Ofgem urges a shake-up of the energy market

This post originally appeared at cobdencentre.org.

Via FT.com, Ofgem urges a shake-up of the energy market,

Sweeping reforms of the UK’s energy market must be brought in urgently to protect energy supplies, reduce greenhouse gas emissions and deliver the £200bn investment needed in the power sector, the energy regulator said on Wednesday.

Ofgem said options for reform would include placing more stringent legal obligations on energy suppliers, and “improved market signals”, which could include a higher price on carbon dioxide emissions. More drastic options could include a centralised renewables market and a central buyer of energy for the whole of the UK.

Which all seems very well, until you realise that this is the fruit of an ideological aversion to the free mutual cooperation of individuals and corporations. Ofgem apparently tell us, “It would mean taking away the market’s role in delivering that investment.”

We need to make our minds up about whether planned or free economies can provide us with the means of our survival and prosperity. History’s answer is clear: planned economies cause misery and then collapse.

Further reading

Climate targets can’t be achieved, say energy companies – Telegraph

Via Climate targets can’t be achieved, say energy companies – Telegraph:

Energy companies have privately warned the Government that its climate change targets are “illusory” and “delusional” as global leaders prepare to sign up to stricter guidelines at the Copenhagen climate change conference in six weeks.

We are already facing electricity shortages: how long before someone suggests we live with rationed electricity?

If we are serious about energy security and global warming, what is required is a business environment which will be stable over the long term so that private companies and individuals can plan to supply what people need: reliable, plentiful electricity.

Britain’s energy crisis: How long till the lights go out? | The Economist

The Economist asks some very reasonable questions:

Thanks to its posturing politicians, Britain will soon start to run out of electricity. What should it do?

IN THE frigid opening days of 2009, Britain’s electricity demand peaked at 59 gigawatts (GW). Just over 45% of that came from power plants fuelled by gas from the North Sea. A further 35% or so came from coal, less than 15% from nuclear power and the rest from a hotch-potch of other sources. By 2015, assuming that modest economic growth resumes, a reasonable guess is that Britain will need around 64GW to cope with similar conditions. Where will that come from?

Read more: Britain’s energy crisis: How long till the lights go out? | The Economist.

FT.com – The brighter side of expensive oil

Perhaps cold comfort to those of us who live out of the city:

It is often pointed out that if Martin Luther King’s most famous speech had declared: “I have a nightmare”, he would not have persuaded anyone.

He might not have sold very many books, either. There is only so much gloom the average reader can take, and today’s publishing climate is not receptive to Old Testament prophecies of imminent destruction.

Expensive petrol, he suggests, will bring all sorts of benefits, from lower road deaths and less obesity to tastier, locally grown food. It could also mean the downfall of Wal-Mart and the “carnival of excess” that is Las Vegas: deaths that Mr Steiner does not seem inclined to mourn.

via FT.com / Books / Non-Fiction – The brighter side of expensive oil.

Some favourite quotes from Karl Popper

Karl Popper is without doubt my favourite character in political philosophy. He was rational, believing knowledge and truth to be objective, but aware of the boundaries of reason. A scientist but concerned with the mechanisms of society. By humanitarian inclination a social democrat — when that meant “Marxist” — but by reason a liberal: a believer in freedom.

In the course of things, I rediscovered these quotations by Popper, which seem apt today, as we hastily seek solutions to our present difficulties:

I see now more clearly than ever before that even our greatest troubles spring from something that is as admirable and sound as it is dangerous — from our impatience to better the lot of our fellows.

Perhaps one from his time, when the foolish utopian experiment communism was still alive in the world:

It seems to me certain that more people are killed out of righteous stupidity than out of wickedness.

And defining ‘tyranny’:

You can choose whatever name you like for the two types of government. I personally call the type of government which can be removed without violence “democracy”, and the other “tyranny”.

On the role of intellectuals:

Why do I think that we, the intellectuals, are able to help? Simply because we, the intellectuals, have done the most terrible harm for thousands of years. Mass murder in the name of an idea, a doctrine, a theory, a religion — that is all our doing, our invention: the invention of the intellectuals. If only we would stop setting man against man — often with the best intentions — much would be gained. Nobody can say that it is impossible for us to stop doing this.

On historicism, but more generally applicable to positivism in economics: trying to produce specific outcomes when ultimately you can only do so by manipulating the actions of individual men and women:

We may become the makers of our fate when we have ceased to pose as its prophets.

On freedom and tolerance:

The so-called paradox of freedom is the argument that freedom in the sense of absence of any constraining control must lead to very great restraint, since it makes the bully free to enslave the meek. The idea is, in a slightly different form, and with very different tendency, clearly expressed in Plato.

Less well known is the paradox of tolerance: Unlimited tolerance must lead to the disappearance of tolerance. If we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them. — In this formulation, I do not imply, for instance, that we should always suppress the utterance of intolerant philosophies; as long as we can counter them by rational argument and keep them in check by public opinion, suppression would certainly be unwise. But we should claim the right to suppress them if necessary even by force; for it may easily turn out that they are not prepared to meet us on the level of rational argument, but begin by denouncing all argument; they may forbid their followers to listen to rational argument, because it is deceptive, and teach them to answer arguments by the use of their fists or pistols. We should therefore claim, in the name of tolerance, the right not to tolerate the intolerant. We should claim that any movement preaching intolerance places itself outside the law, and we should consider incitement to intolerance and persecution as criminal, in the same way as we should consider incitement to murder, or to kidnapping, or to the revival of the slave trade, as criminal.

So let us be tolerant then, but only up to the point our open society is threatened, and let us also be reasonable:

There are many difficulties impeding the rapid spread of reasonableness. One of the main difficulties is that it always takes two to make a discussion reasonable. Each of the parties must be ready to learn from the other. You cannot have a rational discussion with a man who prefers shooting you to being convinced by you.

And also, thinking of the sacrifices we are invited to make today for the future — I think particularly of the world’s desperately poor, who need inexpensive energy1:

Do not allow your dreams of a beautiful world to lure you away from the claims of men who suffer here and now. Our fellow men have a claim to our help; no generation must be sacrificed for the sake of future generations, for the sake of an ideal of happiness that may never be realised.

We might reflect on whether we are still permitted to apply our intelligence in every area:

The open society is one in which men have learned to be to some extent critical of taboos, and to base decisions on the authority of their own intelligence.

And whether we are succumbing to the temptation to rely on the government for our security at the expense of our freedom:

We must plan for freedom, and not only for security, if for no other reason than only freedom can make security more secure.

Most schemes of social organisation have been explored and lived through, but one thing is certain: those who follow us will have different ideas and preferences which we cannot know in advance. We must allow room for our successors to develop these ideas and preferences, that is:

We must go on into the unknown, the uncertain and insecure, using what reason we may have to plan as well as we can for both security and freedom.

  1. And we are not far behind. []

FT.com – Call for more intervention on energy

Via FT.com / UK / Politics & policy – Call for more intervention on energy:

An “interventionist” approach by the government will be needed if security of energy supply is to be guaranteed, a report commissioned by the prime minister will conclude on Wednesday.

Malcolm Wicks, the former energy minister appointed by Gordon Brown as his special representative for international energy issues, will say that “the time for market innocence is over” and that the government needs to do more to safeguard electricity and gas supplies.

“The era of heavy reliance on companies, competition and liberalisation must be re-assessed,” he said. “We must still rely on companies for exploration, delivery and supply but the state must become more active: interventionist, where necessary.”

Oh dear. At this point it is worth indicating more or less any part of my reading list, but consider, for example, this from Mises in Economic Freedom and Interventionism:

The Middle Way

Many politicians and authors believe that they could avoid the necessity of choosing between capitalism (laissez faire) and socialism (communism, planning). They recommend a third solution which, as they say, is as far from capitalism as it is from socialism. In imperial Germany this third system was called Sozialpolitik; in the United States it is known as the New Deal. Economists prefer the term used by the French, interventionism. The idea is that private ownership of the means of production should not be entirely abolished; but the government should “improve” and correct the operation of the market by interfering with the operations of the capitalists and entrepreneurs by means of orders and prohibitions, taxes, and subsidies.

But interventionism cannot work as a permanent system of society’s economic organization. The various measures recommended must necessarily bring about results which, from the point of view of their own advocates and the governments resorting to them, are more unsatisfactory than the previous state of affairs which they were designed to alter. If the government neither acquiesces in this outcome nor derives from it the conclusion that it is advisable to abstain from all such measures, it is forced to supplement its first steps by more and more interference until it has abolished private control of the means of production entirely and thus established socialism. The conduct of economic affairs, i.e. the determination of the purposes for which the factors of production should be employed, can ultimately be directed either by buying and abstention from buying on the part of consumers, or by government decrees. There is no middle way. Control is indivisible.

It is interventionism that produces all those evils for which a misguided public opinion indicts laissez-faire capitalism. As has been pointed out above, the endeavors to lower the rate of interest by means of credit expansion generate the recurrence of depression. Attempts to raise wage rates above the height they would attain in an unhampered market result in prolonged mass unemployment. “Soak-the-rich” taxation results in capital consumption. The joint outcome of all interventionist measures is general impoverishment. It is a misnomer to call the interventionist state the welfare state. What it ultimately achieves is not improving but lowering the common man’s welfare, his standard of living. The unprecedented economic development of the United States and the high standard of living of its population were achievements of the free enterprise system.

But nevertheless, here we go…

A pipedream of six turbines a day until 2020 – Telegraph

Via A pipedream of six turbines a day until 2020 – Telegraph:

Last Wednesday, two days before our Climate Change Secretary, Ed Miliband, told us that motorists could help save the planet by changing more quickly to a lower gear, his underling Lord Hunt made one of the most absurd claims that can ever have been uttered by a British minister. Solemnly reported by the media, he said that by 2020 he hopes to see thousands more wind turbines round Britain’s coasts, capable of producing ‘25 gigawatts (GW)” of electricity, enough to meet “more than a quarter of the UK’s electricity needs”.

Booker goes on to explain three important points:

  • The plan is not cost-effective: these turbines could only provide half what is claimed thanks to the variability of the wind and cost was not mentioned.
  • There is no way the stated number of turbines can be built.
  • Lord Hunt’s absurd claims were dutifully reported without asking any of these questions.

As has been pointed out elsewhere, if we really care about the environment and energy security, we need some clearer thinking.

Fixing the Grid: Make Conservation Simple (and Easy)

A smart grid requires smart electric meters that let households track and manage their power consumption in real time. The Obama administration wants 40 million homes to have technology like this installed within the next three years. But smart meters require smart consumers—or at least attentive ones—and most people don’t think about their energy use until it’s time to pay the bill or until the lights go out.

7 WAYS TO FIX THE GRID, NOW:

Power to the People

Generate Electricity Everywhere

Deliver Clean Energy to Distant Cities

Store Power in Super Batteries

Monitor the Electrons in Real Time

Trade Electricity Like Pork Bellies

Think Negawatts, Not Megawatts

via Fixing the Grid: Make Conservation Simple (and Easy) .

Hydrogen cars – just a thought

Hydrogen in the periodic tableIf the Californians have a “Hydrogen Highway“, which includes self-service hydrogen pumps, and if hydrogen internal combusion engines are possible, what are we waiting for and why are we talking about fuel cells? 

Wikipedia refers to claims of 20% extra power… And surely the conversion effort would more or less that for LPG… Surely we could reduce our consumption of non-renewables faster if we used the cars we already have? And can fuel cells run on ethanol? Why not tri-fuel cars (petrol, ethanol, hydrogen)?

Safety perhaps? But the Californians seem to have satisfied themselves that hydrogen can be made safe for public use.

Answers please, through the contact page.

Gas supplies to Europe dry up as row between Russia and Ukraine deepens – Times Online

Gas supplies from Russia to Europe plummeted overnight with four countries reporting a complete halt as the dispute between Moscow and Ukraine over payment rates dramatically worsened.

Kiev said that Gazprom, the Russian state gas company, had cut the flow by 60 per cent following Vladimir Putin’s threat yesterday to punish Ukraine for allegedly stealing fuel it is supposed to allow to transit through its pipelines en route to Europe.

via Gas supplies to Europe dry up as row between Russia and Ukraine deepens – Times Online .

BBC NEWS | Northern Ireland | Tidal energy system on full power

A tidal turbine near the mouth of Strangford Lough has begun producing electricity at full capacity for the first time.

The SeaGen system now generates 1.2MW, the highest level of power produced by a tidal stream system anywhere in the world.

via BBC NEWS | Northern Ireland | Tidal energy system on full power.

I am a fan of tidal power. Inconstant as it is, it is regular, predictable and reliable. The same cannot be said of  wind or wave power.

Coskata: next generation ethanol?

Ethanol

Try searching Digg for biofuel: it’s not encouraging, but Coskata may be:

Coskata is a biology-based renewable energy company. Our technology enables the low-cost production of ethanol from a wide variety of input material including biomass, municipal solid waste and other carbonaceous material. Using proprietary microorganisms and patented bioreactor designs, we will produce ethanol for under US$1.00 per gallon.

Nanosolar

Nanosolar reckon solar power can now be cheaper than coal:

Their PowerSheet cells contrast the current solar technology systems by reducing the cost of production from $3 a watt to a mere 30 cents per watt. This makes, for the first time in history, solar power cheaper than burning coal.

Some old news in the Telegraph too.