It’s hard to know how to keep up with news on the problem of mitigating CO2 emissions – there’s just so much happening – so I’m just going to jot down a few thoughts. This piece on wind power in Salon by Joseph Romm has a couple of particularly interesting snippets I want to jot down.

* since 2000, Europe has added 47 GW of new wind energy, but only 9.6 GW of coal and a mere 1.2 GW of nuclear
* The carbon price required for large scale expansion in wind power (to 20 per cent of all US electricity by 2030) is estimated at $50/ton

Given our larger area of land per person, I’d imagine the economics in Australia would be at least as favorable. Ignoring for the moment the demand response, the revenue associated with permits sold at $50/ton in Australia would be about $25 billion (given current emissions around 500 million tonnes). Taking account of an emissions reduction of at least 20 per cent*, revenue would be $20 billion (enough to fund the abolition of payroll tax and a reasonably generous compensation program for low-income households). The net welfare loss would be much less than this – given the many problems with payroll tax, there might even be a net gain.

* The Salon article is only on electricity, but there are comparable savings to be made in other areas.

To get really serious about reducing CO2 emissions, we’ll need in the end to have a price of $100/tonne or so. At that price, there seems little doubt that we could halve emissions over the next few decades, so we’d be looking at revenue of $25 billion, and a welfare loss of $10 billion to $20 billion, or 1 to 2 per cent of national income. (A request that will doubtless prove fruitless: if you’d like to challenge this estimate, please provide a comparable estimate of your own, rather than thumping the table and saying you don’t believe it).

For a 90 per cent reduction by 2050, as has recently been suggested by Garnaut, we’d need to rely, not only on prices but on the innovations that higher prices will bring about. More on this soon, I hope.

68 thoughts on “Wind

  1. Ian – “The quoted average feed from wind farms in ca. 15% in 2003 and 15% on 2005.”

    And that figure is the average feed in from wind farms not the capacity factor of the wind farms. The low figure could be because of the factors I mentioned before even though this would not be noted in the report.


    For years, people in the wind power field have talked about and tried to build shrouded turbines – a shrouded turbine uses an outer metal or fabric shroud to direct the wind onto a small turbine.

    This raises the effective wind speed allowing the turbine to operate a lower speeds and with greater efficiency and replacing the extremely expensive high-tech turbine blades used on current grid-scale wind projects with much smaller and cheaper ones.

    It’s a simple idea that has surprisingly difficult ot make work in practice – for one thing the weight of the shroud has been a problem.

    It appears the problem has now been solved:

    Flodesign is an established aeronautical company with numerous successful design projects behind it.

    They also one a recent sustainable design competition run by MIT.

    So personally I’d hesitate before dismissing them with analogies to moon colonisation.

    Flodesign wind turbine shoudl be cheaper than existing designs, produce more power and have significantly higher availability factors due to their superior low wind speed performance.

  3. Ian; Forgive me for being ever so slightly sceptical. Even in their own press release they say
    “A wind turbine shaped like a jet engine that its designers hope will provide more electricity at a lower cost than conventional windmills”
    These breakthroughs are always, on the cusp,nearly there,one step away….. but alas
    Perhaps they can power the new colonies on the moon.

  4. The wind shroud is almost exactly the same idea as the new solar panels, concentrate the expensive difficult bit into a small area, make the big stuff cheap.

  5. Ian, that doesn’t look like it, and I couldn’t locate the power point presentation I had with the link to the paper.

    Doesn’t matter, though. I found a better source. This author uses the term “capacity credit”, which is equivalent to what I referred to as diversified reliability.

    This one’s a literature review covering 50 earlier studies:


    Wind energy has a capacity credit. All the about 50 studies catalogued here, done by public research institutes, private consulting companies and electrical utilities, support this statement. The capacity credit is depending (among other things) on the load factor and the penetration. It tends to decrease from approximately the load factor for small penetrations to some 10-15 % at high penetrations.

    So the study I had read had the number at the low end of the range, but the high end isn’t much higher, at 15%.

  6. Ender, this is what reliability means in this context:

    NATIONAL ELECTRICITY RULES, Chapter 4, Power System Security

    4.2.7 Reliable Operating State

    The power system is assessed to be in a reliable operating state when:

    (a) NEMMCO has not disconnected, and does not expect to disconnect, any points of load connection under clause 4.8.9;
    (b) no load shedding is occurring or expected to occur anywhere on the power system under clause 4.8.9; and
    (c) in NEMMCO’s reasonable opinion the levels of short term and medium term capacity reserves available to the power system are at least equal to the required levels determined in accordance with the power system security and reliability standards.

  7. SJ – “Ender, this is what reliability means in this context:”

    Ok fair enough – I am glad we are on the same page now.

  8. “Hope?
    These breakthroughs are always, on the cusp,nearly there,one step away….. ”

    There’s a difference between healthy skepticism and willful denial,

    The rate of technological progress is never easy to predict exactly – but the correct answer is seldom “zero”.

  9. I’ve deleted this incomprehensible snark in line with previous warnings. If you have a point to make, please do so in a clear and straightforward way, without
    (a) making insinuations about alleged inconsistencies in someone or other’s position
    (b) pretend-professions of bemused ignorance
    (c) anything else along these silly-clever lines
    As the previous warning seemed to work for a while, I hope you will return to making constructive comments – JQ

  10. OK John. The pros and cons of wind energy being of some interest here in ameliorating CO2 emissions, the clear impetus for such technology is boiling down to the best way to increase the price of current CO2 externality, presumably in order to better reflect truer social cost and make alternatives like wind more economic and widespread. I largely concur with Greg Mankiw that ‘cap and trade = carbon tax + corporate welfare’ and now we’re observing that here-,23636,23730759-31037,00.html
    Skeptics of straight carbon taxing care to differ, or else explain why a committed, large producer of CO2 is selling its rights to emit to a financial institution, who you’d reasonaby expect would have a lesser need to emit same on behalf of its customers, albeit, no doubt they are emitting more CO2 on that score than they were 12 months ago?

    As for the pros and cons of wind energy here, I have only an anecdotal experience to relate, after spending 4 days in Edithburgh, directly across St Vincent’s Gulf from Adelaide a few weeks ago. Just outside Edithburgh was an impressive array of 30-40? (I didn’t count) wind turbines churning powefully for 3 of the days on this clearly windy promontory. On the last day I arose early to brew the caffeine in the motel on the esplanade and peruse the investments in the Fin, whilst the town was thinking of stirring, if not the bubble and strife. Since the jug turned off with the lights immediately without warning I retired for a sojourn along the seafront to watch the emerging light and sunrise. Directly across the glassy water you could unusually see Adelaide’s Mount Lofty on the horizon, before the sun rose at least. Further along, Kangaroo Island boldy perched on this perfect grey mirror and no doubt the wind turbines far away on the opposite mainland toward Cape Jervis were as tranquil and silent as Edithburghs. I had more than an hour to soak it all up before the motel sign lit up to beckon me back for the caffeine, etc. The media seemed as oblivious to it all over the next few days as Mrs sleepyhead was at the time. Late risers too I surmised.

  11. Thanks for this Observa. Now I can see what you are getting at.

    It turns out that AGL is a big supplier of offsets. I guess they are on both sides of the market, but the stated explanation that they are trying to provide liquidity to get the market going seems plausible under the circumstances.

    I’ll try to post a bit more on taxes vs emissions trading when I get a bit of free time.

  12. cap and trade = carbon tax + corporate welfare

    Only in practice, not in principle.

    The real test of Rudd et al. and the one that may go down in infamy is if they give away free permits to non-trade exposed industries. Still, we shall know by the end of the year.

  13. Exactly. The real question is free permits, not cap-and-trade vs taxes (which could be offset by various forms of compensation analogous to free permits)

  14. Liquidity? And here was I thinking all that CO2 AGL puts into the atmosphere was a gas. Still, it looks like AGL’s cup runneth over with their version of liquidity-
    “Information not supplied by AGL”
    Perhaps if their spin doctors and Westpacs produce enough hot air it will reduce the need for all that CO2. Look out solar, AGL and Westpac are coming through! However if AGL haven’t exactly assuaged all my reservations about cap and trade here, no doubt they will soon if they get their fair share of those free permits wilful suspects. The ones that AGL will be so surprisingly short of by then. In that case my Wespac Broking finger will be firmly on their ‘buy’ button, strictly to assist with all that liquidity you understand. Come to think of it, perhaps they know something about all that future liquidity I don’t know about right now. Gotta go… something urgent’s come up…

  15. “The real question is free permits..” and underpriced ones, not that all the players might know that at the time. I’m thinking of all those soldier settler blocks with water rights along the MD Basin, along with the Snowy infrastructure to boot, all for services rendered. In retrospect some might argue now they were a bit underpriced, but imperfect knowledge and all that. Might have been a bit different now if they’d started out leasing those water rights, however cheaply at the time.

  16. If a carbon tax is too low, then there will not be enough emissions reductions; if a cap is too high (too weak), the carbon price will be much less than the social cost of carbon.

    I suspect that the factor with the biggest risk of undermining climate policy is if politicians set a cap to be too weak or a price to be too low. In this sense the political barriers to climate change abatement are greater than other ones.

    It seems like Garnaut is mostly opposed to free permits, but whether Penny Wong and the Dept of Climate Change decide whether to allocate any free permits is another matter.

    I don’t know a great deal about how the water market in the MD Basin works but I get the impression that permits to use water last for much longer than a year or so which is why the government is planning to buy permits back. If greenhouse emission permits lasted for a long time and were over-allocated then it would of course be a disastrous policy.

  17. You nail the problems I have with CO2 cap and trade pretty well Peter. In fact I don’t really know what form C&Tcan take to overcome the problems demanding its solution by that path. It’s not like water in the MD Basin where there is a fixed average flow available, albeit that might be falling over time somewhat if the science is right. That essentially means a fixed quantity available per year as a natural cap. OTOH we have a relatively fixed amount of CO2 emitted per year now(albeit that seems to be growing with demographics somewhat)and want to decrease that, presumably annually to our ideal. Let’s say by 60% by 2050, although 90% reductions are now being bandied about. In other words, presumably the cap needs to be shrinking by 1.5% pa to get that 60% over 40 years, the low hanging fruit argument for front end loading aside here. How on earth do you invent a cap and trade system to do that, other than auction a 1 tonne permit today, that the successful bidder understands is shrinking by 1.5% pa and can take ownership and trade same accordingly, presumably to gain the maxm benefits of C&T. Either that or you auction say some 3yr permits and they have to come back and bid for the next lower tranche. That negates the benefits of C&T and becomes a defacto tax. If so why not cut out all the admin/policing dramas and slap on a straight tax? The alternative one off auction of declining permits is fraught with the long term information problem, just like MD water rights all those years ago. It seems to me we’re really arguing about a C&T ghost here. These high priests need to how us the substance, rather than their incantations. Failing that, their ghost who walks is really an AGL flogging make believe carbon credits to banks. You can’t cover up rubbish tips and walk away from them without tapping the methane, or you’ll end up with a bigger bang than Chernobyl. The fact that AGL saw an opportunity to claim the necessary as an emission credit is as facile as Origin’s similar try-on when it took over Snowy Hydro.

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