subject: It's better to go nuclear than ask people to be nice posted: Tue, 29 Nov 2005 21:15:00 -0000
[This article claims to be part of the debate about emissions
targets, but really it's just a pro-nuclear power article. Which is
fine with me. Although I don't agree with his stance on emissions
targets. Milestones are good. - Stu]
It's better to go nuclear than ask people to be nice
The real world is pushing the politicians to adopt the US way
By Mark Tinker
Published: 27 November 2005
Winter has arrived in Britain with a vengeance and with it the
realisation that UK energy policy is in a complete mess. Mother
nature has exposed the foolishness of policymakers who have spent the
past few years discussing the need to consume less energy to save the
planet, while ignoring the reality that people are keen that
everybody else should make the sacrifice but them.
Thus we are closing down nuclear and coal-powered stations without
any real plan for making up the lost output. And simultaneously, we
are devoting large amounts of time and (human) energy to policies
such as wind farms.
The latter are enthusiastically embraced by greens and the rich
investors getting tax breaks from them, but their contribution to the
need for energy right now is, well, almost nothing. Gas prices,
meanwhile, have trebled in recent weeks, leaving large parts of gas-
hungry industry talking of the need to close down production.
A few months ago, I wrote an article that produced a flurry of angry
emails when I dared to suggest politicians were going to abandon
Kyoto and that nuclear energy would once again appear on the agenda.
All of the emails focused on the problem, and expressed their
authors' certainty of impending environmental disaster, when in fact
I was discussing the practically of the Kyoto treaty as a solution.
My expertise, such that it is, is not as a scientist in discussing
the problem, but as an economist in discussing the solution. Sorry to
say it, but the "if only everybody would be nice" route never works.
People are selfish. Fact. Adam Smith recognised this back in the 18th
century, and the underlying philosophy of his work is that incentives
matter and that society is best served if selfish interests are
channelled for the common good. The role of government here is to
prevent the abuse of this - the formation of cartels and monopolies -
but also to allow innovation to deliver the solution. In effect,
carrots are better than sticks.
Of course, we now find Sir David King, the UK's chief scientific
adviser and the man who said global warming was a bigger threat than
terrorism, admitting that no government in the world would switch off
its power stations to hit C02 targets, if this seemed to threaten the
country's economy. In effect, he has described Kyoto as unrealistic.
The real world is pushing the politicians to adopt the US approach -
voluntary reductions combined with technology.
As for incentives, the current high level of energy prices is
producing a lot of carrots to develop alternative energy. It is also
providing the cash for the oil companies to spend billions to reduce
the pollutants in petrol and diesel and to develop "clean coal".
Some are looking enviously across the channel, where the state
control of energy "prevents" this price volatility, but to do so,
some honesty is required. One reason why the French, for example,
have not seen their energy prices rise so rapidly is that 80 per cent
of their electricity generation is nuclear. That's right, nuclear -
the source that is currently causing such anxiety among the
environmentalists in the UK, Italy and Germany, although, as I noted
earlier in the year, it continues to be adopted in countries such as
Sweden and Japan. It is also going to be an important part of China's
growing energy output.
If it's C02 you are worried about then here's an answer and, whatever
the politicians say in the UK, it is going to be a significant part
of the medium-term solution to the world's need for energy.
That's one of the reasons why uranium prices are up around 75 per
cent so far this year.
Mark Tinker is a director of Execution Stockbrokers.