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Weekend reflections

February 20th, 2009

It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.

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  1. Ikonoclast
    February 20th, 2009 at 18:28 | #1

    A Ruddy Failure!

    The Rudd Government is a complete failure.
    Rudd has failed to substantially reform Howard’s Workplace Relations Bill. Agency bargaining remains in place. The Federal Public service is still a mess of many different pay rates. The right to strike is still severely limited right across the workforce. So called ‘pattern bargaining’ still remains embargoed. Building workers still have fewer rights than other workers and those remain stripped to the Howard set levels.
    Rudd has failed to come up with any new policy on Aboriginal issues. So far it’s been “Sorry, but we are still keeping Howard’s legislation and the Racial Discrimination Act still remains suspended to allow this travesty to go on.”
    Rudd has failed to tackle the growth in CO2 emissions with the absurd mess he has made of that policy so far. The open letter signed by Quiggin et al lays bare how bereft of logic and efficacy the Rudd government’s policy formulations on this issue have been to date. Rudd has also failed to develop any coherent renewable energy policy.
    However, Rudd is likely to win the next election because Turnbull has less nous than Rudd. It seems our fate is to be governed by those who stand for wrong ideas or those who have no ideas at all.
    Rudd like all modern politicians has a strange inability to grapple with reality. They are governed by image, empty rhetoric and the pursuit of power for the mere holding of power rather than the purposive use of power for any public end. The game of getting power and keeping it is all consuming. There is nothing left for action on real issues that need solutions. Intellectually, they are as out of touch with purposive thought as were the medieval schoolmen.
    I could go on but I’ll throw it open to other bloggers. Can you think of anything the Rudd government has actually DONE? Strip away the words and promises. Can you think of a single real and substantial achievement in this term? I cannot. Can you think of a single promising sign that he may achieve something real and substantial? I cannot.

  2. mitchell porter
    February 20th, 2009 at 19:39 | #2

    Here’s a speculation about global economic developments to come:

    The global financial crisis has already produced a global manufacturing crisis (according to The Economist) and a collapse in world trade, and yet if you look at the discussion among politically engaged economists, it’s still about how to reform the global financial architecture. So – just as we’ve seen the “return” of Keynesianism – a logical further step would be to see the “return” of industrial policy, and an attempt to produce something like “global industrial policy”. Thus, in the present we have people writing about the need for the next G-20 meeting to produce a “grand bargain” in the financial sphere, and in six months’ time, we’ll have people calling for sectoral coordination of global industrial policy at the G-20.

    In fact, what comes to mind is the Asia-Pacific Partnership that Bush and Howard set up as an alternative to Kyoto. That was all about multi-sectoral collaboration under the umbrella of “clean development and climate”. Globally 2009 looks like it may be another hot year, after the cooler 2008, so I can well imagine that, after further extreme weather events and generalized climate panic amid the world recession, we’ll have another round of green stimulus in the G-20 economies, but this one internationally coordinated, and targeted specifically at fostering the huge technological and infrastructural changes implied by a move towards low-emissions societies. (There’s already a big green element to the current stimulus plans, but it could clearly get much, much bigger.)

    Even the seeds of the next boom/bubble are there, because once people truly realize just how many millions of wind turbines, solar panels, electric motors, etc would need to be built (and maybe we can even throw in nuclear power plants and thousands of km of pipeline for the transport of captured CO2 emissions) – and once they see it as something that is actually going to happen, rather than as an effort too huge to ever take place – then we will be off to the races again.

  3. carbonsink
    February 20th, 2009 at 20:06 | #3

    Mitchell: Yes, we need to engineer a green bubble.

    The politicians refuse to use sticks, so it has to be all carrots. Tax credits, rebates, subsidies, whatever … governments need to make investing in clean tech irresistible.

  4. observa
    February 20th, 2009 at 20:08 | #4

    ‘Can you think of anything the Rudd government has actually DONE?’

    Implemented the first tranche of promised tax cuts, introduced Grocerywatch but was prevented from introducing Fuelwatch, began MDB water buybacks, signed up to Kyoto, said Sorry, pulled out of Iraq, organised a 2020 summit of minds, gave us some fiscal stimulus and is preparing to roll out a lot more and is now readying the CPRS for implementation.

    Whilst I’m not a big fan of some of those achievements and directions, the Govt doesn’t appear to have broken any major ‘core’ promises. They might have disappointed some with the details and pace of change, but in fairness to the Govt, they’ve run smack bang into what could well be a rerun of the 1930s. That certainly has to temper the enthusiasm of Opposition, as they get mugged by the harsh realities of Govt.

    I guess the transition to Govt after many years in Opposition does raise a lot more expectations than the return of incumbents and the Rudd Govt will wear some of that flak. The flip side is, what expectations were always fanciful and bound to be mugged by reality. The main ones? I’d suggest turning back the IR clock to the bad old days on building sites and even the wharves in a globalised world. Practical sorry is always a bottomless pit of resources and good intentions. Lastly that an ETS would be some marvellous elixir, rather than a complex administrative head bang, prone to rent seeking and special pleading in a competitive world, absent such imposts.

    How important are we in all this? I was reminded of that by a report that next year all mobile phone Cos have agreed on phones being charged via a mini USB port. What a great idea given those cupboards full of old chargers and the inevitable panicky- ‘Has anyone got a charger for a….?’ That was until some commenter noted that China had required all its mobiles use a mini USB charge port as of July 2007. US too eh?

  5. mitchell porter
    February 20th, 2009 at 20:31 | #5

    Would have linked to this if I had read it before commenting:

    “When G-20 leaders meet in London in April, they should seek to coordinate green components of national stimulus programs and take stock of how these efforts impact long-term emission-reduction goals.”

    There you go – a call for G20 coordination of green stimulus programs with particular attention to climate change. Green New Deal, here we come!

  6. mitchell porter
    February 20th, 2009 at 20:38 | #6

    Or as Gordon Gekkonidae might put it (and Google reveals that several hundred people had this idea before me):

    “Green is good. Green is right. Green works. Green clarifies, cuts through, and captures the essence of the evolutionary spirit.”

    etc., just do a global search-and-replace.

  7. Dave
    February 20th, 2009 at 23:36 | #7

    Hey with all the rain up north and all the dry down south in Australia, a lot of people are probably going to start to call for piping the water down south in Australia.
    Now I know that water is heavy and these schemes (such as the Kimberley piping scheme) are incredibly expensive, but whats always interested me is, what is the big cost killer here? Is it the labor to lay the pipes? the cost of the pipes itself or the pumping required to push the water down the pipe.

    I know that piping is incredibly expensive, but I’ve always wondered why – can anyone clarify?

  8. Kevin Cox
    February 21st, 2009 at 03:25 | #8

    #7 Dave water is heavy and it takes a lot of energy to push it through pipes. That makes it expensive in comparison to its price to shift around in large quantities.

    There are however some interesting ideas on how to overcome the energy problem and to move water around and that is to use gravity. There is a proposal to pipe water from the mountains of the West Coast of Tasmania to Melbourne and use gravity to power the flow. The economics of that appear quite good as long as you make the pipe big enough. The political problems may not be as easy to solve.

    Another idea is to put pumps along the Southern Edge of the Great Artesian Basin in the parts that are in the Murray Darling Basin. If you pump the water from the Southern part of the basin into the Darling then you will create a difference in water level between the Northern parts of the Artesian Basin and the Southern Part and this will cause water to flow from North to South using the Basin as the “pipeline”. You now work out ways to increase the rate of absorption of the summer surface flows in the North into the Artesian basin and you “solve” Adelaides water problem. It would be relatively easy to calculate if this would work on a sustainable basis but my guess is that it is probably feasible particularly if you powered the pumps with solar thermal power plants and you pumped enough to make a large difference in water levels.

  9. carbonsink
    February 21st, 2009 at 08:15 | #9

    Does anyone want to comment on Glenn Stevens and (ANZ CEO) Mike Smith’s view that Australia will escape recession and we’re near a bottom?

    Alan Kohler’s view makes a lot more sense to me…

    In the circumstances, the optimism evident in yesterday’s Reserve Bank minutes for later in 2009 looks unrealistic.

    Deflation in the US, Europe and Japan would leave China with significant over-capacity that it would be struggling to meet with domestic demand. Chinese output would have to shrink and along with it demand for raw materials, at least in the short term.

    The twin engines of Australia’s long boom – bulk exports and business investment – will inevitably go into reverse. More likely, the Australian downturn will be just getting underway in the second half of 2009 – not ending.

  10. Kevin Cox
    February 21st, 2009 at 08:18 | #10

    Alanna and Socrates I have made a comment on how to “fix” emissions trading at http://johnquiggin.com/index.php/archives/2009/02/20/an-argument-for-emissions-trading/

  11. Ikonoclast
    February 21st, 2009 at 08:30 | #11

    Observa says Rudd has;

    “Implemented the first tranche of promised tax cuts, introduced Grocerywatch but was prevented from introducing Fuelwatch, began MDB water buybacks, signed up to Kyoto, said Sorry, pulled out of Iraq, organised a 2020 summit of minds, gave us some fiscal stimulus and is preparing to roll out a lot more and is now readying the CPRS for implementation.”

    Let’s look at these ‘achievements’ in detail and see how they involve only tokenism and a complete lack of real policy action.

    1. The Tax Cuts

    Tax cuts often only give back bracket creep. A more enlightened tax policy would index tax rates to obviate the need to give back bracket creep. Where tax cuts give back more than bracket creep they are regressive, that is the cuts favour the rich and the middle class. The poor get almost nothing out of tax cuts. Finally, giving tax cuts when infrastructure spending is desperately needed is the height of populist short sightedness.

    2. Grocery watch

    The introduction of grocery watch was pointless. It is the action of a government that is trying to avoid action. The sub-text of the government’s actions in relation to tax cuts and grocery watch was to avoid and deny the elephant in the room. This is the deliberate falsification of the CPI statistic. The CPI is falsified by manipulating the basket of goods used for its statistical calcualtion and ensuring that the basket of goods does not represent what pensioners (for example) purchase most.

    The issues of collusion, price fixing and misuse of oligopoly power against both farmers and consumers in the grocery market are never addressed. Which is hardest to achieve, genuine policy action against entrenched corporate oligopolist power or the setting up of “grocery watch”? When the question is framed in this way we see how gutless and ineffective Rudd’s government is.

    3. The Intro of MDB buybacks.

    This is the continuation of Howard’s policy so no marks for imagination there. Historically we have had a massive overallocation of water and irrigation rights. Maybe the science wasn’t all in so one cannot be totally critical.

    However, the introduction of the privatised water market made matters much worse. People who got allocations they should have never received are now getting massive compensation. Water is a national resource and the resource and infrastructure should always belong to the nation.

    All water resources should be nationalised. JQ and many other economists have pointed out that nationalisation (even of banks) is the current and only posible policy response to the failure of the ‘casino capitalism’ we have been subjected to for the last 2 decades at least.

    4. Sorry and Kyoto.

    I said enough in my intial post about the emptiness of a ‘sorry’ which is not backed by any real action or any change from Howard’s racist policies.

    Soon the phrase “doing a Kyoto” is likely to enter our parlence. “Doing a Kyoto” will mean siging up to something but not doing anything. The summit of minds was doing a Kyoto in a drama workshop.

    5. The Fiscal Stimulus

    The fiscal stimulus is necessary but the methods of introducing it (free cash and insulation bats) again show a dearth of imagination on the vast infrastructure projects and renewable energy projects we need. The open letter by Quiggin et al on the CPRS is actually a devasting inditement of the paucity of effective action in that CPRS as it stands.

    Rudd’s report card reads 0.5 out of 100. I’ll give him half a mark for the early stimulus package.

  12. nanks
    February 21st, 2009 at 09:14 | #12

    a fair mark Ikonoclast – the problem we have is that govt’s have been so hopeless that someone who appears to be talking about thinking about doing something begins to appear to be doing something.

  13. Alanna
    February 21st, 2009 at 10:05 | #13

    Ikonoclast # 11 on 2. Grocery watch – says

    “The introduction of grocery watch was pointless. It is the action of a government that is trying to avoid action.”

    Ikono – I agree. The real action needed is changes to Australian Competition Legislation which, to my knowledge has not yet been done. Alan Fels has many valuable suggestions. In Australia our competition laws do not have as many teeth as the US or European laws (and many other countries) which do allow governemnts to eg get out the scissors and carve up monopolistic structures. Our legislation in Australia, still fails to allow this to occur – so for all our complaints the best we get is Grocery watch or Fuel Watch. (Much like the thing a government can be seen to be doing, that will have ultimately a barely negligible effect). I would argue that Australia with its small population lends itself to the growth of market concentration nicely – it doesnt take one or two or three firms long to get the economies of scale necessary to dominate the industry (cosy oligopolies). We need changes to the TPA so that at least our competition laws are as advanced as the US and European models such as s.46 TPA criminal sanctions for hardcore collusion (fines not sufficient or should be much higher eg 7 times the profit made from the collusion as well as possible jail terms). Until the TPA has teeth, we will go on wasting resources once more by throwing them at the consequences (Grocery Watch) instead of addressing the source of the problem (cartel behaviour).

  14. Salient Gren
    February 21st, 2009 at 10:10 | #14

    dave #7 pipeline costs example
    1.5m dia pipeline to deliver 200mL/day (the Murray in depleted state flowing 6000mL/day) cost $4500/metre. This is to replace existing pipline.

    Add cost to traverse new ground(planning, design, permits etc.) remote area fly in fly out mining type wages, pumping stations, power lines.

    I seem to remember it has been costed at around $10/kL, iceberg $25, desal $2.40, stormwater re-use $1.40, reduce poulation $0.

  15. Kevin Cox
    February 21st, 2009 at 10:17 | #15

    Free market advocates and social democrats are both right. It is implementation of markets that causes their goals to be unrealised.

    Let me characterise free market proponents as those who believe that free markets are the best way of allocating resources efficiently. Not only do they allocation resources efficiently they will also allocate ownership of resources efficiently. Let me characterise social democrats who believe free markets are the best way of allocating resources efficiently but markets cannot be left on their own to achieve the social goals of a “fair” allocation of resources.

    These two views are not mutually exclusive and if we implement markets designed well then both objectives and both sets of beliefs are compatible. Let us start with where both agree. Both agree that free markets are a good way of allocating resources. Where they disagree is in how markets are to be regulated.

    Free marketeers believe that markets left on their own will achieve the goal of the best allocation of resources. Social democrats believe that while the most efficient allocation of resources could be achieved, in practice they result in social inequity and overall misallocation of resources. Consequently we need regulation and direction to achieve other social and political goals.

    Both are right but the implementation of our economic system does not permit multiple objectives to be achieved. A solution is to modify the way we implement our economic systems so that instead of one large market where all markets interact seamlessly we construct multiple independent markets where each market can interact – in well defined ways – with other markets but where each market is set up to achieve multiple purposes specific to that market.

    It is only in the last five years have we had the technology to achieve these goals. Already we are seeing instances arising with the likes of Amazon which is a market place for many sellers to sell books and other information items, and google which is a market place for many advertisers to sell clicks and Ebay which is a market place where anyone can sell almost any consumer item. We can do the same type of thing for money, for health, for education, for ways to reduce green house gas emissions, for ways to make more efficient use of water, and for markets that allocates loans using criteria other than how much money the person already possess.

    Free market proponents are let down because of the way markets are constructed. Many markets are unpredictable because of their internal construction and hence by definition they cannot be efficient. We cannot fix market failure by external regulation. It just doesn’t work. Both groups can get their objectives achieved if we construct what I call “Markets with Purpose”. I have described such a market with the purpose of reducing greenhouse gas emissions in the most efficient way. Other purposes that market has is to “print” non inflationary new money and to distribute the money in a socially equitable way.

  16. Michael of Summer Hill
    February 21st, 2009 at 12:32 | #16

    John, what many fail to grasp, albeit one smart Liberal backbencher, is that Labor’s decision to scrap this week’s ETS inquiry may in fact be a ploy to push the ball back into the oppositions lap and not pass the Bill. It seems like Labor has done its homework for it is all about timing and of course the ‘polls’.

  17. Ikonoclast
    February 21st, 2009 at 16:05 | #17

    Kevin Cox, the Efficient Markets Hypothesis is refuted.

    As John Quiggin says, “Once the EMH is abandoned, it seems likely that markets will do better than governments in planning investments in some cases (those where a good judgement of consumer demand is important, for example) and worse in others (those requiring long-term planning, for example). The logical implication is that a mixed economy will outperform both central planning and laissez faire, as was indeed the experience of the 20th century.”

    A mixed economy roughly equals dirigism for the big issues (eg developing carbon-neutral renewable energy sources) and free markets for the frivolous issues (making ice-cream and plasma TVs). I’m being too sarcastic about free markets. They do seem good for example at guaranteeing an adbundant and diverse food supply; many niches, many tastes, many little “markets within markets”.

    However, I don’t understand the development of your idea. It seems to be contradictory. You say,
    “We cannot fix market failure by external regulation. It just doesn’t work. Both groups can get their objectives achieved if we construct what I call “Markets with Purpose”.”

    Would you not have to legislate differentiations and demaractions to create these “markets with purpose”? Legislation to differentiate and demarcate IS regulation.It is one and the same thing.

    As a further proof I would add this. If these different “markets with purpose” did not require legislation and regulation to come into existence, they would already have come into existence spontaneously in this most recent period of laissez faire capitalism.

    I don’t disagree with the markets with a purpose idea but simply with the assertion that they do not require regulation. Regulation is exactly what they do require.

  18. Dave
    February 21st, 2009 at 16:35 | #18

    KevinCox/SalientGreen thanks for the feedback re water piping costs.

    $1800 per metre to lay water pipes! Blimey! I can see the main costs are digging the channel, the backfill, extensive labor, welding the pipe together etc.

    But what about a big rubbery pipe you lay over the ground and power by solar pumps (seriously could they try this).

    Also, what about pumping the water from very very north Queensland south just enough to make it into the Murray basin……

    Ikonoclast, yes you are right re the Rudd govt. The most people I know can come up with is that they have changed the ‘tone’ of politics, I think this is tacit admission that nothing has changed.

  19. Ikonoclast
    February 21st, 2009 at 16:39 | #19

    KC, on another issue in another forum (ETS at Core Economics) you make several appeals to common sense. Probably one of the weakest ways to argue is to appeal to common sense.

    “Common sense” does not exist, at least not in the sense of it being some sort of normative repository of wisdom to which we can be appeal to clinch any argument. What is common sense to one man is nonsense to another. In general our “common sense” equals our prejudices and opinions and nothing more.

    Consensus “common sense” is no different. It is just as possible for masses to be deluded as for individuals to be deluded. Consensus scientific views, backed by substantial empirical evidence, are very different and much more dependable. I add that so I allow no opening for the AGW sceptics.

    You wrote, “common sense tells us that installing solar saves emissions”. You might as well have written “our prejudice, our prejudgement of the issue, tells us that installing solar saves emissions”.

    Does installing solar save emissions? I don’t know. We would have to test it empirically wouldn’t we? In addition might it not depend on the type of solar, the scale, the situation, the distribution method and so forth?

    My firm hypothesis is that in their full life cylce getting power from many solar panels placed on many houses may cause more CO2 emissions than getting power by burning coal and transmitting the power via power lines.

    A full CO2 audit on the entire life-cycle in both cases would have to be undertaken along with many field experiments to determine what level to set all parameters at in our CO2 audit. Don’t forget all the power used to manufacture solar panels and transport them to site. Then the power to dump or recycle old or damaged must be taken into account. this case is not simple and certainly not a matter of common sense.

    I am not trying to imply that you were advocating solar panels to harness power. You did not define the method of harnessing solar power.

    My hypothesis is that the best way to harness solar power will not be by solar panels but by very large solar convection towers producing power on an industrial scale and transmitting it via the existing grid. In addition, solar convection towers can produce power 24 hours a day. I’ll let people research for themselves on how that is possible.

  20. plaasmatron
    February 21st, 2009 at 16:55 | #20

    Protectionism. Are economic stimulus packages, bank bail-outs, deposit guarantees and even fiscal and monetary meddling, the modern equivalent of the protectionism that drove the Great Depression deeper? I am pretty sure giving $50 billion in “loans” to GM is modern-day protectionism. If Citibank can’t take the hits, should’t it stay off the grass?

    With so many promises by international politicians not to return to protectionism (the latest G7 meeting, Frank-Walter Steinmeier in Washington a few weeks back etc.) I can’t help thinking that we are.

    If the Chinese-Rio deal is blocked then globalisation is over for Australia. “Free-trade” was always a massive joke!

  21. Kevin Cox
    February 21st, 2009 at 18:15 | #21

    Ikonclast I had just listened to http://www.ted.com/talks/barry_schwartz_on_our_loss_of_wisdom.html where he makes an appeal to common sense. It is obvious that if it costs less energy to produce than it generates then solar cells will save green house gas emissions. It is not obvious that buying emissions permits will save anything.

    When people start to argue like lawyers and economists then that is when I start to despair. Things are not as complicated as many would make out. We may not immediately understand all the “emergent properties” of systems we create but we do understand our bottom level transactions.

    I know if I build something that will produce more electricity than it took to build then it must reduce greenhouse emissions. It may not be as effective as other methods but that is a different issue.

    All the ifs and buts make no difference to the fact that there is an extremely high probability that investing in solar energy will reduce green house gas emissions and that is common sense.

  22. Kevin Cox
    February 21st, 2009 at 18:36 | #22

    Ikonclast you say “If these different “markets with purpose” did not require legislation and regulation to come into existence, they would already have come into existence spontaneously in this most recent period of laissez faire capitalism.”

    If I now show you some that have come into existence then you will accept my proposition?

    Here are three of the best known Markets with a Purpose.

    1. Amazon – This market place has products from all sorts of suppliers other than Amazon. It has a purpose of allowing us not only to get the best value book but for us to work out if the book is of any use to us.

    2. Google Advertising – This market place allows me as a business to advertise in places where I am likely to be noticed. It gives me extensive tools as part of the market to work out exactly how I am doing. The market place helps me advertise better. This is why it is so much better than newspaper ads.

    3. EBay – This market place allows me as an individual to sell to people in a way that there is a high probability that I will get paid and where they have a high probability that they will get the goods they paid for.

    What we do with these market places is we build the rules and regulations into the market places to fit the market. You DO NOT NEED governments to regulate how a market place will operate. Of course there are rules and regulations but they are internal to the market and tailored to the market not external.

    The way I am suggesting will happen as it is already happening and proving very successful. Because of the climate change problem and the global financial crisis we have a once in a generation opportunity to have the political acceptance to change the way we distribute and spend community funds through “Markets with Purpose”. People are skeptical of the old solutions and would be prepared to allow a government to innovate.

    What I am suggesting is that the government can take advantage of this innovation in the way market places operate and use them to distribute public monies through “Markets with Purpose”.

  23. Alanna
    February 21st, 2009 at 19:09 | #23

    Dave#18 says
    “Ikonoclast, yes you are right re the Rudd govt. The most people I know can come up with is that they have changed the ‘tone’ of politics, I think this is tacit admission that nothing has changed.”

    The problem is we all woke up one day and found what was once considered a conservative government (the liberals) has moved to the extreme and wanted to undo the very structures of government we had all become accustomed to over many decades. Then what we expected would (in history’s view) be more likely to be perhaps a radical government in terms of implementing necessary changes (labor) has moved to a conservative outlook on policy. The fiscal stimulus is conservative, the carbon target is conservative, the policies designed to correct for workchoices are conservative.

    Yes, the world of politics has definitely changed since the 1960s, but I guess I still prefer the new conservatives to the extremists even if change isnt moving as fast as I would like.

  24. Socrates
    February 21st, 2009 at 20:04 | #24

    Dave 18

    I know large water pipes can seem expensive but the critical word is “large”. Slaient Green and Kevin Cox are correct – the sort of size pipes you need to make a difference to large flows into the Murray will cost well over $1 million per km. A rubber pipe simply won’t do the job. Consider the forces in a large (over 1 metre diameter) pipe flowing full – each cubic metre of water weighs one tonne, and may be flowing at 2 to 3 metres per second. The forces are so large that changes in pipe direction often require concrete thrust blocks weighing several tonnes each at the bends.

    Unfortunately the physics favours large pipes. Larger pipes have less friction and use less energy per volume pumped.

  25. Socrates
    February 21st, 2009 at 21:33 | #25

    Further to the water pumping/energy problem, I was listening to an Adelaide water engineer talk about the desalination plant the other day and the energy involved is remarkable. The energy to pump water for adelaide up over the Adelaide Hills from the Murray is so large that it goes a long way towards justifying the desalination plant (in energy terms – still a big capital cost).

  26. Ikonoclast
    February 22nd, 2009 at 06:16 | #26

    Kevin Cox, you say “It is obvious that if it costs less energy to produce than it generates then solar cells will save green house gas emissions.”

    That statement contains an “if” and that was the essence of my post. I was wondering if a solar panel costs less or more energy to produce than it generates over its lifespan. I was also pointing to the need to add in transport and distribution costs and obsolesence or decommissioning costs. I was not stating an answer either way. I was simply stating that the obvious “comon sense” assumption that solar panels save on C02 emissions needs to be tested.

    It is certainly the case that a number of scientists (Pimentel is one) question the value of biofuels because they have calculalated energy inputs and energy outputs from biofuel production and use.

    “”There is just no energy benefit to using plant biomass for liquid fuel,” says David Pimentel, professor of ecology and agriculture at Cornell. “These strategies are not sustainable.”

    Pimentel and Tad W. Patzek, professor of civil and environmental engineering at Berkeley, conducted a detailed analysis of the energy input-yield ratios of producing ethanol from corn, switch grass and wood biomass as well as for producing biodiesel from soybean and sunflower plants. Their report is published in Natural Resources Research (Vol. 14:1, 65-76).

    In terms of energy output compared with energy input for ethanol production, the study found that:

    corn requires 29 percent more fossil energy than the fuel produced;
    switch grass requires 45 percent more fossil energy than the fuel produced; and
    wood biomass requires 57 percent more fossil energy than the fuel produced.
    In terms of energy output compared with the energy input for biodiesel production, the study found that:

    soybean plants requires 27 percent more fossil energy than the fuel produced, and
    sunflower plants requires 118 percent more fossil energy than the fuel produced. “”

    Full article at;

    In other words, biomass fuels are an “energy sink” not an “energy tap”. I am concerned, similarly that solar panels might be a “energy sink” rather than a net energy source.

  27. Kevin Cox
    February 22nd, 2009 at 07:26 | #27

    Ikonclast – a quote from the US office of Energy Efficiency and Renewable Energy:

    “Typically, the energy payback time (i.e., the time it takes for a PV system to generate the same amount of energy that it took to manufacture the system) for PV systems is 2 to 5 years. Since a well-designed and maintained PV system will operate for more than 20 years, and a system without moving parts will operate for close to 30 years, PV systems produce far more energy over their useful life than we use to manufacture them.”

    This quote, plus links to technical papers on this question, are at:

  28. Ikonoclast
    February 23rd, 2009 at 11:09 | #28

    They have probably done their homework (ie. empirical tests) so I will accept that. I would like also to see the research of an incisive researcher like Pimentel on PV solar panels.

    The PV energy return is quite modest. Two to five years just to get the energy back is rather mediocre in my book. And it does not even appear that they have counted transport, installation and decommissioning (dumping, recycling) energy costs.

    It seems quite likely that those energy costs could double the situation to four to ten years to get back energy inputs.

    How long does it take to get back the energy input into manufacturing a diesel generator I wonder? (Assuming for the moment that the diesel fuel is free like the sunlight is free.) I would wager that it is much less then 2 years. I suspect a few hundred hours of operation would do it easily.

    This illustrates one of the problems of transition to renewable power with a low return rate like PV solar panels. A large energy investment is required up front and this energy investment is only slowly recouped. The large up front energy investment is subsidised as it were by fossil fuel use until the solar investment is paying its own way by generating enough power to manufacture all future PV needs plus meeting other power needs.

    If we are not careful we will be caught in an energy “bind”, a severe energy shortage, where not enough renewables have come on stream to meet needs and fossils are declining severely. Whilst we currently waste enormous amounts of energy and could probably live nearly as well on half the energy we could still have an energy crunch where failure to secure energy security then impacts on food security and the need to run urban infrastructure.

    I don’t need to sketch out what happens to populations facing food shortages and collapsing urban infrastructure.

  29. Ernestine Gross
    February 27th, 2009 at 10:55 | #29

    In find the discussions on energy efficiency very interesting. The type of questions Iconoclast raises are assumed to be answered when a economic theoretician writes down, in an abstract way, “production possibilities” and checks for “resouce feasibility” in an intertemporal model of an economy with finite life. (Sometimes I gain the impression that Economics, concerned with the material welfare of humans, will survive outside Economics and Commerce Faculties.)

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