What “transition” are the Germans up to exactly?

19 02 2020

Jonathon Rutherford pointed me to this fantastic article…. Last night the ABC’s Foreign Correspondent had a piece on energy transition, making the broad argument that Germany is succeeding by comparison to Miserable old Australia. Much has been written about Germany’s Energiewende, but the real situation is a good deal more messy than the doco portrayed as shown in this piece by Jean Marc Jancovici (written in 2017, but still applicable). It will be fascinating indeed to see how the German transition, involving the planned phase out of coal by 2038 pans out, especially if it is combined with the nuclear phase out. Make no mistake though, Germany is closing down unviable mines, just like Britain had to 70 years past its Peak Coal…. As Jancovici shows, the transition to date – which, despite massive renewable investment has achieved literally no carbon reduction – has been very expensive. While the German electorate seems more willing to stomach the costs than Australia, there might be limits! I say this, of course, as somebody who, like Jonathon, wants such a transition; but doubts it can be done within the growth-consumer etc framework taken for granted and desired everywhere collapsing first…

Jean Marc Jancovic

250 to 300 billion euros, which is more than the cost of rebuilding from scratch all the French nuclear power plants, is what Germany has invested from 1996 to 2014 to increase by 22% the fraction of renewable electricity into the gross production of the country (that went from 4% to 27%). For this price tag our neighbors did not decrease their energy imports, did not accelerate the decrease of their CO2 emissions per capita, that remain 80% higher to those of a French, increased the stress on the European grid (which is not less useful when electricity production is “decentralized”, all the opposite), and it is debatable whether it allowed to create industrial champions and jobs by millions. If net exports are taken into account – they rose from zero to an average 6% of the annual production, and mostly happen when the wind blows or the sun shines – the fraction of renewable electricity in the domestic consumption is probably closer to 20%. Analysis below.

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Seen from France, our German neighbors definitely combine all virtues: their public spending is under control, their exports are at the highest, the unemployement low, and on top of that housing affordable and mid-sized companies thriving like nowhere else. With such a series of accomplishments, why on Earth should we act differently from them on any subject? And, in particular, when it comes to energy, the French press is generally eager to underline that they have chosen the right path, when we remain blinded by our radioactive foolishness.

As usual, facts and figures may fit with the mainstream opinion in the paper… or not. In order to allow the reader to conclude his way, I have gathered below some figures that are published by bodies that are neither antinuclear nor pronuclear, neither anti-renewables nor pro-renewables, but only in charge of counting electrons depending on where they have been generated. Let’s start!

Where do the German electrons come from?

Anyone saying that German electricity is more and more renewable will indeed answer correctly. Without any doubt, renewable electricity increases in Germany.

German electricity generation coming from renewable sources since 1996, in GWh 
(1 GWh = 1 million kWh ; the electricity consumption of Germany is roughly 600 billion kWh – hence 600.000 GWh – per year).

In 12 years (1996 to 2012) the renewable production has been multiplied by 7.

Data from AGEE-Stat, Federal Ministry of Environment, Germany.

From there, anyone will conclude that if renewables increase, the rest decreases. True again!

Breakdown of German electricity generation in 1991.

Renewables amount to 4% of the total, with 3% for hydroelectricity (which amounts to 12% in France).

Data from TSP data portal TSP data portal

Breakdown of German electricity generation in 2014.

Renewables now amount to over 27% of the total, but only half of them is composed of intermittent modes (solar and wind).

Data from ENTSOE

But there is something else that is obvious when looking at the graphs above: in 2011 as in 1991, most of the electricity generation comes from fossil fuels, coal (including lignite) being the first primary energy used, and, furthermore, the amount of kWh coming from coal, oil and gas is about the same today as what it was 20 years ago. If the name of the game is to decrease CO2 emissions, then no significant progress has been made in two decades.

Breakdown of the German electricity generation from 1980 to 2014

One will easily see that the total coming from fossil fuels (coal, oil and gas) is roughly constant over the period, with a little less coal, a little more gas, and almost no oil anymore.

One will also notice that nuclear has begun to decrease in 2006 (thus before Fukushima), and that the “new renewables” (biomass, solar and wind) increase came on top of the rest until 2006.

Data from TSP data portal

A zoom at the monthly production for the last years (since 2005) confirms the rise of the “new renewables” (biomass, wind, solar) in a total that remains globally unchanged. Something else which is clearly visible is that fossil fuels account for the dominant share in the winter increase (France is thus not the only country with an increased consumption in winter).

Monthly electricity production in Germany from January 2005 to May 2015, with a breakdown showing fossil fuels (oilgas and most of all coal), nuclear, hydroelectricity, and “new renewables” (all renewables except hydro).

The sharp decrease of nuclear after Fukushima (March 2011) is clear, but a close look indicates that shortly after it came back to its historical trend, that is a slow decline that begun in 2006.

Data from ENTSOE

What is absolutely certain is therefore that renewable electricity has significantly increased in Germany, and that’s definitely what is focusing the attention of the French press. But… the available data indicates that before 2006 this renewable supply came on top of the rest (with no impact on CO2 emissions), and after 2006 they mostly substituted nuclear (with no more decrease of the CO2 emissions!).

If that is so, then the overall “non fossil” generation (nuclear and renewables alltogether) must be about stable. And it is indeed what is happening!

Historical monthly “non fossil” electricity generation in Germany from January 2005 to May 2015, in GWh.

This production totals renewables (including hydro) and nuclear. The trend is almost flat, and we will see below that the increase of the last two years is almost fully exported.

Author’s calculations on primary data from ENTSOE

As the global production is otherwise almost stable, it means that the share of “non fossil” must be about constant (on average), which is confirmed by figures.

Monthly share of “non fossil” electricity generation in Germany from January 2005 to May 2015.

Author’s calculations on primary data from ENTSOE

Another element that confirms that renewables substitute nuclear, and not fossil fuels, is to observe the historical energy imports of Germany and France (which has far less renewables in its electricity generation, but far more nuclear).

Reconstitution of German imports by energy, in billion constant dollars since 1981.

There is no obvious difference with France (below): the trends are exactely the same for oil and gas, and the amounts of the same magnitude. One will notice that Germany imports coal (almost 50% of its consumption).

Author’s calculations on primary data from BP Statistical Review, 2015

Energy imports in France, in billion constant dollars since 1981.

It resembles a lot to Germany!

Author’s calculations on primary data from BP Statistical Review, 2015

One might argue that we should also take into account the exports associated with domestic industries in renewable energies: wind turbines, solar panels, or biogas production units. But… for solar panels Germany is a heavy importer, as Europe. We have imported for more than 110 billion dollars of imported solar cells from 2008 to 2014, and Germany accounted for almost half of the total. For wind turbines China is also becoming a tough competitor on the international market. It is not clear whether the cumulated exports have outbalanced by far the cumulated imports!

What about money?

Another hot topic regarding the German “transition” is its cost. First, let’s recall that the “transition”, for the time being, is a change for 22% of the electricity production (but Germans also use oil products, gas and coal – the latter for their industry). Discussing money allows for a number of possibilities, and the first item that is discussed here is investments. These are absolutely indispensable to increase capacities, and one thing is sure: capacities have increased!500

Installed capacities for various renewable modes in Germany since 1996, in MW.

The total amounts to 93.000 MW, or 93 GW.

Source: AGEE-Stat, Federal Ministry of Environment, Germany.

Germans therefore had 93 GW (or 93 000 MW) of installed capacities for renewable electricity at the end of 2014, that is more than the French installed capacity in nuclear power plants, that will amount to 65 GW when Flamanville is completed. One might therefore conclude that Germany produces more renewable electricity than France nuclear. Actually, it is not the case: Germany produced roughly 160 TWh (160 billion kWh) of renewable electricity in 2014, when the French nuclear output was about 3 times more. The reason is that the load factor for the new renewable capacities in Germany is between 60% and 10%, when for nuclear the values are rather between 70% and 80%. Furthermore, the german load factor (for renewables) is rapidly decreasing for the moment.

Load factor for each renewable capacity in Germany.

This factor corresponds to the fraction of the year during which the capacity shoud operate at full load to produce what it really produces in a year.

For example, if this factor is 20%, it means that the annual output would be obtained with the capacity operating at full load during 20% of the year, and nothing the rest of the time. What really happens, of course, is that during the year the output of a given installation constantly varies between zero and full load, and when an average is done over a large number of installations and a long time (one year), then we get this famous load factor.

The higher it is, and the more electricity you get out of a given capacity.

The curve “total” gives the average factor for all renewable capacities in Germany. It has been divided by 2 since 1996, because solar (which contribued a lot to new capacities) has a much lower load factor than any other renewable capacity.

Author’s calculations on primary data from (BP Statistical Review, European Wind Association, AGEE Stat).

As a consequence, to produce as much as 8 GW of nuclear (one third of the German capacity) with a 80% or 90% load factor, it is necessary to have – in Germany – 40 GW of wind turbines, that have a load factor below 20% (as low as 14% for bad years), and even more if losses due to storage are taken into account. With photovoltaic, 65 GW are necssary (without losses due to storage). In both cases, it is more than what has already been installed in Germany.

To benefit from the production of these new capacities, investments are necessary. One should of course invest in the production units themselves (wind turbines, solar panels, etc), but also in the grid. It is obviously necessary to connect the additional sources, but also to reinforce the power transmission lines, or add some new. Indeed, the new capacities (in the Northern part of the country for wind) are located far from the regions of high consumption (which are rather in the South).

Besides, for a same annual production, the installed capacity increases when the load factor decreases. The low load factor of solar and wind lead to a high installed capacity… that will sometimes lead to a very high instant power that has to be evacuated, including through exports (see below).

The question is: how much will it cost? Figures for this part are hard to find, because the operators of low and high voltage power lines do not separate, in their financial reporting, what pertains to the “transition” from the rest. The graphs below give some hints from which we will derive an order of magnitude.

Billion euros invested yearly into the transportation network in Germany.

Source: European Parliament

One can see a strong increase after 2011, 2 years after Germany voted a “Law on the Expansion of Energy Lines”. But in 2016 Transport operators (transport is the part of the grid that operates over 90.000 volts) had completed only a third of the new lines to be built (source: same as above).

Billion euros invested yearly into the distribution network in Germany (distribution is the part of the grid that operates below 90.000 volts).

Source: European Parliament

If we sum up what is invested into the grid, both low and high voltage, we come up with something in the range of 8 billions per year, that is about what is now invested into production means. But no breakdown is available between what is just regular maintenance, and what is linked to the increase in the total power installed.

The commentary in the European report that goes with the chart on soaring investment in the transport network from 2011 suggests that there is a part of the investments that “remain to be done”. We will therefore assume, as a first approach, that investments in the grid (in the broad sense) are, or will eventually be, about 50% of what goes into production units over the period.

If we make the a additional hypothesis that unitary costs for solar, wind and biomass decrease by respectively 5%, 2% and 2% per year, and if we accept that for the period pre-2004 it was also necessary to put half of an euro into the grid when one euro was invested into new capacities, then Germany has already invested more than 250 billion euros into its “transition”.

Yearly investments, in billion euros, that Germany has made into adding new renewable capacities.

These amounts include both the sources (solar panels, wind turbines) and the rest of the electric system (grid). This amount does not include the amounts, far less important, invested into renewable heat.

Author’s calculations on primary data from BP Statistical Review, European Wind Association, AGEE Stat.

The graph below provides an estimate directly given by the German Ministry of the Economy. One can see that the order of magnitude is the same for the “production” part, with a higher peak around 2010.

Investments in renewable electricity production unites in Germany, in billion euros.

Source: Renewable Energies Information Portal

And what about a “completed” transition? If Germany was to turn to renewables all its present electricity production, it should “convert” an additional 320 TWh, or 2 times what has already been done. We can assume that the unitary cost of wind turbines and solar panels is not bound to be divided by something significant anymore (among other reasons, we might suggest that the production of turbines or panels will increasingly suffer from the growing scarcity of raw materials, that will apply here as elsewhere).

We can also assume that the unitary costs of the investments in the grid required to absorb new capacities increase with the installed capacity of intermittent sources. In other words, the integration cost of the last MW to be connected is supposed to be higher than the integration cost of any MW that came before. In practical terms, we will assume that for any euro invested into additionnal capacities, al capacities, we must put one euro into the grid “at large”: low and high voltage power lines, transformers, storage devices.

We will at last assume that the share of each mode remains the same.

With these hypotheses, we need to add:

  • 90 GW of wind turbines, and
  • 120 GW of solar, and
  • 20 GW of biomass

for a total cost of 750 billion euros, grid reinforcement included.

But then, to backup intermittence with no more coal and gas power plants (and no possibility to rely on the “dirty” plants of the neighboring countries!), such a system would require a storage capacity of 100 to 200 GW (such as pumping stations), when Germany has only 4 so far, for an investment of 500 to 1000 billion euros, for example with new dams in the German Alps, and plenty of pipes to carry water up and down from the Baltic Sea (with batteries the investment would be even higher and the lifetime much shorter).

As such a way to store electricity generates losses of 30% of the incoming electricity (the yield of a pumping station is 75%, and transporting electricity from the turbines to the storage and vice-versa adds 5% at least), it means that the installed capacity has to be increased by 20% to 40% – depending on the share used without storage – for an additionnal 250 billion euros, grid included.

The total bill should therefore amount to something close to a year of GDP, that is over 2000 billion euros. Furthermore, assuming biomass units keep the same load factor and have a yield between 30% and 45% (smaller units have a smaller yield), that any land devoted to biomass production can produce 5 tonnes oil equivalent per year of raw energy, then 20% to 25% of the country (8 to 10 million hectares) would be devoted to biomass production for electricity generation. Easier said than done!

If we try to summarize, at this point we can conclude that:

  • From 1996 to 2014, Germany has increased by 140 billion kWh (or 140 TWh) its renewable electricity, and in this total:
    • a little more than 60 TWh is an increase of electricity production (which contradicts the idea sometimes put forward that “when everyone has a solar panel on his roof and a wind turbine in the field next door, then the population becomes conscious of the true value of electricity and uses less”), that will mostly be exported at “sacrified” prices since the global consumption is decreasing,

Electricity generation in France since 1985, in billion kWh.

From 1995 to 2014 it increased by 12%.

Source BP Statistical Review, 2015

Electricity generation in Germany since 1985, in billion kWh.

From 1995 to 2014 it increased by 14% (a little more than in France). Besides the global aspect is very similar (the stability during the 80’s and the early 90’s is the reflect of the reunification, because of the poor efficiency of former East Germany).

Source: BP Statistical Review, 2015

  • Roughly 60 TWh has been used to partially offset nuclear, that decreased from 160 to 100 TWh,
  • Fossil fuels decreased by only 12 TWh, which is not significant over the period (the change of the shares of gas and coal in the total fossil is not linked to the penetration of renewables),
  • Germany has invested 300 billion euros (over 10% of its annual GDP), and should multiply this amount by 7 at least to become 100% renewable in electricity. This investment should be repeated for a large part in 25 year, that is the lifetime of wind turbines or solar panels (nuclear power plants last 60 to 80 years). Over 60 years, a “100% renewable electricity” plan would therefore require 15 to 30 times more capital than producing the same electricity with nuclear power plants (not accounting for the cost of capital).
  • This “transition”, so far, has had no discernable impact on the energy trade balance. Becoming fully renewable for electricity will avoid gas imports for electricity generation (now amounting to 160 TWh per year, or 16 billion cubic meters, for roughly 4 billion euros), but no more, since oil (which represents by far the dominant part) is almost absent from electricity generation, and coal is mostly domestic,
  • This “transition”, so far, had had no effects on CO2 emissions, and to have one it will be necessary to phase out coal, when, for the time being, our German friends are planning to add more capacities (and lignite production has been increasing for several years),

Monthly electricity generation coming from lignite in Germany since 2006, in GWh.

Not really going down!

Source: ENTSOE

Let’s recall that lignite, apart from CO2 emissions, is produced from open pit mines, that lead to a complete destruction of the environment over tens of square kilometers, heaps of ashes, water pollution, population displacement, etc, and that lignite power plants are no more virtuous than nuclear ones regarding heat losses.

A lignite mine in Germany, with a digging machine at the center of the picture.

The size of the bulldozer, at the bottom of the excavator, gives an idea of the size of the digging machine! And besides the landscape is not precisely environmentally friendly…

Photo: Alf van Beem, Wikipedia Commons

A lignite power plant in Germany (Neurath; roughly 4000 MW of installed capacity).

The difference with a nuclear power plant is not that obvious! The “answer” is in the presence of chimneys (to evacuate fumes), that do not exist for nuclear power plants, in a water treatment plant (not necessary with nuclear), and in the train terminal used to carry lignite (50 000 tonnes per day at full capacity, when a nuclear power plant will use 10 kg of U235 to provide the same thermal energy).

  • and, at last, it is absolutely certain that some jobs have been created, but if we offset those that have been destroyed elsewhere, because the end consumer cannot spend his money twice, the total is most certainly below the numbers boasted by the German government (which, like all governments, counts what is created in the sector sustained, but cautiously avoids to look at the perverse effects that might happen elsewhere for the same reason!).

Let’s now take a lookat what happened for the end consumer. The amount per kWh has indeed increased, but not only because of renewables. Gas and coal also played a role, because the price of the fuel represents 50% to 70% of the full production cost with coal and gas fired power plants.

Price per kWh for the individual cosumer in Germany, 1998 to 2012.

The increase is clear, but the main contributor is “production+distribution”, which includes transportation costs, but also the purchasing price of fossil fuels used with coal and gas power plants. One will notice that the red bar increases during the 2000-2009 period, when the price of imported gas and coal rises fast, and decreases when the price of imported gas and coal decrease (2009-2011).

Source : BDEW

Spot prices of gas in several regions of the world (Henry Hub relates to the US) and of oil, all expressed in dollars per million British Thermal Unit 
(1 million BTU ≈ 0,3 MWh).

CIF means Charged Insurance and Freight, that is the full cost with transportation and insurance.

The price of gas in Europe evolves just as the red bar in the previous graph over the period 2000 – 2012.

Source: BP Statistical Review, 2015

Spot prices of coal in several regions of the world.

Over the period 2000 – 2012, the price of coal in Europe has also evolved as the red bar in the graph giving the price per electrical kWh for the end consumer.

Source: BP Statistical Review, 2015

We might now suggest an additional conclusion: if electricity prices have increased for the individual, it is not only because of renewables, but because there remains an important fraction coming from fossil fuels!

Where do the German electrons go?

That’s a funny question: if Germans produce electricity, it is to use it, ins’t it? Well, that partially true, but also partially false. European countries are interconnected, and electricity can go from one country to another. Statistics show that imports and exports have greatly increased at the borders of Germany lately.

Monthly balance of electricity echanges (with the rest of Europe) at the border of Germany, in GWh.

One will easily notice that the magnitude increases until 2007, and remains at the same level since then. Besides, Germans used to export little amounts before 2005, and now export more, mainly in the winter.

Data from ENTSOE

As the above graph shows, exports mostly take place in the winter (and imports in the spring). It happens that it is also in the winter that there is more wind, as the graph below shows.

Monthly wind production in GWh from January 2005.

The output is highly variable depending on the year, but it always happens in December of January.

Data from ENTSOE

It is therefore normal to wonder wether there is not a link between wind and exports. And it might well be the case!

Monthly exchanges (vertical axis, positive values mean net imports and negative ones net exports) depending on the monthly wind production in Germany, from January 2005 to May 2015.

The dots clearly show that when wind production increases, exports also increase. It suggests that increased exports are directely or indirectely linked to an increase in wind production.

Author’s calculations on primary data from ENTSOE

This link between the German electricity production coming from “new renewables” and German electricity exports is also found when looking at the hourly production and exports.

German hourly production coming from solar and wind combined, in MWh (horizontal axis), vs,  for the same hour, German electricity exports in MWh (vertical axis), for the year 2013.

This cloud of points clearly shows that hourly exports increase with the hourly production coming from wind+solar.

Source: Author on data from Paul-Frederik Bach

This is, incidentally, exactly the situation in Denmark, which, even more spectacularly, manages the intermittency of its production with imports (not necessarily carbon-free) and dispatchable modes (namely fossil fuels, Denmark is a flat country with no dams!).

Danish Electricity supply in November 2017

Source: Paul-Frederik Bach

If exports have increased along with the increase of the amount of renewable electricity produced, then it might be instructive to look at the fraction of “non fossil electricity” that remains in Germany once deducted the exports that appeared since the beginning of the EnergieWende.

Non fossil electricity (renewable+nuclear) once additional exports (since the beginning of the EnergieWende) are deducted.

Surprise: what remains for Germany is about constant for the last 10 years. In other words, the fraction of renewables that does not replace nuclear is exported (and does not replace any fossil production, which is consistent with what is mentionned above).

Author’s calculations on data from ENTSOE

As production increases when the wind blows, but not consumption, a last effect generated by the 10% of electricity coming from wind is a significant decrease in spot price of electricity when wind increases.

Hourly spot price of electricity on the German market depending on the hourly wind production for 2013.

Obviously, the more wind there is, the lower the price is, with the apparition of nil or even negative prices over 10 GWh per hour. As there was roughly 30 GW of installed capacity in Germany in 2013, it means that when one third of wind turbines operate at fiull power, nil or negative prices appear (and then the producer pays the consumer to take the electricity, because the cost of stopping everything is even higher).

When there is no wind the average price is 50 euros per MWh, and when the installed capacity is operating at almost full power (24 GW) the average price per MWh falls below 20 euros.

Data from pfbach.dk

If we come back to the initial question, our dear neighbors certainly do something that is meaningful for them, but what they do not do for certain is trying to phase out fossil fuels as fast as possible. A simple reminder of the emissions per capita on each side of the Rhine will show that the “good guys” are not necessarily where the press finds them!500

Per capita CO2 emissions coming from fuel combustion in France, from 1965 onwards (in tonnes). This graph is made assuming the emission factor is constant for each fuel.

Coal contributes for a little below 1 tonne per person and per year (4 times less than in 1965), gas for about 1,5 tonne, and oil for 4 tonnes, for a total of roughly 6 tonnes in 2014.

Author’s calculations on data from BP Statistical Review, 2015

Per capita CO2 emissions coming from fuel combustion in Germany, from 1965 onwards (in tonnes). This graph is made assuming the emission factor is constant for each fuel.

Oil contributes a little more than in France, but gas is 50% higher, and coal 5 times higher, for a total of over 10 tonnes.

Since 1980 he evolution for oil is very similar to what it is for France, but the “transition” is still to come regarding coal and gas… and obviously the “EnergieWende” didn’t have any kind of “CO2 avoided” effect that is often boasted in governmental or even academic publications.

Author’s calculations on data from BP Statistical Review, 2015

If we look at Germany’s overall CO2 emissions, we can see that those arising from coal and gas – which are the two fossil fuels used for electricity generation, oil being marginal – have only decreased by 40 million tons in 20 years.

Fossil CO2 emissions in Germany from 1965, discriminated by fuel (this graph is made assuming the emission factor is constant for each fuel).

Emissions from coal have dropped by 40 million tonnes since 1996 (but this also includes the effect of improving the energy efficiency in the industry after the reunification), and those from gas have hardly changed.

Calculation: Jancovici on BP Statistical Review data, 2017

But that does not prevent our German friends from claiming more than 100 million tonnes of avoided emissions thanks to these renewable energies!

Avoided emissions claimed by the German Ministry of the Economy.

While electricity consumption is not increasing, it is extraordinary to find avoided emissions – thanks to renewable electricity – that amount to 3 times the real decrease in emissions from coal and gas, all uses combined! The “politically correct” that replaces a correct calculation (or an efficient action…) is also effective on the other side of the Rhine…

Source: Renewable Energies Information Portal

Of course, one can only wish that our Germans friends do succeed, in a short delay, to get rid of fossil fuels, in electricity generation and elsewhere. But, on the ground of the available data, a preliminary conclusion is that they have achieved nothing significant in that direction for the last 15 years. If they eventually succeed to get rid of fossil fuels in the 10 to 20 years to come, and if the population is ready to pay 10 times more (that is 3000 billion euros instead of 300) to avoid the inconvenients of nuclear, real or supposed, there is nothing to object. It is a respectable choice, only it is not the only one which is possible!

But if the Germans where to stop in midstream, that is with renewables that have substituted only nuclear, without replacing fossil fuels, then they will have spent their money on something else than the European objective (phasing out fossil fuels), and lost a precious time, which is the most serious damage in the present case, as Europe is running against time regarding its energy supply.





Are Gilets Jaunes the new guillotine?

8 12 2018

POPULAR UNREST IN AN AGE OF FALLING PROSPERITY

Between my French origins and the opinions expressed within this little blog, I have taken more than a passing interest in the events happening in France, especially when it’s fuelled by passionate and restless wwoofers who come from there too! As you will or should know, I believe the real economy runs on energy, not money, and surplus energy in particular…… as a result, I have been following Tim Morgan’s Surplus Energy Economics blog for a while, which I would encourage you all to follow too. This is Tim’s latest gem, which proves that when you do the math…….  the truth comes out!

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This weekend, the authorities plan to field 89,000 police officers across France in response to anticipated further mass protests by the ‘gilets jaunes’. In the capital, the Eiffel Tower will be closed and armoured cars deployed, whilst restaurateurs and shopkeepers are being urged to close their businesses at one of the most important times of their trading year.

Though the government has climbed down on the original cause célèbre – the rises in fuel taxes planned for next year – there seems to be no reduction in the worst protests experienced in the country since the 1960s. Reports suggest that as many as 70% of French citizens support the protestors, and that the movement may be spreading to Belgium and the Netherlands.

For the outside observer, the most striking features of the protests in France have been the anger clearly on display, and the rapid broadening of the campaign from fuel prices to a wider range of issues including wages, the cost of living and taxation.

The disturbances in France should be seen in a larger context. In France itself, Emmanuel Macron was elected president only after voters had repudiated all established political parties. Italians have entrusted their government to an insurgent coalition which is on a clear collision-course with the European Union over budgetary matters. The British have voted to leave the EU, and Americans have elected to the White House a man dismissed by ‘experts’ as a “joke candidate” throughout his campaign.

Obviously, something very important is going on – why?

Does economics explain popular anger?

There are, essentially, two different ways in which the events in France and beyond can be interpreted, and how you look at them depends a great deal on how you see the economic situation.

If you subscribe to the conventional and consensus interpretation, economic issues would seem to play only a supporting role in the wave of popular unrest sweeping much of the West. You would concede that the seemingly preferential treatment of a tiny minority of the very rich has angered the majority, and that some economic tendencies – amongst them, diminishing security of employment – have helped fuel popular unrest.

Beyond this, though, you would note that economies are continuing to grow, and this would force you to look for explanations outside the purely economic sphere. From this, you might conclude that ‘agitators’, from the right or left of the political spectrum, might be playing a part analogous to the role of “populist” politicians in fomenting public dissatisfaction with the status quo.

If, on the other hand, you subscribe to the surplus energy interpretation of the economy professed here, your view of the situation would concentrate firmly on economic issues.

Though GDP per capita may be continuing to improve, the same cannot be said of prosperity. According to SEEDS (the Surplus Energy Economics Data System), personal prosperity in France has deteriorated by 7% since 2000, a trend starkly at variance with the growth (of 12%) in reported GDP over the same period.

Not only is the average French person poorer now than he or she was back in 2000, but each person’s share of the aggregate of household, business and government debt has increased by almost 70% since 2000. These findings are summarised in the following table, sourced from SEEDS.

France prosperity snapshot

Two main factors explain the divergence between the conventional and the surplus energy interpretations of the economy. One of these is the pouring of enormous quantities of cheap debt and cheap money into the system, a process which boosts recorded GDP without improving prosperity (for the obvious reason that you can’t become more prosperous just by spending borrowed money). The other is the exponential rise in the energy cost of energy (ECoE), a process which impacts prosperity by reducing the share of output which can be used for all purposes other than the supply of energy itself.

In France, and with all sums expressed in euros at constant 2017 values, GDP grew by 23% between 2000 and 2017. But this growth, whilst adding €433bn to GDP, was accompanied by a €3.07tn increase in aggregate debt. This means that each €1 of reported growth in the French economy has come at a cost of more than €7 in net new debt. Put another way, whilst French GDP is growing at between 1.5% and 2.0%, annual borrowing is running at about 9.5% of GDP.

Cutting to the chase here, SEEDS concludes that very little (about €100bn) of the reported €433bn rise in GDP since 2000 has been sustainable and organic, with the rest being a simple function of the spending of borrowed money. Shorn of this credit effect, underlying or clean GDP per capita is lower now (at €29,550) than it was in 2000 (€30,777).

Meanwhile, trend ECoE in France is put at 7.8%. Though by no means the worst amongst comparable economies, this nevertheless represents a relentless increase, rising from 4.6% back in 2000. At the individual or household level, rising ECoE is experienced primarily in higher costs of household essentials. In the aggregate, ECoE acts as an economic rentdeduction from clean GDP.

Between 2000 and 2017, clean GDP itself increased by only 5.7%, and the rise in ECoE left French aggregate prosperity only marginally (2.2%) higher in 2017 than it was back in 2000. Over that same period, population numbers increased by 10%, meaning that prosperity per person is 7.1% lowernow than it was at the millennium.

In France, as elsewhere, the use of credit and monetary adventurism in an effort to deliver “growth” has added markedly to the aggregate debt burden, which is €3.1tn (86%) higher now than it was in 2000. The per capita equivalent has climbed by 69%, making the average person €41,800 (69%) more indebted than he or she was back in 2000.

The prosperity powder-keg

Gilets Jaunes Acte 3 – Samedi 1er Décembre – Perpignan

To summarise, then, we can state the economic circumstances of the average French citizen as follows.

First, and despite a rise in official GDP per capita, his or her personal prosperity is 7.1% (€2,095) lower now than it was as long ago as 2000.

Second, he or she has per capita debt of €102,200, up from €60,400 back in 2000.

Third, the deterioration in prosperity has been experienced most obviously in costs of household essentials, which have outpaced both wages and headline CPI inflation over an extended period.

This is the context in which we need to place changes in the workplace, and a perceived widening in inequality.

On this latter point, part of the explanation for the anger manifested in France can be grasped from this chart, published by the Institut des Politiques Publiques.

In the current budget, policy changes hurt the disposable incomes of the poorest 10% or so (on the left of the scale), but ought to be welcomed by most of the rest – and perhaps might be, were it not for the huge handouts seemingly being given to the very wealthiest. Moreover, these benefits aren’t being conferred on a large swathe of “the rich”, but accrue only to the wealthiest percentile.

French budget 2

This is part of a pattern visible throughout much of the West. Unfortunately, perceptions of hand-outs to a tiny minority of the super-rich have arisen in tandem with a deteriorating sense of security. Security is a multi-faceted concept, which extends beyond security of employment to embrace prosperity, wages, living costs and public services.

Even in the euphoric period immediately following his election, it seemed surprising that French voters would back as president a man committed to ‘reform’ of French labour laws, a process likely to reduce workers’ security of employment. Add in further deterioration in prosperity, and an apparent favouring of the super-rich, and the ingredients for disaffection become pretty obvious.

Where next?

The interpretation set out here strongly indicates that protests are unlikely to die down just because the government has made some concessions over fuel taxes – the ‘gilet jaunes’ movement might have found its catalyst in diesel prices, but now embraces much wider sources of discontent.

Given the context of deteriorating prosperity, it’s hard to see how the government can respond effectively. Even the imposition of swingeing new taxes on the super-rich – a wildly unlikely initiative in any case – might not suffice to assuage popular anger. It seems likelier that the authorities will ramp up law enforcement efforts in a bid to portray the demonstrators as extremists. The scale of apparent support for the movement – if not for some of its wilder excesses – suggests that such an approach is unlikely to succeed.

Of course, it cannot be stressed too strongly that the French predicament is by no means unique. Deteriorating prosperity, a sense of reduced security and resentment about the perceived favouring of the super-rich are pan-European trends.

In the longer term, trends both in prosperity and in politics suggest that the West’s incumbent elites are fighting a rear-guard action. The credibility of their market economics mantra suffered severe damage in 2008, when market forces were not allowed to run to their logical conclusions, the result being a widespread perception that the authorities responded to the global financial crisis with rescues for “the rich” and “austerity” for everyone else.

This problem is exacerbated by the quirks of the euro system. In times past, a country like Italy would have responded to hardship by devaluation, which would have protected employment at the cost of gradual increases in the cost of living. Denied this option, weaker Euro Area countries – meaning most of them – have been forced into a process of internal devaluation, which in practice means reducing costs (and, principally, wages) in a way popularly labelled “austerity”. The combination of a single monetary policy with a multiplicity of sovereign budget processes was always an exercise in economic illiteracy, and the lack of automatic stabilisers within the euro system is a further grave disadvantage.

Finally, the challenge posed by deteriorating prosperity is made much worse by governments’ lack of understanding of what is really happening to the economy. If you were to believe that rising GDP per capita equates to improving prosperity – and if you further believed that ultra-low rates mean that elevated debt is nothing to worry about – you might really fail to understand what millions of ordinary people are so upset about.

After all, as somebody might once have said, they can always eat brioche.





The Receding Horizons of Renewable Energy

15 07 2018

Another excellent article by Nicole Foss…  also known as Stoneleigh.

Renewable energy is best used in situ, adjacent to demand. It is best used in conjunction with a storage component which would insulate consumers from supply disruption, but FIT programmes typically prohibit this explicitly. Generators are expected to sell all their production to the grid and buy back their own demand. This leaves them every bit as vulnerable to supply disruption as anyone who does not have their own generation capacity. This turns renewable generation into a personal money generating machine with critical vulnerabilities. It is no longer about the energy, which should be the focus of any publicly funded energy programme.

nicolefoss

Nicole Foss

Stoneleigh: Renewable energy has become a topic of increasing interest in recent years, as fossil fuel prices have been volatile and the focus on climate change has sharpened. Governments in many jurisdictions have been instituting policies to increase the installation of renewable energy capacity, as the techologies involved are not generally able to compete on price with conventional generation.

The reason this is necessary, as we have pointed out before, is that the inherent fossil-fuel dependence of renewable generation leads to a case of receding horizons. We do not make wind turbines with wind power or solar panels with solar power. As the cost of fossil fuel rises, the production cost of renewable energy infrastructure also rises, so that renewables remain just out of reach.

Renewable energy is most often in the form of electricity, hence subsidies have typically been provided through the power system. Capital grants are available in some locations, but it is more common for generators to be offered a higher than market price for the electricity they produce over the life of the project. Some jurisdictions have introduced a bidding system for a set amount of capacity, where the quantity requested is fixed (RFP) and the lowest bids chosen.

Others have introduced Feed-In Tariff (FIT) programmes, where a long-term fixed price is offered essentially to any project willing to accept it. Tariffs vary with technology and project size (and sometimes inversely with resource intensity) with the intention of providing the same rate of return to all projects. FIT programmes have been much more successful in bringing capacity online, especially small-scale capacity, as the rate of return is higher and the participation process much less burdensome than the RFP alternative. Under an RFP system accepted bids often do not lead to construction as the margin is too low.

The FIT approach has been quite widely adopted in Europe and elsewhere over the last decade, and has led to a great deal of capacity construction in early-adopter countries such as Germany, Spain and Denmark. In Canada, Ontario was the first north American jurisdiction to introduce a similar programme in 2009. (I was involved in negotiating its parameters at the time.)

Renewable energy subsidies are becoming increasingly controversial, however, especially where they are very large. The most controversial are those for solar photovoltaics, which are typically very much higher than for any other technology. In a number of countries, solar tariffs are high enough to have produced a bubble, with a great deal of investment being poured into infrastructure production and capacity installation. Many of the countries that had introduced FIT regimes are now backing away from them for fear of the cost the subsidies could add to power prices if large amounts of capacity are added.

As Tara Patel wrote recently for Bloomberg:

EDF’s Solar ‘Time Bomb’ Will Tick On After France Pops Bubble:

To end what it has called a “speculative bubble,” France on Dec. 10 imposed a three-month freeze on solar projects to devise rules that could include caps on development and lowering the so-called feed-in tariffs that pay the higher rate for renewable power. The tariffs were cut twice in 2010. “We just didn’t see it coming,” French lawmaker Francois- Michel Gonnot said of the boom. “What’s in the pipeline this year is unimaginable. Farmers were being told they could put panels on hangars and get rid of their cows.”…. ….EDF received 3,000 applications a day to connect panels to the grid at the end of last year, compared with about 7,100 connections in all of 2008, according to the government and EDF.

Stoneleigh: The policy of generous FIT subsidies seems to be coming to an end, with cuts proposed in many places, including where the programmes had been most successful. The optimism that FIT programmes would drive a wholesale conversion to renewable energy is taking a significant hit in many places, leaving the future of renewable energy penetration in doubt in the new era of austerity:

Germany:

Half of the 13 billion euro ($17.54 billion) reallocation charges pursuant to Germany’s renewable energy act was put into solar PV last year. The sector produced about 7 GW of electricity, surpassing the 5-GW estimate. The government deemed the industry boom as counterproductive, pushing it to reduce subsidies and narrow the market.

The Czech Republic:

In an attempt to get hold of what could be a runaway solar subsidy market, the Senate approved an amendment April 21 that will allow the Energy Regulatory Office (ERÚ) to lower solar energy prices well below the current annual limit of 5 percent cuts. At the start of 2011, the state will now be able to decrease solar energy prices up to 25 percent – if President Klaus signs the amendment into law. Even with a quarter cut, the government’s subsidies for feed-in tariffs remain so high that solar energy remains an attractive investment.

France:

The Ministry of Sustainable Development is expected to cut the country’s generous feed-in tariffs by 12 percent beginning September 1 in an effort to rein in demand and curb spending, according to analysts and news reports from France.

Italy:

Incentives for big photovoltaic (PV) installations with a capacity of more than 5 megawatts (MW) will be slashed every four months by a total of up to 30 percent next year, said Gianni Chianetta, chairman of the Assosolare industry body. Incentives for smaller PV installations will be gradually cut by up to 20 percent next year. One-off 6 percent annual cuts are set for 2012 and 2013 under the new plan, the industry source said.

The UK:

The U.K. government signaled it may cut the prices paid for electricity from renewable energy sources, saying it began a “comprehensive review” of feed-in tariffs introduced last year. Evidence that larger-scale solar farms may “soak up” money meant for roof-top solar panels, small wind turbines and smaller hydropower facilities prompted the study, the Department of Energy and Climate Change said today in an statement. A review was originally planned to start next year.

The move will allow the government to change the above- market prices paid for wind and solar electricity by more than already planned when the new prices come into force in April 2012. The department said it will speed up an analysis of solar projects bigger than 50 kilowatts and that new tariffs may be mandated “as soon as practical.” “This is going to put the jitters into some market segments,” Dave Sowden, chief executive officer of the Solihull, England-based trade group Micropower Council, said today in a phone interview.

Portugal:

The Portuguese government has announced that it will review the existing feed-in tariff mechanism following calls that the subsidies are excessive and contribute to the increase of electricity prices to final consumers.

Ontario

Initial enthusiasm among ratepayers for the scheme is flagging in the wake of perceived links between the FiT and increased energy prices. The FiT passed into law in May 2009 as part of the Green Energy Act, which aims to promote the development of wind and solar generation in the province. With provincial elections slated for 6 October next year, the opposition Progressive Conservative Party is threatening to substantially revise and possibly even scrap the FiT should it win. Even if it the subsidy scheme were to be revoked, the legal implications of rescinding the over 1500MW in existing FiT contracts would be highly problematic.

Stoneleigh: Spain is the example everyone wishes to avoid. The rapid growth in the renewable energy sector paralleled the bubble-era growth of the rest of Spain’s economy. The tariffs offered under their FIT programme now come under the heading of ‘promises that cannot be kept’, like so many other government commitments made in an era of unbridled optimism. Those tariffs are now being cut, and not just for new projects, but for older ones with an existing contract. People typically believe that promises already made are sacrosanct, and that legal committments will not be broken, but we are moving into a time when rules can, and will, be changed retroactively when the money runs out. Legal niceties will have little meaning when reality dictates a new paradigm.

Spain:

Spain’s struggling solar-power sector has announced it will sue the government over two royal decrees that will reduce tariffs retroactively, claiming they will cause huge losses for the industry. In a statement, leading trade body ASIF said its 500 members endorsed filing the suit before the Spanish high court and the European Commission. They will allege that royal decrees 156/10 and RD-L 14/10 run against Spanish and European law. The former prevents solar producers from receiving subsidized tariffs after a project’s 28th year while the latter slashes the entire industry’s subsidized tariffs by 10% and 30% for existing projects until 2014. Both bills are “retroactive, discriminatory and very damaging” to the sector. They will dent the profits of those companies that invested under the previous Spanish regulatory framework, ASIF argued.

Austerity bites:

The government announced soon after that it would introduce retroactive cuts in the feed-in tariff program for the photovoltaic (PV) industry in the context of the austerity measures the country is currently undergoing. According to this plan, existing photovoltaic plants would have their subsidies cut by 30%, a figure that would go up to 45% for any new large scale plants. Smaller scale roof installations would lose 25% of their existing subsidy, while installations with a generating capacity of less than 20 KW would have 5% taken from their tariff.

Spain is too big to fail and too big to bail out:

Spain has been forced to cut back on solar subsidies because of the impact on ratepayers. But Spain’s overall economy is in much worse shape and the subsidies for feed in tariff are threatening to push the country into bailout territory or, at lease, worsen the situation should a bailout be needed.

FIT and Debt:

The strain on government revenue is in part due to the way Spain has designed its feed-in tariff system. Usually, this type of subsidy is paid for by utilities charging more for the electricity they sell to consumers, to cover the cost of buying renewable energy at above-market prices. Therefore no money is actually paid out of government revenues: consumers bear the cost directly by paying higher electricity bills.

In Spain, however, the price of electricity has been kept artificially low since 2000. The burden has been shouldered by utilities, which have been operating at a loss on the basis of a government guarantee to eventually pay them back. The sum of this so-called ‘tariff deficit’ has accumulated to over €16 billion (US$ 20 billion) since 2000. For comparison, Spain’s deficit in 2009 was around €90 billion (US$ 116 billion) in 2009 and its accumulated debt around €508 billion (US$ 653 billion).

Stoneleigh: Ontario threatens to take the Spanish route by instituting retroactive measures after the next election. For a province with a long history of political interference in energy markets, further regulatory uncertainty constitutes a major risk of frightening off any kind of investment in the energy sector. Considering that 85% of Ontario’s generation capacity reaches the end of its design life within 15 years, and that Ontario has a huge public debt problem, alienating investment is arguably a risky decision. FIT programmes clearly sow the seeds of their own destruction. They are an artifact of good economic times that do not transition to hard times when promises are broken.

Ontario

The outcome of an autumn election in Ontario could stunt a budding renewable energy industry in the Canadian province just as it is becoming one of the world’s hot investment destinations. If the opposition Progressive Conservatives win power on Oct. 6, the party has promised to scrap generous rates for renewable energy producers just two years after their launch by the Liberal government. That could threaten a program that has lured billions of dollars in investment and created thousands of jobs.

The Conservatives, who are leading in the polls, have yet to release an official energy manifesto. Even so, the industry is privately voicing concern, especially after the party said it would scrutinize contracts already awarded under Ontario’s feed-in tariff (FIT) program. “They are going to go through the economic viability of the energies and review all of the past contracts … I think that is going to cause a lot of delays, a lot of problems and a lot of risk to Ontario,” said Marin Katusa, chief energy analyst at Casey Research, an investor research service.

George Monbiot, writing for The Guardian in the UK, provides an insightful critique of FIT programmes in general:

The real net cost of the solar PV installed in Germany between 2000 and 2008 was €35bn. The paper estimates a further real cost of €18bn in 2009 and 2010: a total of €53bn in ten years. These investments make wonderful sense for the lucky householders who could afford to install the panels, as lucrative returns are guaranteed by taxing the rest of Germany’s electricity users. But what has this astonishing spending achieved? By 2008 solar PV was producing a grand total of 0.6% of Germany’s electricity. 0.6% for €35bn. Hands up all those who think this is a good investment…. .

As for stimulating innovation, which is the main argument Jeremy [Leggett] makes in their favour, the report shows that Germany’s feed-in tariffs have done just the opposite. Like the UK’s scheme, Germany’s is degressive – it goes down in steps over time. What this means is that the earlier you adopt the technology, the higher the tariff you receive. If you waited until 2009 to install your solar panel, you’ll be paid 43c/kWh (or its inflation-proofed equivalent) for 20 years, rather than the 51c you get if you installed in 2000.

This encourages people to buy existing technology and deploy it right away, rather than to hold out for something better. In fact, the paper shows the scheme has stimulated massive demand for old, clunky solar cells at the expense of better models beginning to come onto the market. It argues that a far swifter means of stimulating innovation is for governments to invest in research and development. But the money has gone in the wrong direction: while Germany has spent some €53bn on deploying old technologies over ten years, in 2007 the government spent only €211m on renewables R&D.

In principle, tens of thousands of jobs have been created in the German PV industry, but this is gross jobs, not net jobs: had the money been used for other purposes, it could have employed far more people. The paper estimates that the subsidy for every solar PV job in Germany is €175,000: in other words the subsidy is far higher than the money the workers are likely to earn. This is a wildly perverse outcome. Moreover, most of these people are medium or highly skilled workers, who are in short supply there. They have simply been drawn out of other industries.

Stoneleigh: Widespread installed renewable electricity capacity would be a very good resource to have available in an era of financial austerity at the peak of global oil production, but the mechanisms that have been chosen to achieve this are clearly problematic. They plug into, and depend on, a growth model that no longer functions. If we are going to work towards a future with greater reliance on renewable energy, there are a number of factors we must consider. These are not typically addressed in the simplistic subsidy programmes that are now running into trouble worldwide.

We have power systems built on a central station model, which assumes that we should build large power station distant from demand, on the grounds of economic efficiency, which favours large-scale installations. This really does not fit with the potential that renewable power offers. The central station model introduces a grid-dependence that renewable power should be able to avoid, revealing an often acute disparity between resource intensity, demand and grid capacity. Renewable power (used in the small-scale decentralized manner it is best suited for) should decrease grid dependence, but we employ it in such a way as to increase our vulnerability to socioeconomic complexity.

Renewable energy is best used in situ, adjacent to demand. It is best used in conjunction with a storage component which would insulate consumers from supply disruption, but FIT programmes typically prohibit this explicitly. Generators are expected to sell all their production to the grid and buy back their own demand. This leaves them every bit as vulnerable to supply disruption as anyone who does not have their own generation capacity. This turns renewable generation into a personal money generating machine with critical vulnerabilities. It is no longer about the energy, which should be the focus of any publicly funded energy programme.

FIT programmes typically remunerate a wealthy few who install renewables in private applications for their own benefit, and who may well have done so in the absence of public subsidies. If renewables are to do anything at all to help run our societies in the future, we need to move from publicly-funded private applications towards public applications benefitting the collective. We do not have an established model for this at present, and we do not have time to waste. Maximizing renewable energy penetration takes a lot of time and a lot of money, both of which will be in short supply in the near future. The inevitable global austerity measures are not going to make this task any easier.

We also need to consider counter-cyclical investment. In Ontario, for instance, power prices have been falling on falling demand and increased conventional supply, and are now very low. In fact, the pool price for power is often negative at night, as demand is less than baseload capacity. Under such circumstances it is difficult to develop a political mandate for constructing additional generation, when the spending commitment would have to be born by the current regime and the political benefits would accrue to another, due to the long construction time for large plants.

Politicians are allergic to situations like that, but if they do not make investments in additional generation capacity soon, most of Ontario’s capacity could end up being retired unreplaced. Large, non-intermittent, plants capable of load following are necessary to run a modern power system. These cannot be built overnight.

Many jurisdictions are going to have to build capacity (in the face of falling prices in an era of deflation) if they are to avoid a supply crunch down the line. Given how dependent our societies are on our electrified life-support systems, this could be a make or break decision. The risk is that we wait too long, lose all freedom of action and are then forced to take a much larger step backwards than might other wise have been the case.

Europe’s existing installed renewable capacity should stand it in good stead when push comes to shove, even though it was bought at a high price. Other locations, such as Ontario, really came too late to the party for their FIT initiatives to do any good. Those who have not built replacement capacity, especially load-following plants and renewables with no fuel cost going forward, could be very vulnerable in the future. They will be buffeted first by financial crisis and then by energy crisis, and there may be precious little they can do about either one.





The era of gnashing teeth

6 02 2017

Since Trump’s election to the Oval Office, there has been an unbelievable amount of teeth gnashing going on all over the internet….. HOW could it possibly have come to this..?

To me, the answer is as clear as a bell. People all over the world can sense that everything ‘is turning to shit’, if you pardon my fluent French. The economies of the world are faltering (in real sense, not GDP money throughput), unemployment is high, manipulated to lower figures with creative accounting, the climate is falling apart causing food shortages in Europe, and the Middle East appears as a seething hot bed of war and terrorism.

The problem lies in the fact nobody knows why this is happening, because they have been conned for years by governments everywhere telling them everything is fine, we just have to ‘return to growth’.

Trump convinces enough Americans to vote for him so he can make America great again, because neither he nor his voters have the faintest idea America is actually on the cusp of collapse.

In France, Marine Le Pen wants to make France strong again……. and just like in America, this resonates with the electorate who now look like they may make her the country’s first woman President, and the first from the extreme right.

Here in Australia, we have a similar rise from the right, with Pauline Hanson and her one nation party making scary inroads into popularity rating. A recent article in the Sydney Morning Herald states:

In the aftermath of Mr Trump’s US election victory, where he strongly advocated reviving that nation’s manufacturing industry, nearly 83 per cent of surveyed Australian said they strongly agreed (42 per cent) or agreed (40.5 per cent) with the notion we are too reliant on foreign imports. Only 6 per cent disagreed.

Support for an expansion of Australia’s manufacturing sector was robust regardless of age, gender, income or locality.

This unsurprising finding comes from the Political Persona Project, a comprehensive attempt to profile different types of Australians based on their lifestyles, social values and politics. Fairfax Media in collaboration with the Australian National University and Netherlands-based political research enterprise Kieskompas conducted the project which revealed there are seven types of Australians, representing seven dominant patterns of thinking in Australian society.

Manufacturing has been declining since the 1970’s, which coincides with the USA’s Peak Oil, in case no one noticed….. then, one in four Australian workers were employed in the sector. This downturn has gathered pace in recent years with over 200,000 manufacturing jobs lost between 2008 and 2015. But no mention of dropping net energy, or an energy cliff. The manufacturing sector now accounts for only about one in 13 Australian workers. The decline means Australia is relying more on foreign producers to supply manufactured goods……… not to mention we have to import over 90% of our liquid fuel requirements, with likely no more than 3 or 4 years before this turns to 100%.

Underpinning the nostalgia for manufacturing was a strong feeling of having been left out of the new economy, said Carol Johnson, Professor of Politics and International Studies at the University of Adelaide.

Might this have anything to do with the fact that since the Thatcher/Reagan era, the economy was converted from an energy based one to a money based version…..?

“Manufacturing still matters to the economy and Australians know it,” he said.

“The public’s gut instinct is absolutely right.”

How much more wrong could they actually be……..?





Moi aussi, je suis Charlie…..

28 01 2015

I’ve refrained from commenting on the Charlie Hebdo murders in Paris, partly because I’ve been frankly very busy, and partly because I got burnt out arguing with people on FB about what they do not understand about French culture.  Yes, it can be construed that as I have been away more than 50 years – dotted with one brief return in 1980 – I am no longer French, and I agree I certainly feel a lot more Australian than French these days, but if there is one thing I miss about this great country, it is culture.  French culture of course.  I’m not in the least being critical of Australia, there’s no way I’m going to live anywhere else, but throwing prawns on the barbie and watching cricket or footy on the tube is not culture………!

There seems to be a misconception all over the internet that Charlie Hebdo is “anti-Islam”. In fact it is anti-religion, anti-censorship, and anti-authority generally. Like me, really…  Many of its past covers have depicted beloved religious, political, and cultural figures saying or doing obscene things, and would be considered far outside the rules of dignified discourse by basically any Western media. Unless of course, it’s French….

In France (and Belgium where I was actually born) it is par for the course in adult cartooning to “take the piss”.  These obscene cartoons are in no way meant to inspire anger or to convert people to the cartoonist’s preferred ideology; they are meant to tear down the walls of your ego.  Not to mention all the things that you believe make you a good person because you hold them so sacred. They are meant to drag you down to the cartoonist’s level and laugh alongside him or her. A bit like Meister Eckhart’s enigmatic saying, “He who blasphemes praises God.”

This intentional testing of the limits of freedom of speech is one of France’s great accomplishments, in my opinion. After all, ‘Freedom of Speech’ was invented there after the Revolution that destroyed the elites’ wish to not have any such freedom.  Compared to Russia, where it seems the overwhelming cultural consensus is that no one benefits from such obscenity and blasphemy, and blaspheming the Prophet Mohammed or the Orthodox Church is even illegal;  Pussy Riot broke this law and paid the price.  There was international outcry over this, but somehow the consensus about Charlie Hebdo is now that they went too far.  Not in France of course…..  In America, where blasphemy is considered distasteful, plenty of people do it anyway simply to be mean to others and apparently prove how cultured and intelligent they think they are. The tradition of French cartooning does not try to be particularly clever or prove a political point: it merely looks upon all of the world’s attempts to establish order and narrative with the scorn I believe it deserves.

Voltaire, Diderot, and the Encyclopédie are where it all started, but there is much more to the story.  During the reign of Louis XVI, peddlers of porn would gather in the royal court square where due to some archaic law they were free from all censorship, and sell slanderous erotica about Marie Antoinette.  Plus ça change, plus c’est la même chose…  Parisians at this time were naive (no internet, remember?), and believed the slander being published.  Marie Antoinette became so hated due to this, the monarchy of 1789 dissolved into violence.  The rest, as they say, is history, and freedom of speech was born.  The maturity needed for all of society to accept obscene fictions as part of the national character was hard-won. An attack on this culture is an attack on France itself.

France is the most feared nation for Islamic extremists precisely because of this cultural freedom; the French demand that sacred cows be allowed to burn, and high and mighty egos set aside, for the shared goals of Liberté, Égalité, Fraternité.  This is a clear repudiation of ignorant, barbaric, and ego-driven terrorism.  The centerpiece of this culture is Charlie Hebdo.  This is why I too join all of France to say “Je suis Charlie” today…….

I’ve lifted some images for your pleasure that show CH is much more than taking the piss from Muslims.  As you can see, the French love bum jokes.  The C word is used constantly in colloquial French, no one ever bats an eyelid….  Irreverance rules, and if Muslims really don’t like it, they can always go back or go some place else.  Like Russia.

 

 

 

UPDATE:
Through reading this very interesting article, I found these two cartoons…..

 

 





Wind Blowing Nowhere

24 01 2015

I’ve just found this amazing post on Euan Mears’ excellent Energy Matters blog that clearly demonstrates, with real data, that anyone who believes renewables can run Business as Usual are just plain dreaming.

In much of Europe energy policy is being formulated by policymakers who assume that combining wind generation over large areas will flatten out the spikes and fill in the troughs and thereby allow wind to be “harnessed to provide reliable electricity” as the European Wind Energy Association tells them it will:

The wind does not blow continuously, yet there is little overall impact if the wind stops blowing somewhere – it is always blowing somewhere else. Thus, wind can be harnessed to provide reliable electricity even though the wind is not available 100% of the time at one particular site.

Here we will review whether this assumption is valid. We will do so by progressively combining hourly wind generation data for 2013 for nine countries in Western Europe downloaded from the excellent data base compiled by Paul-Frederik Bach, paying special attention to periods when “the wind stops blowing somewhere”. The nine countries are Belgium, the Czech Republic, Denmark, Finland, France, Ireland, Germany, Spain and the UK, which together cover a land area of 2.3 million square kilometers and extend over distances of 2,000 kilometers east-west and 4,000 kilometers north-south:

Figure 1:  The nine countries

We begin with Spain, Europe’s largest producer of wind power in 2013. Here is Spain’s hourly wind generation for the year. Four periods of low wind output are numbered for reference:

Figure 2:  Hourly wind generation, Spain, 2013

Now we will add Germany, Europe’s second-largest wind power producer in 2013. We find that Spanish low wind output period 4 was more than offset by a coincident German wind spike. Spanish low wind periods 1, 2 and 3, however, were not.

Figure 3:  Hourly wind generation, Spain + Germany, 2013

Now we add UK, the third largest producer in 2013. Wind generation in UK during periods 1, 2 and 3 was also minimal:

Figure 4:  Hourly wind generation, Spain + Germany + UK, 2013

As it was in France, the fourth largest producer:

Figure 5:  Hourly wind generation, Spain + Germany + UK + France, 2013

And also in the other five countries, which I’ve combined for convenience:

Figure 6:  Hourly wind generation, nine countries combined, 2013

Figure 7 is a blowup of the period between February 2 and 15, which covers low wind period 2. According to these results the wind died to a whisper all over Western Europe in the early hours of February 8th:

Figure 7: Wind generation, nine countries combined, February 2013

These results are, however, potentially misleading because of the large differences in output between the different countries. The wind could have been blowing in Finland and the Czech Republic but we wouldn’t see it in Figure 7 because the output from these countries is still swamped by the larger producers. To level the playing field I normalized the data by setting maximum 2013 wind generation to 100% and the minimum to 0% in each country, so that Germany, for example, scores 100% with 26,000MW output and 50% with 13,000MW while Finland scores 100% with only 222MW and 50% with only 111MW. Expressing generation as a percentage of maximum output gives us a reasonably good proxy for wind speed.

Replotting Figure 7 using these percentages yields the results shown in Figure 8 (the maximum theoretical output for the nine countries combined is 900%, incidentally). We find that the wind was in fact still blowing in Ireland during the low-wind period on February 8th, but usually at less than 50% of maximum.

Figure 8:  Percent of maximum wind generation, February 2013

But even Ireland was not blessed with much in the way of wind at the time of minimum output, which occurred at 5 am. Figure 10 plots the percentage-of-maximum values for the individual countries at 5 am on the map of Europe. If we assume that less than 5% signifies “no wind” there was at this time no wind over an area up to 1,000 km wide extending from Gibraltar at least to the northern tip of Denmark and probably as far north as the White Sea:

Figure 9:  Map of percent of maximum wind generation, February 2013

During this period the wind was clearly not blowing “somewhere else”, and there are other periods like it.

Combining wind generation from the nine countries has also not smoothed out the spikes. The final product looks just as spiky as the data from Spain we began with; the spikes have just shifted position:

Figure 10: Spain wind generation vs. combined generation in all nine countries, 2013 (scales adjusted for visual similarity)

Obviously combining wind generation in Western Europe is not going to provide the “reliable electricity” its backers claim it will. Integrating European wind into a European grid will in fact pose just as many problems as integrating UK wind into the UK grid or Scottish wind into the Scottish grid, but on a larger scale. We will take a brief look at this issue before concluding.

Integrating the combined wind output from the nine countries into a European grid  would not have posed any insurmountable difficulties in 2013 because wind was still a minor player, supplying only 8.8% of demand:

Figure 11: Wind generation vs. demand, nine countries combined

But integration becomes progressively more problematic at higher levels of wind penetration. I simulated higher levels by factoring up 2013 wind generation with the results shown on Figure 12, which plots the percentage of demand supplied by wind in the nine countries in each hourly period. Twenty percent wind penetration looks as if it might be achievable; forty percent doesn’t.

Figure 12:  Percent of hourly demand supplied by wind at different levels of wind penetration using 2013 data

Finally, many thanks to Hubert Flocard, who recently performed a parallel study and graciously gave Energy Matters permission to re-invent the wheel, plus a hat tip to Hugh Sharman for bringing Hubert’s work to our attention.





We cannot shop our way out of environmental crisis, ‘green’ or not

20 08 2014

1Guest post by Pete Dolack.  Pete is an activist, writer, poet and photographer. He wishes he could keep all those balls in the air but keeps dropping some of them. He has worked with a variety of groups as an activist, and currently works with Trade Justice New York Metro as part of the effort to stop the Trans-Pacific Partnership. He writes about the economic crisis, and ideas for a better world in his blog Systemic Disorder. He is also the author of the upcoming book, It’s Not Over: Lessons from the Socialist Experiment.

Originally published at Generation Alpha

 

 

There is no alternative to a dramatic change in the organization of the global economy. We cannot make ‘green’ what cannot be green. A powerful 33-page paper by Dr. Richard Smith, Green capitalism: the god that failed, demonstrates this as effectively as anything I have read. Richard, from the Institute for Policy Research & Development in London, argues that:

  • “Green capitalism” is “doomed from the start” because maximizing profit and ecological sustainability are broadly in conflict; the occasional time when they might be in harmony are temporary and rare exceptions. This is because corporations are answerable to private owners and shareholders, not to society. Profit maximization trumps all else under capitalism and thereby sets limits to ecological reform.
  • No capitalist government can impose “green taxes” effective enough to end the coal or other destructive industries because the result would be recession and mass unemployment.
  • Green-capitalism proponents vastly underestimate the speed with which environmental collapse is coming. No amount of tinkering can alter the course of environmental destruction under the present system. Humanity, therefore, must replace capitalism with a post-capitalist ecologically sustainable economy.
  • Resource extraction is inherently polluting but can’t be shut down without chaos. It is not possible to “dematerialize” much of the economy, as green-capitalism proponents believe possible. The only way to reduce greenhouse-gas emissions is to “enforce a drastic contraction of production in the industrialized countries.” This is not possible under capitalism because the affected industries would be committing suicide. It could only be carried out through a socialization of industry and a redeployment of labour to sectors that need to be developed for social good.
  • Consumerism and over-consumption are not “cultural” or the result of personal characteristics — they are a natural consequence of capitalism and built into the system. Problems like climate change and other aspects of the world environmental crisis can only be solved on a global level through democratic control of the economy, not by individual consumer choices or national governments.

 

Cap-and-trade equals profits by polluting

European attempts to implement “cap and trade” schemes to limit greenhouse-gas emissions were countered from the start by industry lobbyists asking for exceptions because, they argued, they would lose competitiveness. Some threatened to move elsewhere, taking jobs with them. Governments gave in. Polluters and traders took in windfall profits, with no real effect on emissions. Dr. Smith writes:

“German electricity companies were supposed to receive 3 per cent fewer permits than they needed to cover their total emissions between 2005 and 2007, which would have obliged them to cut emissions by that amount. Instead the companies got 3 percent more than they needed — a windfall worth about $374 billion at that time.”

A proposal to directly tax carbon in France, proposed by the administration of Nicolas Sarkozy, was ruled unconstitutional because most of France’s major polluters would have been let off the hook entirely while households would have assumed the burden. Dr. Smith put the farce of this failed proposal in perspective:

“The court said that more than 1,000 of France’s biggest polluters could have been exempted from the charges, and that 93 percent of industrial emissions would not have been taxed at all. But even if Sarkozy had successfully imposed his carbon tax, this tax would have raised the price of gasoline by just 25 US cents per gallon. Given that the French already pay nearly $9 per gallon for gasoline, it’s hard to see how an additional 25 cents would seriously discourage consumption let alone ‘save the human race.’ ”

Some advocates of cap-and-trade or carbon taxes in the United States try to get around industry pushback by advocating they become “revenue-neutral.” But if “carbon tax offsets are revenue neutral, then they are also ‘impact neutral,’ ” Dr. Smith writes. That brings us back to the reality that imposing drastic cuts would be the only way to effect the significant reductions in greenhouse-gas emissions necessary to prevent catastrophic climate change in coming decades. That, in turn, can’t be done without massive dislocation.

Yet reductions are not only necessary, but will be required by physical limits — the world’s population is using the resources at the rate of 1.5 Earths and the United Nations predicts we’ll be using two Earths by 2030. Moreover, if all the world’s peoples used resources at the rate that the United States does, “we would need 5.3 planets to support all this.” Needless to say, we have only one Earth available.

 

More efficiency leads to more consumption

One of the pillars on which green capitalists rest their advocacy is increased efficiency of energy usage, achieved through technological innovation. But energy usage has been increasing, not decreasing, despite greater efficiencies gained out of a range of products. Gains in efficiency can, and frequently are, used to expand production; given that capitalist incentives reward expansion, that is what is done. Moreover, “green” industries are not necessarily green. The paper points out:

“Even when it’s theoretically possible to shift to greener production, given capitalism, as often as not, ‘green’ industries just replace old problems with new problems: So burning down tracts of the Amazon rainforest in order to plant sugarcane to produce organic sugar for Whole Foods or ethanol to feed cars instead of people, is not so green after all. Neither is burning down Indonesian and Malaysian rainforests to plant palm-oil plantations so Britons can tool around London in their obese Landrovers.”

Making motor vehicles more fuel-efficient, although a goal that should be pursued, nonetheless falls far short of a solution. Fuel usage from the increasing number of vehicles and longer distances travelled are greater than all the savings from fuel efficiency. And focusing on only when the vehicle is being driven leaves untouched most of the pollution caused by them. Dr. Smith writes:

“Most of the pollution any car will ever cause is generated in the production process before the car even arrives at the showroom — in the production of all the steel, aluminium, copper and other metals, glass, rubber, plastic, paint and other raw materials and inputs that go into every automobile, and in the manufacturing process itself. Cars produce 56 percent of all the pollution they will ever produce before they ever hit the road. … [S]o long as [automakers] are free to produce automobiles without limit more cars will just mean more pollution, even if the cars are hybrids or plug-in electric cars.”

Those electric vehicles are only as “clean” as the source of electricity used to power them. Many plug-in electric vehicles are coal-powered vehicles because coal is a common source of electricity. Looking at it holistically, such an electric vehicle would be more polluting than a gasoline-fuelled vehicle; and the majority of the pollution from the manufacturing (for the vehicle itself) would be there just the same. Then there is the pollution and greenhouse-gas emissions of the electric-car battery. Nickel is a primary input; the Russian city that is the site of the world’s largest source of nickel, Norilsk, is one of the world’s most polluted places.

“I would not be surprised if the most ecological cars on the planet today are not those Toyota Priuses or even the Chevy Volts with their estimated [seven- to 10-year] lifespan, but those ancient Fords, Chevrolets, and Oldsmobiles cruising round the streets of Havana. For even if their gas mileage is lower than auto-producer fleet averages today, they were still produced only once, whereas American ‘consumers’ have gone through an average of seven generations of cars since 1960 (when the U.S. embargo ended car imports to Cuba), with all the manufacturing and disposal pollution that entailed.”

 

Consumerism props up capitalist economies

Planned obsolescence is part of the problem, across the spectrum of manufactured products. Capitalist manufacturers don’t want products that last a long time; repeatedly selling new products is far more profitable. But it would be overly simplistic to lay full blame for this on greed, however much greed is rewarded by a capitalist economy. Household consumption — all the things that people buy for personal use from toothbrushes to automobiles — accounts for 60 to 70 percent of gross domestic product in almost all advanced capitalist countries. If people aren’t buying things, the economy struggles.

Proponents of green capitalism fail to grasp the structural causes of over-consumption. However much better for the environment, and the world’s future, drastic reductions in consumerism would be, moral exhortations can’t be effective. Trapped in an idealist mirage that capitalism can be “tamed” or “repurposed,” green capitalists, through seeking individual solutions to structural and systemic problems, not only miss the forest for the trees but leave the economic structure responsible untouched. People in the global North should consume less, but to place the blame on individual behaviour lets the manufacturers of useless products off the hook and is blind to the economic realities should the system be left in place intact.

Once again, we cannot shop our way out of economic and environmental problems. Even not shopping would bring its own set of problems, Dr. Smith writes:

“[H]ow can we ‘reject consumerism’ when we live in a capitalist economy where, in the case of the United States, more than two-thirds of market sales, and therefore most jobs, depend on direct sales to consumers while most of the rest of the economy, including the infrastructure and not least, the military, is dedicated to propping up this super consumerist ‘American way of life?’ Indeed, most jobs in industrialized countries critically depend not just on consumerism but on ever-increasing over-consumption. We ‘need’ this ever-increasing consumption and waste production because, without growth, capitalist economies collapse and unemployment soars. …

[I]t’s not the culture that drives the economy so much as, overwhelmingly, the economy that drives the culture: It’s the insatiable demands of shareholders that drive corporate producers to maximize sales, therefore to constantly seek out new sales and sources in every corner of the planet, to endlessly invent [new needs]. … ‘[C]onsumerism’ is not just a ‘cultural pattern,’ it’s not just ‘commercial brainwashing’ or an ‘infantile regression.’ … Insatiable consumerism is an everyday requirement of capitalist reproduction, and this drives capitalist invention and imperial expansion. No overconsumption, no growth, no jobs. And no voluntarist ‘cultural transformation’ is going to overcome this fundamental imperative so long as the economic system depends on over-consumption for its day-to-day survival.”

There is no way out other than replacing capitalism with a steady-state economy based on meeting human needs, and that could only be attained through bottom-up, democratic control. No one promises new jobs to those who would be displaced under capitalism; logically, then, those who jobs and ability to earn a living is dependent on polluting or wasteful industries resist environmental initiatives. The wholesale changes that are necessary to prevent a global environmental catastrophe can’t be accomplished under the present economic system; it would require a different system with the flexibility to re-deploy labor in large numbers when industries are reduced or eliminated, and one that would have no need to grow. Inequality would have to be eliminated for any kind of global democratic economy to be able to function.

Dr. Smith pronounces this “a tall order to be sure.” That it is. But with many world cities, and entire countries, at risk of becoming inhabitable due to rising sea levels, more erratic weather and an accelerated timetable to deplete the world’s resources, what choice do we have? Green capitalism is not only not green, it is worse than illusion because of the false hope it dangles in front of our eyes.