3,000 megawatts of sensible energy

[RandomGuy]

There is, somewhere I am sure, a "weighted average cost" of a unit of energy.

Take the amount of energy consumed from each form of energy, add that all up, and divide by total energy. Multiply that factor times the unit cost of each unit of that form energy you can get the "weighted average cost" of a unit of energy.

I am sure that energy is getting more expensive, as we have so far relied on oil and coal for our energy, both of which will get more expensive at accelerating paces as they near their exhaustion.

This will make other forms of energy automatically make more economic sense.

We can encourage efficiency, and technological advances will bring down costs, so I don't think we are in some "doomsday" spiral, but still, we have to think about what we should be doing, and the sooner, the better.

[RandomGuy]

Secondly, you are obviously an economist because you view the effects of pollution as "externalities", somehow external to the economic system and thus not the responsibility of those that generate them. Pollution is only "external" to economics because economics is flawed and has not yet been recast to incorporate the reality that pollution is not relative to the viewer, it is not a subjective "value", it is a by-product of the production process and must be viewed as a "cost". Just because it is a public good being affected does not render it suddenly subjective. (This is a major failing of the economic rationalist worldview IMHO.)

I agree entirely.

You can't isolate the costs of pollution from the cost of production. In essence pollution "steals" public health. Public health is a VERY expensive "commodity", making things that pollute much more expensive in the long run than most think.

What are the costs of making 1 in a 1000 workers sick for one extra day out of any given year?

What are the economic costs of decreased life spans for 1 out of 100,000 people who die 10-40 years "early" from avoidable pollution related causes?

My formerly pregnant wife was told by her doctor to not eat fish because of mercury concerns. Mercury=coal power. Are coal plants going to pay for all the health etc. costs of the babies who were born to mothers that didn't know about this?

I am all about forcing polluters to pay the FULL costs of their products by forcing them to not pollute at all. Better to have the costs paid for up front than to expensively "back end" them in public health and future public health.

[boutons_]

"You can't isolate the costs of pollution from the cost of production"

You shouldn't exclude the military/hurman costs of defending US suppy of foreign oil, which includes the entire war on terr, nor the probaby endless costs of increased domestic security (TSA charade, etc) and the economic friction (losses) of domestic security, costs which were insignficant up to 2002.

The big winners are the owners of America and owners of the Repug party: the energy companies, which are essentially taxpayer-subsidized to pocket 10s $Bs per year of windfall proftis from ... taxpayers.

[scott]

Well here is the trillion dollar question then:

At what point will the price of oil make it economically feasible to BE energy independent?

At some point, the cost of oil energy will pass the point where it makes more economic sense to get energy from some other form, do we have any idea where that point is?

The only answer, of course, is to let the market play out and let it happen - without influence either way.

I personally believe that the technology that will make us "independent" has yet to be invented. $70 oil goes a long way in speeding the process up.

[scott]

Scott, two things.

There is economic value incorporated in renewable energy industries, it's not just about social values. For instance, calculate the impact of enhanced global warming on changing land use patterns (eg. desertification making land untenable for agriculture), the incidence of major storm/flooding events, or the public health costs of fine particulate pollution (which leads to asthsma, respiratory disease and cancers). These things can be measured in $$$. If coal-fired electricity generators were forced to account for their pollution, the price of coal fired electricity would double (in Australia: coal - about $35-40/MWh, wind/solar/tidal - about $70-80/MWh, hydro is even cheaper but ruins river ecosystems) and suddenly renewable energy would be compe ive. The extra cost would have to be absorbed by the community, and therein lies the sticking point as I'm sure you well know.

Secondly, you are obviously an economist because you view the effects of pollution as "externalities", somehow external to the economic system and thus not the responsibility of those that generate them. Pollution is only "external" to economics because economics is flawed and has not yet been recast to incorporate the reality that pollution is not relative to the viewer, it is not a subjective "value", it is a by-product of the production process and must be viewed as a "cost". Just because it is a public good being affected does not render it suddenly subjective. (This is a major failing of the economic rationalist worldview IMHO.)

Of course, the idea of paying for pollution is not popular with polluters, and they have a lot of money (they don't have to pay for the damage done by their pollution to the community's health, social and environmental welfare) and with it political power, so the situation is unlikely to change, but that doesn't mean that it shouldn't change. Governments subsidise polluters through health and environmental programs to the tune of billions of dollars a year, but no-one ever talks about it.

Why is there not more work being done by academic economists to internalise the cost of "externalities"? Oh, that's right, the world is run by economic rationalist neo-cons...

Lots of work is done on externalities which, by the way, you appear to not have a very good grasp on how they are incorporated into economics. Externalities are not "external" to economics. They are external to the market price paid (in terms of dollars). The field of economics goes far beyond dollars and cents.

I had the pleasure to study under a great Environmental Economist during my graduate program. He's done a lot of great work in the field, and economists are continually looking for ways to "internalize" (as you say) externalities like pollution into market prices. Tradable pollution credits, toll roads, broadband trading (a great idea from a bad company - Enron) are all examples of "internalizing" externalities. Once the cost of pollution is incorporated into market prices, it is no longer considered an externality.

Maybe you haven't heard about the work being done in these areas because you are looking in the wrong places. Unless you are an economist, I doubt you are truely up to date as to what economists are studying (which is typically not reported... well, anywhere).

And yes, it's still non-economic from a cost per unit of energy perspective.

We (humanity) will get there, but there are a ways to go.

Next time you respond to a post of mine, please leave your assumptions about what I believe at the door (and I will try to do the same).

[RuffnReadyOzStyle]

Where have I made assumptions about what you believe? You are an economist and a lecturer, correct?

Sorry, I miswrote when I said "external to economics" - I meant external to the market/price mechanism, which, let's face it, is the major (only) determinant of economic behaviour in the world today. Academic economists can do all the work they like on internalising externalities, but how much of it is actually affecting markets and protecting non-price values (social, environmental, intergenerational)?

Anyway, my point remains - polluters are by in large not required to pay for their pollution of public goods, which leads many commodities like oil and coal to be vastly undervalued by the market when compared to their "true price" (the price of the good when all the externalities are included). You totally miss my point, for the second time, here: "it's still non-economic from a cost per unit of energy perspective." Competing (renewable/non-polluting) technologies WOULD NOT be non-economic if polluting technologies were made to incorporate the cost of their externalities in their price!

See, I have a feeling we are not connecting on this because of worldview. You keep saying "but price makes competing technologies non-economic", while I am saying "the price mechanism is lying to the market, and that's why the competing technologies are non-economic". You are obviously intelligent and extremely knowledgable on your subject, but worldview can obscure things from even the most brilliant minds.

FYI, I am currently doing a Masters in Human Ecology (a synthesis of hard science, sociology, ecology and economics) to be followed by a PhD in Urban Sustainability. Don't get me wrong by thinking that I am disrespecting your mind or credentials, I am not, but I also have some idea of what I'm talking about.

[RuffnReadyOzStyle]

Oh, and two other things.

RG, good points about nuclear energy - that's what I meant when I said "don't believe the hype that it's clean".

And Scott, I am aware of emissions trading and the like, in fact I just wrote 10,000 words on the Australian electricity market's mandatory renewable energy target (MRET), not a carbon trading scheme but a compulsory renewable energy quota imposed on all energy wholesalers in order to channel investment to the renewable sector.

Carbon trading is a very good idea that has shown some efficacy, although there are currently some problems with it. Targets need to be set correctly and enforced (constrained by political will), and in fact carbon trading really needs to go global or comparative advantage will shift to those nations that don't trade in carbon and pollute freely. The cap on total carbon also needs to be incrementally reduced to have any real effect on the volume of pollution, and that is extremely politically unpopular. Here's a BBC article on the problem with excessive target setting in the EU scheme:

http://news.bbc.co.uk/2/hi/business/4771871.stm

I actually read an academic article on the problems encountered by the Euro's carbon trading scheme but can't find it right now. I have to record references for what I read more fully! Then there is the fact that the biggest greenhouse polluter in the world (guess who?), and my sorry nation (I hate our PM), won't even come to the table on carbon trading because it will "cost jobs". It will also create jobs, but the neo-cons ignore that.

Anyway, didn't want you to think that I'm talking out my arse.

Your use of the example of toll roads is a curious one! It could be argued that toll roads have nothing to do with curbing externalities and everything to do with shifting the burden for maintenance of the road system from the government to companies and thus onto the general public directly through the tolls. There are some shocking examples of toll roads gone wrong in both Australia and the UK, although I'm not so familiar with the American experience.

[RandomGuy]

Your use of the example of toll roads is a curious one! It could be argued that toll roads have nothing to do with curbing externalities and everything to do with shifting the burden for maintenance of the road system from the government to companies and thus onto the general public directly through the tolls. There are some shocking examples of toll roads gone wrong in both Australia and the UK, although I'm not so familiar with the American experience.

Toll roads in the US are generally pretty well managed, in my experience.

I am all about people using roads paying for them 100%. I would rather public money go towards decent mass transit. Cities need to be denser for a lot of reasons, and that is one way to encourage it.

[johnsmith]

"FYI, I am currently doing a Masters in Human Ecology (a synthesis of hard science, sociology, ecology and economics) to be followed by a PhD in Urban Sustainability. Don't get me wrong by thinking that I am disrespecting your mind or credentials, I am not, but I also have some idea of what I'm talking about."
WHO THE CARES???????????
Here's an idea, go out and get a job and better mankind rather then just ing about it in a university and on a chat board. I'm going to go out on a limb and say you are going to be a college professor. They are all the same, no real world experience but they assume they know how everything works and they have the answer for everything. You are the reason I only enjoyed drinking while receiving my under-grad.

[RandomGuy]

Here's an idea, go out and get a job and better mankind rather then just ing about it in a university and on a chat board. I'm going to go out on a limb and say you are going to be a college professor. They are all the same, no real world experience but they assume they know how everything works and they have the answer for everything. You are the reason I only enjoyed drinking while receiving my under-grad.

Education provides a framework for understanding problems.

One needs some form of education to fix cars instead of sacrificing chickens to "the engine god". The same is true of more complex, larger issues.

I'm going to go out on a limb and say you are a used car salesman who has done nothing to better humanity in his life. pfft.

[johnsmith]

Education provides a framework for understanding problems.

One needs some form of education to fix cars instead of sacrificing chickens to "the engine god". The same is true of more complex, larger issues.

I'm going to go out on a limb and say you are a used car salesman who has done nothing to better humanity in his life. pfft.

I agree that education provides a framework for understanding problems but if you sit in a classroom for most of your adult life and don't do anything to solve said problems then what good are you doing? So spare me your "I know everything because I'm still in school" at ude, I too graduated college and shortly thereafter realized that I really know nothing. You will too, don't worry, the only sad part is that you will then be working for me.

[johnsmith]

Furthermore, although I am not a used car salesman, what would be wrong with being one? They are doing far more to better other people then your happy ass is by just plugging tuition money back into your prestigious UTSA no doubt.

[RandomGuy]

I agree that education provides a framework for understanding problems but if you sit in a classroom for most of your adult life and don't do anything to solve said problems then what good are you doing? So spare me your "I know everything because I'm still in school" at ude, I too graduated college and shortly thereafter realized that I really know nothing. You will too, don't worry, the only sad part is that you will then be working for me.

I have only spent 1/2 my adult life in school. (amused) I was in the army for a few years and worked for a few more before starting, and have interspersed a few years working in between.

I know fully that school is not the end-all, be-all, and have enough real-life experience to know the value of an education and the possibilities it opens up. My parents haven't paid a dime for me to sit around drinking instead of learning.

While one can indeed make something of one's self with little or no education, your chances are much greater with one.

Based on your at ude to education, I would say it is more likely that you will end up working for me.

[RandomGuy]

Furthermore, although I am not a used car salesman, what would be wrong with being one? They are doing far more to better other people then your happy ass is by just plugging tuition money back into your prestigious UTSA no doubt.

Heh, try Texas State. Undergrad was UTA.

Good/sucessful car salesmen tend to be a tad sociopathic.

I do my share of things to better peoples' lives and consider doing such the primary purpose of my own. I have set myself on a career track that should allow me to be doing some very good things for humanity, if all pans out well. If things go really well, I plan on dwarfing the Gates Foundation at some point, but that is 40 years down the road.

[johnsmith]

I have only spent 1/2 my adult life in school. (amused) I was in the army for a few years and worked for a few more before starting, and have interspersed a few years working in between.

I know fully that school is not the end-all, be-all, and have enough real-life experience to know the value of an education and the possibilities it opens up. My parents haven't paid a dime for me to sit around drinking instead of learning.

While one can indeed make something of one's self with little or no education, your chances are much greater with one.

Based on your at ude to education, I would say it is more likely that you will end up working for me.

Good comeback dude, "No, you will be working for me".......Come up with something original you .

[scott]

Where have I made assumptions about what you believe? You are an economist and a lecturer, correct?

Sorry, I miswrote when I said "external to economics" - I meant external to the market/price mechanism, which, let's face it, is the major (only) determinant of economic behaviour in the world today. Academic economists can do all the work they like on internalising externalities, but how much of it is actually affecting markets and protecting non-price values (social, environmental, intergenerational)?

Anyway, my point remains - polluters are by in large not required to pay for their pollution of public goods, which leads many commodities like oil and coal to be vastly undervalued by the market when compared to their "true price" (the price of the good when all the externalities are included). You totally miss my point, for the second time, here: "it's still non-economic from a cost per unit of energy perspective." Competing (renewable/non-polluting) technologies WOULD NOT be non-economic if polluting technologies were made to incorporate the cost of their externalities in their price!

See, I have a feeling we are not connecting on this because of worldview. You keep saying "but price makes competing technologies non-economic", while I am saying "the price mechanism is lying to the market, and that's why the competing technologies are non-economic". You are obviously intelligent and extremely knowledgable on your subject, but worldview can obscure things from even the most brilliant minds.

FYI, I am currently doing a Masters in Human Ecology (a synthesis of hard science, sociology, ecology and economics) to be followed by a PhD in Urban Sustainability. Don't get me wrong by thinking that I am disrespecting your mind or credentials, I am not, but I also have some idea of what I'm talking about.

I think we are connecting just fine, Oz, and I don't think it has anything do with worldview. My statement that these alternative energy sources are non-economic includes all applicable marginal costs and benefits (including those not expressely detailed in dollars and cents).

I do, however, have my own opinion of what the value of pollution is, as you obviously have yours. I think the disconnect is the value we place on said pollution. In the end, it doesn't matter what our individual values are, but what the market value is (the market equilibrium quan y of pollution) and obtaining economic efficiency by forcing the producers to bear all the costs of pollution, not non-producers. I think the market value of pollution is lower than what you probably think it is, leading to my statement (of opinion) that things are non-economic.

Economists, who you said aren't spending time studying this because they are "economic rationalist neo-cons", actually are spending quite a bit of time on the very subject. Whether or not they are implemented is not a problem with Economists, but a problem with Politicians who are not in the business of making correct decisions but in the business of being re-elected.

Re: Toll Roads - the theory behind a toll road (or a tradable emissions credit for that matter) is different from the reality of how they are currently implemented, so it's best not to mix the two. The theory of a toll road is solving the externality problem. You shift the cost of building and maintaining the road to those who use is rather than taxpayers who don't use it. Of course, that isn't reality and of course municipalities find ways to create economically inefficient externalities - a rental car and hotel tax to pay for the Spurs' arena, for example.

In the end though, don't assume economists aren't working on these problems just because some politician's economic advisor (who many times isn't an economist himself) doesn't talk about them.

[RuffnReadyOzStyle]

I understand that economists are working on these things, once again miscommunication on my part (apologies), but my problem is that very little of their work is translating to reality (as you state, a largely political problem), and I still maintain that there is a worldview disjoin. You say:

"I do, however, have my own opinion of what the value of pollution is, as you obviously have yours. I think the disconnect is the value we place on said pollution."

which I cannot agree with. The "value" of pollution cannot be separated from the production process, it is integral to it, however that is not accounted for in the market price. That is a fact. Coal electricity generation without pollution control = $35MWh, with carbon sequestration = $70-80MWh. That is not a question of "my values", that is a reality.

I understand what you are getting at - that I "value" this pollution differently from you. However, my argument is that the market itself is corrupted by not accounting for a cost of production, being the effect of that pollution on the general public and public goods. This is a fundamental flaw of economic theory - it externalises that which is difficult to deal with by labelling it "non-economic values".

Anyway, we are not going to agree on this, but it is healthy to debate it. Unfortunately for me and others who think like me, the world is run by economists (not having a go at you, but in general), who, I think, often forget that their "science" is an inexact metaphorical modelling of the real world (as is all science), and that reality is what is really important. The reality is that we have massive evidence of the damage we are doing to the planet, yet politicians are choosing to do nothing about it, generally using economics (often incorrectly) as their reasoning.

Have a nice day.

[scott]

Ruff,

As you are well aware, there are trade-offs to be made for less pollution. You provide two numbers... $35/unit with pollution, $70 without pollution. But as you are also aware, the market equilibrium quan y of "pollution" is not zero - so the value of incremental pollution is just not the marginal difference in cost between current pollution and no pollution. The fact of the matter is that some people are willing to accept some level of pollution - that is what I meant with discussing the value of pollution. At what price level is the equilibrium quan y of pollution reached?

At least we agree on one thing (I think), however, that is the problem lies not with the economists (though you say the world is run by economists... I disagree on that point) but with people who use economics (or science) incorrectly.

[RuffnReadyOzStyle]

Good point. However I would argue that in the long run we have to aim for zero-pollution, which of course we will never reach, but that to aim in that direction is the only way we will "minimise" pollution. Also, any pollution reduction strategy will be incremental, so it is not as if what I'm calling for will double the price of energy overnight - the increase in price has to be spread over 20-30 years, and may turn out to be far less than anticipated due to innovation and economies of scale in growing renewable energy industries.

I should have said "the world is run by an economic midset" rather than by "economists", making the point that bottom line is the ubiquitous determinant in decision making today (as opposed to social, cultural, environmental values). However, as we agree, that is the domain of politicians (utterly co-opted by big business through the donation system), so no surprises there.

A pleasure as always.

[RandomGuy]

Good comeback dude, "No, you will be working for me".......Come up with something original you .

You're funny, I like that.

[RandomGuy]

[message truncated for brevity]
In the end though, don't assume economists aren't working on these problems just because some politician's economic advisor (who many times isn't an economist himself) doesn't talk about them.

This is a very good point. Good economics and what politicians do with that are two separate things.

Not to knock on politicians, very often there are quite a few competing interests that have to be dealt with, even to reach less-than-efficient solutions.

[RandomGuy]

Good comeback dude, "No, you will be working for me".......Come up with something original you .

[RandomGuy]

Good comeback dude, "No, you will be working for me".......Come up with something original you .

[RandomGuy]

Good comeback dude, "No, you will be working for me".......Come up with something original you .

[RandomGuy]

Good comeback dude, "No, you will be working for me".......Come up with something original you .

[/flame]