Is it a matter of markets or is it a matter of "knowing" and knowing well?
Everyone looks to France beacuse it has almost 80% of its electricity coming from nukes, as a result of strategic public policies.
I'll bet that the Danish government is behind their wind power development.
The "solution" presented by Steve Chapman is pure government planning, of the same kind he's rejecting. [ironic]How does the government know that fossil fuel are bad? The market are asking for more, how is it that taxes are needed to foster alternative energies? Let the market decide how and when and leave it to its own. [/ironic]
And how is it that USA has become the biggest energy consumer in the world? How come those wasteful SUVs in the first place? Maybe through the "market". People want SUVs let them have them!
So what's the answer? IMHO markets AND governments. Maybe through taxes on fossil fuels, maybe through direct investing (as France did with nuclear energy).
I'll bet that the Danish government is behind their wind power development.
You might lose that bet !
Only indirectly is the Danish Gov't behind their remarkable wind industry.
The Danish Gov't published a survey of in-service performance for various wind turbines. This brought more orders to the good models; and bankruptcy to the poor performers.
They enacted a carbon tax. An indirect wind subsidy.
They made it easy (via laws) for a co-op of farmers or city-dwellers + a farmer to buy & operate wind turbines. At one time, almost half of the WTs were owned by these co-ops.
The national grid was encouraged to take wind power, even when additional lines were required.
Denmark did NOT spend massive amounts on R&D, or have gov't owned WTs. Rather they provided fertile ground for the industry to grow. Quite different from France.
But, part of the argument still holds. How does the Danish government know that "Wind is better". Why is it "distorting" market signals to provide "fertile ground"? The Danish government HAS diverted resources from some part of their economy to another place, probably a different one the market would have chosen.
How is subsidizing wind energy different from subsidizing corn ethanol?
"How is subsidizing wind energy different from subsidizing corn ethanol?"
What the government (the public) should subsidize in our society is a pretty fundamental expression of our values I suppose. We should ask this question honestly in a broader sense.
We seem to value mobility, in fact we have become dependent on being mobile in order to survive - in this way we are like the nomadic people, except that we return to the same bed every night. Is it possible that we will every come back to seeing the value in living in place, without he need for so much mobility? If that happened, I think then the questions over what the public should subsidize would change quite a bit.
"We seem to value mobility, in fact we have become dependent on being mobile in order to survive - "
Are we dependent on independence? What a conundrum!
('Conundrum' - this could be Canada's Oil Drum!)
As far as valuing mobility. I don't really dispute that, but it makes me think about how much we seem to strive for 'safe isolation' .. gated communities, soundproof cars, personal entertainment systems, .. there is a lot of great comradery in our culture, too, but I think of the millions of people sitting together or apart, and all watching TV. When I was a little kid, I wasn't allowed to watch TV until my folks realized it was all the other kids in the carpool were talking about, and my brother and I were miserable outsiders..
Well for the direct answer, subsidizing Wind, I contend, is one, wise direction to move our energy resources towards. There is a great return, simple proven technology, and the likelihood of a long future for this abundant resource, without serious downsides like soil depletion, increased water dependency and need for signifigant inputs like NG or Oil to produce it.
From another side, many see the benefits of wind without the helping hand of a gov't grant, so it could be it'll move forward fine without it.. that is, unless it needs it just to Compete with other subsidies like Corn, Ethanol, life-supports for GM and Exxon and the Contras.. See how Amtrak's subsidy could hardly be expected to armwrestle with The Auto Industry's favors, sweetheart deals in Saudi, the Highway system and the Airports..
How is subsidizing wind energy different from subsidizing corn ethanol?
Apart from point 4 (The national grid was encouraged to take wind power, even when additional lines were required.) this doesn't look like a subsidy, rather, facilitation of the "market rules" (point 1), removing red tape (point 3) and having a general incentive to carbon free energy (point 2) NOT specifically wind.
And this last may even have covered the costs of point 4 at least in part.
While subsidizing corn ethanol means gobs of money, even more so for subsidizing nuclear.
That messes up the market and prevents us from knowing what is working.
"The Market", as you refer to this construct anthromorphicly, is composed of advertisers (aka persuaders, mind manipulators). They are the ones who "mess" with our minds and thus determine what "works" in the market place (albeit to a limited extent) and what doesn't. Ultimately, the things that "work" are those that pander to the irrational, child like desires of the masses.
Do I have a solution?
Sorry, no.
That is why I revisit TOD so often.
I keep hoping some of the way smarter people here will offer insights.
A gov. doesn't have to spend massive monies on R&D to be behind something. Nuclear power required gov intervention because of the nature of the power source--dual use for WMD when enriched enough--and the fact that the economics were never right--still aren't--from a "market" perspective.
Did the "free market" build our road network? I always found the case of Thomas Paine Bridge Designer, not revolutionist writer, to be very instructive.
In 1979, Denmark implemented a subsidy equal to 30% of wind turbine investment costs. This spurred much investment and led to the initial deployment of 200-300 machines a year. These subsidies were phased out for wind power in 1989, after they helped increase the reliability and decrease the price of turbines. Until 1999, the government provided direct grants for each kWh turbine owners sold to the grid. Now Denmark has about 15 subsidy programs for both energy production and consumption. The largest subsidy is a production subsidy per kWh for electricity generated from renewable energy resources. The majority of the subsidy schemes "are directed primarily at converting central and electric heating systems to district heathing and to expanding and renovating the existing district heating network" (Renewable Energy Policy Project)
Despite their being cited as the shining example of what can be accomplished with wind power, the Danish government has cancelled plans for three offshore wind farms planned for 2008 and has scheduled the withdrawal of subsidies from existing sites. Development of onshore wind plants in Denmark has effectively stopped. Because Danish companies dominate the wind industry, however, the government is under pressure to continue their support. Spain began withdrawing subsidies in 2002. Germany reduced the tax breaks to wind power, and domestic construction drastically slowed in 2004. Switzerland also is cutting subsidies as too expensive for the lack of significant benefit. The Netherlands decommissioned 90 turbines in 2004. Many Japanese utilities severely limit the amount of wind-generated power they buy, because of the instability they cause. For the same reason, Ireland in December 2003 halted all new wind-power connections to the national grid. In early 2005, they were considering ending state support. In 2005, Spanish utilities began refusing new wind power connections. In 2004, Australia reduced the level of renewable energy that utilities are required to buy, dramatically slowing wind-project applications. On August 31, 2004, Bloomberg News reported that "the unstable flow of wind power in their networks" has forced German utilities to buy more expensive energy, requiring them to raise prices for the consumer.
More specifically, Krogsgaard (2001a) claims that Danish electricity consumers annually pay more than DKK 10 billion (including VAT) in excess of what they would if the country only operated its central power stations, said to be amongst the most modern and least polluting in the world. Other estimates put the annual total Danish climate input cost at DKK 15 billion (From, 2001e). About DKK 2.5 billion of subsidies is paid to private owners of turbines (excluding VAT); and a further very large subsidy is paid to combined heat and power (CHP) plants, many of which (e.g. open field plants) are facing serious economical problems.
If Germany gave the benefits to the consumer via market rates (letting people buy power really cheap when the wind farms were cranking), that "problem" might have solved itself.
However, market mechanisms and Social Democrats don't mix.
What you are talking about is pie in the sky. First there is no infrastructure for demand management anywhere in the world; Second I don't see why do you think that the power will be "really cheap while turbines are cranking". The biggest costs for wind turbines are the fixed costs for construction and maintainance; if utilities are selling (probably much) cheaper if wind is in surplus they will be doing that at loss. Afterwards they will incurr another loss importing electricity when wind is not enough and overall they will still have to raise their base rates to cover these expenses. There is no such thing as free lunch, anywhere.
First there is no infrastructure for demand management anywhere in the world
Then what do you call all the programs to e.g. allow utilities to switch off water heaters and air conditioners at times of peak demand? I got a leaflet about this in my electric bill last month.
Second I don't see why do you think that the power will be "really cheap while turbines are cranking".
Basic supply and demand. It's the same reason that wee-hours off-peak rates are low and afternoon rates are high.
if utilities are selling (probably much) cheaper if wind is in surplus they will be doing that at loss.
Whereas the current situation is that utilities are selling off very expensive peak power at a loss, and subsidizing it with far higher-than-cost rates on cheap off-peak power, wind power, etc.
If you want people to invest in the infrastructure required to shift demand to periods of surplus (wee-hours or high winds, either way) you have to make it pay for them to do so.
I am not an engineer but always wondered if a super-conducting coil could store the wind generated electicity?
My understanding is that at absolute zero, there's effectively little loss, and the power could be stored indefinitely until needed. This would seem to answer the problem of the erratic nature of wind power generation.
You are correct about the superconductors, strictly speaking, the energy would be stored in the creation of the magnetic field around the coils.
My guess is that this would be work out to be a very expensive way of storing energy.
This is always the problem with energy, there are no lack of clever ideas for storing energy or converting it from one form to another. However, unlike manufactured goods which gain value by having more work done on them energy loses value the more you do to it. This is what makes oil such a miracle fuel. It is has extremely high energy density, it takes very little effort to get it (most of the time), you can carry it and store it in a bucket and you get the energy out by putting a match to it.
Other ideas for storing energy are pumping water uphill to a higher level reservoir and then running that water downhill through a turbine to retrieve the energy. High tech fly wheels can store energy. Splitting water into oxygen and hydrogen so that they can be recombined later in a fuel cell is another. There is also talk of solar power generators in which a large collection of mirrors focus sunlight on an absorber which becomes very hot. This heat is transferred to a pool of molten salt. This pool of salt is used to heat a fluid to drive a turbine and generate electricity. This way the periodic inputs of solar power are converted to electricity available on demand.
This is a good discussion. Storage solutions are extremely important. We just need to find a cost effective solution, and then get a venture capitalist to fund it. :-)
aweo.org obviously is one of these private-run windpower-basher sites that spreads all that FUD (such as those alleged thousands of dead bats under just one turbine - a canard) devised by the hired guns of the heartland institute and the like.
Country Guardian is a rabidly anti-wind site (they want to "protect" scenic country vistas in England from the descrerations of wind turbines). They earlier posted some bird kill stats that were simple false. Having caught them once in a self serving lie; I do not bother reading any new claims of theirs. A "zero crediability" source IMO.
the Danish government has cancelled plans for three offshore wind farms planned for 2008 and has scheduled the withdrawal of subsidies from existing sites.
I've asked Georg Nehls from the german Bioconsult-SH about this. The company serves for environmental expertise in the coastal environment.
Dr. Nehls told me that the danish wind parks are being installed as scheduled, however he spoke of two, not three.
He supposed the information about cancelling those wind parks was probably "old".
His company did not furnish an opinion about the danish wind parks, btw ..
So- the 'information' on aweo.org seems to be old, at best ..
Bingo! It will take a combination of markets and governments. As I've argued several times over on my site, the optimal mix is to have governments push strategies (higher vehicle efficiency, cleaner alternatives) and let the market work out the tactics (technology X is better than technology Y).
In some rare cases, like solar or wind power, I think the answer is clear (more is better), so government should use technology-specific subsidies to promote growth of those sources. But in most other cases, like vehicle efficiency, the government should avoid "picking winners"; instead they should increase CAFE standards and offer tax breaks based purely on a vehicle's MPG, and let the car companies and consumers figure out how best to get those lower numbers.
In short, the people can use public policy to guide and accelerate the market changes we want.
Where we continually bollix it up is when we legislate 40 mpg:
except for this model, units built on Tuesdays, all cars in Alaska, or by those who gave money to "X's" PAC.
This shouldn't be hard to accomplish. It requires only a modest amount of integrity to enact a fair standard, which reflects the broad social direction, and is applied without exception across all sellers and purchasers.
In large part because we're afraid of killing domestic car companies, whose only defense against foreign and non-union labor is their structural cost advantage in light trucks.
The straightforward answer (though not exactly easy) is to find other ways to help the car companies, like subsidizing their health care costs, or taking over their pensioners. In the long run this would be much cheaper, and much better for the car companies, who are gradually losing their light truck market due to gas prices.
We're afraid because it's the last thing actually "made" in America and even that is really not true anymore (parts from Mexico, China, Japan; assembled in Mexico; etc.)
We lose the US Auto companies and what else does the world want to import from us...perhaps mercenary services and military weaponry...we seem to excel at that.
"We're affraid of killing the car companies".
they have had ample DECADES to come up with something...you can only protect so much..look at all the other manufacturing that has left the US. they have been plying thier protectionist political trade for years.
I feel sorry for the rank and file as they are getting the shorter end of the stick, though thier union wages are killing the price competitive part.
We could probably get a pretty fast concensus here at TOD to apply guzzler fines to all light vechicles which score below some boundry MPG, thus killing Detroit.
Yes, though I think it would be fair to do something to help the car companies.
For instance, Japanese companies don't have to pay for health insurance in Japan, for current workers or retirees. Whether that's Japanese corporate welfare, or bad US public policy, it's not a level playing field.
I believe that there are some other such differences.
The way I've heard it told, Detroit in the 70's complained about the uneven playing field, and that only if the Japanese had to build cars here things would be different. Now, unfortunately, the Japanese are building cars here and beating Detroit on (almost) the same turf.
Now the difference is the classic newcomer (with lower pension obligations) advanatage, as well as more favorable labor deals.
I epxect that the "Japanese" will continue to expand their build in America system, but will be forever unable to acquire American companies because they have the union/pension obligations. If Detroit can't negotiate itself down to the same deal Japan has in American plants, I don't see much hope.
For instance, Japanese companies don't have to pay for health insurance in Japan, for current workers or retirees.
Japanese companies most certainly do pay for their employees' health insurance--not for all of it, mind you, but they do make a not insignificant contribution. Is this less than GM pays on average per employee? Surely, yes. But they do pay.
Employee Health Insurance covers people who are working for medium to large companies; national or local government; or private schools. There is also a government-managed program within this plan for employees of small businesses. Premiums are based on monthly salary (excluding bonuses) and half is paid by the employer, half by the employee. The average contribution is around 4% of the person's salary. Those covered under Employee Health Insurance pay 20% of their medical costs when hospitalized and 30% of the costs for out-patient care.
Overall my impression is that Japanese companies are subject to a heavier tax burden than their American counterparts, but I don't have any hard data to back that up. They are responsible for pension payments, national corporate income tax, prefectural and other local taxes, and property taxes. I believe the U.S. is generally considered more business-friendly in terms of tax policy, but again, I don't have any links to support that at hand.
I'd say that qualifies as a non-level playing field.
You sound like you're complaining about a somewhat socialist government (Japan) providing unfair support for its businesses... But who said that the world is a level playing field, or that life is fair? The idea that people and companies should start out from a position of equality (that they should receive according to their needs!) is a socialist/Marxist one.
And in any case, are you seriously arguing that American corporations, operating comfortably from their resource-rich base in the most powerful and economically advanced country in the world, propsering in one of the most favorable regulatory environments in all of American history, are suffering from structural disadvantages that undermine their international competitiveness?
"Overall my impression is that Japanese companies are subject to a heavier tax burden than their American counterparts"
Interesting. My impression was the Japanese companies had a more favorable regulatory/tax environment than American companies, but I don't have data either. It will be interesting to be on the lookout for evidence either way.
"You sound like you're complaining about a somewhat socialist government (Japan) providing unfair support for its businesses... But who said that the world is a level playing field, or that life is fair?"
I'm arguing from the point of view of economic efficiency, and good public policy. It's not
efficient for companies to lay people off in one country, and transfer capital to another to hire there, when the only difference is arbitrary regulatory preferences. It's also mighty painful for the people who lose their jobs.
"The idea that people and companies should start out from a position of equality (that they should receive according to their needs!) is a socialist/Marxist one. "
No, it's just a sensible position. As I discussed above, why have people tearing up manufacturing in one country and moving it to another to take advantage of arbitrary tax and regulatory differences?
Further, we started the discussion here on a question of public policy - should we institute a carbon/gas tax? One of the major obstacles to a such a sensible idea is that it would hurt american car companies. As a practical matter, it would be a good idea to appease car companies in order to get the tax passed. So, the question arises, is giving the car companies something in return for a higher CAFE, or a new tax, a bad idea? Well, if the car companies are indeed handicapped by regulatory/tax differences, then it is not unreasonable to give them something and the whole gordian knot is resolved.
Of course, if not then we have to decide how hard we're willing to hold our noses in order to bribe the car companies (and their employees).
It's not efficient for companies to lay people off in one country, and transfer capital to another to hire there, when the only difference is arbitrary regulatory preferences. It's also mighty painful for the people who lose their jobs.
If it weren't efficient, I question if the companies would be doing it. It seems the process of shifting production is the very essence of buiding efficiency by lowering costs. It certainly is painful for the people who lose their jobs, but I wonder if the solution doesn't have more to do with building social systems for educating and retraining workers to give them new opportunities than it does with keeping their failing employers afloat with some form of subsidy.
In any case, I agree that the important thing is to get some kind of carbon or gas tax passed, and soon. So if what you suggest would do the trick, I'm definitely for it. At this point addressing our overuse of oil and all the environmental damage that goes along with it has to be the absolute and overriding priority.
"If it weren't efficient, I question if the companies would be doing it. "
Well, companies respond to whatever incentives are out there, whether they're tax/regulatory, or more basic financial ones. That said, I suppose there's no question that lower wages are the main draw.
"It seems the process of shifting production is the very essence of buiding efficiency by lowering costs. "
I wouldn't describe cutting wages as building efficiency. I would describe building efficiency as raising worker productivity - doing something in fewer hours. Cutting wages, not so much.
When you cut wages by hiring someone cheaper you usually reduce productivity, because the new person is less well trained and experienced, possibly less well educated. The lower wages have to more than compensate for the lower productivity to make the switch worth it. Sometimes it isn't, as some manufacturers have discovered to their regret. Probably usually it is, but efficiency can't be described as going up - all you can say is that costs are lower.
The lower costs come from the middle class, and go to the poor and the rich. Is that an improvement? I don't know. It's certainly hard on the middle class person who is now, literally, on the street: unemployment in Detroit is now over 30%, and laidoff assembly workers are going to have a very hard time getting even minimum wage jobs.
"I wonder if the solution doesn't have more to do with building social systems"
They'll help a bit, but they can never begin to replace the good jobs that are being lost.
" keeping their failing employers afloat with some form of subsidy"
Well, that was my original point. If overseas employers are getting implicit subsidies (by say, being able to pollute, or using child labor, or not paying for healthcare, or getting artificially low cost loans from government controlled lenders) then helping a company here may be appropriate, rather than corporate welfare.
"I agree that the important thing is to get some kind of carbon or gas tax passed, and soon."
Actually, the playing field is only uneven to the extent we've dug ourselves into a hole of consumption-driven debt-accumulating insanity. This is a bit off-topic, but the numbers never fail to surprise me:
Average household debt
United States: $71,500
(No figure for Japan)
Average household savings
United States: $4,201
Japan: $45,118
Trade balance
United States: -$113,240 million
Japan: +$77,110 million
Current account balance
United States: -$105,900 million
Japan: +$56,783 million
Investment as percentage of GDP:
United States: 17.1%
Japan: 30.6%
Average CEO's pay as multiple of average worker
United States: 17.5
Japan: 11.6
Size of middle class
United States: 53.7%
Japan: 90.0%
Deaths of malnutrition (per million)
United States: 20
Japan: 3
Healthcare expenditures as percentage of GDP
United States: 13.4%
Japan: 6.8%
Average paid maternity leave (1991)
United States: 0
Japan: 14 weeks
Infant mortality rate (per 1,000 live births)
United States: 10.4
Japan: 5.0
Teen pregnancies per 1,000 teenagers
United States: 98.0
Japan: 10.5
Prisoners (per 1,000 people)
United States: 4.2
Japan: 0.4
Murder rate (per 100,000 people)
United States: 8.40
Japan: 1.20
Rape (per 100,000 people)
United States: 37.20
Japan: 1.40
Armed robbery (per 100,000 people)
United States: 221
Japan: 1
Energy units of oil burned annually
United States: 791.5
Japan: 234.3
Carbon dioxide released per person per year
United States: 5.8 tons
Japan: 2.2
Debris inhaled per person per year
United States: 81 pounds
Japan: 2
Percentage of all paper and cardboard recycled
United States: 8.4
Japan: 54.5
Yeah, this does diverge pretty far from our discussion. In fact, I'm not sure what your point is. Do we have things we could learn from the Japanese? Sure. But I'm not sure it's the joys of saving.
They save way too much. That's one of the principal subsidies of Japanese companies, this very cheap source of capital.
The average Japanese is not all that happy. Their birth rate has plummeted because young women are educated and working, and refuse to live with an oppressive mother-in-law and an overworking, never-there salary-man, and live in tiny homes with no privacy.
As a country they can invest more because their military is limited to about 1% of GDP, thus freeing up enormous engineering resources for better things. This was not voluntary, but imposed by military occupation post WWII. It certainly has turned out to be a good idea, and I wish the US would move further in that direction, but it wasn't their idea.
Could we learn some specicic things from the Japanese? Sure. But I'm not sure if there's any larger lessons to be learned from them. I don't think they're tuned into a fundamentally better way of living. I certainly don't think their export driven system is a model we could follow: we would need another country to export to. I certainly think it would be a good idea for the US to greatly reduce it's balance of trade problem, though I think the best way of doing that is dramatically reducing oil imports...which brings us back to where we started.
Don't think we'll have the chance, unfortunately (or fortunately, depending on your perspective). If the U.S. was populated at the same density as Japan (337 people/sq km), our population would be almost 3.1 billion people. To reach China's population density, we'd have to hit 1.2 billion. I don't see that happening, either.
We don't know how to calculate the odds .. but it kind of strikes me as a darkly possible scenario. If we don't crash, and we don't find a power-down curve to sustainable lower density living ... well, what happens with higher population?
I'd love it if the US followed Europe on a curve to lower population, even if that meant slower growth (by the GDP metric).
Well, we are on a curve to stable population - the US is exactly at a stable fertility rate of 2.1.
The problem is immigration, and demographic momentum: Mexico is still exporting it's poor to us, and there's still a baby boom echo, which has to grow up.
If we want to reduce population growth we need to push Mexico to improve it's educational system, and open up it's economy so young ambitious Mexicans don't have to come to the US to open up their landscaping companies....or wash our dishes.
Nick, I think you cited a bunch of detailed population statistics a week or two ago, so I assume you know (a lot) more about this than I do. Is it fair to say that without immigration, there would be essentially zero population growth within 10 years or so?
It would be pretty close. Recent immigrants have a higher fertility rate than people who've been here a while (and higher than people who stay in Mexico! - I think they feel this is a better place to have kids...), so if immigration stopped the overall rate would be something below replacement.
There's still the baby boom echo that has to finish, and I'm not sure that would be done by 10 years from now. Plus, life expectancy continues to rise (meaning death rates continue to fall), so there will probably be a very small increase for a while.
I suspect that in about 20 years the fertility rate would fall enough below the replacement rate to offset the falling death rates, and you'd have ZPG.
I'm not quite sure what my point was myself. I guess, regarding the playing field, that we've made our bed and now we're sleeping in it. That we've undermined our own propsects for future health and prosperity in profound ways.
As for learning from the Japanese, I agree with everything you just said. I lived there for eight years, and you're dead on right. What we can do is not so much learn from the Japanese, but examine what other forms a modern industrial or post-industrial society might take. Europe provides (in my view) a more interesting object lesson than Japan, but we were talking about Japan, so I threw that out there.
" we've undermined our own propsects for future health and prosperity in profound ways. "
Yeah, we've been pretty short sighted to ignore our oil imports. Carter started a very good plan, and succeeding presidents undermined it. If automotive CAFE had continued a gradual rise (even if it had been very gradual), and the truck loophole had been very gradually closed, Detroit (and the US) would be in much better shape now.
"As for learning from the Japanese, I agree with everything you just said. I lived there for eight years, and you're dead on right."
Thanks for your gracious reply. It's very nice to have constructive discussions.
"Europe provides (in my view) a more interesting object lesson than Japan"
Yeah, they're doing a pretty good job of planning for a transition to renewables. I have to like to say that I like their humane approach to an industrial transition, though it's certainly far from perfect, with it's very high unemployment.
I don't see why wind or solar should be treated as special cases. Instead of that we should examine exactly why exactly wind and solar are percieved as better technologies (because they are cleaner) and come up with regulations which encourage cleaner technologies and discourage dirtier ones. Then
Everyone looks to France beacuse it has almost 80% of its electricity coming from nukes, as a result of strategic public policies.
I'll bet that the Danish government is behind their wind power development.
The "solution" presented by Steve Chapman is pure government planning, of the same kind he's rejecting. [ironic]How does the government know that fossil fuel are bad? The market are asking for more, how is it that taxes are needed to foster alternative energies? Let the market decide how and when and leave it to its own. [/ironic]
And how is it that USA has become the biggest energy consumer in the world? How come those wasteful SUVs in the first place? Maybe through the "market". People want SUVs let them have them!
So what's the answer? IMHO markets AND governments. Maybe through taxes on fossil fuels, maybe through direct investing (as France did with nuclear energy).
Best
Fernando
You might lose that bet !
Only indirectly is the Danish Gov't behind their remarkable wind industry.
- The Danish Gov't published a survey of in-service performance for various wind turbines. This brought more orders to the good models; and bankruptcy to the poor performers.
- They enacted a carbon tax. An indirect wind subsidy.
- They made it easy (via laws) for a co-op of farmers or city-dwellers + a farmer to buy & operate wind turbines. At one time, almost half of the WTs were owned by these co-ops.
- The national grid was encouraged to take wind power, even when additional lines were required.
Denmark did NOT spend massive amounts on R&D, or have gov't owned WTs. Rather they provided fertile ground for the industry to grow. Quite different from France.But, part of the argument still holds. How does the Danish government know that "Wind is better". Why is it "distorting" market signals to provide "fertile ground"? The Danish government HAS diverted resources from some part of their economy to another place, probably a different one the market would have chosen.
How is subsidizing wind energy different from subsidizing corn ethanol?
What the government (the public) should subsidize in our society is a pretty fundamental expression of our values I suppose. We should ask this question honestly in a broader sense.
We seem to value mobility, in fact we have become dependent on being mobile in order to survive - in this way we are like the nomadic people, except that we return to the same bed every night. Is it possible that we will every come back to seeing the value in living in place, without he need for so much mobility? If that happened, I think then the questions over what the public should subsidize would change quite a bit.
Are we dependent on independence? What a conundrum!
('Conundrum' - this could be Canada's Oil Drum!)
As far as valuing mobility. I don't really dispute that, but it makes me think about how much we seem to strive for 'safe isolation' .. gated communities, soundproof cars, personal entertainment systems, .. there is a lot of great comradery in our culture, too, but I think of the millions of people sitting together or apart, and all watching TV. When I was a little kid, I wasn't allowed to watch TV until my folks realized it was all the other kids in the carpool were talking about, and my brother and I were miserable outsiders..
Well for the direct answer, subsidizing Wind, I contend, is one, wise direction to move our energy resources towards. There is a great return, simple proven technology, and the likelihood of a long future for this abundant resource, without serious downsides like soil depletion, increased water dependency and need for signifigant inputs like NG or Oil to produce it.
From another side, many see the benefits of wind without the helping hand of a gov't grant, so it could be it'll move forward fine without it.. that is, unless it needs it just to Compete with other subsidies like Corn, Ethanol, life-supports for GM and Exxon and the Contras.. See how Amtrak's subsidy could hardly be expected to armwrestle with The Auto Industry's favors, sweetheart deals in Saudi, the Highway system and the Airports..
Who's grant buried Grant in Grant's tomb?
Bob Fiske
Apart from point 4 (The national grid was encouraged to take wind power, even when additional lines were required.) this doesn't look like a subsidy, rather, facilitation of the "market rules" (point 1), removing red tape (point 3) and having a general incentive to carbon free energy (point 2) NOT specifically wind.
And this last may even have covered the costs of point 4 at least in part.
While subsidizing corn ethanol means gobs of money, even more so for subsidizing nuclear.
probably a different one the market would have chosen
Does this means you assume that "the market" choose wisely?
The market actually "choose" SUVs!
In my opinion the important choice is not what alt-energy you fund, but: do you fund just research, or also production?
I'd say fund a broad array of research, but stay out of production funding. That messes up the market and prevents us from knowing what is working.
"The Market", as you refer to this construct anthromorphicly, is composed of advertisers (aka persuaders, mind manipulators). They are the ones who "mess" with our minds and thus determine what "works" in the market place (albeit to a limited extent) and what doesn't. Ultimately, the things that "work" are those that pander to the irrational, child like desires of the masses.
Do I have a solution?
Sorry, no.
That is why I revisit TOD so often.
I keep hoping some of the way smarter people here will offer insights.
But ah, you got an alternative other than central planning?
Did the "free market" build our road network? I always found the case of Thomas Paine Bridge Designer, not revolutionist writer, to be very instructive.
http://www.geni.org/globalenergy/policy/renewableenergy/subsidies/wind/denmark/index.shtml
Unfortunately I could not find a source for the exact amounts envolved but I could guess they are in the billions.
http://www.aweo.org/ProblemWithWind.html
And another one:
http://www.countryguardian.net/denmark.htm
However, market mechanisms and Social Democrats don't mix.
Basic supply and demand. It's the same reason that wee-hours off-peak rates are low and afternoon rates are high.
Whereas the current situation is that utilities are selling off very expensive peak power at a loss, and subsidizing it with far higher-than-cost rates on cheap off-peak power, wind power, etc.
If you want people to invest in the infrastructure required to shift demand to periods of surplus (wee-hours or high winds, either way) you have to make it pay for them to do so.
My understanding is that at absolute zero, there's effectively little loss, and the power could be stored indefinitely until needed. This would seem to answer the problem of the erratic nature of wind power generation.
Flavius Aetius
My guess is that this would be work out to be a very expensive way of storing energy.
This is always the problem with energy, there are no lack of clever ideas for storing energy or converting it from one form to another. However, unlike manufactured goods which gain value by having more work done on them energy loses value the more you do to it. This is what makes oil such a miracle fuel. It is has extremely high energy density, it takes very little effort to get it (most of the time), you can carry it and store it in a bucket and you get the energy out by putting a match to it.
Other ideas for storing energy are pumping water uphill to a higher level reservoir and then running that water downhill through a turbine to retrieve the energy. High tech fly wheels can store energy. Splitting water into oxygen and hydrogen so that they can be recombined later in a fuel cell is another. There is also talk of solar power generators in which a large collection of mirrors focus sunlight on an absorber which becomes very hot. This heat is transferred to a pool of molten salt. This pool of salt is used to heat a fluid to drive a turbine and generate electricity. This way the periodic inputs of solar power are converted to electricity available on demand.
We can take it one step further by lisiting the storage techniques more abstractly as:
- Static potential energy (i.e. water behind a dam)
- Kinetic energy (i.e. a flywheel)
- Chemical energy (i.e. combustible hydrocarbons)
- Thermal energy (i.e. molten salt)
- Radioactive decay energy (i.e. U238)
Anyone out there who can think of other generalized forms of energy storage?Click on picture for article on magnetic superconducting storage
For more on energy storage concepts, try here:
And which "homo" did I attack?
and
http://www.energybulletin.net/18286.html
provides with a lot of interesting background about this
I've asked Georg Nehls from the german Bioconsult-SH about this. The company serves for environmental expertise in the coastal environment.
Dr. Nehls told me that the danish wind parks are being installed as scheduled, however he spoke of two, not three.
He supposed the information about cancelling those wind parks was probably "old".
His company did not furnish an opinion about the danish wind parks, btw ..
So- the 'information' on aweo.org seems to be old, at best ..
Good bet. Here's an article about it:
On a tiny island off the Danish coast, life after oil is working out just fine
It seems obvious to me that flexibility is more important than ideology. The Soviet Union was too inflexible.
The U.S., OTOH, incorporated socialist elements when necessary.
In some rare cases, like solar or wind power, I think the answer is clear (more is better), so government should use technology-specific subsidies to promote growth of those sources. But in most other cases, like vehicle efficiency, the government should avoid "picking winners"; instead they should increase CAFE standards and offer tax breaks based purely on a vehicle's MPG, and let the car companies and consumers figure out how best to get those lower numbers.
In short, the people can use public policy to guide and accelerate the market changes we want.
- The government sets a mileage standard: 40 mpg.
- The market figures out how to get there.
Where we continually bollix it up is when we legislate 40 mpg:except for this model, units built on Tuesdays, all cars in Alaska, or by those who gave money to "X's" PAC.
This shouldn't be hard to accomplish. It requires only a modest amount of integrity to enact a fair standard, which reflects the broad social direction, and is applied without exception across all sellers and purchasers.
Why can't we do this???
The straightforward answer (though not exactly easy) is to find other ways to help the car companies, like subsidizing their health care costs, or taking over their pensioners. In the long run this would be much cheaper, and much better for the car companies, who are gradually losing their light truck market due to gas prices.
We're afraid because it's the last thing actually "made" in America and even that is really not true anymore (parts from Mexico, China, Japan; assembled in Mexico; etc.)
We lose the US Auto companies and what else does the world want to import from us...perhaps mercenary services and military weaponry...we seem to excel at that.
they have had ample DECADES to come up with something...you can only protect so much..look at all the other manufacturing that has left the US. they have been plying thier protectionist political trade for years.
I feel sorry for the rank and file as they are getting the shorter end of the stick, though thier union wages are killing the price competitive part.
But we aren't Amercia, are we?
For instance, Japanese companies don't have to pay for health insurance in Japan, for current workers or retirees. Whether that's Japanese corporate welfare, or bad US public policy, it's not a level playing field.
I believe that there are some other such differences.
Now the difference is the classic newcomer (with lower pension obligations) advanatage, as well as more favorable labor deals.
I epxect that the "Japanese" will continue to expand their build in America system, but will be forever unable to acquire American companies because they have the union/pension obligations. If Detroit can't negotiate itself down to the same deal Japan has in American plants, I don't see much hope.
Japanese companies most certainly do pay for their employees' health insurance--not for all of it, mind you, but they do make a not insignificant contribution. Is this less than GM pays on average per employee? Surely, yes. But they do pay.
http://www.nchc.org/facts/Japan.pdf
So this 2% contribution is essentially identical to the 1.45% Medicare contribution made by US companies?
So beyond this healthcare insurance premiums have no counterpart in Japan?
I'd say that qualifies as a non-level playing field.
Also, do Japanese companies pay the equivalent of Social Security taxes of 7.45% (not including employee contribution)?
You sound like you're complaining about a somewhat socialist government (Japan) providing unfair support for its businesses... But who said that the world is a level playing field, or that life is fair? The idea that people and companies should start out from a position of equality (that they should receive according to their needs!) is a socialist/Marxist one.
And in any case, are you seriously arguing that American corporations, operating comfortably from their resource-rich base in the most powerful and economically advanced country in the world, propsering in one of the most favorable regulatory environments in all of American history, are suffering from structural disadvantages that undermine their international competitiveness?
Interesting. My impression was the Japanese companies had a more favorable regulatory/tax environment than American companies, but I don't have data either. It will be interesting to be on the lookout for evidence either way.
"You sound like you're complaining about a somewhat socialist government (Japan) providing unfair support for its businesses... But who said that the world is a level playing field, or that life is fair?"
I'm arguing from the point of view of economic efficiency, and good public policy. It's not
efficient for companies to lay people off in one country, and transfer capital to another to hire there, when the only difference is arbitrary regulatory preferences. It's also mighty painful for the people who lose their jobs.
"The idea that people and companies should start out from a position of equality (that they should receive according to their needs!) is a socialist/Marxist one. "
No, it's just a sensible position. As I discussed above, why have people tearing up manufacturing in one country and moving it to another to take advantage of arbitrary tax and regulatory differences?
Further, we started the discussion here on a question of public policy - should we institute a carbon/gas tax? One of the major obstacles to a such a sensible idea is that it would hurt american car companies. As a practical matter, it would be a good idea to appease car companies in order to get the tax passed. So, the question arises, is giving the car companies something in return for a higher CAFE, or a new tax, a bad idea? Well, if the car companies are indeed handicapped by regulatory/tax differences, then it is not unreasonable to give them something and the whole gordian knot is resolved.
Of course, if not then we have to decide how hard we're willing to hold our noses in order to bribe the car companies (and their employees).
If it weren't efficient, I question if the companies would be doing it. It seems the process of shifting production is the very essence of buiding efficiency by lowering costs. It certainly is painful for the people who lose their jobs, but I wonder if the solution doesn't have more to do with building social systems for educating and retraining workers to give them new opportunities than it does with keeping their failing employers afloat with some form of subsidy.
In any case, I agree that the important thing is to get some kind of carbon or gas tax passed, and soon. So if what you suggest would do the trick, I'm definitely for it. At this point addressing our overuse of oil and all the environmental damage that goes along with it has to be the absolute and overriding priority.
Thanks for taking the time to respond.
Well, companies respond to whatever incentives are out there, whether they're tax/regulatory, or more basic financial ones. That said, I suppose there's no question that lower wages are the main draw.
"It seems the process of shifting production is the very essence of buiding efficiency by lowering costs. "
I wouldn't describe cutting wages as building efficiency. I would describe building efficiency as raising worker productivity - doing something in fewer hours. Cutting wages, not so much.
When you cut wages by hiring someone cheaper you usually reduce productivity, because the new person is less well trained and experienced, possibly less well educated. The lower wages have to more than compensate for the lower productivity to make the switch worth it. Sometimes it isn't, as some manufacturers have discovered to their regret. Probably usually it is, but efficiency can't be described as going up - all you can say is that costs are lower.
The lower costs come from the middle class, and go to the poor and the rich. Is that an improvement? I don't know. It's certainly hard on the middle class person who is now, literally, on the street: unemployment in Detroit is now over 30%, and laidoff assembly workers are going to have a very hard time getting even minimum wage jobs.
"I wonder if the solution doesn't have more to do with building social systems"
They'll help a bit, but they can never begin to replace the good jobs that are being lost.
" keeping their failing employers afloat with some form of subsidy"
Well, that was my original point. If overseas employers are getting implicit subsidies (by say, being able to pollute, or using child labor, or not paying for healthcare, or getting artificially low cost loans from government controlled lenders) then helping a company here may be appropriate, rather than corporate welfare.
"I agree that the important thing is to get some kind of carbon or gas tax passed, and soon."
Yeah, I agree.
Average household debt
United States: $71,500
(No figure for Japan)
Average household savings
United States: $4,201
Japan: $45,118
Trade balance
United States: -$113,240 million
Japan: +$77,110 million
Current account balance
United States: -$105,900 million
Japan: +$56,783 million
Investment as percentage of GDP:
United States: 17.1%
Japan: 30.6%
Average CEO's pay as multiple of average worker
United States: 17.5
Japan: 11.6
Size of middle class
United States: 53.7%
Japan: 90.0%
Deaths of malnutrition (per million)
United States: 20
Japan: 3
Healthcare expenditures as percentage of GDP
United States: 13.4%
Japan: 6.8%
Average paid maternity leave (1991)
United States: 0
Japan: 14 weeks
Infant mortality rate (per 1,000 live births)
United States: 10.4
Japan: 5.0
Teen pregnancies per 1,000 teenagers
United States: 98.0
Japan: 10.5
Prisoners (per 1,000 people)
United States: 4.2
Japan: 0.4
Murder rate (per 100,000 people)
United States: 8.40
Japan: 1.20
Rape (per 100,000 people)
United States: 37.20
Japan: 1.40
Armed robbery (per 100,000 people)
United States: 221
Japan: 1
Energy units of oil burned annually
United States: 791.5
Japan: 234.3
Carbon dioxide released per person per year
United States: 5.8 tons
Japan: 2.2
Debris inhaled per person per year
United States: 81 pounds
Japan: 2
Percentage of all paper and cardboard recycled
United States: 8.4
Japan: 54.5
Source: http://www.huppi.com/kangaroo/8Comparison.htm
They save way too much. That's one of the principal subsidies of Japanese companies, this very cheap source of capital.
The average Japanese is not all that happy. Their birth rate has plummeted because young women are educated and working, and refuse to live with an oppressive mother-in-law and an overworking, never-there salary-man, and live in tiny homes with no privacy.
As a country they can invest more because their military is limited to about 1% of GDP, thus freeing up enormous engineering resources for better things. This was not voluntary, but imposed by military occupation post WWII. It certainly has turned out to be a good idea, and I wish the US would move further in that direction, but it wasn't their idea.
Could we learn some specicic things from the Japanese? Sure. But I'm not sure if there's any larger lessons to be learned from them. I don't think they're tuned into a fundamentally better way of living. I certainly don't think their export driven system is a model we could follow: we would need another country to export to. I certainly think it would be a good idea for the US to greatly reduce it's balance of trade problem, though I think the best way of doing that is dramatically reducing oil imports...which brings us back to where we started.
I'd love it if the US followed Europe on a curve to lower population, even if that meant slower growth (by the GDP metric).
Absolutely. What you just described is one of the best-case scenarios.
The problem is immigration, and demographic momentum: Mexico is still exporting it's poor to us, and there's still a baby boom echo, which has to grow up.
If we want to reduce population growth we need to push Mexico to improve it's educational system, and open up it's economy so young ambitious Mexicans don't have to come to the US to open up their landscaping companies....or wash our dishes.
There's still the baby boom echo that has to finish, and I'm not sure that would be done by 10 years from now. Plus, life expectancy continues to rise (meaning death rates continue to fall), so there will probably be a very small increase for a while.
I suspect that in about 20 years the fertility rate would fall enough below the replacement rate to offset the falling death rates, and you'd have ZPG.
As for learning from the Japanese, I agree with everything you just said. I lived there for eight years, and you're dead on right. What we can do is not so much learn from the Japanese, but examine what other forms a modern industrial or post-industrial society might take. Europe provides (in my view) a more interesting object lesson than Japan, but we were talking about Japan, so I threw that out there.
Yeah, we've been pretty short sighted to ignore our oil imports. Carter started a very good plan, and succeeding presidents undermined it. If automotive CAFE had continued a gradual rise (even if it had been very gradual), and the truck loophole had been very gradually closed, Detroit (and the US) would be in much better shape now.
"As for learning from the Japanese, I agree with everything you just said. I lived there for eight years, and you're dead on right."
Thanks for your gracious reply. It's very nice to have constructive discussions.
"Europe provides (in my view) a more interesting object lesson than Japan"
Yeah, they're doing a pretty good job of planning for a transition to renewables. I have to like to say that I like their humane approach to an industrial transition, though it's certainly far from perfect, with it's very high unemployment.