Renewable generation – The reality

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Government ministers continue to eulogize about the potential of UK renewable energy. New policy documents have proliferated and ever more ambitious targets are being set. What remains short, though, is adequate finance for renewables investment, which remains uncomfortably dependent upon the six integrated energy suppliers and on the monopoly grid operator, National Grid.

For some years now, these six players have dominated UK electricity generation. EdF, and the two German companies – E.On and RWE - are the leading players in England, along with Centrica. North of the border, Iberdrola, the owner of ScottishPower, and Scottish and Southern Energy (SSE), which owns many old – and fully depreciated - hydro-plants, prevail.

Since the net debt levels of most of these companies have soared over the last two years, there are now more financial constraints on their investment programmes. Importantly, EdF’s investment focus is on new nuclear-build. And, whilst E.On remains committed to heavy renewables investment overall, much of it will be in the US. Moreover, Centrica’s strong interest in renewables has been diluted by the recent fall in gas prices. But Scottish renewables investment remains robust with both Iberdrola and SSE, along with Sweden’s Vattenfall, continuing to support new wind projects there.

Securing grid connections also remains a serious problem, especially in developing offshore wind plants. This scenario is not helped either by National Grid’s net debt currently exceeding £22 billion. In terms of renewable technologies, only onshore wind – with a few exceptions – has made real progress to date in the UK, especially in Scotland where planning requirements are less restrictive. Offshore wind offers some prospects, along with biomass plants, which the Government has been trying to develop.

The key issue remains. Will the six integrated energy companies deliver the required renewables investment, given the many attractive investment opportunities beyond the UK - notwithstanding their own deteriorating finances?

Food food everywhere...

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...but not a morsel to spare. Or so we are being led to believe by the Anderson Review. This view is further entrenched by the opposition's, Nick Herbert, highlighting our 'shockingly' increased reliance on food imports. Yet a question hangs over both of these opinions: what is the problem?

Why is food security important? To the government it represents a step in the process of controlling our food supply chains and food production. In no uncertain terms: nationalization. To the Conservatives the remaining large agri-businesses represent a key constituent in funding and support, and therefore anything they can do to increase agricultural prices to the detriment of the consumer will be undertaken. Both approaches show the short sighted, short-term gains and befuddled economic thinking of our current crop of inept politicians and inane civil servants.

Why do we want to produce something at a higher cost when someone else wants to do it for us, cheaper and more environmentally friendly than we can? Where is the benefit to us? Quite simply: there isn't any.

We currently hold enough intelligence to feed all the people of this world (and a few billion more). Yet we decide to hinder ourselves by attempting to make bio-fuels, subsidizing farming, rejecting GM Crops and embracing previous technologies that tie multiple farmers to the land in inefficient modes of production (re: organic and fair trade). All of this is done so that the moral minority can sleep at night safe in the knowledge that they are doing their bit to reduce their impact on the climate. They are living in the Dark Ages and pulling the already impoverished unto them, foisting a life of drudgery and despair on them. All in the name of their selfish ideal. We have been feeding ourselves since the New Stone Age, 10,000-15,000 years ago (becoming more successful as time passed). We need to end farm subsidies/food tariffs, privatize land and seas, and get government out of the way; this would lead to efficient production and resource allocation and the alleviation of food shortages.

Holiday reads

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Deviod of reading material? The CATO Institute has put together a good list on a variety of policy issues.

Are you being watched?

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The latest report by the Interception of Communications Commissioner reveals that government authorities monitored citizens’ telephone calls and emails more than 500,000 times last year.

This “Use of Communications Data" is permitted under the Regulation of Investigatory Powers Act 2000, which has introduced a system of governmental surveillance on a scale unprecedented in Britain, and internationally unrivalled.

Of course, the police and the security services need the means to investigate serious crimes and prevent acts of terrorism, but these demands must always be balanced against the protection of privacy; both because our privacy is inherently valuable, and because a system of surveillance inevitably risks abuse by rogue employees or government itself. A just policy must be based on two principles: proportionality and supervision.

The current arrangement is far from proportional. The Act (together with subsequent statutory instruments) allows almost 800 government bodies, from the Charity Commission to Wiltshire County Council, many with no obvious law enforcement responsibilities, to view our telephone and email records, and to send employees to follow us covertly. These powers have notoriously been used to pursue infringements as trivial as allowing a dog to foul on the street. The power to listen in on our telephone calls, surely among the greatest possible intrusions into our privacy, can be justified under the dangerously imprecise purpose of “safeguarding the economic well-being of the United Kingdom." We must recognise that these surveillance measures should only be used in the most serious circumstances, and (given past events) we should not trust the authorities to exercise restraint in their use of the legislation. The measures must be restricted by statute to be employed only by the police and security services, and only in cases of national security or serious criminal behaviour.

The RIPA act is even weaker in ensuring adequate supervision. All the surveillance measures covered in the Act can be authorized by an officer of appropriate seniority within the investigating organisation itself, with the exception of intercepting the contents of telephone calls and emails, which requires a warrant be signed by the Home Secretary. These are hopeless safeguards: the executive has no incentive to restrain itself. Authorisation of surveillance must be put in the hands of the judiciary (as the Lib Dems suggest), who can provide genuinely independent supervision with adequate concern for citizens’ privacy. Unless a court decides to the contrary, details of any surveillance should be released to the suspect if a conviction does not result.

Spot the difference

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"Depicting the president as demonic and a socialist goes beyond political spoofery, it is mean-spirited and dangerous." Earl Ofari Hutchinson commenting on President Obama's recent depiction as the Joker. His silence in 2008 though on the appearance of George Bush in Vanity Fair as the Joker, shines a light on how the left in America reconstructs politics on all levels primarily to enable the reorganization of the state as a top down centralized bureaucracy. Luckily for Americans their right to free speech is protected in the First Amendment to the US Constitution. Unfortunately for the liberals of America it means that they cannot yet control who says what, meaning that their 'darling' President will be continually parodied, as seen above. But if we cast our minds back to the previous occupant of the White House and the unceasing attacks upon Bush and the comparisons made against him, the above is 'attack-lite'. It was incessant from the moment he set foot in the White House, hardly letting up in the aftermath of 9-11. Yet the few voices of dissent against these attacks struggled to gain a foothold in the US media, indeed should anyone seek to stand up for Bush they too were branded as a 'neo-con fascist.' Dissent must be approved. The left in America seeks to control the public domain via its shrill screaming of some perceived wrong, in this instance, racism. Liberals in America will have to accept that the President is a focal point for perceived wrongs and a driver of negative change. The fact that President Obama wishes to 'nationalise' health care via government control leads to him being labelled as a leader of the socialism movement, wholly understandable in the circumstance. It seems after eight years of dishing out abuse, the liberals of America don't like it when it comes home to roost. So typical of the 'holier-than-thou', 'morally superior' herd like mentality that they exhibit. For them wrong is what they say it is, not what it actually might be.

Biofuel regulations and subsidies

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The intellectual premise upon which the latest Policy Exchange report is sound enough:

Aviation is, amongst other things, a fundamental part of the global economy and facilitates inter-cultural exchange. Moreover, people throughout the world want to travel. As a result, we must promote methods that can reduce emissions from those flights that do take place.

Yet the substance leaves a lot to be desired, as Martin Livermore has discussed previously on this blog.

Green Skies Thinking argues for the EU and UK polities to promote the development and commercialization of sustainable bio-jet fuels, complaining that at present “there are no specific policies within Europe to create that aim." The policy suggestion is built upon the creation of an EU Sustainable Biofuels Mandate, that if introduced would require planes to be run on 20% bio-jet fuel by 2020, rising to 80% by 2050.

If as this report suggests there is commercial viability for bio-jet fuel, then there is no need to upload airline energy policy to EU. Competition, not subsidy is the only sustainable energy policy. Of course there are financial risks involved, but this will not deter the entrepreneur. And it is much better that they take on this risk, as opposed to European taxpayers.

The argument for regulations and subsidies for investment are never a sensible move for the defenders of free markets. Even if you happen to make the right call on the technological path (hard enough in itself), overturning the regulations and turning off the subsidy tap becomes increasingly difficult.

Although the political capital of climate change gives think tanks an opportunity to cash in and exert influence over government policy, those usually on the right side of the debate should tread with caution. The policy suggestions contained in this paper put politics before markets and upload key aspects of private company and national energy policy to the European level.

Tax freedom day in Sweden

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If you think the UK is bad...

Ignoring the wood for the trees

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Compass has a report out about the state of the housing market. Dire they say, there should be lots more, well, essentially, lots more of the things that Compass likes. State intervention, more taxpayers' money being spent, more social housing and, by the way, can we get the bankers out of the whole thing? It isn't all bad, it has to be said, they come out in favour of land value taxation which as has been pointed out here before is a thoroughly good idea.

However, they seem incapable of, while discussing which shade the bark on the trees should be, of understanding the wood which is our real problem in the housing market.

The need to understand notoriously opaque land markets and the complexities of the planning process also make housebuilding an extremely difficult industry for new competitors to enter, reducing competitive pressure further. The result is a business model that does not deliver the homes we need, but is very difficult to change.

Now someone like me would say, OK, then we should be looking at changing the planning system if that's one of the major problems. And of course, the planning system is. They note that in recent years we've been building flats on brownfield sites, the houses that do get through are rabbit hutches crammed together: and yet they fail to note that this is exactly what the planning system, in all its complexity, has been demanding. If you don't put 14 houses on a hectare you won't get permission. The extraordinary price of housing is not because houses are expensive to build, nor is land: what is expensive is the licence that allows you to build a house on a certain piece of land.

There have been solutions proposed to this of course: if the planning system is the problem then let's change the planning system. But of this sensible sort of thinking we get none from Compass: despite their approval of LVT showing that they have at least one rational individual within their ranks.

Still, at least they are not quite as crazed as the current government was with the Pathfinder scheme. This baby of John Prescott's was going to solve the shortage of affordable housing by knocking down hundreds of thousands of cheap houses: you can imagine how well that worked.

A maximum wage

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In Friday’s Guardian, Andrew Simms resurrects the idea of a maximum wage to “tackle inequality". The actual consequence: employers would no longer be able to attract the best workers by offering them higher salaries, so would instead offer them more perks and less hours. That is, the most productive workers (not just bankers, but doctors, business owners, and Guardian editors) would work less. Many others would move abroad.

All it would achieve is a fall in the level of economic activity, and a corresponding fall in tax revenue and trickle-down spending. This is the nonsense of equality by levelling down: dragging down the rich, out of sheer envy, to the detriment of everyone.

But his argument avoids this sort of practical concern for what the actual effects of the measure would be, relying instead on bashing ‘the market’. He complains that the market “interferes with life, the universe and everything else," and that after government saved the banks, “there must be a serious quid pro quo" from the market. This is nonsense: the market is the structure that allows the buying and selling of goods and services. It’s a system permitting voluntary exchange. It isn’t an agent - it doesn’t interfere with anything, and it can’t owe anything. Perhaps Simms means that the banking industry interferes in our lives, and owes society something: if so, he should say that, but it will not sustain the argument he tries to make.

Simms goes on to attack the “failed neoliberal economic model", blame inequality for “most social problems", and claim that “we know now all too well how destructive are the forces of seeking profit and pay maximization for their own sake." If he had a memory longer than a year or two, or a field of vision wider than the prosperous West, Simms would reach very different conclusions. The neoliberal economic model of free market capitalism is not a failure, it is the most successful model in human history for improving standards of living and lifting people out of real poverty. It’s not inequality that’s responsible for most social problems, but tyranny, corruption and theft. And it’s been people seeking profit and pay who have driven the economic miracle that provides him with everything from the clothes on his back, to the keyboard on which he types this drivel.

The wrong kind of healthcare reform

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Most people in the US think their healthcare is good. So why is Obama pushing for a more socialized system?