A new sandpit for long side discussions, idees fixes and so on. Unless directly responding to the OP, all discussions of nuclear power, MMT and conspiracy theories should be directed to sandpits (or, if none is open, message boards).
Midweek Message Board
A special Midweek Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
Score one for the planet
Several pieces of news in quick succession, have made in clear that the nightmare prospect of six mega-coal mines in the Galilee Basin has been staved off, at least for the foreseeable future. The key to the whole process is the Carmichael mine proposed by Indian conglomerate Adani. The rail line and port expansion proposed by Adani is necessary if any of the other mines are to proceed. Now the goods news
* Having already sacked its contractors, Adani is laying off most of its own staff, their non-denial denial notwithstanding. The break with Korean Steel company POSCO is particularly notable since POSCO was a likely equity investor and could have brought in debt funding from the Korean Export-Import bank
* The Federal Court overturned Minister Hunt’s approval of the project. While the grounds were technical, the decision raises the possibility that the whole process will need to be reassessed in the light of the adverse information that
* The Commonwealth Bank, the last likely source of debt finance for the project has ended its role as advisor
The remaining question is why, with no mine remotely in prospect, the Queensland government is still calling for expressions of interest in dredging for the proposed Abbot Point expansion. Hopefully, they have just been going through the motions. But, with the latest news, it’s time to stop throwing public money at this mirage. The tender process should be halted, at least until, and unless, the project is re-approved.
The generation game and the 1 per cent
For a generation (fifteen years) or more I’ve been writing and rewriting the same piece about the silliness of the “generation game”, the idea that one’s year of birth matters more than class, gender or race in determining life outcomes and attitudes. But this is a zombie idea that can never be killed.
Stephen Rattner in the New York Times is the latest example, with a piece showing that US Millennials (those born after 1980) are doing much worse than previous generations at the same age, despite higher levels of education. Rattner notes the role of the recession, now nearly a decade old, but then jumps to the conclusion that it is the Baby Boomers, as a group, who are to blame. His only evidence for this is the long-discredited claim of a looming crisis in Social Security.
Rattner doesn’t present any evidence about the recent experience of non-Millennials, but his piece leaves the impression that the experience of doing worse than older cohorts at the same age is uniquely Millennial. So I thought I’d do his work for him, and dug out this graph prepared by Doug Short 
As can be seen, the group suffering the biggest loss, relative to older cohorts at the same age, are those households with heads aged 45-54 in 2013, a mix of late Boomers (for aficianados, this group is called Generation Jones) and early X-ers. But the main point is that median household income is falling for all groups except the 65+ cohort (mostly called Silents in the generation game). Part of this is due to declining household size, but (IIRC) household size has stabilized recently as forming a new household has become less affordable.
Rattner doesn’t mention, even once, the obvious and well-known explanation for the fact that median income is falling while mean income rises. This can only occur if the distribution of income is becoming more skewed, with the top tail (the 1 per cent) benefiting at the expense of everyone else.
EROEI
Among critics of renewable energy, one key idea is that of Energy Returned On Energy Invested (EROEI). The central idea can be illustrated by the case of ethanol produced from corn in the US. It’s argued by critics that the production of ethanol from corn uses more fossil fuel inputs than it displaces. The US Department of Agriculture has an EROEI slightly greater than 1, but it’s still clear that corn ethanol is not going to do much to solve the carbon dioxide problem.
Now lets look at the case of solar PV. The energy-intensive component of a solar PV module is the polysilicon used to produce the wafer, which is produced using an electric furnace. Clearly, if more electricity is used in this process than is generated by cell, EROEI < 1, and the idea does not work. We can do a rough check by observing that a typical wafer uses 5 grams/watt of polysilicon. The cost of polysilicon is $20/kg. To be conservative let's assume this is all electricity, at a cost of 5c/Kwh. Then a quick calculation shows that each watt of PV requires 2 KWh of electricity in production or about 1 year's generation in a favorable location. So, for a panel with a 10-year lifetime, the EROEI is 10. Clearly not much of a problem. The estimate omits the energy costs of the rest of the module, but that's almost certainly more than offset by the conservative assumptions about polysilicon.
Some EROEI fans don't like this calculation. They want to include all sorts of other costs, going as far as the food energy used by the workers who instal the panel. At this point, the exercise becomes one of trying to price all economic activity in terms of energy, an idea that has been tried without success for decades. For everything except energy-intensive activities like smelting, energy costs are a small part of the total, and imputing such costs to any particular energy source is a fools errand.
No regrets
Another quick reaction piece, this time on Obama’s climate policy, for The Conversation. My key observation is that, despite its ambitious goals, Obama’s policy is still in the “no regrets” class. That is, the domestic benefits for the US, disregarding climate effects, outweigh the costs. More over the fold
How our Senate (and not the US Senate) blocked the TPP
Following the breakdown of talks on the Trans Pacific Partnership last week, I did a quick reaction piece for Inside Story, making the point that our much-maligned Senate was the most important source of resistance to the demands for yet more protection for US pharmaceuticals, demands that make a mockery of both the claim that the TPP is a “free trade agreement” and the “diffusion of knowledge” rationale for the patent system.
Is an emissions trading scheme a carbon tax?
I was recently asked this question by ABC Fact Check. Here’s my answer:
The core idea of an ETS is to limit the volume of emissions (of carbon dioxide) by creating a set of permits that must be used by emitters. The permits may initially be auctioned or given away. Since the permits are tradeable a market price will be determined by the demand for permits and the willingness of permit holders to sell their permits. By contrast, a carbon tax sets a price on carbon emissions and allows the market to determine the volume of emissions.
There are a large variety of schemes that resemble the ETS in general structure. Within the environmental area, both the Renewable Energy Target and the government’s Emissions Reduction Fund (if augmented with a baseline allocation and penalty structure) fall into this class. Other examples include taxi licenses, electronic spectrum auctions, and tradeable catch quotas in fisheries. None of these policies is normally described as a tax.
CCS: A fiction that has outlived its usefulness
With only a handful of pilot projects in operation around the world, Carbon Capture and Storage (CCS) has not played a significant role in reducing carbon dioxide emissions. CCS has, however, been valuable as a fiction for all those who want, for whatever reason, to avoid dealing explicitly with the fact that stabilizing the global climate will require ending the use of fossil fuels, and particularly coal. For example, rather than prohibiting new coal-fired power stations, the US EPA has proposed that only power stations equipped with CCS technology should be permitted. Since new coal stations are mostly uneconomic even without CCS, this amounts to a ban, but can be justified simply as requiring best practice.
It now appears that this fiction has outlived its usefulness. Recent reports suggest that the EPA will drop the CCS requirement in favour of the weaker requirement that all new coal-fired stations should use supercritical combustion. There are two main reasons for this
(a) The requirement might not stand up to legal challenge on the basis that CCS is not a feasible technology
(b) No new coal plants are likely to be built anyway
Meanwhile, the EU is struggling over proposals to stop subsidies for coal-fired power. Again, the compromise was to subsidise only projects with CCS. But the coal lobby is now arguing that
proposed requirements on carbon capture and storage (CCS) to neutralise emissions have to be realistic as the technology is still in its infancy.
In this context, “realistic” means supercritical and therefore theoretically ready for CCS, as opposed to actually using the technology.
Combine this with a string of cuts in funding for CCS projects, and the conclusion is inescapable. CCS is an ex-parrot.
The socialist objective
There’s a push within the ALP to remove the party’s long-standing socialist objective, which states
The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields.
Then follows a long list of commitments, notably including
(i) the restoration and maintenance of full employment;
(j) the abolition of poverty, and the achievement of greater equality in the distribution of income, wealth and opportunity; and
(k) social justice and equality for individuals, the family and all social units, and the elimination of exploitation in the home
I’m ambivalent about this, both as as regards substance and timing. When I started this blog, I made the decision to describe myself as a social democrat rather than a democratic socialist. In 2006, I gave the following explanation, in a comment
I prefer “social democratic” because it clearly refers to the set of policies implemented and advocated by social democrats in the second half of the 20th century, including a mixed economy, an active welfare state, government responsibility for full employment and so on.
By contrast, socialism is less well defined. It can mean comprehensive public ownership, which I don’t support, or it can be just a general statement of values and aspirations, consistent with social democracy.
So, if the change was simply to replace “democratic socialist” with “social democratic”, and to give a description of goals consistent with that, I’d have no problem. But let’s look at the text proposed by NSW Labor Leader Luke Foley[1]
The Australian Labor Party has as its objective the achievement of a just and equitable society where every person has the opportunity to realise their potential.
“We believe in an active role for government, and the operation of competitive markets, in order to create opportunities for all Australians, so that every person will have the freedom to pursue their wellbeing, in co-operation with their fellow citizens, free from exploitation and discrimination”.
Foley’s further comments make no reference to full employment, equality, poverty or any other social democratic concerns. He goes on to say
We understand that competitive markets are best placed to deliver the economic growth that the people we represent rely on.
We also know that regulation and redistribution are necessary to correct market failures, to ensure dignity and opportunity for all Australians.
Is there anything here that Tony Abbott, or even Joe Hockey, could disagree with?
