In all the shouting about the go ahead for the Cumbrian coal mine this is the comment that grates the most:
Tony Bosworth, a campaigner at Friends of the Earth…..”and this mine risks becoming an expensive stranded asset.”
The money being used seems to flow through West Cumbria Mining, itself backed by EMR Capital, that seems to be a conduit for varied sources of private equity. That is, the money being used is not that of Mr. Bosworth nor of Friends of the Earth. Meaning that the correct response to this claim of Mr. Bosworth’s - or of FoE - is what’s that got to do with you, Matey?
Because this is how a market economy works. People are free to waste their money on whatever moonbeams into sunshine cucumber machine they desire. Rather than be subject to the insistences of some prodnose with a grievance.
Sadly, the major newspaper commentators seem not much better:
Besides, steelmakers have dramatically reduced Russian imports since the invasion of Ukraine, and the industry is moving rapidly to low-carbon alternatives to coking coal such as hydrogen anyway, so the project risks quickly becoming an expensive white elephant.
That’s not even the right question, let alone the right answer.
As background, yes, we need coking coal if we’re to continue running blast furnaces. “We” here being humanity in general. Yes, DRI with hydrogen looks like it might well become the technology of choice in time. Electric arc furnaces have been making inroads into the market for 60 years now and show no signs of stopping. But that 60 years is an important number. For that recycling of scrap in arc furnaces - led in a market sense by Nucor over in the US - has taken that 60 years to penetrate the market. For blast furnaces are vast capital investments and once one has been built the financial incentive is to keep using it until it falls over. This is the Nordhaus point about climate change. The least cost method of reducing emissions is to keep using all our old kit until it does fall over, but make absolutely certain that new stuff we build is non-emittive.
They did give Nordhaus the Nobel for this point so it’s worth including it in our calculations.
But to step back from the decision making about whether we, ourselves, think that it’s a good investment or not. And consider what is being said by these varied people now. Which is that those not involved in the investment decision, those with no money at risk, do in fact know whether it is going to be a profitable investment or not. Which is fine - you think it’ll lose money then don’t invest in it. But they’re going that unallowable one step further. They’re saying that because they, themselves, think it will be unprofitable then other people cannot be allowed to invest in it.
No, that’s not how a free market system works. Other people get to do as they wish with their money. That’s rather what private property means and it’s very much what the free part of free markets means.
Yes, yes, we grasp all the points about public policy and emissions and so on. Given that we are talking about planning permission of course there’s an element of planning in this as well. But those aren’t the points - nor even the desirability of coking coal or steel making - that we insist upon highlighting here.
The claim is that West Cumbria Mining should not be allowed to do that because they’ll lose money. The answer to that being what’s that to do with you, Matey? Because the essence of, the driving force of, free market capitalism is that the capitalists are free to spray their money up against any wall they wish. Yes, we know all too many don’t believe this but the experience of the last 250 years is that we get, on balance, more correct decisions this way than through any other investment decision process anyone has ever tried.
West Cumbria Mining will lose money? Let ‘em lose it then. Shrug.