Low-carbon electricity future: the big picture

The latest renewables v nuclear sandpit thread has racked up 300 comments and counting. Rather than attempting to arbitrate, I’m going to assume that both sides are right in their most pessimistic estimates of the other technology. That is, I’m going to look at the implications of assuming that a low-carbon electricity generation (mainly carbon-free with some gas) will imply average costs of $200/MWh.

What does that mean at the household level. Average generation costs are currently around $50/MWh, so there’s an increase of $150/MWh or 15c/kWh.

UpdateI didn’t think I needed to spell it out, but obviously I do. Debate on the merits of specific technologies, such as nuclear v renewables belongs in the sandpit. End update
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Stutchbury on QR (and Quiggin)

Michael Stutchbury in the Oz offers a case for the Bligh government’s asset sales, and that of QR in particular. Mostly, he wants to argue that the sales will put an end to the oppression of the bosses by the workers[1], or as he puts it, would allow business to “clean up its anti-management culture”. But he also tries a half-hearted defence of the official case for privatisation, that selling assets will finance non-commercial investments.
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Bandwidth limit

I just got an automated message from my hosting service saying my bandwidth limit had been exceeded. I’m not sure what this means, but it’s possible the blog will go off air without warning. In the meantime, please don’t download any big files, and use the RSS feed if you want to check the site regularly. I will see if I can get the comments feed working again.

If the site goes down, I’ll post directly to Posterous

http://johnquiggin.posterous.com/

Niches or clones

Chris Bertram’s CT post on the Browne reforms[1] in UK Higher Education has prompted me to write a post I’d half-planned a while ago, after seeing this familiar (to Australian eyes) claim.

Too many universities simply state a desire to “achieve excellence in teaching and research” and appear unable to carve out a market niche, Professor Beer said.

The idea that a pseudo-market system (centralised control but with sharper price incentives) will generate diversity is one of many illusions that were exposed during the Australian reform era of the 1990s. Faced with pressure to find a market niche and select a “flagship” program, 37 Australian universities (out of 37) decided that business education and a multitude of specifically labelled vocational degrees were the right niche and that an MBA would be a good flagship. This is scarcely surprising: given the incentives, business degrees were the obvious profit centre. It’s only as the reform program has faded from memory that we are seeing serious attempts at diversity like the “Melbourne model”

However, similar choices didn’t produce a homogenous outcome. Rather, the historical hierarchy (century-old sandstones at the top, former teachers colleges at the bottom) which had been somewhat muted when funding flowed a little more freely, re-emerged stronger than ever. At the top, there was enough surplus to maintain, more or less, the full range of disciplines as well as the long-established professional schools (law, pharmacy and so on). The further down the scale you went the less of the arts, humanities and sciences survived. This apparently came as a surprise to the Australian equivalents of Professor Beer.

Even more bizarre was the shock expressed by some market advocates when they discovered that, with a customer base consisting of 18-year olds (who understood their own preferences), and parents (who mostly knew very little about units), the market produced very little demand for anything that was hard and didn’t purport to offer training for a well-paid job. Some of them seriously appeared to think that the market would kill off critical theory in favor of good old-fashioned classical education. In fact, provided the pill was sugar-coated with film studies and pop culture, critical theory didn’t do too badly, at least relative to old-style humanities. I myself am affiliated with the QUT Centre for Creative Industries, which derives much more from crit theory than from lit crit.

Australia has a long history of importing policies that have already failed in the UK. It’s a source of mild schadenfreude to see the trade going in the opposite direction for once.

fn1. As always, I use “reform” to mean “change in structure” with no implication of approval or disapproval. Given the history of C20, most reforms consist, in large measure, of undoing some previous reform.

The other shoe

The bailout of the US financial sector through the Troubled Assets Recovery Program (TARP) looks to have been fairly successful on its own terms – the banks have become profitable again and the final estimated loss to the government is relatively small. That doesn’t change the fact that the government took on huge risks for negative returns, without any reason to expect that the future behavior of the banks will change.

But all of that was based on assumptions of an orderly resolution of the mortgage crisis. Those assumptions now look very dubious, as the legal consequences of the practices of the financial sector during the bubble, ranging from sloppiness to outright fraud, manifest themselves.
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Water is heavy

I just did an interview with ABC Radio Lismore about the latest proposal to divert water from the Clarence River to the Murray Darling Basin. Apart from the environmental effects (disastrous according to the studies I’ve seen) proponents of ideas like this seem to be unaware of a crucial fact. Water is heavy. A megalitre of water (worth maybe $200 as bulk supply to irrigators) weighs 1000 tonnes. Pumping that much mass over even a low mountain range is prohibitively expensive. You can overcome that with tunnels if the gradients are steep enough, but the Great Dividing Range is pretty broad in Northern NSW.

And, don’t get me started on the really crazy projects like Colin’s Canal.

A bad omen ?

Apparently the Mont Pelerin Society is meeting in Sydney. The proceedings are apparently unpublished, which is a pity, since I would be interested to see how, if at all, members have adjusted their views in response to the Global Financial Crisis. In the absence of this, we can all think about the maxim “bad things come in threes”.

The last meeting of which I heard anything[1] was in Reykjavik, at which time the MPS was happy to share in the glory of its proteges such as David Oddson. There was also a meeting in Chile in 1981, notable for producing an endorsement of the Pinochet regime from Hayek The Chilean economy ran into a severe crisis shortly thereafter. So, let’s hope that this meeting passes off uneventfully, and without any nasty aftershocks.

fn1. Google suggests there have been plenty of other meetings, but these are the only ones I heard anything about.