A bit more on solar PV

I wanted to develop a few more points on solar PV. Like quite a few commenters, I think subsidies for rooftop solar PV installations are not a first-best policy option, and probably not even second-best. But the fact remains that a relatively modest subsidy is enough to make this a reasonably attractive choice (in comments to the previous post, Uncle Milton describes it as ‘marginal’, which is about right – at the margin, there’s just enough to make it an appealing option for suitably located households).

It doesn’t look so good as public policy. Assuming 6 KWh/day, the energy saving is around 2MWh/year, which, if it displaced brown coal would save about 2.5 tonnes/year. If the public subsidy is $5000, and the real annual interest rate faced by the government is 4 per cent, that’s about $100/tonne.

There are certainly better options than trying to achieve a large proportion of our emissions reduction goals through an approach like this. But lets suppose that the kind of political noise being made by Tony Abbott and others forces us into a high-cost winner-picking approach. Now suppose we decide to reduce emissions by 500 million tonnes a year (about 90 per cent of existing emissions), using approaches that are, on average as efficient as residential rooftop PV, that is, at an average cost of $100/tonne. The cost would be $50 billion a year or about 4 per cent of GDP, that is, about 2 years worth of annual growth in income per person.

In other words, even using highly inefficient approaches, the cost of climate stabilization would be marginal in comparison to the ordinary fluctuations in GDP associated with the business cycle, let alone the variations in personal income (IIRC, the coefficient of variation is more than 20 per cent).

This is a point that seems to be resisted vigorously both by advocates of ‘business as usual’, and by lots of people who think that the existing order of things is doomed by virtue of necessary increases in the cost of energy. The arithmetic above shows that this can’t be true[1], but I doubt that I will convince to many people of that.
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Going solar

The Rudd government’s ventures in subsidising energy-saving measures such as home insulation haven’t exactly covered it in glory. It’s not alone in this respect. The Howard government had similar problems, and Spain had a huge boom and bust in solar photovoltaics. The common feature in all of these cases was that the schemes got into difficulty because take-up was much more enthusiastic than was expected. This in turn reflects the fact that the economics of these measures, particularly solar PV, are improving fast.

I recently got solar PV installed on my roof, and the deal (available from Origin here), though not the cheapest on the market, was very attractive. A modest upfront payment, and monthly payments that are substantially offset by the cost savings, especially when the system is exporting back to the grid and attracting the feed-in tariff. And it is just so cool to open the meter box and watch the wheel turning backwards and the numbers going down.

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Deltoid vs The Thunderer

My recent scuffle with the Oz, is one of a long line in which a paper which was once (long ago, and only for a few years, but still) Australia’s best has had it out with bloggers, mostly coming off second-best. After being shredded in its fight with the psephbloggers in 2007, and having long since abandoned any claims to credibility, the Oz is not much of a scalp to hang on your belt these days.

A much more interesting match-up is between Tim Lambert’s Deltoid and the Times of London, as represented by their laughably mis-titled ‘Science’ reporter Jonathan Leake. With more than 200 years as the world’s best known newspaper of record, the Times ought to be a shoo-in. But Murdoch ownership erodes credibility at a startling rate, and Lambert has Leake dead to rights. I’m betting on a TKO for Deltoid.

Starting with Leakegate (Leake’s role in pushing the anti-science lies associated with ClimateAuditGate), Lambert has pointed out all manner of journalistic malfeasance on Leake’s part. The Times wisely stuck to dignified disregard for a while, but, like the Oz, they couldn’t keep it up. Leake had a fellow reporter call Lambert and claim to be doing a general story on science blogging. She didn’t manage to get much but ran a hatchet job anyway. Now, as Lambert is reporting, Leake is getting banned from all sorts of places for such malfeasance as breaking embargoes. You can read the whole story here.

Science the victim of dishonest attacks

That’s the title of my Fin column for Thursday 11 March 2010, which naturally picked out The Australian newspaper as a prime vehicle for these attacks. The Oz replied next day, with characteristic mendacity, pointing out that, on the same day they

ran an opinion piece by climatologist James Hansen, the NASA Goddard Institute for Space Studies chief who also happens to be known rather snappily as the “father of global warming”.

Only problem was, they weren’t running Hansen to defend science against their attacks, but because his policy views (he opposes an ETS and supports nuclear power) could be used in their continuing wedge campaign. The piece (can’t find it to link ran under the headline “”Only carbon tax and nuclear power can save us”

Anyway, here’s my piece
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A small win for economists

Late last year I was among more than 20 economists who published a statement rejecting the case for privatisation put forward by the Queensland government in its ‘The Myths vs the Facts’ booklet. Among the claims to which we objected was one which read

MYTH: The five commercial businesses the Government plans to sell generate a lot of income for the State

FACT: The total return from all five businesses in 2008-09 was approximately $320 million. This is less than 0.9% of the Government’s income. For every $100 of Government income that’s less than 90 cents. When the sale process is completed, it is anticipated the Government will save $1.8 billion every year in interest payments.

The economists’ statement observed

This is an invalid, apples-and-oranges comparison. The $320 million figure consists solely of dividend payouts, excluding retained earnings, tax-equivalent payments[1] and the interest paid by the government business enterprises to service their debts.
The $1.8 billion represent the interests that would be saved, at a rate of about 6 per cent, if the state realised $15 billion from the asset sale and avoided $12 billion in new investment.  Most of this interest would be serviced out of the revenues of the GBEs, and can therefore not be compared with dividends derived from earnings after the payment of interest and tax.

The booklet is now on the web, and I’ve just noticed that the $1.8 billion claim has been dropped. If anyone would care to look through the archive, it would be interesting to see when this change was made.

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Climategate:The smoking gun

In writing my previous post on the “Climategate” break-in to the University of East Anglia computer system , I remained unclear about who was actually responsible for the break-in theft of the emails, which were then selectively quoted to promote a bogus allegation of scientific fraud. It seems unlikely at this point that the hacker/leaker wll be identified, so as far as criminal liability is concerned, we will probably never know.

Looking over the evidence that is now available, however, I think there is enough to point to Steven McIntyre as the person (apart of course from the actual hacker/leaker) who bears primary moral responsibility for the crime.
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Touring the Murray

A few weeks ago, following the Australian Agricultural and Resource Economics Society conference in Adelaide I drove with my Risk and Sustainable Management Group colleagues David Adamson and Sarah Chambers to Melbourne, going by way of the Murray River. David and Sarah had been to the Coorong in a pre-conference tour and on our trip together we managed to visit all the remaining ‘icon’ sites – these are the sites that are supposed to best represent the environmental values of the Basin.

There was quite a striking pattern, though not so surprising given the way water allocation works in the Australian federal system. The South Australian (downstream) sites, the Coorong and Chowilla, were much drier than would be expected under normal conditions, even allowing for a long drought. Things were much better in the Victorian (upstream) sites (Hattah Lakes, Gunbower Forest and the Barmah-Millewa). The Murray channel itself, which is the sixth icon site, shows the same pattern. There’s a problem with the icon sites approach – they are supposed to be representative indicators, but the temptation is to throw a lot of resources at the icon sites, and ignore everything else.

There are some reasons for optimism though. Most obviously, it’s been raining an awful lot in Queensland since our return, and some of that water is bound to make its way down the Darling and on to South Australia (we’re now trying to estimate how much). There’s also a major project going on at Chowilla to ensure that at least some of the floodplain there can actually get flooded from time to time. And, with the drought at least partly broken, the Rudd government’s policy of buying back water rights from holders willing to sell looks as if it will pay off. Hopefully, this will mean an end to some of the sillier engineering projects on the table, which will save only small amounts of water at very high cost.

There’s a set of pictures from the trip at my Flicker site

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