be behind it, necessarily.

    If Labor is serious, it would clear that block now, not spend years playing politics with it and using it for electoral advantage by scaring the population with anti-nuclear scare stories at every election. My problem is they would always want to fight on the basis of “trust us; we are anti-nulcear; you can only trust us to bring you nuclear power at 10 to 100 times the safety of other industries”. So the argument will be over safety rather than cost. That does nothing for us. So I wonder why we should disadvantage ourselves with an ETS when Labor is not serious about reducing emissions.

  83. Peter Lang and Ewen Laver

    I have been following your discussion with interest. It would be a pity if it degenerated into a left /right dispute. Peter, you seem to be accusing Ewen of wishing to welch on investors in coal and take this as indication that he is approaching the problem politically from the left. Ewen argues that his stance is no different from that adopted by anti-tobacco campaigners and that the coal sector should have seen the warning signs already.

    On another thread (Emissions Cuts Realities), I have been making to Peter many of the same points that Ewen has. I definitely come from the right but consider that, in a state of emergency as we are now in, one should consider going on a war footing, requiring more state direction than would normally be acceptable in a free society. Until recently, however, I hadn’t understood what Peter was referring to when he spoke of the need for emissions regulations for all generators. This has been explained on the present thread. It seems to be a phased cap on emissions plus enforced retirement of older coal plants. Compensation would be paid to the owners of the retired plants. I can now see some merit in this proposal but why Peter should conclude that it won’t increase electricity prices I cannot understand.

    Like Peter, I’m worried by the bureaucratic implications of ETS type schemes and their apparent lack of effect as exemplified by the European example. This thread underlies a post by Steve Kirsch, a post endorsed by Peter. In another post, the same author was advocating “tax and dividend” as an alternative to “cap and trade”. Peter says he hasn’t considered “tax and dividend”. Perhaps he should because he might find that it has many of the advantages of his emissions control approach plus others as well.

    The two extra advantages are as follows:
    1) Peter’s controls or caps apply only to electricity generators and thus emissions from transport and domestic heating escape restraint. A carbon tax would prevent such escape.
    2) Peter acknowledges that his proposal does nothing to ecourage efficiency. A “tax and dividend” scheme provides a relatively simple and non bureaucratic way of incentivising individuals to become more energy efficient, at least until such time as all energy is produced from carbon free sources.

    In a pure “tax and dividend” arrangement, all tax raised would be returned to citizens as dividend. Perhaps, Peter might wish to retain, say, 20% of the fund to compensate coal investors whose plants he would wish to close. However, he says that he would wish to target the “Old Clunkers” and I take it that these are plants whose capital costs have already been paid for and which are, in consequence, highly profitable. Does this mean he would wish to compensate investors at higher levels than he would had their plants been cleaner and more modern? I doubt it , but the investors might not appreciate the equity of early retirement with modest compensation. Perhaps, therefore, pure “tax and dividend” would be best. Investors have probably had their money’s worth from the “clunkers” and the introduction of stricter controls on non CO2 coal emissions would probably see them off as it would probably not be worth cleaning them up. I might note in passing that many of my previous investments have “gone up in smoke” through, no doubt, faulty decisions on my part. To an extent, therefore, Ewen is correct to point out that coal investors should have seen the “writing on the wall” for a considerable time and “got out” when they had the chance.

    I would argue that “Tax and Dividend” would be the fastest way to achieve emissions reduction, would accelerate nuclear roll out, would be a relatively easy system to deploy and police and would have the greatest prospect of being adopted on a global scale. Having said that, I’m no economist and might be writing rubbish. The law of unintended consequences seems to crop up too often for comfort.

    Because of the emergency situation we’re in, I would suggest going one stage further to accelerate the adoption of emissions free technology, particularly because of the dire global financial situation. We need long term investors in new energy solutions. Who has the money to invest? I would argue that it is the uber rich and the pension funds. When I’m invited to take control, I’d impose a super tax on the very wealthy but give them an opt out position if they chose to invest what would otherwise be taxed into clean energy investments (I hope they wouldn’t choose to invest in things like wind but I am liberal enough not to block them [I think] Anyway, removal of subsidies to wind generators should be sufficient.) I’d also give financial incentives to pension funds which have a continual flow of income but are stretched to find suitable long term investments. Small savers could also be given tax breaks for similar investment so that I couldn’t be accused of giving an unfair advantage to the very rich!

    Any suggestions as to the flaws in my thinking would be greatly appreciated.

  84. Douglas Wise,

    When people start advocating this sort of stuff, they completely lose me:

    Who has the money to invest? I would argue that it is the uber rich and the pension funds. When I’m invited to take control, I’d impose a super tax on the very wealthy but give them an opt out position if they chose to invest what would otherwise be taxed into clean energy investments.

    And I sure aint wealthy!!

  85. Peter said:

    to make enormous profits trading an unmeasureable substance …

    CO2 is not measurable?

    I think I understand now where you are coming from. It is deep left.

    Conservatives think me deep left and lefty populists think me a right winger. … I don’t care either way

  86. Peter Lang

    I appreciate that Australia has managed to escape recession due mainly, as I understand, to its natural wealth in commodities rather than through the singular ingenuity of its population. This is not the case in the UK as, no doubt, you know. The government plus our over-reliance on the poorly regulated financial sector, has got us into enormous debt. We have an impending energy crisis through lack of appropriate past investment. Please don’t dismiss the remarks in my final paragraph out of hand. Where is the investment for new infrastructure to come from? The government can’t afford it, short of continuing to print more increasingly worthless fiat currency. Bond buyers may stop playing the game – there’ll be an investment strike – and we may end up defaulting on our debts. Wealth, surprisingly or unsurprisingly, depending upon one’s philosophical views, has been increasingly concentrated at the top during the tenure of the current left wing government . It is now only the very rich few who have much left to invest (plus pension funds). The government wishes to introduce a higher tax band. The opposition dares not oppose it. My suggestion is that the opposition doesn’t oppose but offers a way of avoidance that would be in the national interest.

    Please explain your reasons for my having “lost you”. I would also appreciate comments on the earlier part of my post.

  87. Ewen Laver and Douglas Wise.

    IMO, you are wrong to promote ETS or Carbon Tax now. Dead wrong!

    All this will do is give Labor a way to avoid making the tough decisions on their internal party policy. It allows Labor to avoid adopting nuclear as part of their platform. They will go to every election using anti-nuclear scare campaigns while saying they are addressing the problem with CCS, renewable energy and energy efficiency.

    I expect Douglas Wise does not fully understand the politics of what is going on in Australia. The Labor Party is anti-nuclear. The Labor Party is in government at the federal level and in every state except one. Even when Liberals are in government, there is no possibility of a Liberal government introducing nuclear into Australia because Labor runs a scare campaign against it. They’ve been doing so at every election.

    So until; Labor bites the bullet and changes policy on nuclear this will go on indefinitely.

    So, in my opinion there is no point falling for the ETS or CPRS line. It is simply a diversion to get Labor out of a bind. Until Labor fully supports nuclear, without caveats, there will be no possibility of nuclear being an option for Australia.

    The policy I suggested, is a fragment of a complete energy policy. It relates only to electricity generation.

    For Option 3 – Nuclear & CCGT in the “Emissions Cuts Realities” paper to be a reality we will need policies and a time line like the one I laid out in the comment here: http://bravenewclimate.com/2010/01/02/investment-we-arent-making/#comment-44336 , No Carbon Tax or ETS is going to allow this program to begin until Labor changes its policy on nuclear. There is no point in Labor half changing – so it says, in effect “we’ll allow nuclear but only if it is the safest in the world”. Labor needs to come out and say their policies will provide electricity generation at a cost less than that of the Coalition’s policies will. That is the grounds on which the elections need to be fought. The two parties need to differentiate themselves not on the basis of safety or whose back yard won’t get an NPP, but on the basis of whose policies are better able to provide least cost electricity. Safety should not be an issue, because we’d be moving to nuclear which is far safer than what we have now; and nuclear will get safer as time goes on but coal will not if CCS is included. And in no circumstances can fossil fuels ever get close to nuclear on safety.

    Ewen, you said:

    Perhaps you think they were counting on being able to poison people with impunity? What would the tobacco people say to that, do you suppose?

    I realise this was said in the heat of our debate. But your point is worth discussing.

    I do not agree this is a fair comparison. Electricity is an essential public service. The electricity engineers who work to provide us the best service they can are dedicated, conservative engineers working within the constraints and regulations that society places on the industry. The investors are Superannuation funds, Managed funds, ‘Mum and Dad investors’ as well as the banks and international investors. Society wanted least cost electricity and chose to have coal. It wasn’t the investors, it was us who made this choice. And we asked the investors to invest. We set the rules. Now we want to change the rules but some of the people who want to change them feel we should not have to pay fair price for the assets we are stranding. That is not right. And it will make investors more nervous about investing in an electrcity asset that has an even longer economic life – nuclear.

    The other point I’d make is about your comment

    “Perhaps you think they were counting on being able to poison people with impunity?”

    Society has accepted the level of safety.of coal generation. In fact, you have in effect been arging to keep it. You’ve been arguing, in effect, that if you can’t level safety up to the level of nuclear, you’d rather stay with coal. And that is what the anti-nuclear activists have been arguing, in effect, for the past 40 years. It is the anti-nuclear activists that have been arguing to stick with coal rather than have nuclear. So I think it totally wrong to say the investors should be the ones to lose out.

    Lastly, think of how investors will analyse a potential investment in nuclear if what you advocate succeeds. In the investors mind the people, through their government, changed the rules and stranded the assets of coal. If the government will do that for coal, what will they do with nuclear. What happens next time public opinion changes about which power generation technologies the people like and don’t like?. Will the rules change so I lose my investment? The probability is yes, as demonstrated by what happened to the investors in Australia’s coal fired power statiosn. So I (the investor) need a higher risk premium to attract me to invest in nuclear in Australia.

  88. Peter,

    I do want to conduct this discussion in an even and civil tone. There’s no heat from me, though at times I find your characterisation of my position troubling.

    I do accept your broad point on the queswtion of stranded assets and sovereign risk. Clearly, any public good that entails a significant sunk cost must have security over the asset from serious changes in the operating environment for at least the time when they can recover that cost if they are not to need a risk premium. My argument however would be at the margins. Those who make these capital investment decisions must take into account the reality that some changes in the operating environment is inevitable during the sunk cost period. Both the technologies with which they compete and the demands of the public abour cost, risk and reward may change.

    It was clear from the mid-1970s for example that some time during the next 20 years CFCs would be banned. Initially, companies like DuPont campaigned against it before jumping ship and backing it. The Montreal Protocol was introduced. Similarly in the case of SO2, trading schemes within a number of US jurisdictions were introduced and these sharply reduced SO2 within ten years. From the mid 1970s therefore, the canniest of investors ought to have concluded that CO2 would itself come to be constrained, and certainly by the time that the IPCC was set up in the late 1980s, the writing was on the wall. In fac t, the companies themselves began talking about CC&S quite early, showing that they knew what was at stake. Hazelwood in Australia dates from the 1960s, so the maths is quite simple.

    And as I said, even if one ignores CO2, it is clear that coal-fired power is causing huge numbers of premature deaths and unnecessary injuries. Like the tobacco promoters and asbestos salesfolk, they could not have imagined that eventually, people wouldn’t twig and demand remediation.

    You imply that I support coal fired power, but I don’t. I favour them indemnifying the public against the cost to the commons. I’d be willing to phase that in, in order to allow a phase out of the activity consistent with recovery of whatever sunk costs remain unmet. The worst power stations would have the lowest margin of utility and go first. Some stations might start doing gasification and more power might come from gas. Some of the newer equipment could be sold to buyers without schemes. The costs raised could begin to offer remedy to those most at risk, and abate emissions elsewhere.

    On the question of nuclear power and the ALP, there is no proposal to allow nuclear at unreasonable safety standards. There is no proposal at all. For us to be debating the required safety would be a step forward, so I’m at a loss to work out why you raise this.

  89. Peter said:

    IMO, you are wrong to promote ETS or Carbon Tax now. Dead wrong!

    All this will do is give Labor a way to avoid making the tough decisions on their internal party policy. It allows Labor to avoid adopting nuclear as part of their platform. They will go to every election using anti-nuclear scare campaigns while saying they are addressing the problem with CCS, renewable energy and energy efficiency

    I disagree. The moment we start a phase of costing out various risk and reward options, nuclear will get onto the same playing field as every other energy technology. Instead of the landscape being divided into nuclear and non-nuclear power options, the landscape will feature all the energy options with costs per emissions and harms avoided on the table. In the long run, that is a debate that nuclear power can’t lose. It is generally agreed that CC&S cannot be competitive at less than $100 per tonne of CO2 and that is well above the prices being quoted now of $10-$20 and yet Australia is part of a massive program of funding the pretense it can work. Out there in the public, CC&S has few friends. Nuclear has far more friends.

  90. Doug Says:

    In a pure “tax and dividend” arrangement, all tax raised would be returned to citizens as dividend.

    I much prefer a cap since this allows those who can’t abate emissions cost-effectively to pay a penalty to those who can. The money is still returned to the public — on the basis of performance. I’d be quite happy for households to get an allowance and then buy and sell their credits in the same way.

    Money raised by the state selling permits could be applied to the provision of community services on a means-tested basis that would mean people would avoid emissions or avoid cost or some of both.

    As I implied above, I long ago stopped thinking labels like left or right were useful for most matters of policy. I’m in favour of whatever combination of measures is likely to allow most people to get most of what they need, most of the time, given the resources that we could most sustainably and efficiently produce.

    Whether people think that makes me a lefty or a rightwinger is of no interest to me. In Australia, speaking positively of nuclear power and resort to market forces and globalisation tends to cast one as on the right, which is how many self-identifying lefties see me. Speaking of the environment, the value of the commons, about moral hazard not being relieved, about equality of outcomes, empowerment of those who are disadvantaged and income transfers to the developing world tends to make self-identifying conservatives wince and cast you as some sort of loony utopian lefty.

    If I have a label it is “humanist”. I believe humans, working together in a collaborative and equitable way acorss national borders, can control their common destiny and prospects, and achieve their full potential. I believe nuclear power is an essential part of that journey. I believe a suitably commons-sensitive funding model would produce the best suite of options, regardless of what predispositions individual governments may have.

    Australia has a large sahre of the world’s throrium and uranium so we are in a position to exercise a considerable positive influence on human life chances. I wish we would.

  91. Ewen Laver,

    I also want to conduct the debate in a civil tone. I apologise for any over the top comments.

    You say:

    Those who make these capital investment decisions must take into account the reality that some changes in the operating environment is inevitable during the sunk cost period. Both the technologies with which they compete and the demands of the public abour cost, risk and reward may change.

    They do take this into account. And raise the risk premium to account for the likely policy changes. The more we change policies and regulations, the more we strand assets before the end of their economic life. The more the investors see the potential for rule changes, the higher the premium must be to attract investors.. The sunk cost period is only relevant for the initial investors. After that all investors buying and selling shares or bonds make their decisions on the expected return and the risk of receiving more or less return and of losing capita value.

    We are not talking about ‘on the margin’. I provided figures from MIT showing a 27% risk premium for nuclear over coal in the USA. The risk premium in Australia may be more like 100% given our politics on nuclear.

    Yes, I am familiar with the trading of the other polutants. Trading CO2 is a totally different situation. I’ve explained some of my reasons in previous posts. There are other reasons too. I could pull all this together and organise it clearly, but it is not where I intend to spend my time today. I’d just refer you to the previous comments. I am not persuaded that an ETS, CPRS or Carbon Tax is the best policy at this time for the reasons outlined previously. I cannot agree to policies that would disadvantage Australia, and squander our wealth for no benefit, given that Labor has an anti-nuclear policy. Labor must show it is genuinely interested in providing the least cost option for reducing emissions or they are simply playing politics. There is no substance to their claim that they want to reduce emissions. They simply want to collect more revenue and win elections using anti-nulcear fear campaigns.

    I can’t take you seriously comparing the electricity generation industry with the tobacco industry. I’d emphasise again it is the greenies that have caused the situation with us having coal fired power instead of clean nuclear. And 20 years of mucking around with wind and solar while blocking nuclear.

    I am at a loss to understand why you cant see that Labor’s anti-nuclear policy is the key block to progress on reducing GHG emissions in Australia. There is no point letting Labor of the hook for another 20 odd years by allowing a ‘out’ with an ETS/CPRS or Carbon Tax. Let Labor to change its anti-nuclear policies first to demonstrate they are serious, then we can take another look in a few years time after policies, perhaps like those I’ve suggested, have been implemented. We need direct action like what I suggested to set the appropriate policies in place as a first step.

    I can see no basis for your argument that if Labor implements its CPRS then they will change their mind on nuclear. I think it is nonsense. The evidence of the past 40 years is the opposite. The CPRS would delay Labor having to address its anti-nuclear policy. Labor’s anti-nuclear policy needs to be reversed this year – this election year!!

  92. Ewen and Peter

    I accept that judgement between the relative merits of ETS/CPRS or Tax and Dividend is not entirely clear cut. I prefer the latter because it is easier to understand, makes gaming the system almost impossible and avoids a great deal of burdensome bureaucracy. Obviously, it would penalise certain highly energy intensive industries which should thus receive some degree of protection from international competitors which were not so constrained.

    I agree with Peter that the introduction of any carbon pricing or capping system introduced at a stage when nuclear is banned may result in heavy investment in inferior or inappropriate energy infrastructure (especially if accompanied by mandates and subsidies). It seems to me, though, that Peter is also calling for a cap through his emissions reduction scheme.

    I think the debate here has been a bit scrambled by intertwining two issues. After all, we all want nuclear and all seem to agree on the desirability of some sort of cap or tax. I think, therefore, that Peter wants the nuclear debate to be won first and, until it is, he doesn’t want any emission control system. Ewen and I are opining that a control system would be more rather than less likely to lead to pro-nuclear policies.

  93. Dougla Wise,

    You are correct. I want the Labor Party to change their anti-nuclear policy first. I think to proceed with CPRS with anti-nuclear Federal and State governments across the country will disadvantage Australia for no benefit.

    Labor’s anti-nuclear policies have prevented progress for 20+ years. To believe that bringing in a CPRS will be the way to change Labor’s anti-nuclear stance is naive.

    Regarding your promotion of ‘Tax and Dividend’, I am not really interested in looking into that at the moment. It would be simply another distraction at this stage. It is not one of the options being considered in Australia. The three options under consideration are:

    1. Emission Trading Scheme (ETS) / Cap and Trade / Carbon Polution Reduction Scheme (CPRS)

    2. Carbon tax

    3. Regulation.

    I am for regulation at least until:

    1. The world decides what mechanism it is going to adopt to manage GHG emissions

    2. we have pro-nuclear policies by both major political parties across the country

    3. policies and funding are available to set up the education, research and administrative facilites needed to support the rapid introduction of nuclear energy, as suggested here: http://bravenewclimate.com/2010/01/02/investment-we-arent-making/#comment-44336

  94. Peter said:

    The risk premium in Australia may be more like 100% given our politics on nuclear

    It’s unfortunate that you utter such an unprovable assertion in numeric terms. Right now, the risk premium on nuclear power is zero, because it will not be approved. If policy changed, then it is very clear the terms would have to be explicit and run for the life of the plant. Any serious changes while the plants were in their sunk cost period would be compensated. Every Australian government, state and federal, has treated investment in infrastructure this way.

    Nuclear power is a well settled set of technologies with a fairly easily accessible set of costs benefits and risks. While it is conceivable, 20 or 30 years from now, that new and improved hazardous materials handling methods may be devised, if these were implemented the costs if any would simply be passed on without implication for the viability of the assets. If something like Price Anderson operated here, I doubt it would change. Risk premiums would probably end up being quite a bit less than in the US because here nuclear power would only be adopted after a very robust debate about all of the related issues and probably in circumstances where it was rightly seen as a necessity. In the US it was adopted in the form that it was largely to meet the need for weapons-grade Pu239 in the context of the Cold War.

    Labor must show it is genuinely interested in providing the least cost option for reducing emissions or they are simply playing politics. There is no substance to their claim that they want to reduce emissions. They simply want to collect more revenue [...]

    This claim is unfortunate. No state can levy its population more than it can pay and remain viable. Indeed, no state which takes account of the satisfaction of populations within its purview can overtax its people. In the end, it matters not a jot how levies are drawn or what mix of direct and indirect measures are adopted. What counts is the total burden of taxation. There’s no evidence at all that the government “simply wants to collect more revenue”. Indeed, in the period since late 2008 it has been most keen to give revenue back and has been willing to run up deficits in the process. It has done this in the face of criticisms about reckless spending and debt and cash splashes. A policy of revenue positive fiscal measures would be a massive reversal which it shows no sign of doing. CPRS is at the moment, revenue-negative, meaning that it collects less than it distributes after compensation has been paid.

    One may argue about the the efficiency of the levy measures or the likelihood that they will have unintended impacts on various sectors of the economy, but merely iterating the populist “great big new tax” rhetoric of the Liberals is, to be polite, intellectually regrettable when it comes from someone of erudition and seriousness such as you.

    I am at a loss to understand why you can’t see that Labor’s anti-nuclear policy is the key block to progress on reducing GHG emissions in Australia.

    I do recognise that it is a key stumbling block to cheap reductions in GHGs. The challenge for those of us who wish to see it abandoned is to rapidly create a context in which it will become the consensus that nuclear power ought to be adopted. In order to do this, it’s probably useful to have an understanding of the historic wellspings of opposition to nuclear power in this country.

    The history of opposition to nuclear power here is interesting. Until early 1975, ALP policy had been largely supportive. In 1957 nuclear power for “industrial purposes” was explicitly endorsed. The 1969 and 1971 positions urged an early roll-out of nuclear power stations. Under Connor, the policy remained unchanged, though he wanted to ensure Australia’s government was the principal beneficiary of uranium assets and was keen, even when prices for uranium rose, to ensure that buyers bough enriched uranium from state enterprises, as part of a state-based nuclear power industry. February 1975 saw a motion that sought to constrain development “pending adequate environmental safeguards” but this related to mining of uranium rather than plant operation.

    The most serious blow was in mid 1975, when Connor, under pressure from NSW, Victoria and SA, decalred that nuclear waste would not be accepted from those buying Australian uranium, which in turn led to a declaration that Australia would use coal and hydro instead.

    The ALP was defeated in December 1975 but even so, in 1976 the ALP declared its willingness to adopt nuclear power if safety and environmental issues could be resolved.

    It wasn’t until mid 1979 and in the wake of TMI that the ALP adopted explicit opposition to nuclear power here.

    Throughout the 1980s the issue of nuclear power became explicitly entangled with debates over the question not only of the safety of mining, but about deployment of nuclear weapons. France’s nuclear tests beginning in 1980 at Mururoa Atoll started this hare running. With the election of Reagan and the debates about deployment of neutron bombs, pershing missiles and SS-20s, the sinking of the Rainbow Warrior the nuclear disarmament movement and the environmental movement got very close. Opposition to uranium mining, worries about a new missile crisis, hatred of French nuclear testing in the Pacific, envioronmental parochialism and with Chernobyl, existential fear of the plants themselves fused into one anti-nuclear gordian knot. Not only did the broad left have a moral rubric, but many of the background issues appealed to those on the right as well. A quarter of a century after Chernobyl, we haven’t moved much beyond whether one is for nuclear or against it.

    If we are to unpick this knot, and to create a context in which one could again consider nuclear power alongside other options, then we have to evaluate them all by the same measurable standards.

    Clearly, the problem of nuclear waste is a key one. That is why we ought to measure nuclear power against the radioactive and other waste emitted by its energy competitors. Coal plants emit far more waste to the open environment per unit of power than nuclear power plants. And as we know, IFRs and LFTRs can subtract from nuclear hazmat.

    Let coal plants emit as little toxic waste as nuclear plants or pay for the privilege sounds like a pretty good talking point to anyone worried about nuclear power to me.

    Similarly, if people understand that it is the case that potentially weapons-grade material is reduced by LFTRs and IFRs then again, this would be a positive reason for adopting such options. What does coal do to reduce the volume of nuclear waste in the world? is what we should ask.

    We should emphasise also the sheer volumes of GHGs that nuclear power can save per dollar and compare this with every dollar spent on every other source. Most of the left now see GHG reductions as a moral rubric — and many don’t trust business not to flim flam their way about the rules. Let us build nuclear plants to replace coal plants will play well because that way, reductions are forced.

    We can also harness resource and broader economic nationalism. Australia has large quanta of uranium and thorium. This is an opportunity to get an edge in the low emissions industrial economy.

    The tricky thing here from a political POV is that this issue is a wedge against whoever raises it. A party that feels its grip on power is secure will generally not raise it since there is no political upside. Were Rudd to raise it now, his own party would split and there would be a strong possibilioty that his postion would weaken. The Liberals won’t raise it either because they would be even easier to wedge, since they are more divided.

    It seems to me that the only way that it will become a reality is if the left of the ALP at least becomes agnostic and runs dead. The left are never going to vote Liberal, and the Greens won’t be able to run with it in such circumstances. Then it would be the Liberals who would be wedged. That’s why the arguments above are so important.

    But how to concretise them? The safest way is to put a price on harming the commons, since the right asserts that picking winners is wrong, but putting a price on externalities allows a market-based solution. If we stay technology neutral, then nuclear power will win out. If people raise the other “values” objections we can deal with these as we should, issue by issue. Australia will not be party to breaching the NNPT. Australia will make the world a safer place by adopting good stewardship over hazmat. Australia will contribute to reducing GHGs. Australia will have cleaner air and cleaner industry. We can put pictures of operating coal plants and nuclear plants side by side and let people see.

    I see no better way. Do you?

  95. Ewen Laver

    Excellent and thoughtful analysis.

    Peter Lang

    Fraud, per se, is not necessarily a relevant reason to dismiss what Ewen is proposing. I suspect most fraudulent losses are associated with spurious offsets and the issuance of too many or too cheap licences to polluters. Mandating and subsidisation of renewables are other very damaging characteristics of EU climate change policy. Australia might learn from the mess made by the EU and its CPRS scheme might avoid some of these problems.

    You say that you are in favour of emissions regulation. Could you be more specific in your explanations as to why this would be superior to, say, CPRS (I’ll omit Tax and Dividend because you suggest it has no current Australian relevance). How would it be enforced? Why wouldn’t it raise electricity prices? Who would provide the funds for compensation? Why does your proposal have any more current Australian relevance than Tax and Dividend?

  96. Hi Douglas Wise,

    Thank you for all these questions. I believe I have provided the answers in a number of posts over several threads. I understand it has become rather disjointed and so it is probably pretty unclear to others what I am suggesting as an alternative and why I believe an ETS is the wrong policy for Australia at this time (maybe ever). I have sent an article to Barry to assist with answering some of these questions. Addressing why regulation rather than ETS may be a subject too big for me to handle in posts like this.

    For now, can I refer you to the quote at the top of this thread:

    If you want to get emissions reductions, you must make the alternatives for electric power generation cheaper than coal. It’s that simple. If you don’t do that, you lose.

    and to the several related posts where I argued the case why this is so important

    Then to: http://bravenewclimate.com/2010/01/09/emission-cuts-realities/#comment-44149
    and the related posts following this. Please also do refer to the links included. The GapMinder chart is important to understand where I am coming from.

    There are many relevant posts on this thread including this: http://bravenewclimate.com/2010/01/02/investment-we-arent-making/#comment-44241

    Understanding what I am trying to say in these posts depends on the paper “Emission Cuts Realities – Electrcity Generation” as a prerequisite. What all these posts are trying to do is to provide a realistic way to achieve the least cost way to reduce emsiions the most and to achieve the schedule for emissions cuts. Option 3 – Nuyclear and CCGT is the option that cuts emissions the msot and alt least cost, so the posts I am referring you to are trying to achieve thos emissions custs and at that rate. In my opinion an ETS will not go close. It will achieve next to nothing for years. We’ll continue to muck around with CCS, solar therma and wind power. Unless we can assit Labor to get over its anti-nuclear policy, quickly, we are not going to make any real progress.

    I believe this year, before the election, is the window of opportunity. If we miss it, the delay can go on for a long time. Its been going on for 20+ years and who knows how much longer. There is no point trusting what the Labor supporters say. They will simply defend what Labor wants to suit its election prospects. That will get us nowhere on introducing nuclear power in Australia. I believe we really need to apply the pressure to Labor now. The most important time is right now as the CPRS Bill is debated in Parliament, and following this in time to get funding included in the budget for this financial year. We need to get Labor to change its policy and take its policy to the election. We also need to encourage Labor that they have a unique selling point and a clear segregator from the Coalition on the basis of who has the best policy to implement nuclear at least cost. Labor can point to many of the argments that others have made here that it needs to have a major public sector involvement to achieve least cost. But don;’t start using safety or scare campaigns. Lets see the policy battel on the basis of least cost electricity. Otherwise, …..

  97. I am new to this site but I am astonished at the general inconsistency in reasoning.

    You are trying to push nuclear energy which is very sensible, but you are doing it with the disproven religion of AGW. That is marketing suicide as the flood gates have been open to the fraud perpetrated upon the public.

    It is a shame that no one can just discuss the science without feeling like they have to cook the data. Do any of you have the original station data, not the homogenized data? Why is that data sequestered, homogenized and then destroyed. Placing your faith on the flawed work of others reduces the value of your objectivity, intelligence, and ability to persuade others of the value of nuclear energy.

  98. Pingback: Do climate sceptics and anti-nukes matter? or: How I learned to stop worrying and love energy economics « BraveNewClimate

  99. Pingback: The problem with ‘Generating the Future: UK energy systems fit for 2050′ « BraveNewClimate

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