Showing posts with label Nick Drew. Show all posts
Showing posts with label Nick Drew. Show all posts

Thursday, October 29, 2020

Greta T may not "vont to be alone", but ... by Nick Drew

(Ed.) Ironically. just as well-meaning activists are pushing pension funds to disinvest in oil companies, the latter could be leading the way to the advanced energy solutions the former would like to see...
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Notwithstanding her much-trailed return to being an ordinary school student, Greta seems still to pout in public quite a bit.  Must be very tempting, I guess.  She may not vont to be alone.


So, asks our good host Sackers, what plans do her NGO handlers have for further exploiting her enormously successful global brand?

I'm rather repeating myself here, having written about the shift in climate-change response several times, and can't stress enough how the whole thing has now gone 100% mainstream, as of mid 2019.  The NGOs did their job too well !  As such, they risk being completely swept aside by Big Business / Big Banking, as it swings into full action mode.  Yes, we really get it, we're really doing it - now just piss off!   (We don't take advice from people in sandals.)

They never really knew how business worked, and they don't know how to intervene in a genuinely purposeful business dynamic such as is happening everywhere now, except as spectators and way-behind-the-curve cheerleaders.  They'd be gobsmacked if they saw the detail of what the heavy-duty, truly purposeful reengineering of whole, real, steel-&-concrete sectors of industry actually involves.  (I'm working on a hydrogen project right now - it's mind-boggling in its ambition.)  They have nothing to contribute! 

It'd be like a 1930's refugee, fetched up in America, who'd been writing to her congressman for a couple of years urging him to drop his isolationism and get the USA into the war.  Then along comes 1941-42.  What does Roosevelt or Ford or Bethlehem Steel or Boeing need to hear from her on the subject of how you build tanks and ships and aircraft by the thousand?  

I'm guessing the NGOs (the ones with the really devious world-government plans) were hoping, or planning, that their Big Chance was if business continued to dig in against change, and would need ongoing and detailed cajoling / direction / manipulation / hand-holding / external interventions of all kinds, by self-appointed green missionaries. 

Too bad, Greta - it'll be Goldman Sachs in charge, as ever.

ND 

[A version of this post first appeared on the C@W blog

Thursday, July 30, 2020

Balancing the Energy Books, by Nick Drew

Some years ago on a sister blog to Broad Oak I wrote several posts noting how problematic was the rise in erratic forms of electricity generation (especially wind power) which presents the operators of grid systems with challenges that sometimes call upon extreme (and costly) (and inefficient) solutions.  Germany is the worst.

The underlying physical facts have not much changed; and the amount of wind power has increased considerably.  But the operators are good engineers - and regulators let them spend whatever they need to (and send us all the bill) - just keep the bloody lights on!   So, by and large, the lights have been kept on, albeit at the cost of ever more of those extreme, inefficient and expensive solutions.

However, new solutions are hoving ever closer into view as practical propositions.  Most of what I summarise below is not red-hot news in the industry; but a lot of MSM types are suddenly catching up with it.
  1. Storage:  it has long been the quip in physics labs around the world that "if you can invent a truly economic means of storing electricity, you can name your university after yourself".   I'm hoping it's obvious how cheap storage would contribute to the erratic windpower problem.  Well, a bit like The Cure For Cancer, there hasn't been a single mighty breakthrough; rather, a lot of impressive incremental improvements, not least in batteries - and we're getting there.  So, there are people building solar + battery combos, and massive grid-scale batteries at cunning points on the system, without subsidies: always the acid test.  It's early days: but we're getting there.  (It's not just batteries, either.)
  2. HydrogenI've written about this (and subsequently so, inter alia, has the DTel) quite recently.  I know there are loads of sceptical views out there: but believe me, the amount of private money and effort going into this is truly immense.  How does it contribute to the erratic windpower problem?  Easy: storing hydrogen is much easier than storing electricity, and negative-price electricity (offpeak windpower at times of big surplus: solar power in many, errr, sunny parts of the world) can generate quite cheap hydrogen, via electrolysis.  And hydrogen can be used for lots of applications - including generating electricity again!   (I'm summarising heavily because it's a very big picture that's rapidly developing.)
  3. Demand-side response & aggregator systems: when the price of electricity goes negative, you can pay people to take it off your hands.  Likewise, when it goes through the roof at times of peak usage, you can pay people to stop using it.  Who are "people"?  Well, just about anyone and any firm or organisation that can, with a bit of thought (and maybe a bit of investment), vary their demand in response to sufficiently juicy price incentives.  To make this work on a big scale requires a lot of software sitting in some aggregator's systems, crunching the most epic quantities of data real-time and transacting millions of times in small quantities.  There are more people with this vision than are making much money out of it - yet.   
On this last category of tool: the sole reason those recent (and thus far quite successful) electricity-market insurgents Ovo and Octopus are in the market as suppliers (an otherwise rather unrewarding business) is to play this game using the ever-expanding fleet of electric vehicle batteries, as soon as this can become a reality.  They expect to clean up.  As noted in the linked article, "It requires dedicated two-way charging equipment that can also communicate with the vehicles, as well high-level aggregator control systems. However all of this technology exists".  Yes - and right now Elon Musk (Tesla) refuses to make batteries that will do 2-way charging!  To be fair, it can shorten battery life significantly, and will require all sorts of potential hazards (and consequent insurance issues) to be resolved. Also warranty issues: if (e.g.) Ovo is offering a stonking real-time pricing deal that incentivises car owners to cane their batteries for £££, they will destroy them quite quickly.

It's all part of the vast, mostly-untapped world of demand-side response potential.  We are going to need it all, eventually: and storage, and hydrogen.  The good news is, this (like hydrogen replacing natural gas) is the kind of phenomenon that can grow slowly (at first), in small but steady degrees.  Contrast with the unicorn of carbon-capture-and-storage - everyone can describe it, some people believe in it, but it doesn't exist - which can only be done by hitting critical mass immediately. That's hard.  That takes public money.

The other beauty of DSR is, early adopters will love it (£££ + prestige) and then, at both the individual and the corporate level, it will become fashionable - always the best form of promo.

So:  balancing a grid which supports a large amount of windpower and solar will never be cost-free - there has to be some flipside to sources of energy with almost zero direct variable cost (i.e. no fuel) - but it is going to get ever more efficient.

ND

Sunday, June 28, 2020

Energy and Liberty

As the statue-rollers do their bit to help capitalism collapse under its self-contradictions, one should have thought the PC response to energy issues is 'renewable/small is beautiful'; but it seems Greenery has its own conundrums. Even Greta Thunberg is not immune from Left criticism, as witness Cory Morningstar's series on how 'Joan of Aargh!' is part of a plan to cash in on eco-investment and the charity/quango gravy train; this is a revolution that, like the French one and pace vegetarianism, threatens to eat its own children.

Nick Drew, writer at Capitalists@Work, here discusses another campaigner's idea that renewables may be a Bad Thing because of a 'power struggle' in two senses...

An important line of thought in energy matters is how coal transformed the entire world by being a very dense (and fairly convenient) form of energy.  Oil is even better.  (Google ERoEI for quantified approaches to these thoughts.)  Cheap coal and oil were the basis of industrial civilisation, and cheap electricity the basis of the modern way of life.  Oooh-errr, missus: isn't "green energy" going to be of much poorer ERoEI, and much more expensive? ... and hence, the end of civilisation as we know it?

When allied to the obvious observation that activist "greens" are generally ignorant to the point of causing despair; and those that aren't daft romantics are often outright malcontents (sometimes anarchists and sometimes malevolent & motivated anti-capitalists) - oh, and add China to the mix, because they ain't falling for this crap but we are!  -  there's scope for some fairly apocalytic visions.    Oooh-errr, missus ...

For a well-written example of this thesis my attention was drawn by our good host to a piece by one John Constable, a name that will be familiar to those who get their kicks from the very peculiar output of the Global Warming Policy Foundation.  His article is here.


Now I understand this "intellectual" line of thinking, and it's always nice to have something theoretical to worry about: but I'm deeply skeptical of it, on three immediate grounds
  • ad hominem: Constable is a deep fellow but always leaves the indelible impression he's pursuing an unacknowledged agenda
  • "Attempting to reverse this process by returning much or all of the energy system to low density flows means handing over to those who control the renewable energy sector the majority of the potential for change available to our society.  The political implications of this are terrifying, and not even public ownership of those resources could avoid the concentration of power and constriction of human freedom that would result.
  • he's dramatically (and, given his considerable knowledge, wilfully) wrong when he talks about "low density flows" as if that's anything remotely new**
Well, it's true Rebecca Long-Bailey (when shadow energy minister before GE2019) planned to hand the whole thing over to local authorities (the irony! when you see what a cock-up they make of their energy endeavours), right down to the level of parish councils and even "local communities ... of around 200 homes"; and of course all workers in the sector to be unionised.   But that ain't going to happen - anywhere.

So whom does Constable imagine has been controlling the energy system** up until now (in the open-market era, i.e. post 1990)?  The nearest UK candidates are, in broad coalition, (a) National Grid (b) Ofgem (c) HMG.  The CCC helps a bit and snipes a bit, from the sidelines: other related quangos are either more helpful (being more closely directed by government and industry) or more snipey (being "greener").  Similar in most countries.  With most aspects of detailed development / delivery / execution outsourced to private companies (and/or municipal utilities in some countries), small and large (EDF is an egregious counter-example, but doomed in its present form).  Any serious signs it's about to be handed over to Greta?  What does she know about constructing anything more weighty than a tweet?

No: as I keep saying (C@W passim): net zero carbon has gone completely mainstream now (since 2019, specifically, in my assessment).  So - it's in the hands of the engineering companies, the traditional energy companies (who ain't volunteering to go the way of the dinosaurs) as well as a rash of really creative newer engineering / technology companies, and the banks.++  Right now I'm working on a project for a gigantic "traditional polluter" whose products are vital for our way of life, whose efforts to go green up until last year were next to nil, and who now are throwing all their excellent people into really bold schemes to go zero carbon!  And when you see real, competent people working these Big (very big) Problems, it makes the idea of "handing things over to parish councils" look utterly, utterly absurd.  And despite RLB's talk of the unions taking a controlling stake in all this, whose side do you think a practical GMB man is on?   (Or Kier Starmer?)  For reasons both of jobs, and keeping the lights on, nobody in the real world will do anything other than let the big corporates do what they're doing.

Now: will our 2050 energy end up being more expensive?  Not sure.  Yes, there are huge upfront capital costs - but right now, that's surely going to be spent on Something Big, on Keynsian grounds at least, so it might as well be building clean & useful stuff.  (Plus adaptation / mitigation, of course - a key part of the 2019 breakthrough-to-mainstream.)  And the beauty of wind and solar is that once the (substantial, but fast declining) capital expenditure has been taken care of, the operating costs are wholly unburdened by the fuel costs that dominate "conventional" energy.  (Don't fret about the details like grid balancing, over which Mr Constable frequently hyper-ventilates - and I used once to worry myself, see this blog a few years ago.  It's just an engineering problem: the Grid is very good at it; lots of clever people are beavering away at it - and the costs of all that will fall, too.)

But let's suppose, as seems possible, that Chinese coal+wind+solar beats western hydrogen+wind+solar+batteries on cost.  So what?  Globalism is over!  We ain't gonna be buying our stuff from them on the same scale anymore, anyway.  Are we ..?

Nick Drew
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** the whole point about the gas industry is that methane is INCREDIBLY low in energy density, (even when you freeze it to put it in ships, it's still quite poor) - but an exceptionally useful form of energy.  And so, highly specialised infrastructures (physical, financial and commercial) have long since been established to cater for this.  In many respects (although the technical analogies aren't easily mapped for non-scientists), the electricity situation is even more extreme.  Neither of these massive industries are in the hands of the Green Blob.  Anywhere.  Whatever daftness sometimes surfaces in the legislation under which they conduct their resolutely practical business.

++ OK, yes, and a bunch of chancers, con artists and would-be 'war profiteers' at the margin    

Tuesday, March 17, 2020

Towards Wiggia's Challenge - Some "ZeroCarbon" Truths

Yesterday, 'Wiggia' outlined some of the problems with 'zero carbon' energy
Here is energy market expert Nick Drew's response:

Our good host invited me to pick up on Wiggia's post, which I'm pleased to do.  It'll be piecemeal, I'm afraid.  I believe things are (a) not quite as bad as Wiggia suggests  -  in fact, (b) rather different to what he suggests, certainly at the macro level.   And as you'll see, we are in full agreement on a couple of important points.

Scenarios whereby the world is going to end:   Shorthand acknowledged, but let's also note that the wiser commentators have always said: the world will be just fine - it's mankind that's at risk.

"We must give up meat":  Actually this is a very recent and tentative new entrant into the list of admonishments.  Thus far, politico-greens (and the NGOs behind them) have mostly avoided recommending anything that might get people's backs up, preferring to stick it to the Man.  It's only very recently that meat and, whisper it softly, over-population have crept into the discourse.  (I am on record as saying that mention of - *gasps* - geo-engineering might be the next hitherto unspeakable suggestion to be voiced.)

Why is so little challenged?  Well of course for many years there was plenty of challenge, but of a spectacularly dumb-sophist nature (Monckton, this means you).  If any of you read my stuff on Capitalists@Work, you'll know I identify 2019 as the year when the whole game changed fundamentally (and XR / Greta are only partly to do with it).  Prior to 2019, "green" investment was a niche, if growing global sector, mostly dependent upon subsidy.  Most people sort-of got it, in a passive sort of way: OK yeah, global warming, probably, but not any time soon, not sure I care ...

The suddenly, two things happened, probably two sides of the same coin.  Various climate-related (or, let's say, extreme-weather-related) disasters struck, and people en masse jumped from Ok-yeah-sort-of, to Well Yes Obviously.  In fact, their position completely overshot the classic Green position, which goes on to say "... so we must de-industrialise and live in caves" - and moved swiftly to "... so we must rebuild those crumbling dams, build new sea-walls and flood defences etc etc" - i.e. Get Stuck In to what is known as Adaptation.

Meanwhile, led by Teresa desperate-for-a-distraction May legislated for "net-zero-2050" with narry a dissenting voice, and every other government in the world (bar a handful of really big'uns) jumped right in behind.

Most significantly, in all of this, the definition of Green (for investment purposes) changed from Prevention (building windfarms to "replace" coal) to Prevention + Mitigation + Adaptation.  This, to cut to the chase, means the governments of the world are gearing up to underwrite quite humungous investments (ironically, many of them into traditional steel-&-concrete projects); and this newly-expanded Green becomes the only game in town for banks and businesses everywhere.  This offers the prospect of a WW2 American war-economy boost to much of the world, Keynsianism on a vast scale (of redoubled significance post-virus), with 'war-profiteering' potential of a once-in-a-generation nature.

UPDATE:  Oh, and of course Swampy-style Hairshirt Greens just hate these developments.  They'd hoped we would understand you can't Adapt (and broadly maintain your lifestyle unchanged), it's not possible: so you must de-industrialise, in line with their happy cave-dwelling instincts.  They don't know how to seize the world's pension-funds and make hay with them (unlike the NGOs who use them as cannon fodder) - and are being left behind in the crush. ND

Not challenged??  There's no challenging something as big as that.   And every big global faction is seeking to lay hands on it:  honest capitalists & businesses;  leftists (who hope to use it as a smokescreen for their workerist agenda, see Green New Deal / Green Industrial Revolution passim); the developing world, which wants "reparations"; 'Green' NGOs (using it as a smokescreen for their "world governance" dreams); charlatans, kleptocrats and organised crime everywhere ...  they all want control of the world's pension funds to pay for all this - and leave them with a healthy cut.

Those that got in early stand to make a fortune: Funnily enough, no.   There were many who identified the potential for this around the time of the 2007-08-09 financial crisis, as being the Next Big Bubble to get into on the ground floor.  They were too early, by a decade.  Many of them lost the lot.

We still need conventional power stations  ... never included in the price equation:  Used to be true, but both aspects are changing fast.  New means of grid-balancing are coming on apace; and the costs of doing so are (a) falling and (b) very definitely being recognised where it matters.  Sure enough there are lavish legacy subsidies still being paid out from the era where the full-system costs were not being (explicitly) acknowledged.  But not going forward.

Still a daydream:  Yes, there are several unicorns featuring in many a "Roadmap" to 2050 - CCS, Hydrogen, etc etc.  We may not be able to tell the unicorns from the thoroughbreds - yet.  But, seriously folks, many engineers are really good, and a lot of money and determination is being put behind them.  Some of these big ideas are going to work.  Don't bet against it.

Lack of extra electricity to charge these vehicles  ...  needs to find three times the current capacity ... up to five times according to some:   EVs are, IMHO, a good example of something that can and will be made to work.  Some really good, intelligent plans are being hatched to manage this complex transition.  Don't bet against it.  But, yes, there really is something out there that could seem to require infeasible expansion of the electricity system, and it's not EVs: it's electrification of residential space heating (currently mostly natural gas).  It's infeasible.  It won't happen.  Best guess is that we'll convert to hydrogen burning instead.

Throw away our (nuclear) technical lead:  forget it.  Nuclear costs just get bigger and bigger, while Moore's Law rules elsewhere.  Back offshore wind, solar, smart-grid, demand-side response ...  all things we are really good at, and which have genuine potential for what's needed.  Leave nuclear to the French: it is going to bankrupt them.

Drax, stupid:  Yup - outrageously stupid.  Criminally stupid.

Germany, stupid:   Yup!  them, too.

Nick Drew

Monday, January 20, 2020

The Electrification of China, by Nick Drew

Somebody (Lenin?) said that communism is soviet power plus electrification.  Or something like that.  And there's no doubt communist Russia and communist China have historically placed vast importance on electrification, along with developing heavy industry in general.   (It's not just them, of course: India feels it's got a lot to do in this respect, too.)

And ... why not?  As Lovelock says, civilisation is energy-intensive (with electricity increasingly the primary delivery-means of useful end-user energy).  Who doesn't want the material benefits of civilisation?  Who's to tell them 'no'?

So: only internal factors are going to stop China (and India) (and one day, Africa) electrifying to the full.  By which I mean: China may pause, if it chooses, when excess coal-smoke is literally killing their people by the thousand.  India may struggle because of its massive political and economic inefficiency.  But they ain't asking permission of anyone to carry on with their electrification (etc) plans.  Particularly not the Chinese who need not bow, and have no intention of bowing, to anyone else ever again.  When they say the Chinese Communist Party recognises no higher authority than itself, they really do mean it.

And that includes Greta.

Today the Beeb ran an item on how China's coal-burning capacity - and concomitant CO2 emissions - continues upwards ("Is China Addicted to Coal?").  They didn't really sermonise about it; just a little wistful, I guess.  Oh dear, look what's happening here; oh well ...

They said "China's economy is slowing" - which is bollocks, of course, it just isn't accelerating as much as heretofore -  which they offered as the reason why coal remains in vogue.  We can put it more simply (as I have been for more than a decade):  when it comes to GDP vs GHG, GDP will win every time.  And of course that's not just China, BTW - though we well know what's at stake for them, specifically: their tacit political settlement is that the populace will shut up and let the Communist Party have its way, provided the populace gets wealthier all the time.  And the CP has no idea how they'd keep the lid on if they fail in their side of the bargain.

As the Beeb notes, China now effectively accounts for the whole globe's annual increase in CO2 emitted.  So - to the extent you worry about these things - you could say: if we all go to hell in a handcart, it'll be because the Chinese CP is afraid of its own people.

ND

Sackerson adds:

Readers might also like to read this piece by China-watchers, about President Xi, his recent purging of a million allegedly corrupt bureaucrats, and the drive to urbanise China as fast as possible and reduce her dependence on the West for trade profits:

https://www.quora.com/What-terrifies-you-about-Xi-Jinping

Sunday, October 22, 2017

Energy Trading: Why We Need Those Big Swinging Dicks

Our host asked me to pen this piece - and even came up with the title ... [BSD is © Nick Leeson - Ed.]


He'd seen reference to how Nicola Sturgeon was being disingenuous when she announced her new publicly-owned Scottish energy company saying it would have the advantage of not needing to pay "corporate bonuses":  but that her careful choice of words meant she knew full well there would need to be the customary big bonuses on offer to the energy traders involved.  How so? - couldn't energy trading be automated?  Might I be able to explain ..?

Well, many commodity markets are indeed already characterised by a lot of algorithmic trading.   But the gas and electricity markets are different (and also, for idiosyncratic reasons of market design, Brent crude oil at the 'spot' end of the market - though not in the longer dated, more liquid forwards).  It was once considered by some academics that gas, and still more electricity, was a paradigm case of a commodity that couldn't be traded (for "reasons" I won't bore you with, because they were fallacious). 

Turns out though, it's not impossible to trade them: this was proved triumphantly by *ahem* Enron, as a pure act of intellectual conviction and commercial will.  But it is more difficult - and in the case of electricity, much more difficult. The primary reason is that in most electricity markets there is virtually no inventory to act as a buffer in the market, so that relatively slight physical events (which happen all the time, with major events not uncommon) within and around the extensive infrastructure can have a rapid and profound impact on the supply / demand balance. In those few electricity markets where there is an effective buffer - which mostly means those such as Norway that are dominated by hydro-electricity, where the buffer is represented by water stored in dams and 'ponds' at the top of the mountain - trading is concomitantly easier.  Gas suffers from a similar, though less pronounced problem of limited inventory.

A secondary (and related) reason is the 'granularity'.   Copper, for example, trades in units of one month: gas is traded by the day; and electricity by the hour, or even the half-hour.  The gas grid needs to be balanced daily; and the power grid requires balancing in real time.  There are many, many other related contributory factors besides, making gas and electricity highly dependent on more than just the usual financial principles.  In consequence, gas and electricity prices (wholesale / traded markets) are hugely more volatile than has ever been encountered elsewhere - an order of magnitude more volatile in the case of gas, and often two orders more in electricity.  Phenomena like the growing amount of intermittent wind power in the 'fleet' only serve to make this more extreme.

Until, then, the advent of that Holy Grail - an effective and efficient form of electricity storage on a large scale(1)  - successful trading in these markets requires a unique blend of classical 'financial' trading skills, plus deep understanding of the very extensive physical / infrastructure aspects and their complex dynamics.   As a rule, financial traders hate getting their hands dirty with the physical stuff; and physical specialists don't understand the financial stuff (which can be deeply counter-intuitive to the novice, even the highly numerate novice, as most engineers are). 

So the winners - who really clean up - are those who can be arsed to acquire both sets of skills.   The amateurs get destroyed.  Some household-name big companies have really screwed this up over the years.  Many companies actually outsource their trading requirements to specialists - and pay a nice mark-up, but can then say "we don't need those nasty traders(2) & we don't pay those immoral bonuses".  But of course they do, really - like retaining an overseas 'agent' to do the dirty business with the backhanders. 

I wonder which route the pious Sturgeon is going down?   Sadiq Khan had promised to set up a municipal energy company for London, but seems to have thought better of it which, in my view, is wise.  Keep those big swinging dicks out of sight of the innocent Scottish politician ...

ND
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(1) Mr Musk has a very, very long way to go yet.  He's a great BS-merchant, though.

(2) The traders' culture is abhorrent to the engineering culture that quite naturally dominates the energy co.s.   There are many points of conflict.  When an energy co eventually realises it needs a trading floor (and be willing to pay serious bonuses), it can cause truly dreadful frictions.  Traders and the like have been heard to call the old-timers "Dougs" - dumb old utility guys ...  and since this is a family blog (is that right, Sackers?), I won't relate what the engineers call the traders.

Tuesday, December 27, 2016

Boiling candy floss

Recently, Nick Drew of Capitalists@Work introduced us to an essay in The New Enquiry entitled "The Scapegoating Machine" (http://thenewinquiry.com/essays/the-scapegoating-machine/).

The writer, Geoff Shullenberger, refers to Peter Thiel, a hedge fund manager (and founder of PayPal) who is now on the executive committee of President-elect Donald Trump's transition team, and links Thiel's thinking to that of his former professor and "philosophical mentor" René Girard.

There may be some good ideas in the article but they are couched in that horrid jumble of jargon from sociology, psychology, Marxism etc that resembles a parody of mediaeval scholastic theology, bristling with unnecessary references and appeals to allegedly established authority. My reaction is typical of the Anglo-Saxon attitude to Continental theoreticians: we like our abstractions to be more concrete.

In my schooldays the way to determine whether there was any substance was to do a précis. Typically this would cut down the original word count to, say, 40%. But one can be much more radical with guffmeisters such as Russell Brand - I got him down to less than 8% (http://theylaughedatnoah.blogspot.co.uk/2014/05/kaking-sense-of-russell-brands.html)

I challenged Nick to do the same for this latest, reducing the 3,445 words of the original to no more than 250. Heroically, he has done so. I now challenge the reader to see if it could be boiled down even further, and then challenged on logic and fact!

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Humans desire things because others desire those things, and we unconsciously mimic them. By having the object of desire, the Other makes us desire it, but also makes us resent the Other’s having it: mimetic desire and violence are inextricable. Desire is potentially a source of conflict (especially when the desire is for something intangible such as honor, status, respect, recognition) - a basic problem for human societies.

The ancient solution was substitution of the scapegoat for the rival - the original “breakthrough” moment of human progress, breaking the cyclical repetition of mimetic violence. Religion ritualized the scapegoat mechanism into sacrifices - symbolic acts that created gods, myths and hierarchies.

The rise of techno-scientific rationality and secular governance correlates with the decline of the sacred. But since religion has been the primary form of regulating violence, its displacement raises the possibility of uncontained violence and a panicked return to violent forms of religion.

The imitative basis of desire can explain the success of social media, which intensify universalized competition, feeding rivalry and ressentiment. They also create the space for new modes of scapegoating. Bullying and “forming communities” are connected: scapegoating is the cement of group identities. Voters in demographic decline turn against the Other. “The 99% vs. the 1%” is modern-day scapegoating.

Developers of technology need to accomplish something comparable to what religions did: the creation of superstructures that blunt the tendencies toward dissolution currently threatening global society.

Monday, December 21, 2015

Energy and liberty

An excellent long-range thinkpiece by Nick at Capitalistsatwork, looking at the energy landscape in the wake of the closure of the UK's last deep coal mine.

I comment:

Bang on. It's very worrying. England's population was only 7.1 million in the early 18th C; for GDP-expanding reasons, we seem to have a policy of suicidal population overshoot. If ever the wonderful world-wide goods trading system hiccups we're sunk into the most terrible chaos - WW2 ended just in time for us, as our soil was getting exhausted ("losing heart" was the phrase used, I understand) - and that was with a population considerably smaller than now, and much more growing land.

And I've been thinking recently that our quasi-democracy and civil rights are luxury by-products of the new energy sources and technological development and empire-building of the Industrial Revolution, else we might easily have gone the way of the French Terror. Funny how we suddenly stopped burning women at the stake in 1789.

We've had Illich's "
energy slaves" for two or three centuries and that's going to change. US/Mexican billlonaire Hugo Salinas Price reckons we'll see the return of domestic service. And maybe the servants will lose the franchise.

Follow-up: Google "Olduvai Theory."


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Monday, October 20, 2014

Energy Policy: Large-scale Unintended Consequences

Wherever you look, 21st century energy policy has been hatched by people who know far less than they need to about the subject in hand.

It's sometimes necessary to diagree with the 'experts'.  Prior to liberalisation of the energy markets, the experts - all wedded to the extremely comfortable monopoly model - declared with absolute certainty that gas and electricity were inevitably and essentially matters for monopolies to control.  Not really commodities at all: something magical and different.  Competition ?  Trading ?  No, these were simply impossible.  Trust us.  We are as efficient as it is possible to be. (© Denis Rooke, 1985)

On that, the experts were utterly wrong.

But that doesn't give a licence to greenish, or green-appeasing politicians and civil servants, to announce that electricity grids can be run on windfarms and wishful thinking for zero CO2 emissions, when people who genuinely know better can prove otherwise.  Sadly this is not enough to stop them giving it a try, armed with vast amounts of our money.  But it ain't gonna work: and the harder they try, the more bizarre will be the unintended consequences.  To list a few that had already made themselves apparent a year or so back:
  • Germany, which has gone further and faster than any country (and, some would say, with the least planning) has seen record levels of expenditure on renewables, record high power prices to residential customers, and, yes, rising CO2 emissions
  • ... and, yes, rising CO2 emissions in the UK also
  • ... and around 50% of 'renewable' energy in the EU coming, not from the antiseptic, sunlit windfarms / solar farms / hydro plants of the brochures, but filthy biofuels, whose only claim to reducing CO2 emissions comes from the fact that they are deemed to do so, irrespective of the truth (which is that in most cases they don't)
And now we have the UK 'capacity market' in the electricity sector, being introduced this year to rectify the problem that in an era when no-one moves without a subsidy, no-one seems willing to build unsubsidised power plants to relace the coal stations that are closing with each passing year.  I may write on the technicalities of this 'market' another time, but for now we need simply to look at the recently published details of who are bidding into the auction process for being awarded 3-year or even 15-year wads of 'capacity payments' (i.e. standing charge contracts) for the 'new capacity' they promise to bring onto the UK grid.  

A fair chunk (by volume) of the bids are made by would-be developers of new CCGTs (large gas turbines in their most efficient configuration).  This is what the government hoped for.  But new CCGTs are costly, and unlikely to win at auction, because even more capacity is on offer from other sources, e.g. bids from companies offering to put old, mothballed CCGTs back into service (again, anticipated and welcomed by DECC).

Then come the unintended consequences.
  • one of the largest 'new build' CCGTs is in fact two-thirds already built, and starts up next year anyway, whether it gets a capacity contract or not!  (The capacity payments don't start until 2018)
  • a large chunk of the bids comes from owners of existing coal plants, offering 'new capacity' by way of eking out extended and better performance from their ageing kit
  • the biggest bidder is bloody EDF, hands out again, pretending that its long-announced life-extension projects for its existing UK nukes are also 'new capacity'.  Again, these are money-for-old-rope projects that will go ahead anyway

Needless to say, this is not what DECC or the greens initially expected from the capacity market, though the logic of it had begun to dawn on them over the summer.  The howls of outrage greeting the coal projects in particular are hilarious to hear.  Anyone could have told them: it's always cheaper to refurbish existing capacity than build new plant.


Looking back at several years' worth of energy postings, I find I have invoked reductio ad absurdum several times: and it is time to roll out this venerable tool of formal logic once again.  The absurdities are there for all to see.   The logicians' answer is that the original assumptions must be wrong.  That's the correct conclusion, and one we urgently need DECC to draw.

Nick Drew

This post first appeared on the Capitalists@Work blog 


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All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Friday, November 01, 2013

UK Sharia Bonds - ?

As part of the government's blitz of 'look what we're doing' announcements, we now have "Britain to become first non-Muslim country to launch sharia bond: David Cameron to unveil £200m Sukuk".  So what's going on here ?


a.  Political Significance

A couple of weeks ago I posted about how the UK is kow-towing to the Chinese as part of our economic escape plan.
"This is a particularly acute risk for the UK ... In our semi-detatched euro-positioning, our vulnerability to having the City isolated by jealous continental and American financial authorities, and our commendable centuries-old willingness to roam the high seas, we will always be inclined to 'trade our way out of trouble'. Now true commercial trade is a great thing and would indeed be the ideal way forward. But increasingly what we see is a baser trade: the prostituting of our institutions to the whim of Russian and Chinese wealth. If they want to lavish their money on our libel courts or Mayfair shops, that's one thing. But it won't be ending there. Today we see the first of the mega-bargains our desperate UK politicians will enter in order to engineer short- and medium-term relief from our woes. Faustian is just one way to describe it."
There, I was writing about the nuclear deal, but of course that was part of Osborne's Sino-package that included a putatively huge and strategic banking 'n' finance deal.  These are the kind of moves that can leave green-eyed Frankfurt and New York grasping vainly at thin air, reinforcing London as "the undisputed capital of the world".  At least, that's how the dream story-line runs.  Brown hoped to do the same, but Osborne is acting more decisively.

The sharia leg of this burgeoning development causes nervous murmurs on the home political front - see this piece at ConHome.  Should it ?  Given that in technical terms the distinguishing  features of sharia finance are, to the unbeliever, quirky to the point of quaint (see below), objectively the whole thing is a bit like the 'ethical investment' industry: why not let anyone who wishes to cut themselves off from the full range products, do so if they choose?

But obviously there is a heavyweight cultural overlay to this, and maybe objectively speaking is not enough.  I am 'relaxed' about all sorts of 'alien' business influences and ownerships in the UK.  To me it is part and parcel of what I take to be a very traditional British openness to trade and cultural curiosity (which, by the way, is only one strand of British tradition as I know full well).

But I am not remotely relaxed about the rule of UK law and for me there is a simple bottom line.  Provided all this UK sharia stuff is subject to the same banking regs as everything else (and these are enforced with the full force of law, see C@W  passim), let's go for the money and leave Frankfurt and New York fuming.  This proviso is not trivial, and not just because enforcement of banking regs had become a sick joke.  It must surely be the case that hawala transfers are routinely used to dodge western banking regulations (not to mention money laundering); and bringing any such system into mainstream scrutiny must be a highly desirable goal of policy - nay, even an imperialistic power-grab!

b.  Financial Aspects

Sharia finance properly analysed is a subset of general Finance-with-a-capital-f, delineated by some strict rules around interest-payments which must not feature in the story of what A pays to B.  Recalling the informal definition of a Swap - the exchange of cash flows between consenting adults - most sharia-compliant deals are what are known in the real world as total return swaps (TRS), and there is nothing scary or alien about them per se. Of course, they are a bit more complicated than plain vanilla loans etc - but so what?  Lots of financial instruments are.

Far from scary, putting aside the political stuff I'd say the whole thing is pretty amusing.  The restrictions that make these deals sharia-compliant remind one of nothing so much as the crazy, tortuous tax regulations which make certain kinds of (e.g.) UK film investments qualify for attractive tax breaks.  In other words, they are an adventure-playground for shyster tax-lawyers, and sharia will be just the same**.  The arguments over what counts as what; the twisted convolutions required to label interest payments as anything but interest, are hair-splitting sophistry - literally theological.  There already is a service industry around this, with "Islamic scholars" getting good money for certifying individual deals.  The People of the Book know all about this stuff, too, and what a gravy-train for the City it promises to be !
______________
** Just as with 'ethical investments', one imagines there are disappointments ahead for those who place great store by what they are being sold truly complying with the advertised principles.  I suppose that in some countries, anyone caught playing fast and loose with the sharia interest rules might have their parts cut off  ... a risk that the City boys will need to factor in for themselves, eh?  


This post first appeared on the Capitalists@Work blog

 
All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Tuesday, October 22, 2013

Enter The Chinese Dragon - and the start of bonded servitude

Under foreign flags
Readers may be aware that I am generally untroubled by inward investment and foreign ownership of UK assets, though this is clearly not a view shared by all who visit these pages.

The Chinese aspect in this week's jaw-dropping (if highly trailed) nuclear announcement is a bit different, though.  There is the national security angle, of course, and many will be most agitated by that.  I don't dismiss it, but it's not what strikes me the hardest.  Security of supply is a non-issue: the Americans tried to pin that on Russia as a gas supplier during the Cold War and it never stuck.  Safety ?  Technology ?  All issues that can be resolved - if you count buying the ridiculous EDF / Areva EPR technology as a good idea in the first place.

More foreign flags
I am more concerned about what it signals, or rather confirms, about what I have long felt to be the probable strategic response of European governments to our parlous financial position.  A couple of years ago I wrote that when we are really up a gum tree the Chinese will have a deal for us, and we will meekly sell the farm.

This is a particularly acute risk for the UK, in my assessment.  In our semi-detatched euro-positioning, our vulnerability to having the City isolated by jealous continental and American financial authorities, and our commendable centuries-old willingness to roam the high seas, we will always be inclined to 'trade our way out of trouble'.  

Now true commercial trade is a great thing and would indeed be the ideal way forward.  But increasingly what we see is a baser trade: the prostituting of our institutions to the whim of Russian and Chinese wealth.  If they want to lavish their money on our libel courts or Mayfair shops, that's one thing.  But it won't be ending there.

Today we see the first of the mega-bargains our desperate UK politicians will enter in order to engineer short- and medium-term relief from our woes.  Faustian is just one way to describe it.  Another would be the PFI-ing of the UK economy to China.  Future generations will curse Camerosborne roundly, as they pay grotesque prices for electricity and probably a great deal more.

And the prices may not only be measured in currency.  Bonded servitude may be the term we are looking for.

This post first appeared on the Capitalists@Work blog 


All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Saturday, October 19, 2013

Weekend Arts: Lowry

Source: Wiki (see terms of use)
You can always get me along to an exhibition of an artist with a clear world-view, even if it's not one I particularly like.  Only just squeaked in to the Tate Lowry, though, which closes this weekend.

No great visual revelations here - you know pretty much what you are going to get, wall after wall of it (none of his strange erotic stuff included in this show).  But there are several really illuminating things to be learned that you won't find in wiki.
  • He can properly be placed squarely in the French tradition of Utrillo and Pissarro, having been formally trained at the Manchester School of Art by the less well-known impressionist Valette.  Indeed, he (Lowry) exhibited in Paris more than in England in his early years.  (To judge from the single Valette in the show - a grand urban nocturne - the master was, *ahem* perhaps better than the student ... just a matter of taste, obviously)
  • He was a fire-watcher on a high factory roof during WW2, which readily explains the perspectives of many of his post-war paintings.
  • He was capable of taking the piss in no uncertain terms.  Two separate paintings are exhibited side-by-side without comment, one entitled 'People arriving at work' and the other 'People going home from work'.  They are essentially identical (not mirror-images), down to the colour of individuals' coats
  • He had a short 'welsh' period when he painted some more-studious-than-usual / less generic, and rather magnificent Welsh landscapes  
  • Gates and gateways clearly had significance for him (might be a fruitful opening for psychological speculation)
This is all a bit late to count as a recommendation for any except London-area readers - sorry about that - but it's meant that way.  Time well spent.

This post first appeared on the Capitalists@Work blog  


All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Sunday, October 06, 2013

Energy Policy: Omnibus Post

For most of the time we are all capable of sailing serenely on in ignorance of how fundamentally our world-views differ from those of others; but once in a while the chasm is illuminated by a bolt from the blue.

One such event happened when Miliband launched his 'energy price freeze' policy.  I and many others in the 'sphere and MSM alike immediately clapped our hands to our heads and proclaimed, that's it ! - he's completely lost it, and shot himself in the vitals on prime-time TV to boot.  We clearly thought the lunacy of it would be obvious to all.

But not a bit of it, because the reaction of other commentators was: a price freeze - so what ?  No big deal, even if it's not something we particularly applaud; and anyhow, the energy companies had it coming. 

In other words, there is no general consensus or shared understanding on some pretty basic energy market concepts.  So here are some responses to the interesting exchanges between 'Timbo', 'BE' and 'BQ' on the comments thread to a recent C@W post.  I'm going to focus on short- / medium-term, (say, out to 15 years hence) because the really long-term stuff is unknowable, thanks to technology shifts we can barely guess at.  (In which latter category I place Timbo's fascinating comments on electricity storage, the Holy Grail of energy policy which would transform the landscape.)

The paramount fundamental is that electricity has staggering high 'utility value', i.e. people (in developed economies) will pay almost any price to get it.  Second only to food, for most people.  (Water comes third because you can generally makes your own arrangements, up to a point.)  By this standard, as Timbo wrote, "...how cheap the grid is.  It's dirt cheap".  And when people will pay almost any price ... things can go horribly wrong.

Notwithstanding various developments in micro- and distributed-generation, and predictions of more to come, the kind of electricity and energy we all want - permanently available, in bulk, almost everywhere we go, and relatively cheap - requires centralised 'organisation' (grids, despatch and balancing systems), if not actually 20th-century style centralised generation.  And this isn't just power for domestic use, schools and hospitals: as BQ said, "you can't run a blast furnace on wood".  The saintly George Moonbat tried very hard to run a self-sufficient smallholding in Wales, and just about managed OK for a couple of years until he had a bad winter - after which he suddenly became a convert to nuclear power.

It used to be thought (and still is, in some dark quarters) that only centralised ownership, or at least centralised control, could deliver the goods: but this was comprehensively disproved in the UK and other regions with the advent of full bilateral (self-despatching) markets at the beginning of this century, which not only confounded the statists dirigistes by working at all, they worked better, and reduced electricity costs as their proponents (incl. yours truly) said they would.  Even the Labour Party still signs up for this, (see Caroline Flint on Brillo's Sunday programme: and the changes that brought it about in in the UK 2001 were put through Parliament by Mandelson) so dissenters are up against it politically.

But there are problems.  Firstly, bilateral market structures, though basically robust, are vulnerable to large-scale interference by the heavy-handed and dull-witted.  This includes many politicians and almost all civil servants.  In particular, there is a limit to how much ill-considered (indeed, sometimes actually infeasible) 'decarbonisation' policy can be loaded onto a market framework without it buckling.   Of course, in this country the rot started under Miliband lui-même when in power - oh the irony - but has been further perpetrated here by t'Coalition (and on an even more manic scale in Germany).  

(As an aside, the chronic state of our Heath-Robinson energy policy makes it very easy for any politician to score a few easy and populist points against it.  That Miliband is the first one to do so on a grand scale, is just hilarious.)

The second point is that those bilateral market structures are relatively new and by no means perfected, even before they started to be messed with.  In particular, (a) liquidity in some parts of the power markets, here and elsewhere, left quite a lot to be desired.  Liquidity, for those who don't have an instinct for it (this includes many politicians and almost all civil servants ...) is absolutely vital for markets to deliver for consumers. Ofgem, which had this forcibly brought to their attention nearly a decade ago, has been farting around ineffectually on the issue ever since.

(b) A related point: the state of competition is unsatisfactory.  There is no reason why the current UK  'supply' set-up - 6 massive players plus a host of lesser ones - shouldn't make for a competitive market.  It is, in fact, more competitive than many people give it credit for.  But there's a damaging, mutually reinforcing effect at work:  unsatisfactory wholesale liquidity makes suppliers migrate towards vertical integration (i.e., becoming generators as well), which further reduces liquidity ... etc etc.  

[To illustrate: Centrica set out in 1996 intending to be a capital-S Specialised Supplier (of gas and power), with no power generation at all and limited gas production of its own (the 'merchant', or 'Enron' model).  But over the years, they found liquidity in the wholesale markets less than satisfactory.  So they have slowly become more and more vertically integrated, to the point where now they have about 75% cover for their supply obligations from their own 'upstream' assets (power plants, gas fields and some large long-term purchases).  This means that, where once they were trading in the wholesale markets for almost all their needs, they are now only trading for 25% (net) of their needs, plus some spec trading etc.]

Two dreadful policy decisions have gravely exacerbated this situation.  The first was to allow large-scale vertical integration by acquisition.  This was of course re-integration, because throughout the whole of the 1990's, Ofgas and Offer (the worthy predecessors of Ofgem) had been preoccupied with breaking up the old verticals (themselves the products of the two big privatisations of the 1980s).  The worst examples of vertical integration by acquisition were (1) Powergen's purchase of Eastern Electricity and other UK assets, followed by E.on's subsequent purchases of both Powergen here and Ruhrgas in Germany; (2) EDF's purchase of British Energy.  These should have been stopped by UK and EC regulators - not because vertical integration is intrinsically wicked, but because the markets weren't sufficiently liquid at the time.  (In fact, truly liquid markets make vertical integration a very dubious commercial proposition - which is the virtuous-circle side of the liquidity picture.  We are stuck with the vicious circle.) 

The second disaster for the liquidity/competition downward spiral is the manner in which decarbonisation is being pursued.  In the UK this means the ridiculous 'Electricity Market Reforms', which - take it from me - undermine liquidity still further, even as ministers and Ofgem continue to pay lip-service to the need for better liquidity.  It's hugely perverse, because several critical aspects of EMR are wholly dependent on there being deeply liquid markets in existence.  They will fail miserably, and piecemeal government interventions of the most grotesque kind will result - the civil servants can hardly contain their excitement at the prospect.  And they will probably keep the lights on, because we can and will pay (see above) - almost any price.

Which brings us back to Miliband's 'price freeze'.  I've banged on too long already to dissect this in detail.  Suffice to repeat: it's bonkers, it's a cheap populist shot, and will have negative consequences far outweighing any limited relief it may deliver to consumers.  Interestingly, in answer to Brillo's questions Caroline Flint (who, it must be said, was quite well briefed) quickly mentioned the really significant new Labour policy, which is to re-introduce something akin to the 'Pool market' (i.e. an end to the bilateral / self-despatch system) which was how things were run here in the 1990's.  It wasn't a disaster, but it was definitely very inefficient.  And - oh, how these things go full circle - it was dreamed up by Oliver sh*t-for-brains Letwin ! (Who still hankers after it, I can tell you, as do civil servants and all the old CEGB dinosaurs.)


This post first appeared on the Capitalists@Work blog



 
All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Sunday, September 22, 2013

Weekend Reading (Heavy Division)

This, by Jonathan Franzen in Saturday week's Grauniad review, is the best essay I have read for several months.  Based on his translation and exegesis of the writings of an Austrian I'd never heard of - Karl 'The Great Hater' Kraus (1874-1936), a kind of proto-blogger - the piece is hard to summarise.  (The Graun's sub-editor has failed hopelessly in this task, so don't be offput by the rubric.)

So I've assembled a little set of extracts.  If you like them you'll read it ... 
"... rather live among the Germans. For although they've strapped art into the Procrustean Folding Bed of their commerce, they've also made life sober, and this is a blessing: fantasy thrives, and every man can put his own light in the barren windowframes. Just spare me the pretty ribbons! "
"Believe me, you color-happy people, in cultures where every blockhead has individuality, individuality becomes a thing for blockheads." You're not allowed to say things like this in America nowadays, no matter how much the billion (or is it 2 billion now?) "individualised" Facebook pages may make you want to say them. 
Vienna in 1910 was, thus, a special case. And yet you could argue that America in 2013 is a similarly special case: another weakened empire telling itself stories of its exceptionalism while it drifts towards apocalypse of some sort, fiscal or epidemiological, climatic-environmental or thermonuclear. 
For Kraus, the infernal thing about newspapers was their fraudulent coupling of Enlightenment ideals with a relentless pursuit of profit and power. With technoconsumerism, a humanist rhetoric of "empowerment" and "creativity" and "freedom" and "connection" and "democracy" abets the frank monopolism of the techno-titans; the new infernal machine seems increasingly to obey nothing but its own developmental logic, and it's far more enslavingly addictive, and far more pandering to people's worst impulses, than newspapers ever were. 
"An invention for shattering the Koh-i-noor to make its light accessible to everyone who doesn't have it. For fifty years now it's been running, the machine into which the Mind is put in the front to emerge at the rear as print, diluting, distributing, destroying. The giver loses, the recipients are impoverished, and the middlemen make a living"
Amazon is well on its way to making writers into the kind of prospectless workers whom its contractors employ in its warehouses 
... the next thing you know, you're translating The Last Days of Mankind as The Last Days of Privileging the Things I Personally Find Beautiful. And maybe this is not such a bad thing. Maybe apocalypse is, paradoxically, always individual, always personal. I have a brief tenure on Earth, bracketed by infinities of nothingness, and during the first part of this tenure I form an attachment to a particular set of human values that are shaped inevitably by my social circumstances. 
Kraus's signal complaint – that the nexus of technology and media has made people relentlessly focused on the present and forgetful of the past ... something that has become a fixture of modernity. The experience of each succeeding generation is so different from that of the previous one that there will always be people to whom it seems that any connection of the key values of the past have been lost. As long as modernity lasts, all days will feel to someone like the last days of humanity. 

You get the picture ...


This post first appeared on the Capitalists@Work blog
 

All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Monday, September 02, 2013

Shale: Another Nail in Osborne's Coffin

Balcombe Blame Rests Here
Or rather, the coffin of his reputation as a strategist.

Oh yes, it's been dead awhile, stone dead.  But by my reckoning, his screw-up on shale is almost up there with the fatal boundary-change abortion.

In both cases, Master George the master-strategist seems to have identified clearly enough the paramount significance of a particular issue.  But instead of following through, of giving it the undivided attention and planning and execution it merits (being An Issue Of Paramount Significance, yeah ?), he farts in its general direction and assumes that plaudits are in order for his spotting, and farting at, the obvious.  But a real strategist understands that strategic insight is empty without genuine, unremitting, practical application to the task of figuring out everything that follows, in grinding, boring detail - and actual implementation of the needful.  Whatever it takes.  With no loose ends.  Because, hey, it's of Paramount Significance.

We know how the boundary changes ended: so what happened with shale ?  When the initial Cuadrilla discovery was announced, we wrote here: This Is The Big One.   Others (e.g. Mr Worstall) followed our lead, and soon it was recognised by all and sundry. See, George, it is really obvious (& let me quickly add that C@W was by no means alone in trumpeting the matter).  George duly cottoned on too and started running his own energy policy - hatching tax breaks (unnecessary) and a streamlined permitting regime (stupid, at least in the way it's been done), with a bit of gratuitous green-baiting (Juvenile George's stock-in-trade).

But what else obviously follows from the obvious significance of shale ?  Why yes: every Green and Red and general unwashed malcontent and transgressionist across Europe would realise that shale gas (if actually found here) could be the death-knell of their various stone-age / statist dreams.  Accordingly, they would be out in force to try to prevent drilling, with a lot more chance of drawing the crowds than (say) the rather recondite NoDashForGas sit-in at West Burton.  Oh yes, this too was entirely obvious - we predicted it here last year - and is a major vulnerability of the whole UK shale gas prospect.

With the Battle of Balcombe rumbling on, there is no need to rehearse just how far short of a strategy we are: and I unhesitatingly blame Osborne.  There is nothing good to be had from going abut the job clumsily and pissing off conservative Middle England in the process.

Is all lost ?  Well, if this were Germany we'd be in really big trouble, because their greens (and the old superannuated Atomkraft-Nein-Danke brigade, now in well-heeled retirement with time on their hands and misty recollections of their glory-days to perpetuate) have serious stamina, as witness the very long-running Battle of Stuttgart Station.

But our homegrown greens are a little less committed.  I maintain that the UK shale programme is vulnerable to the antis, but there is certainly an optimistic scenario.  Those with long memories will recall the massive pro-coal-mining demonstrations in the early 1990's, when Michael Heseltine (sic) was at the DTI and allowing large-scale pit closures to take place.  A short moratorium, a general return to the sofa to watch whatever was the compelling soap of the day; and after a couple of months all was forgotten and the pits closed as planned.  Likewise in the first year of the NuLab government, some more pit closures were announced: cue massive popular hostility to the Dash For Gas (yes, even then - and that was technically the second D-F-G; the current one is the third).  And what did young Peter Mandelson do then ? (yep, he was at the DTI in 1997).  Why - another moratorium ! - this time on new gas-fired power plant permits.  And after the usual short interval ... well, you know the rest.

So there's at least a chance the great unwashed just pack up and go home**.  Therefore, if there is a decent strategist somewhere in Whitehall (and I very much think there is) there is at least the possibility of getting this show back on the road.  There is, after all, no great rush.

If a real strategist takes charge, there is one final optimistic precedent worth noting.  In the first Thatcher government a truly strategic attack on the NUM was being hatched under a properly thought-out, comprehensive plan (which embraced such details as building coal stocks to unprecedented levels, uprating Felixstowe for coal imports, building the A14 to get them to the Midlands by road, and installing an infrastructure for coordinating the Police nationally.  See, George, that's what a real strategy looks like.)  In 1981, before all this was complete the NUM went on strike for a pay rise.  So Thatcher ordered a tactical retreat - looked like a horrible climb-down at the time - reculer pour mieux sauter, until things were good and ready.  Well, you know the rest.

So all is not lost.  But Osborne ... his failings are inexcusable.  Is there really not a better candidate for Chancellor on the coalition benches ?  That's another job where strategy is at a premium, n'est-ce pas ?


** having a few spare hours last week, I monitored the tweeting on events at Balcombe.  Somewhat to my surprise, having been at frenetic and very high-volume levels all week, it fell off dramatically after lunchtime on Friday.  Does this mean all these tossers are tweeting from work ? Watching the cricket ?  


This post first appeared on the Capitalists@Work blog


All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Monday, August 05, 2013

Peak Oil, EROEI and the Muffled Drum

An interesting thing happened last month. The Oil Drum, a well-regarded website + blog, announced it was ceasing operations and archiving itself for posterity. Well, everything has its day - we can all list blogs that were thriving a few years back but are no longer with us.

Some have suggested it was the extraordinary shale-based renaissance of US gas and oil production that did for the Drum. Probably not. But, fairly or unfairly, the Drum was associated with 'peak oil', which at its simplest is a view (or theory or doctrine or whatever) that global oil production - as a function of oil-in-the-ground - is doomed to peak, after which we start 'running out of oil'.

At its simplest, it is Malthusian hogwash. Of course, there are more nuanced versions than that, and the Drum shouldn't be tarred with the brush one would use for countering hogwash. Much more important is the concept of EROEI - energy return on energy invested, which has been another Drum favourite. And this concept really does bear careful consideration. Declining EROEI could be the end of civilisation as we know it for, in the immortal words of James Lovelock - "civilisation is energy-intensive". Better believe it.

So - no more drum-beat. But you'll not stop hearing about EROEI.


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Thursday, July 18, 2013

Arguing The Toss On Climate Change

Following hard on his purposeful assault on Michael Fallon two weeks ago, the redoubtable Andrew Neil had a go at Ed Davey this time around, and only peripherally on energy policy per se. His main thrust was an outright challenge to a simplified version of what one might call the warmist-scientific consensus. Of course, Neil is the better debater in every dimension than Davey - a Jesuitical novice could have mounted a better defence without raising his voice above a conversational level - but it's just a low-grade spectator sport with carefully-briefed sophistry on both sides. Taken at face value, there are rarely any knock-down points scored in such encounters, and I can't imagine many viewers changing their minds.

But points of interest still arise.
  • The days when the Beeb's policy was for active suppression of climate-change skepticism are, it seems, over. (Davey was more than just called upon to defend his position: Neil made it clear that in his view, Davey had failed to do so.) That's not a trivial development. 
  • Davey's principal fall-back arguments were (1) a Pascal's wager: even given uncertainty, it's still appropriate to insure against the downside of possible climate change (2) "a lot of our policies are 'no-regrets' policies" - we should be doing them anyway. 
Lots of people relish the fight over forecasts of temperatures - hockey-sticks at dawn - but I don't find that fruitful at all (go to Bishop Hill if you want to vent steam, though as one contributor says there, it can become a "back-slapping echo-chamber"). Better by far is a practical approach, where knock-down points can truly be scored. (1) and (2) above are perfect cases in point. Because it's trivial to demonstrate that current UK / EU policies don't represent any type of insurance policy against climate change: they don't even reduce CO2 emissions, thereby failing against even the most basic of their own criteria.

(The only thing that might represent insurance is adaptation and, as we know, UK expenditure on flood defences is pitiful.)

As for 'no regrets' policies, Minister, You Are Having a Laugh. Only self-financing, unsubsidised energy conservation measures and small-scale biomass / waste incineration could conceivably fall in this category: everything else is a massive gamble on rising gas prices - a huge speculative long. With our money.

At best, the other steps being taken might contribute to a bit of security of supply, and to Keynsian job-creation. But there would be cheaper and more effective ways of doing both. Nope, it isn't remotely difficult to paint the 'regret' scenarios.


This post first appeared on the Capitalists@Work blog


All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Thursday, July 04, 2013

Energy Policy: Reductio Ad Absurdum

It is hard to know where begin a post on UK energy policy just now, though I feel vaguely obliged to try. Last week there were flurries of straws in the wind, adding up to what ought to be unavoidable recognition of the failure of the programme initiated by Ed Miliband when in power as Energy Secretary. His predecessor, John Hutton, was considerably more realistic but Miliband adopted a fantasy green agenda - arguably, part of Gordon Brown's overall scorched-earth strategy which I wrote about at the time - and with very few modifications the coalition swallowed it whole.

Now we have an updated forecast of reserve capacity which shows we can easily be up the proverbial creek by 2015 - no news to anyone reading C@W, I realise - and Ofgem scurrying for short-term fixes. Cue hysteria in the mainstream media (save for a curious silence in the Guardian).

The government and regulators will, of course, succeed in preventing large-scale black-outs, and probably even rolling brown-outs, although there could well be the odd isolated incident. How will they do this ? By throwing money at the problem, of course, because no politician will ever allow the lights to go out. Switching off large industrial customers, revving up diesel generators, paying the owners of mothballed gas-fired power plants to re-commission them, prolonging the lives of old nukes a bit - it isn't even very difficult. But it is far more expensive than it should be, and we shall all pay for it.

Perhaps - just perhaps - someone will also quietly finish off DECC's mad green + nuke agenda: because that is what all this ad-hoccery amounts to. The real problems are going to happen 2015-2020, when both Cameron and Miliband both hope to be holding the reins.

So we might hope for a bit of belated realistic policy-making from now on. They seem to have got the bit between their teeth on shale gas - (which, by the way, will bring forth the most astonishing amount of green fury). Some reckon that Ed Davey has lost faith in EDF's ability to come up with the nuclear goods, and not before time: EDF have given enough compelling evidence of their uselessness. Michael Fallon, the new safe-pair-of-hands energy minister (actually, minister for just about everything, it seems) seems pretty robust and clear-sighted. But he bullshits like the worst of them, and it's worth a few minutes to watch him in action against Andrew Neil (second item in this programme) - who asked a bunch of the right questions but allowed himself too easily to be fobbed off with Fallon's confident sophistry and bluster

It would be fun to fisk the whole interview but, sorry, I just don't have the time. Or energy. Sorry.


This post first appeared on the Capitalists@Work blog


All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.