Energy - Market Forces or Politics?

[Roxanne Appleby]

. . .The electricity supplied costs more than that generated by natural gas power stations and alternative systems have to be in place for when the wind doesn't blow but all the wind-generated power saves fossil fuel use.

Wind power is becoming more cost effective as the technology develops and the cost of oil production increases. I think that wind power in the UK will become as financially efficient as coal or nuclear power generation within the next ten years.

Og, let us assume that in 75 years fossil fuels will be prohibitively expensive as fuel to generate power. This means that if there is any backup source for your windmills it will have to be nukes, geothermal or some other source that is not dependent on weather (and those are the only two I'm aware of except perhaps hydro, the opportunities for which are limited by geography).

Wouldn't that mean that the windmills are just an expensive add-on, a luxury that caters to the aesthetic sensibilities of a population that wants to think of itself as "green?" Unlike burning fossil fuels, once a nuke plant is up and running the marginal cost of each additional btu it produces is practically zero. So you have this big nuke capable of producing all your power, but when the wind blows it sits semi-idle. IOW, the windmills are an expensive frivolity that save nothing.

 

[amicus]

http://195.200.115.136/textbase/nppdf/free/2006/SR_Portugal.pdf.

Portugal's current energy production and consumption:


59%: Oil
14%: Natural Gas
12%: Coal
11%: Combustible renewables and waste
02%: hydro, wind, solar, geothermal

Increased VAT on all energy consumption was put into place in 2005 in partial response to comply with Kyoto accords and fund government energy programs.

Energy Consumption

38%: Industrial
35%: Transport
15%: Residential
12%: Commercial and other...

~~~~~~~

The article is not definitive by any measure, but does provide interesting data.

I am reminded of the glorious "Five Year Plans" periodically released by the now defunct Soviet Union.

The government of Portugal is imposing high taxation on business and industry and penalties on excess energy consumption, all of which will restrict and limit the ability all all industries to perform and higher taxes on consumer products across the board, e.g. continual lowering of living standards for the entire population. (except government workers)

An interesting history, for those who might be curious, of the early electrification of America, beginning in New York. The Edison Electric Company and Westinghouse Electric, with both energy production and transmission means and the controversy over AC (alternating current) and DC (direct current) usage, is quite interesting.

Expansion was rapid and competitive (lowest cost, highest quality, merit function of the market) and took place before government had any taxes or regulations in place to control and restrict growth and development.

The transition from fossil fuels to other sources for the massive amounts of energy required by a modern society, is an exciting era and if only government would get their greedy fucking hands out of the industry, it would be an enlightening time with many new discoveries not yet conceived.

I predict an absolute failure of the Portuguese economy over the next decade, a bankruptcy and a political collapse that will spread throughout the EU.

Curious, eh?

Amicus...

 

[Joe Wordsworth]

I'd rather leave the market to deal.

 

[neonlyte]

I'd rather leave the market to deal.

Actually... so would I. The biggest renewable energy investors in Portugal are the oil majors and electric generating companies. BP owns the factory that produces photo-voltaic cells. All their petrol stations in Portugal operate on photo-voltaic power. EDF (French generator) is building the 120 unit wind turbine farm. The 130 hectare solar farm is owned by a consortium of oil majors. The government has acted as a facilitator in guaranteeing an operable purchase price for the energy and easing the passage (planning etc) to enable the developments to take place.

 

[neonlyte]

I predict an absolute failure of the Portuguese economy over the next decade, a bankruptcy and a political collapse that will spread throughout the EU.

Curious, eh?

Amicus...

About thirty years late with the prediction, Amigo. Portugal's economy collapsed in the late 70's. The country has been bailed out by the despot EU. Curiously, the country enjoys its first majority government (socialist) since 1974. In my town, people vote Communist or Socialist (the Communists have the best band). I think we're the only Western European country with Communist municipalities.

If the nation were a company, it would be bankrupt. EU subsidies - until recently the highest in the EU states - keep the country afloat. The subsidies have largely fixed the infrastructure, that's taken 20 years. Now they are being applied in the renewable energy sector in what ought be termed 'an interesting experiment'.

The problem with 'leaving it to the market' is the market has little incentive to innovate since all renewable energy is more expensive than fossil fuel. Lead-in subsidy for renewable energy stimulates the renewable technology industry by setting a target at which profit is achievable, the greater the efficiency of the technology, the greater the profit for the deliverer. If I've a turbine producing a return of 10% I have an incentive to make that turbine more efficient, lower maintenance, and of longer life. As importantly, I have a realistic timescale in which it can be achieved. The subsidy guarantees my base line and gives me freedom to pursue greater efficiency and more profit.

I suspect this plan is a 'behind closed doors' EU initiative. A trial on a relatively small EU population that just happens to be conveniently located in southern Europe with an Atlantic exposure. If you wanted to select a site to trial renewable technologies, Portugal has wind, sun and waves in abundance. Someone has to be picking up the tab on the subsidies, the consumer isn't, at the moment. Tax on consumer energy is lower than in the UK, for example; and energy tax on business is fully deductible. The government cannot afford to foot the subsidy bill, so my guess is a component of the 'head count' subsidy from the EU is ring fenced to pay the renewable subsidy. The logic being, a trial of this magnitude needs doing, the population is small so the target of 60% renewable is probably achievable; and, raising the economic base of Portugal by stimulating an renewable industrial base will improve the Portuguese economy and reduce, over time, the need for EU subsidy.

Watch this space seems appropriate.

 

[amicus]

Good points all, Neon, and well taken, thank you. Also impressed by your in depth knowledge and perusal of the issue and the roots.

There is a flaw, somewhere, in your thinking or mine, as concerns the function of the market.

In my mind, in the open market place, the ideas of individuals around the world, who specialize in the various trades, industries and professions, can be be focused on the problem at hand.

The human mind, set free from coercion and restrictions, is an unlimited resource of new ideas to meet specific problems.

Government, by definition, functions according to rules and regulations and guidelines and thinking outside of those is forbidden and certainly not encouraged.

Thus, my blanket, and I think accurate, statement, that a collective, or statist, endeavor is destined to fail.

It is not always my intention to be confrontational, it just seems to work out that way. Appreciate the thread.

Amicus...

 

[oggbashan]

Og, let us assume that in 75 years fossil fuels will be prohibitively expensive as fuel to generate power. This means that if there is any backup source for your windmills it will have to be nukes, geothermal or some other source that is not dependent on weather (and those are the only two I'm aware of except perhaps hydro, the opportunities for which are limited by geography).

Wouldn't that mean that the windmills are just an expensive add-on, a luxury that caters to the aesthetic sensibilities of a population that wants to think of itself as "green?" Unlike burning fossil fuels, once a nuke plant is up and running the marginal cost of each additional btu it produces is practically zero. So you have this big nuke capable of producing all your power, but when the wind blows it sits semi-idle. IOW, the windmills are an expensive frivolity that save nothing.

In 75 years time you might be right - IF wind power and nuclear power remain at their current technology. However wind power systems are improving year on year and becoming more efficient. If many householders can generate their own power from wind and sun then large wind farms might be redundant. Their current life is estimated at 30 years before replacement is necessary.

I believe that nuclear power is an essential part of the power generation mix in the UK and we could expand it significantly. Nuclear already generates a significant part of our energy but is more expensive than natural gas generation. We also swap electricity with France through the Channel Tunnel because our peak demands are at different times. Nuclear power is the main source of electricity for Northern France.

There are other so-called green sources of energy - hydro, tidal, wave and solar. There is limited possibilities for geothermal in the UK but heat pumps to heat and cool houses are already being installed. I have seen a very small system installed in a greenhouse that stores heat during the day and pumps it out at night. The power comes from a solar panel and is stored in an old car battery. Running cost is nil. Capital cost was less than 100 dollars plus the owner's and friends' labour.

Our local garden centres sell solar lighting that lights at night from power stored from daylight. As long as the small solar panel is kept clean the garden path is outlined at night. Price for a set of six is about 30 dollars.

Some of our local road signs are lit up by wind and light energy. A solar panel about one foot square is mounted on the post with a one-foot diameter windmill on top of the post. A 12 volt car battery in a box at the foot of the post, a light sensor, and the sign lights up when it gets dark and turns off when it is daylight. As this sort of technology becomes more common it gets cheaper to buy and install.

I think E F Schumacher was right: Small is beautiful. It may be the way of the future.

Og

 

[Roxanne Appleby]

Here's my problem with all this alternative energy central planning: Most of the resources it uses will be wasted, because no one can know which alternatives make sense until real market processes discover that. It's a chicken/egg issue though, because our civilization is still receiving the "subsidy" that the planet's fossil fuel legacy provided, allowing industrial civilization to get a "jump start" over the past 200 years.

Eventually that "subsidy" will be withdrawn as the easy-to-extract fossils are consumed and the cost goes up (they don't "run out" - at least half will remain in the ground, just too costly to extract for fuel). As this happens over a few decades (starting in 20-40 years) real market processes can perform their discovery role. No artificial subsidies will be necessary, because innovators, entrepreneurs and investors who build better energy "mouse traps" will earn billions.

I understand that everyone is eager to "get on with it already," and so is willing to pour billions (of other people's money) into what will turn out to have been a lot of worthless rat-holes (remember Jimmy Carter's "syn-fuels?" Remember Richard Nixon's "Manhattan Project to acheive energy independence within a decade?")

Yes everyone is eager, just like a kid is eager to become an adult and do adult things. But maturity comes at its own pace and can't be rushed. The cost of trying to rush in energy a misallocation of scarce resources, and a relative reduction in the wealth of our societies. That means a relative reduction in the advance of human well being and the amelioration of human suffering. In return for nothing. That is why I get passionate about this stuff. (Plus it makes me nuts to see rent seekers and slimy pols do well on the backs of Joe and Joanna Citizen.)

I have described in this thread (and elsewhere) the one thing a nation can do now to fast-forward the process, which is to artificially raise the price of fossil fuels by imposing an expensive carbon tax. The tax ratchets higher every year; it's made revenue neutral by lowering income taxes by an equivalent amount; and those of modest income (who pay no income tax) are made whole through means-tested rebates or prebates, so that in the aggregate no income level pays more taxes than currently - they just pay different taxes (energy consumption tax vs. income tax).

This system creates an implicit subsidy for non-fossil fuel energy sources, but does so in a way that establishes a level playing field for any and all of them - including things no one has thought of yet. No central planner has to correctly guess what will make the most sense - consumers and innovating producers will sort all that out via billions of individual choices and transactions. Rather than a few grand experiments selected by politicians and bureacrats (and subject to all the pernicious influences characteristic of those) we get thousands and millions of experiments large and small. And the way a producer gets rich is by building a better energy mousetrap - not buying influence with the right bureau or politicians.

Ideally all nations would adopt the same system, increasing the incentives for innovators by making the potential market worldwide, and making a level playing field in international trade, too. But single nations can still benefit by going alone.

 

[neonlyte]

Roxy,
It's a nice argument, and I could see it working except you can't get a level playing field unless all industrial nations join in.

The problem, as I see it, is you need to ratchet the Carbon Tax 4 to 6 fold current energy prices to compete at the same level as current renewables. You will stifle industrial investment in countries applying the ratchet and boost industry in those prepared to let someone else solve the energy problem. I know you can balance the thing with rebates and deductions, but that just becomes a bureaucrats (government) nightmare, can you imagine means testing 50 million people in the US to see who is entitled to a Carbon Tax rebate?

I can see the right and wrong in both approaches, (I think ) The Portuguese experiment is nothing if not bold and whilst I recognise it goes against your grain, it will be an interesting process to observe. The rate of change here is astonishing. We spoke to a municipality four years ago about building zero-energy houses, they hadn't got a clue what we were talking about; now, I can get a reduced interest loan for construction and a guaranteed 10% rebate per year on the saved energy of the new homes until the renewable energy component cost is amortized. It's not perfect but it is little different from the German scheme running for the last decade that covered 50% of the cost of installing solar panels. I was in Germany last week, virtually every house has them. Their programme was aimed at avoiding the need to construct additional generating plant.

 

[Roxanne Appleby]

Roxy,
It's a nice argument, and I could see it working except you can't get a level playing field unless all industrial nations join in.

The problem, as I see it, is you need to ratchet the Carbon Tax 4 to 6 fold current energy prices to compete at the same level as current renewables. You will stifle industrial investment in countries applying the ratchet and boost industry in those prepared to let someone else solve the energy problem. I know you can balance the thing with rebates and deductions, but that just becomes a bureaucrats (government) nightmare, can you imagine means testing 50 million people in the US to see who is entitled to a Carbon Tax rebate?

Neon - the "mechanics" of the prebates etc. are not hard at all - the states and U.S. federal government do that sort of thing all time with programs like earned income tax credits, means-tested state income tax credits against the cost of home property taxes, etc. (Some unfair or silly things too, like income tax credits for hybrid vehicle buyers.)

With regards to "stifle industrial investment in countries applying the ratchet and boost industry in those that don't," at some point this may happen, but you overstate the problem for this reason: The carbon tax is revenue neutral. Every dollar is raises is a dollar's worth of reduction in some other tax.

My preference would be to eliminate the corporate income tax and any property taxes on business tools and equipment, and lower individual taxes on wealth-generating activities like investment. Can you imagine how that would supercharge investment in a nation? Of course the investment might be in different things - non-energy intense industrial processes, say, or in methods to make existing processes less energy intensive. Or, a country might just build a bunch of nukes exempt from the carbon tax, meaning that power would cost just a bit more than fossil fuels, rather than 4 to 6 times higher. And you still get some of the growth-generating tax cuts, because you won't eliminate fossil fuel use 100 percent for a long time.

(Of course I wouldn't get all the offsetting tax cuts in the form I would prefer - the usual political mud wrestling will distribute them to different beneficiaries via things like EITC, old age income maintenance, and other wealth redistribution rather than wealth-generating tax policies. That's OK, that's politics. The nation that resists redistribution and favors investment will grow faster, but in most cases at least part of the goodies will go to the latter.)

~~~~~~~~~~

Edited to add: Someone has to pay for the massive subsidies that will support the kind of thing Portugal is attempting. That "someone" will be consumers and taxpayers. You have to consider that when criticizing my carbon tax proposal, because it's not as if the competing proposal has no cost. In terms of fairness and creating the optimum array of incentives that operate on every business and individual the carbon tax is the superior policy. The only "losers" are polticians and bureaucrats whose power is not enhanced by being empowered to pick particular winners and losers, and the rent seeking winners they would pick. A carbon tax creates a fair field with no favors, and so does not increase the power of members of the government class or the wealth of pure rent seekers.

 

[trysail]

It is not without a bit of irony that Galp Energia SGPS, SA is the owner of a ten percent (10%) interest in Petroleo Brasileiro SA's (a/k/a Petrobras) Tupi discovery in the Santos Basin and a twenty percent (20%) interest in the adjacent Jupiter discovery.

Subject to confirmation by drillbit, Tupi is reported to contain a reserve of 12 to 30 billion barrels of oil equivalent (OOIP) while Jupiter has been reported to contain a similar reserve.

If initial estimates prove to be accurate, the two discoveries would rank among the five largest to occur within the last thirty years. It should be pointed out that development of both fields will require the employment of techniques and technology that are currently at the outer limits of human ability. Both fields are sub-salt reservoirs located roughly 180 miles offshore in 10,000 foot water depths. The challenges include, but are hardly limited to, extremes of metallurgy and fluid dynamics.

 

[rgraham666]

A little blog entry I made about a year ago on the philosophical idea of 'the level playing field'.

 

[trysail]

It is also worth noting that a mere ten percent (repeat, 10%) of the world's hydrocarbon reserves are accessible to private industry today.

That, obviously, means that ninety percent (90%) of the world's hydrocarbon reserves are already controlled by governments.

 

[oggbashan]

European governments, including Portugal, have signed up to agreements to reduce carbon emissions substantially.

Wind farms are one of the technical solutions to reducing carbon emissions. As more and more are built they technology is improving and so is the efficiency.

IF the UK government makes it easier for citizens to generate their own power for example by tax concessions on the capital investment and simplified development consents then micro-generation could be another technical solution.

What worries European governments is their dependence on Middle-Eastern oil and Russian gas. Their power generation and distribution systems need to both flexible and robust to survive natural disasters and political blackmail. Micro-generation, like the internet, is likely to be less affected by external events.

Og

 

[Roxanne Appleby]

European governments, including Portugal, have signed up to agreements to reduce carbon emissions substantially.

Wind farms are one of the technical solutions to reducing carbon emissions. As more and more are built they technology is improving and so is the efficiency.

IF the UK government makes it easier for citizens to generate their own power for example by tax concessions on the capital investment and simplified development consents then micro-generation could be another technical solution.

What worries European governments is their dependence on Middle-Eastern oil and Russian gas. Their power generation and distribution systems need to both flexible and robust to survive natural disasters and political blackmail. Micro-generation, like the internet, is likely to be less affected by external events.

Og

Pardon me if it seems I'm riding a hobby horse, but the policy goals you cite (including one I find highly dubious - carbon reduction - but it's their choice) would all be advanced more effectively by a carbon tax than by government central planning. Does micro-generation make more sense than nukes? Do windmills make more sense than more efficient lightbulbs and peak-hour surcharges? Damned if I or anyone else knows, but if you use a carbon tax to establish a fair field for all non-fossil fuel sources with no favors to any particular ones nobody has to know - the market decisions of individual consumers and producers will sort all that out.

It's likely the optimum solution will change all the time, too, and allowing market processes to work allows for much more flexibility, so that at any moment the particular mix is closer to optimum than a centrally planned solution can ever be.

 

[Weird Harold]

This means that if there is any backup source for your windmills it will have to be nukes, geothermal or some other source that is not dependent on weather ...

Wouldn't that mean that the windmills are just an expensive add-on, a luxury that caters to the aesthetic sensibilities of a population that wants to think of itself as "green?" ... So you have this big nuke capable of producing all your power, but when the wind blows it sits semi-idle. IOW, the windmills are an expensive frivolity that save nothing.

Roxy, you've missed or are ignoring the English plan to use excess wind generated power to pump water up into hydro generation reservoirs for a totally green backup for windless days. There are several other ways to "store" off-peak electric power capacity that don't depend on the availability of hydro generation reservoirs -- Anchorage, Alaska (IIRC) has a huge battery backup system capable of feeding the entire city for an hour if the main generating system goes offline.

Wind generators are weather dependent, as are Solar generating systems. Both need sufficient capacity to charge some "energy storage" system to cover down-time. Depending on how the storage is managed, expensive nukes and pollution generating fossil fuel plants will become the "expensive frivolities.

Here's my problem with all this alternative energy central planning: Most of the resources it uses will be wasted, because no one can know which alternatives make sense until real market processes discover that. It's a chicken/egg issue though, ...

You're right that it is a chicken/egg issue, which is WHY "alternative energy central planning" is necessary. Energy companies -- utilities and oil companies -- are too conservative to spend the initial capital investment for alternative infrastructure as long as they can pass on any carbon taxes to the consumers. It's the consumers who are going to pay for the infrastructure in the long run either through taxes, increased energy costs or direct costs of private installations for power independence.

Another factor is that "which alternative will work" is a question without a singular answer -- Wave/Tidal generation is strictly a non-starter for my locale, but a prime choice for the north-eastern seaboard where Solar is minimally efficient.

I agree with oggs:

I think E F Schumacher was right: Small is beautiful. It may be the way of the future.

The benefits of alternative energy sources are easier to see for private installations -- the expense of the initial installation of "cutting edge" technology is the sticking point for most home-owners, not the month-to-month benefits of being less dependent on the grid for heat and light.

 

[oggbashan]

Pardon me if it seems I'm riding a hobby horse, but the policy goals you cite (including one I find highly dubious - carbon reduction - but it's their choice) would all be advanced more effectively by a carbon tax than by government central planning. Does micro-generation make more sense than nukes? Do windmills make more sense than more efficient lightbulbs and peak-hour surcharges? Damned if I or anyone else knows, but if you use a carbon tax to establish a fair field for all non-fossil fuel sources with no favors to any particular ones nobody has to know - the market decisions of individual consumers and producers will sort all that out.

It's likely the optimum solution will change all the time, too, and allowing market processes to work allows for much more flexibility, so that at any moment the particular mix is closer to optimum than a centrally planned solution can ever be.

We already have carbon taxes.

We will have a ban on less efficient light bulbs. Shortly it will be impossible to buy a traditional light bulb in the UK. We have peak-hour surcharges on industry and variable rates on domestic electricity favouring early hour use of storage heaters.

We have government encouraged home insulation. Recently all houses sold have had a requirement added that the energy efficiency of the house must be professionally assessed at the vendor's cost.

All new electrical appliances have to show their energy efficiency for that type of applicance from A (best) to G (worst). That is affecting consumers because they will pay a small premium for lower running costs.

In the UK at least there are a number of energy-reduction schemes as well as research and development of different means of energy generation. Reducing power use and generating power by a variety of methods are both complex but we are trying. On Friday this week the National Trust is giving all its employees the day off and encouraging them to use that day to reduce their energy use e.g. by changing to low power light bulbs, installing house insulation, considering their energy use for transport etc.

London has just introduced a low emission zone for vehicles. Unless a truck has been modified to reduce pollution it will have to pay about 50 dollars a day to drive into London NOW. Larger cars and SUVs will have to pay that charge later this year. That is being seen by some, including me, as a political ploy and not a realistic carbon reduction method but it will be interesting to see what effect it has - if any.

The UK government is trying education and encouragement as much as central planning. The message is getting through. People are changing their habits to reduce their carbon footprint. It may be in little things and on a global scale even if the UK reduced its carbon emissions to zero the impact would probably not notice - but we - national government, local government, power producers, employers, employees, and the general public - are trying to make a difference. Most of Europe is doing the same. We still use far more energy per head than China or India and much more than Africa but we are trying to reduce our use.

There is political will and popular backing for change. We argue about how, when and why but are are acting. If the theories of global warming are wrong our activities will do no harm. If they are right our activities MIGHT mitigate the effects. Doing nothing could be disastrous.

Og

 

[Weird Harold]

Portugal is undergoing rapid transformation. No where is this more apparent than in renewable energy.

By 2020 (12 years) Portugal aims to produce 60% of all its energy requirements from renewable sources. It is using four technologies, Wind Turbine, Hydro-Electric, Wave Power and Solar.

http://195.200.115.136/textbase/nppdf/free/2006/SR_Portugal.pdf.

Portugal's current energy production and consumption:


59%: Oil
14%: Natural Gas
12%: Coal
11%: Combustible renewables and waste
02%: hydro, wind, solar, geothermal

Increased VAT on all energy consumption was put into place in 2005 in partial response to comply with Kyoto accords and fund government energy programs.

Energy Consumption

38%: Industrial
35%: Transport
15%: Residential
12%: Commercial and other...

~~~~~~~

The article is not definitive by any measure, but does provide interesting data.

Interesting numbers indeed. It would appear that Portugal's target is to completely convert all electrical production to "renewables" because their approach doesn't (directly) address the transportation sector which is -- according to these numbers -- nearly all of the 40% remainder from their announced goal.

Which is the really BIG problem with the kinds of alternative energy sources Portugal is subsidizing -- they generally do nothing to reduce single biggest fossil fuel consumer. Urban railroads and bus routes can be electrified but the expense of converting inter-city rail to electric is prohibitive and does nothing to green-up road transport.

 

[oggbashan]

... Urban railroads and bus routes can be electrified but the expense of converting inter-city rail to electric is prohibitive and does nothing to green-up road transport.

Much of Europe's rail network is already electric and more is changing to electric with new construction of superfast rail systems such as the French TGV. The relatively short distances between centres of population and the high passenger use make electricification viable and sometimes commercially economic.

In the UK passenger rail-miles are increasing and are at higher levels than at any time since railways were invented.

Og

 

[Weird Harold]

Pardon me if it seems I'm riding a hobby horse, but the policy goals you cite (including one I find highly dubious - carbon reduction - but it's their choice) would all be advanced more effectively by a carbon tax than by government central planning.

The flaw I see in your carbon tax approach is that it is a "negative subsidy" that removes money from the energy sector and inhibits the financing of any alternative that requires a capital investment in infrastructure.

On an individual consumer level, it means that means the power bill is artificially inflated too high to allow for budgeting a micro-generation system to reduce the power bill.

With a general subsidy/tax break for any "non-carbon" or "carbon neutral" the energy conglomerates and individual consumers have more incentive to invest in the technology and infrastructure development necessary to wean ourselves away from fossil fuels.

I agree that subsidizing selected technologies is potentially restricting development of currently unknown possiblilities, but it is at least a positive reponse rather than a negative response.

 

[Weird Harold]

The relatively short distances between centres of population and the high passenger use make electricification viable and sometimes commercially economic.

Therein lies the rub -- without relatively high population densities, rail travel is simply uneconomic for passengers. The US passenger rail service, AMTRAK, barely survives on the eastern corridor traffic because it has to subsidize a minimal trans-continental passenger service by it's charter.

How much of Europe's rail transport is freight?

At least in the US, the majority of "transport" as far as fuel/energy calculations are concerned is transportation of freght rather than people -- by rail, water and air as well as by over-the-road trucking.

I'm not conversant with the particulars of electric locomotives, but my impression is that any locomotive dedicated to passenger service is generally less powerful than those designed for hauling freight. The implication there is that it is probably easier/cheaper to electrify a rail system for passenger service than it is to elcetrify it for freight service because of higher power requirements per train.

In the UK passenger rail-miles are increasing and are at higher levels than at any time since railways were invented.

Og

Do you know if that is an absolute figure or a percentage of travel-miles?

I suspect that computed as a percentage of travel-miles it's very low and declining even with the current increased use of rail travel.

 

[oggbashan]

Therein lies the rub -- without relatively high population densities, rail travel is simply uneconomic for passengers. The US passenger rail service, AMTRAK, barely survives on the eastern corridor traffic because it has to subsidize a minimal trans-continental passenger service by it's charter.

How much of Europe's rail transport is freight?

Not as much as it could be. Transhipping (moving goods from one form of transport to another) is more expensive than leaving it on say a large truck from source to destination. Rail transport is used for bulk goods such as gravel and ore. In the UK we suffer from being the originators of railways. The loading gauge is much smaller than in Europe or the US so rail trucks have to be smaller too.

At least in the US, the majority of "transport" as far as fuel/energy calculations are concerned is transportation of freght rather than people -- by rail, water and air as well as by over-the-road trucking.

I'm not conversant with the particulars of electric locomotives, but my impression is that any locomotive dedicated to passenger service is generally less powerful than those designed for hauling freight. The implication there is that it is probably easier/cheaper to electrify a rail system for passenger service than it is to elcetrify it for freight service because of higher power requirements per train.

European and UK electric locomotives are powerful enough for any freight load the rail track could carry. The speed of electric passenger locomotives especially on the dedicated high speed lines is challenging short-haul air travel because the trains run city centre to city centre with much faster check in times and no real restrictions on baggage weight.

Do you know if that is an absolute figure or a percentage of travel-miles?

I suspect that computed as a percentage of travel-miles it's very low and declining even with the current increased use of rail travel.

In the UK passenger rail travel is increasing as an absolute figure and as a percentage of travel miles because of congested cities and motorways (interstates). It is far quicker for me to travel to London by train than by car. Commuting by train in SE England is increasing in volume and distance because of faster rail times and slowing road travel times. Cost is still critical. If I want to travel to London on my own it's probably cheaper by rail even though I own a car. If two or more of us want to travel then car is cheaper even with London's congestion charge. It is always a complex calculation. Which is faster, cheaper or more convenient? For cross country travel from a small town to a small town a car is almost always the fastest and cheapest means. From a town, with a train station within reach, to and from a major city the train is usually much faster and more comfortable for the driver and passengers. The cost depends on what discounts are available.

However as a taxpayer I have to admit that the cost of railways is high because the infrastructure has to be subsidised. On the other hand car usage in the crowded SE cannot continue to grow without major road building programmes which cost as much as, if not more than, the rail network.

Og

 

[Jenny_Jackson]

No one has thought of the obvious solution to both the energy problem and the political/economic problems the high cost of oil has caused.

The clear solution is wood burning cars. Just think, we can denude the national forests for wood (there's plenty for the next 100 years) which will clear new land to build new houses which will push us out of the Housing slump. Weyerhauser and the other "Biggies" in the timber business will become obscenly wealther which will give GW a massive hard-on. The Arabs will go broke and we will be world leaders again. GREEN AMERICA!

See? Problem solved.

 

[neonlyte]

Interesting numbers indeed. It would appear that Portugal's target is to completely convert all electrical production to "renewables" because their approach doesn't (directly) address the transportation sector which is -- according to these numbers -- nearly all of the 40% remainder from their announced goal.

Which is the really BIG problem with the kinds of alternative energy sources Portugal is subsidizing -- they generally do nothing to reduce single biggest fossil fuel consumer. Urban railroads and bus routes can be electrified but the expense of converting inter-city rail to electric is prohibitive and does nothing to green-up road transport.

Not quite sure what you mean here, Harold. For clarity, all rail services in Portugal are electric. In the Greater Lisbon area, I have a monthly travel pass, costs me about $100, includes all travel (bus, metro, tramway, ferry and rail). In the UK I commute about the same distance into London as I do into Lisbon, my UK fare costs me around $400 just for the rail fare.

The Portuguese transport policy encourages the use of public transport, however, the general economic growth dictates individuals prefer to use their cars With petrol rapidly approaching $8.00 a gallon, that might change.

 

[Roxanne Appleby]

Roxy, you've missed or are ignoring the English plan to use excess wind generated power to pump water up into hydro generation reservoirs for a totally green backup for windless days. There are several other ways to "store" off-peak electric power capacity that don't depend on the availability of hydro generation reservoirs -- Anchorage, Alaska (IIRC) has a huge battery backup system capable of feeding the entire city for an hour if the main generating system goes offline.

You're right that it is a chicken/egg issue, which is WHY "alternative energy central planning" is necessary. Energy companies -- utilities and oil companies -- are too conservative to spend the initial capital investment for alternative infrastructure as long as they can pass on any carbon taxes to the consumers. It's the consumers who are going to pay for the infrastructure in the long run either through taxes, increased energy costs or direct costs of private installations for power independence.

Harold, you might take a closer look at the capacity of those hydro-generation resevoirs. Unless they hold volumes comparable to regular hydroelectric impoundments the amount of generating capacity is likely to be hours, not days.

It's not correct that energy companies and other investors are "too conservative" to take risks on alternatives. Billions are invested in speculative ventures of all kinds all the time. A lot of that does go to energy projects.

What you're really saying is that it's your preference that more be invested in alternative energy. The reason it doesn't happen is because it doesn't make economic sense when we know that fossil fuels will provide the most cost effective source of energy for several more decades. When the easy-to-extract fossils have been extracted and the cost gradually goes up then alternatives will become preferred, investment dollars will flow, and innovation will flood forth. You may not like it, but that's the reality. A carbon tax like the one I've described can accelerate the process, however.

The flaw I see in your carbon tax approach is that it is a "negative subsidy" that removes money from the energy sector and inhibits the financing of any alternative that requires a capital investment in infrastructure.

On an individual consumer level, it means that means the power bill is artificially inflated too high to allow for budgeting a micro-generation system to reduce the power bill.

With a general subsidy/tax break for any "non-carbon" or "carbon neutral" the energy conglomerates and individual consumers have more incentive to invest in the technology and infrastructure development necessary to wean ourselves away from fossil fuels.

I agree that subsidizing selected technologies is potentially restricting development of currently unknown possiblilities, but it is at least a positive reponse rather than a negative response.

There are several non sequitors here. First off, a carbon tax doesn't "remove money from the energy sector." It does tilt the playing field against fossil fuels by giving alternatives a built-in price advantage, however (but in a way that creates a level playing field amongst those alternatives). That means providers of the alternatives that provide the best value stand to make billions of dollars - that will attract huge sums from investors.

On the next point - higher energy taxes mean households can't afford to purchase "micro-generators" - you forget the offsetting income tax cuts (or refundable credits for those who pay no income tax) that put money back into those householders' pockets. In the aggregate the population and each income strata pays no more in taxes. They just pay different taxes. So your point does not stand.

Your point about conglomerates is not clear, so I can't respond.

Your final point sounds an awful lot like a politician's impulse to "do something" just to make the claim, and not to accomplish anything real. Without real competition and real price signals causing consumers to make choices between alternatives based on relative value, there is no way to learn from brute-force subsidies which strategies make sense and which do not. Without the subsidies most of the benefiary providers will dry up and blow away - but there is no way to tell which ones. So a few players get rich, taxpayers and consumers shell out a bundle, but nothing is really gained, nothing is learned. It's all just wasted.

In contrast a carbon tax provides real competition and genuine price signals that reward producers who provide the best value, including ones providing innovative products that no central planner could have imagined. That kind of innovation is priceless, and that information is invaluable. Best of all, it's all "free": All we've done is rearrange the existing tax structure, taking no more money from any particular income strata, but simply taxing people more on the basis of fossil fuel use and less on their income. You get all these benefits for free!