Another great piece. The only recommended action I disagree with is "Impose an incrementally increasing carbon tax." That because I think the IPCC models are running too hot (SSP5-8.5 shouldn't be included in any average) and because warmer temperatures provide benefits as well as costs. I live in Arizona so I should be biased against any warming but I know it mostly happens at night and saves far more lives from less cold than from more heat.
I strongly agree with your first recommendation -- to eliminate all subsidies. I was disappointed that, yesterday, Bryan Caplan said anyone wanting this was "an idiot". What is foolish is to try to correct existing market distortion by adding new ones.
Max raises an interesting point. Let's assume for the moment that global warming is beneficial in some places. Then Pigovian economics would call for a GHG bonus for technologies that increase GHG in those areas. Unfortunately, there is no such technology. GHG;s spread across the planet, so the GHG tax/bonus has to be based on the average cost/benefit to the planet as a whole. I hold with those who believe that average is definitely negative if only because of sea level rise.
Jack, you may well be correct about the average being negative; I haven't checked the studies on this closely enough to be sure. However, what I saw made it plausible that the first degree C or so in temperature increase would be net beneficial. (At 1.5 - 3mm/year sea level rise, adaptations can take their time.) There is a major effect on plant growth which should help poorer countries (most African nations) feed their people. I say "should" because politicians excel in preventing good things from happening.
Another reason for my dislike of carbon taxes is they are based not on the observed realities but on the output of climate models that have been repeatedly falsified. Alas, the modelers are not Popperians. Applications of such models, such as by Swiss Re, make some exceedingly questionable assumptions such as projection of 3.2C of warming by 2050 if no action is taken and 2C with significant mitigating actions are taken.
These uncertainties aside, a major reason for my dislike of carbon taxes is that it means more revenues going to governments. In practice, we can be almost certain that these will not be spent for the proper purpose and, to the extent they are, most of the additional revenue will be wasted.
I'll shut up now, before this turns into an essay. Thanks for your excellent posts. I am a dedicated new reader.
In terms of reducing the cost of nuclear power Jack has overlooked making use of the waste heat from nuclear electricity generation. That is easier to do with liquid sodium cooled reactors that operate with discharge temperatures in the range 460 C to 500 C than with water cooled thermal reactors. It is also easier in Canada where there is a fossil carbon tax and where a lot of energy is used for winter space heating and for drying of forest and agricultural products.
Use of low quality heat has very marginal effect on nuclear plant economics. Use of high quality heat means less electricity produced, robbing Peter to pay Paul. And if it did make a real difference, ALARA would just push up regulatory costs to match.
They critical all-important feature of the Plan is we must change the way we regulate nuclear power. If we unchain nuclear power from the current regulatory system, the market will sort out how much heat goes to non-electricity. If we don't unchain nuclear power, there won't be any heat to worry about.
I agree with your entire comment except with respect to wasted nuclear heat. Low grade nuclear heat has two important contributions:
a) It displaces fossil fuels in the comfort heating sector;
b) It reduces winter peak electricity demand.
I do not know where you live, but we have over a foot of snow around our home essentially from late November to early March.
My annual heating bill for a well insulated single family four bedroom home is about $8000.
I am working on a SMR intended to provide low temperature district heating as well as electricity.
You have been spending too much time in Indonesia where snow and - 40 C outside air temperatures are just a dream.
.The winter peak demand issue is paramount. If we tried to replace fossil fuels with electric resistance heating we would have to upgrade our entire electricity transmission and distribution system four fold.
In circumpolar climates the driver is not simple energy cost. The cost driver is deliverable heating capacity on cold winter days. The most economical way to meet this winter peaking load is to base load nuclear reactors in the winter and to use their surplus capacity during other seasons to make synthetic liquid fuels that are used to assist in meeting the peak thermal demand the following winter.
I think that you will have difficulty competing head on against coal. I think that for now you should focus on markets where the main competition is LNG.
Another great piece. The only recommended action I disagree with is "Impose an incrementally increasing carbon tax." That because I think the IPCC models are running too hot (SSP5-8.5 shouldn't be included in any average) and because warmer temperatures provide benefits as well as costs. I live in Arizona so I should be biased against any warming but I know it mostly happens at night and saves far more lives from less cold than from more heat.
I strongly agree with your first recommendation -- to eliminate all subsidies. I was disappointed that, yesterday, Bryan Caplan said anyone wanting this was "an idiot". What is foolish is to try to correct existing market distortion by adding new ones.
Max raises an interesting point. Let's assume for the moment that global warming is beneficial in some places. Then Pigovian economics would call for a GHG bonus for technologies that increase GHG in those areas. Unfortunately, there is no such technology. GHG;s spread across the planet, so the GHG tax/bonus has to be based on the average cost/benefit to the planet as a whole. I hold with those who believe that average is definitely negative if only because of sea level rise.
Jack, you may well be correct about the average being negative; I haven't checked the studies on this closely enough to be sure. However, what I saw made it plausible that the first degree C or so in temperature increase would be net beneficial. (At 1.5 - 3mm/year sea level rise, adaptations can take their time.) There is a major effect on plant growth which should help poorer countries (most African nations) feed their people. I say "should" because politicians excel in preventing good things from happening.
Another reason for my dislike of carbon taxes is they are based not on the observed realities but on the output of climate models that have been repeatedly falsified. Alas, the modelers are not Popperians. Applications of such models, such as by Swiss Re, make some exceedingly questionable assumptions such as projection of 3.2C of warming by 2050 if no action is taken and 2C with significant mitigating actions are taken.
These uncertainties aside, a major reason for my dislike of carbon taxes is that it means more revenues going to governments. In practice, we can be almost certain that these will not be spent for the proper purpose and, to the extent they are, most of the additional revenue will be wasted.
I'll shut up now, before this turns into an essay. Thanks for your excellent posts. I am a dedicated new reader.
In terms of reducing the cost of nuclear power Jack has overlooked making use of the waste heat from nuclear electricity generation. That is easier to do with liquid sodium cooled reactors that operate with discharge temperatures in the range 460 C to 500 C than with water cooled thermal reactors. It is also easier in Canada where there is a fossil carbon tax and where a lot of energy is used for winter space heating and for drying of forest and agricultural products.
Charles,
Charles,
Use of low quality heat has very marginal effect on nuclear plant economics. Use of high quality heat means less electricity produced, robbing Peter to pay Paul. And if it did make a real difference, ALARA would just push up regulatory costs to match.
They critical all-important feature of the Plan is we must change the way we regulate nuclear power. If we unchain nuclear power from the current regulatory system, the market will sort out how much heat goes to non-electricity. If we don't unchain nuclear power, there won't be any heat to worry about.
Hello Jack:
I agree with your entire comment except with respect to wasted nuclear heat. Low grade nuclear heat has two important contributions:
a) It displaces fossil fuels in the comfort heating sector;
b) It reduces winter peak electricity demand.
I do not know where you live, but we have over a foot of snow around our home essentially from late November to early March.
My annual heating bill for a well insulated single family four bedroom home is about $8000.
I am working on a SMR intended to provide low temperature district heating as well as electricity.
You have been spending too much time in Indonesia where snow and - 40 C outside air temperatures are just a dream.
.The winter peak demand issue is paramount. If we tried to replace fossil fuels with electric resistance heating we would have to upgrade our entire electricity transmission and distribution system four fold.
In circumpolar climates the driver is not simple energy cost. The cost driver is deliverable heating capacity on cold winter days. The most economical way to meet this winter peaking load is to base load nuclear reactors in the winter and to use their surplus capacity during other seasons to make synthetic liquid fuels that are used to assist in meeting the peak thermal demand the following winter.
I think that you will have difficulty competing head on against coal. I think that for now you should focus on markets where the main competition is LNG.
It is easier to walk before you run.
Regards,
Charles Rhodes
The most sensible solution I've seen yet.