Just say no to the Swansea lagoon

Everybody obviously colours the argument for their pet scheme. But it’s rare to see something quite as transparent as the entirely fallacious arguments being put forward for the Swansea lagoon:

Plans to build the world’s first tidal lagoon power plant in Swansea Bay have now been granted development consent. At a time when the UK is struggling to rewire its electricity market to introduce more security, less carbon and less cost, here is a blueprint for an infrastructure solution that ticks each box and that will endure.

Reliable? Quite possibly, low carbon almost certainly yes. However, less cost it simply will not be. We can tell this because they’re asking for a contracts for difference price on the electricity to be generated of £168 per MWhr. Rather higher than even the most absurd of the nuclear plans and very much higher than a gas plant, or even wind turbines (and yes, higher than gas even taking carbon emissions into account).

We know this because this has all been extensively studied. Hundreds and hundreds of pages of analysis with this basic conclusion:

In the light of these findings the Government does not see a strategic case to bring forward a Severn tidal power scheme in the immediate term. The costs and risks for the taxpayer and energy consumer would be excessive compared to other low-carbon energy options. Furthermore, regulatory barriers create uncertainties that would add to the cost and risk of construction. The Government believes that other options, such as the expansion of wind energy, carbon capture and storage and nuclear power without public subsidy, represent a better deal for taxpayers and consumers at this time.

That was the report that killed off the idea of the government itself investing in it. Now Frankenstein’s Monster has risen again by claiming that it won’t get government subsidy. It’ll just pick all our pockets through the electricity price instead. Same people having to pay the same subsidy just via a different route.

That analysis really is damning too. The larger the lagoon, barrage, built, the more money is lost. It’s as if the cot com boom never happened: we lose money on every transaction and make it up in volume. It’s really not too strong to say that this is the rapine of the citizenry.

It’s also possible to identify where the original mistake was made: by Ed Miliband, yes it was. If there’s going to be a subsidy to renewables (we prefer a carbon tax but…) then that subsidy should be the same for all technologies. And thus we’ll end up building out the renewables that work best. However, the decision was made to vary that subsidy dependent upon the costs of each different technology. So it’s possible for people to wander in and claim they’ve got this great idea: but they’ll just need to sell their ‘leccie for 4 times the going rate to fund it. This is madness. And it’s exactly the problem that the imposition of a carbon tax avoids.

We absolutely know that this phantasmagorical plan just will not work, will not work in providing us with the energy that we desire at a price that we’re willing to pay for it. We really do need to tell these chancers and scheme promoters to take a long walk off that short pier that their lagoon will obliterate.

Are these people Nimbys or Bananas?

The reason that Lancashire is not going to allow fracking for natural gas:

Here’s the wording of the official rejection – all about the impact on the landscape and the noise:
1) The development would cause an unacceptable adverse impact on the landscape, arising from the drilling equipment, noise mitigation equipment, storage plant, flare stacks and other associated development. The combined effect would result in an adverse urbanising effect on the open and rural character of the landscape and visual amenity of local residents contrary to policies DM2 Lancashire Waste and Minerals Plan and Policy EP11 Fylde Local Plan.
2) The development would cause an unacceptable noise impact resulting in a detrimental impact on the amenity of local residents which could not be adequately controlled by condition contrary to policies DM2 Lancashire Waste and Minerals Plan and Policy EP27 Fylde Local Plan.

Wrong decision.

It’s worth recalling a few facts about this fracking thing. Carbon related emissions in the US have been falling even as the economy grows. Because that fracking has led to a massive boost in the supply of natural gas, a fall in its price and thus the displacement of he far more polluting coal. Given that the Bowland Shale is three times the depth of the Marcellus, we would rather expect teh same to happen here.

And we’ve even had reports that it would: the amount of extra gas that Cuadrilla announced as a result of just one well test would lower natural gas prices for all of Western Europe by 4%. That’s just the extra from one well test. We do indeed get DEC saying that fracking will not reduce gas prices: but that’s because they speak with forked tongue. What they mean is that gas prices won’t fall from today’s levels: while their own economic models claim that gas prices will double into that same future. Fracking would, by their own admission, stop that doubling, even if not drop prices from today’s levels. Forked tongue or what?

As to impact upon landscape: come one, puhleeze, this is Lancashire we’re talking about. It’s not exactly sticking an oil rig in Lake Windermere, is it?

At which point all we can really wonder about is whether these people are Nimbys (Not In My Back Yard) or Bananas (Build Absolutely Nothing Anywhere Near Anyone) for it’s clear and obvious that they are bananas.

The world is not running out of resources after all, says new ASI monograph

The depletion of mineral reserves poses no serious threat to society, a new monograph published today by the Adam Smith Institute has concluded.

The No Breakfast Fallacy: Why the Club of Rome was wrong about us running out of resources” argues that outcries over resource availability from environmentalist groups are based on a misinterpretation of numbers and a misunderstanding of what mineral resources actually are.

The monograph, written by Adam Smith Institute Senior Fellow and rare earths expert Tim Worstall, says that groups that have warned about the world running out of rare mineral resources, such as The Club of Rome, have been using the wrong sets of data, mistaking the exhaustion of mineral reserves for the exhaustion of mineral resources.

Mineral reserves, the monograph explains, are simply the minerals that have been prepared for use for the next few decades; they are minerals that can be mined with current technology at current prices. Some reserves are going to run out in the near future, but this is a normal process. Every generation runs out of mineral reserves.

Mineral resources, however, refer to a concentration of minerals of a certain quality and quantity that have shown reasonable prospects for eventual economic extraction. These are much larger than mineral reserves.

Organic farming, for example, may be a useful idea, the monograph asserts, but the idea that it is a necessity because we’re about to run out of inorganic fertilisers is based on a falsehood. The reserves for minerals used in fertilizers may exhaust in the next few hundred years, but the exhaustion of resources is not estimated to occur for 1,400 years for phosphate and 7,300 years for potassium.

The report concludes that efforts to conserve and/or recycle mineral resources are wasteful and often end up being net harms to society, by diverting economic activity from more productive uses.

Senior Fellow at the Adam Smith Institute and author of the report, Tim Worstall, said:

We have a basic problem in our discussion of resource availability. Which is that most of the people in that discussion are grievously misinformed about what a resource is and how much of any of them we might have. It really is true that Paul Ehrlich, Jeremy Grantham, the Club of Rome, Limits to Growth and the rest are looking at the wrong numbers when they consider how much of any mineral or metal there is that we might be able to use.

This is not some arcane economic point. It is not some mystery explained only to the illuminati. Quite simply, most people assume that mineral reserves are what we have left that we can use. This is not so: mineral reserves are only what we have prepared for us to use in the next few decades. As such, it’s really no surprise at all that mineral reserves are generally recorded as being going to last for the next few years.

This book explains this simply enough that even a member of the Green Party should be able to grasp the point. We are no more going to run out of usable minerals because we consume mineral reserves than we are to run out of breakfast because we eat the bacon in the fridge.

To read the full press release, click here.

The Swansea Barrage is still an absurd idea

As Christopher Booker points out, the Swansea Barrage is an absurd idea. Not because the idea of tidal power itself is absurd, but because we’ve actually studied this version of it and come to the conclusion that it is, well, absurd:

Yet, as I reported on April 18, under the headline “Will Welsh eels scupper the craziest ‘green’ project ever?”, in practical terms this scheme should be a non-starter. On the developer’s figures, the 16 tidal-powered giant turbines, built into a six-mile long breakwater round Swansea Bay, will intermittently generate only a pitiful amount of the most expensive and heavily subsidised electricity in the world. They will require constant back-up from fossil-fuel power stations for all the many hours when they are producing little or no power. In return for the developers receiving a mind-boggling £168 per megawatt hour for electricity, including a subsidy of 240 per cent, even more than that for offshore wind, we shall on average get just a derisory 57 megawatts. Yet the £1 billion gas-fired power station recently built down the coast at Pembroke can produce 35 times as much electricity, whenever needed, without a penny of subsidy.

As one of us pointed out some time ago this really does not make economic sense.

There’s been a large study of all of the different variations of a plan to generate tidal power from the Severn Estuary. They compared the cost of that tidal power against the cost of natural gas fired stations. And they included the cost of the gas rising into the future, the taxes that would have to be paid on CO2 emissions and so on and on. It was a proper cost benefit analysis done properly. And they found that the larger we built the tidal power plant the more money we lost on it. This being indicated by the net present value of each of the different variations of the plan. The larger it was the greater the negative amount showing up as that net present value.

We can get to the same result by looking at the price for that contract for difference for the energy to be produced. All in costs (including carbon taxes!) for gas fired plants are in the £80 to £100 level. Anything that costs us more than this loses us money. We might, maybe, perhaps, accept small installations that are loss making as a method of encouraging a new technology. Vast monsters of plants designed to work for a century and more do not meet this test, of course.

It’s really very simple indeed. Whatever is it that we need to do about climate change deliberately setting out to do so in a manner that makes us poorer just isn’t the right way to start. Yet that’s what the Swansea Barrage does, as we can see from the two sets of numbers we can use to check it. It has a negative net present value and a requirement for a contract for difference vastly above other potential power sources.

We just shouldn’t even be entertaining the idea of building it. Well, not with our money, at least. Someone wants to go and lose their own on it then fine: but that means no contract for difference.

So Britain has solved climate change then

As regular readers will know we’re pretty simple in our approach to climate change around here. If it’s happening, we’re causing it, then the thing to do about it is a carbon tax. That lovely Pigouvian Tax on externalities, just as Mssrs. Stern, Nordhaus and Tol tell us is the solution. And, for the sake of argument, while we think it’s too high, we’re willing to at least consider Stern’s rate of $80 per tonne CO2-e. Which brings us to:

Environmental taxes hit a new record high of £44.6 billion in 2014, official figures show, as the bill for renewable energy levies rose to almost £3 billion.
The data from the ONS shows that the green tax burden has more than doubled over the past two decades, from £19.4 billion in 1994.
Last year saw the ninth consecutive increase in the tax burden, which stood at £43 billion in 2013.
The vast majority of the taxes are those levied on transport fuels such as petrol and diesel, accounting for £27.1 billion. Vehicle duties accounted for £6 billion of the total and air passenger duty £3.2 billion.
The cost of renewable energy taxes to subsidise wind and solar farms rose by more than a fifth to £2.9 billion.

So, the UK has already solved climate change. We’re done and dusted. Emissions are of the order of 500 million tonnes a year in this country. That’s $40 billion in taxes righteously required in order to adjust market prices. We’re already charging ourselves more than that. We’re done.

This is of course somewhat in contrast to the repeated squeals that much more should be done. But this is absolutely the mainstream scientific opinion here that we are cleaving to. If climate change, then carbon tax. And when the appropriate tax is in place then no more need be done, we can just wait for that alteration of prices to work through the market system.

So, what’s it like to live in the first country that has actually dealt with the major environmental challenge of our times? And wouldn’t it be just lovely if those who rule us realised that they’ve already managed that feat?