Excuse me for a moment or three while I pull us out of the Big Discussions (like the throw-down brewing between James Hansen and Joe Romm) into a side trip on a topic I think it worth stressing.
The core concept is that we have to differentiate between a design or theory and the actual implementation we get in the real world.
Exhibit A is the cash-for-clunkers law making its way through the US legislative process:
What is the point of the “cash-for-clunkers” plan cooked up in the House of Representatives?
It took a relatively toothless, much-criticized bill to scrap old, inefficient cars and made it even more toothless. Any environmentalists looking to this first round of congressional horse-trading as a harbinger of things to come on the wider climate debate better head for the hills.
The compromise version of “cash-for-clunkers” announced by the House offers prospective car buyers between $3,500 and $4,500 vouchers for trading in old cars to get new ones. But the bar is set really, really low.
For passenger cars, “clunkers” that get less than 18 miles per gallon can be traded in-for cars that get at least 22 miles a gallon. The corporate average fuel economy for new cars is 27.5 miles a gallon
If the new car is 4 mpg more efficient, the consumer will get $3,500. If the new car offers a 10 mile-per-gallon improvement, the payout rises to $4,500.
Things don’t get any more ambitious when it comes to light trucks. Says the House Energy and Commerce Committee plan: “New light trucks or SUVs with mileage of at least 18 mpg are eligible for vouchers.” A similar sliding-scale payout applies.
The problem with all this, as Duke’s Bill Chameides pointed out last month, is that making a new car produces, on average, about 6.7 tons of carbon dioxide. By his calculations, it would take at least five years to “pay off” the environmental impact of building the new car with a 22-mile-per-gallon purchase. That SUV might be even worse-the estimated payback time is almost 20 years.
To use a technical economics term, that sucks. A lot.
Twenty two MPG for a car? Seriously? Who in their right mind (oh, yeah, this is the US House we’re talking about) thinks that’s high enough to earn an incentive worth more than one of those little pine tree air fresheners?
So, cash for clunkers is a Stupid Idea, right? Well, no. The basic concept is very sound–give people a financial incentive to do what we want them to do (i.e. things that will help society in general). So the theory and general design of the program is sound. But the details of the implementation are pathetically bad.
Aside from the fact that this will waste money and not accomplish much, a situation that makes all economists go nuts, as we’re trained to always look for the lost opportunity costs in a situation, the worst part is that this program will be used by the anti-government camp and the ideologically driven global warming deniers as “proof” that government can’t do anything effectively, so it shouldn’t even try.
As my wife and I like to say, everything in life is a test. Do your best to pass every one, and things will go much better for you in the long run.
Exhibit B of theory vs. implementation, and the one that makes me most often want to say something sarcastic about a beautiful theory being slain by an ugly fact (or set of facts), is nuclear power.
Nuclear power’s supporters point out that it’s a very low CO2 way to pump electrons, and (all together now) “no one has ever died in a nuclear power plant accident in the US”, both of which are true. But they also love to talk about how economical nuclear power is, which just ain’t so, at least not when you’re looking at building new power plants. One of many such articles about cost overruns appeared on ClimateProgress just yesterday, What do you get when you buy a nuke? You get a lot of delays and rate increases….:
Progress Energy said Friday it has pushed back by 20 months its schedule for bringing on-line two planned new nuclear reactors in Florida, after the Nuclear Regulatory Commission said its review of the plant site will take longer than expected.
Progress also said it will spread out over five years certain early-stage costs for the new reactors that it could legally bill to ratepayers entirely in 2010, an apparent bid to tamp down customer anger over rate increases linked to the project that took effect earlier this year.
New nuclear plants are so expensive they are likely to provide electricity at some 15 cents per kilowatt hour (see “Nuclear power, Part 2: The price is not right“) – or possibly more than 20 cents/kWh (see “Exclusive analysis, Part 1: The staggering cost of new nuclear power“). The precise answer – 50% higher than average U.S. electricity prices or more than 100% higher – is hard to know since it is all but impossible to find a utility willing to stand behind a firm price in a rate hearing.
When we last left Progress Energy in 2008, it had said the twin 1,100-megawatt plants it intends to build would cost $14 billion, which “triples estimates the utility offered little more than a year ago.” And that didn’t even count the 200-mile $3 billion transmission system utility needs, which brings the price up to a staggering $7,700 a kilowatt. Under Florida law, to pay for these nuclear power plants, Progress Energy can raise the rates of its customers a $100 a year for years and years and years before they even get one kilowatt-hour from these plants. Sweet deal, no?
Energy Daily (subs. req’d, quoted above) updates the Florida story. Let’s start with the cost to consumers:
As for project costs, Progress said it has filed with the Florida Public Service Commission (PSC) for permission to add to customer bills next year an additional $6.69 per thousand kilowatt-hours (KWH) charge to cover the Levy County reactor costs as well as work to boost output at its existing Crystal River nuclear plant from 900 to 1,080 megawatts.
The costs of the Levy County project have already irked some Florida ratepayers who saw their bills jump 25 percent in January to cover early costs for the new reactors as well as increases in the cost of fuel Progress purchases to generate power.
I suspect that the low costs in cents/kWh nuclear proponents talk about are relatively accurate when you limit the discussion to older, existing plants. But building new plants is proving to be a conspicuous challenge, even with copious government assistance (Google “US nuclear power subsidies insurance guarantees” and see how many analyses you find of how the nuclear industry would be non-existent without subsidies of various forms).
After reading dozens of such reports and articles over the last couple of years, I think it’s fair to say that this isn’t a single failed instance (like a bad first attempt at a cash-for-clunkers program), but a systemic or even fundamental problem. As I’ve said many times before, if someone can show me real world evidence or a compelling case that we can build, fuel, run, and manage new nuclear power plants, and guard their waste forever in a cost competitive way (including all costs, right down to the mining of uranium ore), then sign me up. Until then, nuclear power looks to me like a beautiful theory that got ruined by a whole list of ugly facts.
