The Nub of the Climate Change Policy Problem

Over at the Conversation, Climate Scientist Mike Hulme has a short article “Science can’t settle what should be done about climate change“. He argues the politics, not science, must take centre stage. He makes four points.

  • How do we value future public goods and natural assets relative to their value today?
  • Is “commodifying” nature appropriate?
  • The morality of technologies for mitigation or adaptation. For instance, fracking and GM crops.
  • The role of national governments against multilateral treaties or international governing bodies. Also the consequent impacts on democracy.

Christopher Wright (Professor of Organisation Studies at University of Sydney) commented

The one problem I have with the above analysis is that the focus on climate science has been a quite deliberate strategy by those seeking to deny or cast doubt on the urgency of the problem. This has meant the debate has continually stalled around issues of whether climate change is a problem or not. The science highlights that it is a very big problem indeed. However, while the science continues to be questioned, we will be unable to have the serious policy conversation about what we need to do to avoid catastrophic changes to our ecosystem.

My reply (with references) is

Science might point to a very big problem, but it cannot translate that into coherent policy terms. Nor can it weigh that against the effectiveness of policies, nor the harms policies can cause. Economics is central to asking those questions. The key figure that encapsulates the predicted harm of climate change is the social cost of carbon SCC, expressed in tonnes of CO2 equivalent. In 2006 Stern measured this as $85/tCO21. A year later the AR4 SPM2 stated a range of -$3 to $95/tCO2 from peer reviewed studies, with an average of $12/tCO2.

The key figure for the effectiveness to policy is the marginal abatement cost. Basically this refers to the marginal cost of preventing a tonne of CO2 equivalent entering the atmosphere. For policy to be of net benefit, MAC needs to be less than SCC.

$85 is about £52, and $12 about £7.50. In the UK onshore wind turbines receive a direct subsidy equivalent to £98/tCO23 saved, and offshore £195/tCO2. Then there are the extra costs of transmission lines, and other costs which could double those figures.

Then you need to recognize that a global problem will not be solved by unilateralist policies by a country with producing less than 2% of global emissions. So the UK is impoverished now by harmful, ineffectual, policies, and still future generations suffer >90% of the consequences of unmitigated climate change. Mike Hulme’s four points above are in addition to this, weighing further against mitigation policy.

Notes

  1. The Stern review noted on pages xvi-xvii

    Preliminary calculations adopting the approach to valuation taken in this Review suggest that the social cost of carbon today, is of the order of $85 per tonne of CO2……. This number is well above marginal abatement costs in many sectors.

  2. The UNIPCC AR4 Summary for Policymakers in 2007 stated on page 22.

    Peer-reviewed estimates of the social cost of carbon in 2005 average US$12 per tonne of CO2, but the range from 100 estimates is large (-$3 to $95/tCO2).

  3. The renewables obligation credit (ROC) buy-out price is currently £42.02 per megawatt hour, as determined by OFGEM. The British renewable industry lobby group renewableUK, uses DECC’s carbon saving figure of 430g/kWh, as stated in an appendix to the Energy Efficiency Innovation Review in 2005. £42.02/.430 = £97.67. Onshore wind turbines get one ROC per MWh generated, offshore wind turbines 2 ROCs.

Kevin Marshall

Jo Nova discusses Mike Hulme’s four points here.

Is there a latent problem with wind turbines?

In a posting “Accelerated Depreciation” Bishop hill says

This article at a blog called Billo The Wisp is important if true. Turbine gearbox failures apparently happen typically after 5-7 years rather than the 20 years that we are normally led to believe wind turbines last for. Moreover, their failure can be completely catastrophic, leading to the destruction of the whole turbine.

My comment is quite sceptical.

I do not think that the thrust of this post is correct – that there is a problem that gearboxes in that they will only last for 5-7 years, that has been around for 25 years and that it was so serious that the US government set up a special department to investigate in 2007. Despite all of this, there is still a largely hidden and hugely costly problem of which people are not aware. Having been in the engineering industry for a number of years I would consider the following if involved in the decision to set up a wind farm.

First, wind turbines are electro-mechanical devices. They need servicing and occasional overhauling. Ease of maintenance is important, including the replacement of major components. I would want a recommended maintenance program, along with projected parts costs, required maintenance equipment (e.g. a crane) and standard labour hours.

Second, I would want data on long-term historical performance, service and maintenance costs of each manufacturer’s equipment.

Third, if there was a large wind farm, I would include some spare parts, including major components that should last the life of the equipment. This may include have complete sets of spare parts that can be quickly swapped out – so major maintenance can be done in a workshop and not 200 metres in the air.

Fourth, I would cross-check this against industry journals. Wind turbine manufacture is a huge business with a number of manufacturers selling into a large number of countries. Issues are discussed, like in any industry.

The largest wind farms cost hundreds of millions. Businesses are not naïve. Even with large potential profits, there is always more money to be made through proper investment appraisal and protecting that investment through a thorough maintenance programme. If a major component of a wind turbine only lasted a third the length of time of the main structure, then replacing that component would become a part of the life-time costs. There would be huge incentives to minimize those costs through better design, such as ease of replacement of bearings. The only issue is that the real costs of wind turbines will never come down to a level where subsidies are no longer required.

NB a source of the reliability claims is this June 2010 article, which is now 3.5 years old.