Downer: Not cheap being green
Credit: Alexander Downer, www.adelaidenow.com.au 6 May 2012 ~~
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Personally, I think it’s a great thing so much of our public debate is about the environment.
After all, I have yet to meet anyone who wants to destroy the planet. Like the rest of you, I prefer fresh air to polluted air, I don’t like seeing vast tracts of my home district – the Adelaide Hills – being turned into undulating suburbs, I worry about the Murray and wasting scarce resources always seems to be a crime.
But they’re not my only social objectives. I believe in individuals being able to chart their own destinies and fulfil their own dreams. I cherish individual freedom.
And I abhor poverty. I delight in seeing people emerge from pestilence to prosperity and know that economic growth is the true vehicle for poverty elimination.
So when I listen to politicians and political wannabes advocating so called environmental policies I often ask myself, is this right?
Take recycling. It sounds good, but is it? Do we expend more resources recycling than just throwing things away?
Is renewable energy really best for conservation or are we actually reducing living standards without any net gain and should we be trying to change the weather by plunging ourselves and particularly the most vulnerable into poverty? These questions worry me.
Recently, an ANU professor of environmental economics called Jeffery Bennett, published a book called Little Green Lies.
It’s a great read. He looks at 12 different environmental assertions and asks the hard questions. Are the accepted assertions about them really right?
Are we really doing the right thing by ours and future generations or are we really doing more harm than good? Are we the victims of fine-sounding slogans which in practice make no sense at all?
Here are a couple of examples of Bennett’s arguments.
First, there’s renewable energy. We know that non-renewables like oil and coal are one day going to run out. But they haven’t run out yet and for now they are much cheaper than renewables.
Bennett argues that as things currently stand, subsidising renewables is going to reduce human welfare. Coal plants, he claims, cost $28-38 per megawatt hour. Hydro electricity costs an average of $55 per MWh, and that’s if you’re happy to see dams flooding valleys.
The Gordon below Franklin saga of the early 1980s suggests that we don’t want to see that.
Wind energy costs $63 per MWh and solar around $85.
And photovoltaic – things like solar panels – cost $120 per MWh. Solar panels depend on rare earth as a raw material.
It’s scarce and most of it comes from China. Rare earth is, well, rare. There’s a limited supply.
Sure, the sun is limitless but not the materials that make solar panels work. So demanding, as the Federal Government does, that 20 per cent of all our power comes from renewables costs society a lot of money. It makes us poorer than we would otherwise be.
So when I look at that array of windmills on Starfish Hill, south of Adelaide, I think, well, that’s nice, it’s clean energy. But, believe me, it costs a lot of money. It doesn’t help us fight poverty.
As non-renewables become more expensive, alternatives will become more competitive. But not yet. And maybe wind and solar will never be more economic.
It may be that nuclear power will become more competitive or hydrogen technology may take off. We don’t know. That will depend on what scientists develop and invent.
It may be that politicians have made a horrible mistake backing wind and solar power when other technologies may turn out to be more competitive at some time in the future.
In any case, as the price of oil and coal – and gas – rise, as they must eventually, although we don’t know when, something else will be a better option.
OK, you may say, what about climate change? It may be causing global warming. Maybe, maybe not. That’s still rather debatable. But if it does, we can’t do much about it.
The whole world would have to reduce emissions if we were to influence the weather. What we do in Australia isn’t going to make a jot of difference.
We are about to impose a $23 a tonne penalty on CO2 emissions. It’s a political stunt. It won’t affect the weather, believe me.
We only produce 1.5 per cent of global emissions. So do the maths. It imposes a cost on Australia without affecting the weather. It fails the test of common sense. It makes us poorer without any benefit. None at all. Zero.
And as Nicholas Stern has argued, if we stopped all CO2 emissions worldwide tomorrow it wouldn’t affect the climate for 50 years.
It would make more sense investing half the revenue from the carbon tax in measures to counter the effects of global warming like building more water storage and erecting barrages against rising sea levels, if that is really going to happen.
Bennett makes plenty of other interesting assertions. As a professor of environmental economics he makes us all, as the Americans would say, do the math. It’s one thing to make an emotional declaration but it’s another to think it through and judge what the unintended consequences might be.
A final word from Professor Bennett. He argues that rich societies show more concern for the environment and are better at conserving it. As he asserts, to say that stopping economic growth in its tracks is going to help the environment is a nonsense.
Here’s why. Rich societies use resources more efficiently than poor societies – that’s one of the reasons they are rich. They have more capacity to invest in environmental management.
For example waterways and coastal areas are better managed and cleaner because rich societies can afford appropriate sewerage systems. National parks and heritage areas are better managed, endangered fauna better protected and so on.
Why? Because all those things cost money. And what is more, it’s cruel to condemn the poor to eternal poverty.
So economic growth generated by the capitalist system will, in the end, give the world better environmental outcomes than low growth, highly regulated economic systems so favoured by environmentalists.
Alexander Downer was foreign affairs minister in the Howard government from 1996 to 2007
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