Thursday, 4 February 2010

Yup. Blame the free markets.

From The Independent:

Britain faces power cuts over the next decade unless ministers take greater control of the privatised gas and electricity network, the energy regulator warned yesterday. In a gloomy assessment of the UK's crumbling power stations, Ofgem said there were serious doubts that the current system deriving from liberalisation 20 years ago would generate enough power by 2020... Coal still rules, generating 35 per cent of UK power. But many plants are coming to the end of their lives and new stations are controversial, given their high greenhouse emissions. E.ON abandoned its plan for a new coal-fired station at Kingsnorth, Kent, last year after environmental protests.

And why are they "crumbling"? Because the EU says they will have to be shut down in a few years (in turn so that the French can build their own nuclear power stations here), so what's the point in repairing them? Why didn't they build any new ones? Because the government insists on perpetrating the global warming nonsense and then gets brownie points for caving in to "environmental protests" and NIMBYs, because the government wants them to build windmills instead (despite the NIMBYs hate those even more).

Methinks that power companies and companies extracting fossil fuels are the businesses with the longest planning time-scales; they have scientists, engineers, economists, lobbyists, accountants, mathematicians and quite possibly astrologers (just for back up) working for them who plan three or four decades ahead and they make their own estimates as to future reserves and resources; fossil fuel prices; customer demand; the impacts of tax and political changes etc etc and decide accordingly. Even if those estimates turn out to be wildly wrong, they are still far, far better than anybody else's (and history tells us they got it right most of the time anyway).

So to suggest that the 'free market' has failed and that government now has to take a bigger role, when quite clearly the government has wantonly stifled the operation of the free markets for a decade or more, is an insult to our intelligence, frankly (although I accept that a lot of people will fall for it).


CityUnslicker said...

it is beyond belief. As you say, we are only closing the plants for political reasons - the whole thing is joke.

That and recent investment has gone into wind wibble that has resulted in no benefits.

hope you and yours are well.

Lola said...

CU, It's not just beyond belief it's bloody depressing,

Nick Drew said...

sends a chill down my spine - the opening of the gas & elec markets was a major and very tangible achievement with benefits for all

energy utilities, when allowed to have cosy monopolies, have been proven the world over to be grotesquely wasteful

as you rightly say, the whole issue stems from envo-meddling, but NOT, IMHO, from the general policy of reducing CO2 emissions, nor the phasing-out (over a very long period) of some really disgusting old coal-fired plants, both of which seem to me fair enough as political decisions - we do the same for all manner of other pollutants. You can make a market in anything and turn it loose (= let it run freely) to get the most economic result IF you get the details right. The CO2 market (EU ETS) works very well mechanistically (give or take VAT fraud) and its other shortcomings are fixable (some very readily).

The problem is that, over and above the basic ETS, the UK has quite dementedly adopted unilateral and utterly infeasible CO2 targets - and then started acting as though they could be achieved if only enough willpower (= wonga) is thrown at it

reductio ad absurdum: from a contradiction, any nonsense follows. In pursuit of the impossible, crazy 'mechanisms' and 'incentives' keep being devised - why would a humble investor build a conventional (clean, efficient) gas-fired power plant in this turmoil, when crazy subsidies are being thrown at useless eco-hobby-projects ?

short-term solution: an immediate end to supra-ETS UK CO2 targets, which immediately gives the thumbs-up to the large number of gas-fired projects waiting in the wings and ready to go

can't see this coming out of a hung parliament ... not even sure the Tories will do it, although it's the only thing that fits with their deficit-slashing ideas

View from the Solent said...

Nick @ 13:31

But you are starting from the wrong place. Namely your assumption that CO2 targets are not founded in wibble.

Nick Drew said...

VftS - not really; I said the ETS parameters (National Allowances) were a legitimate political decision

obviously you can disagree with the parameters in detail, or the very existence of CO2 emissions limits at all

but I was commenting on the blaming of markets for failings that are not in fact market failures

my point being: markets can operate very effectively within a context of overall schemes of pollution limits

which is a good thing, and important to cling to, because otherwise lefties will tell us that the need for pollution controls in general [which is a given] means markets must be abolished

= it's important not to reduce the markets issue to one of whether you agree with this or that pollution control - because if you lose that specific debate, you lose the markets as well

bayard said...

Note that most public money is being thrown at windmills, because these have to be built by large companies. Very little public money is being offered to anything small-scale, like hydro, because that would give too much to the little-people-that-aren't-important. Nor is anything significant being put into fusion research, because the eco-warriors hate fusion, which threatens to make them all irrelevant.

wv surgency (is that the opposite to an insurgency?)

James Higham said...

Well, they have to hit the free market [which doesn't exist anyway] the middle class and the taxpayer.

Mark Wadsworth said...

ND, the ETS thing is a huge scam, it's a bizarre mixture of tax and subsidy. Why not just slap a tax on burning fossil fuels or emitting CO2, which would encourage efficient use thereof? So suppliers respond as we want, and we can give the money back as higher pensions or tax cuts, so nobody ends up worse off.

And once this greenie malarkey turns out to be a hoax, well, what have we lost? Not much, really.

dearieme said...

In the cost/benefit analysis for windmills, has anyone allowed for the outpoouring of a nation's joy when they see Blair dangling from one?

Mark Wadsworth said...

D, when his private helicopter gets caught by the blades - now that would be funny :)

neil craig said...

The BBC 10 o'clock news reported this saying there was a "consensus" that this was a failure of free enterprise & more state control & possibly nationalisation would be needed.

This was, of course, merely the very highest standard of honesty to which the lying parasites in the BBC aspire. If we had a free market it would long ago have built nuclear power stations & our electricity prices would be a quarter.

Mark Wadsworth said...

NC, "consensus" indeed. I think we've heard enough of that word to last a lifetime. Agreed on new power stations, of course.