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The Forum > Article Comments > The cost of a green economy > Comments

The cost of a green economy : Comments

By Arthur Thomas, published 17/2/2010

Developed countries have benefited from China's cheap solar panels and insulation but at what cost to the environment?

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I think we have to seriously question whether Australia's dependence on China makes us vulnerable in the long run. Politicians seem inordinately pleased with coal and LNG export deals to China but that CO2 further imperils the Murray Darling and the Great Barrier Reef. One day there will be holes in the ground where rich mineral deposits used to be. Perhaps we can fill the holes with the discarded cheap junk we bought with the proceeds. Future generations will have to solve this problem with no help from us.

Some analysts believe China's southern cities will run short of coal by 2015. Australia will not be able to supply enough in spite of recently announced deals. There is also the glaring inconsistency that Australians will have to pay CPRS carbon charges on coal at home but the Chinese get to burn Australian coal with impunity. For a few lousy bucks in export income we greatly increase global pollution, diminish our resource base for future generations and amuse ourselves with cheap nick knacks.
Posted by Taswegian, Wednesday, 17 February 2010 9:03:47 AM
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An interesting article, Arthur- for the number of important issues that it raises. It's a pity that your frequent use of (negative) hyperbole isn't backed by any numbers or analysis or meaningful references.

I used to spend a lot of time debating economic multipliers with Treasury officials. It's surprising, seeing it is the key issue all politicians fret about, that clearer analyses of job multipliers aren't available. There is no reason to believe that green jobs cost more to create than any other job that has a similar mix of capital and labour. The key issues with job creation and multipliers are 1) the leakage of money out of the economy- ie to imports that aren't matched by export. Solar panels are a bit of a worry for us, as about two-thirds of the cost is from imported goods. I don't know how much of a gas-fired power station would be made in Australia, but I suspect not much more. 2) The return on investment- in the case of energy producers it is the energy return(EROI) that is important. At this stage, PVs arent as good as coal or gas, but there are many predictions (see for example) that PV prices will match gas by 2015- and that comes off long term trends, not short-term aberrations.

Like all other innovations, solar has to go through the "valley of death" of early high-cost demonstrations. After all, it is still at less than 5% of most country's electricity. Given that, it is interesting to note that Obama had to give a loan guarantee of $10 billion to restart the US nuclear manufacturing industry. Has anyone done an employment multiplier analysis on that?
Posted by Jedimaster, Wednesday, 17 February 2010 2:01:44 PM
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Very interesting and informative article. I share much of your sentiment.
Posted by Chris Lewis, Wednesday, 17 February 2010 6:52:12 PM
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Informative article Arthur however, I would like to have seen either some conclusions and recommendations or at least a process by which readers could draw their own. Given that many of the issues to which you refer are hot topics, we really do need to cut through to action.
Kepner and Tregoe offer one such analytical and decision making process and I’ve used this to try to give context to your copious information.
As I see it the “Situation” is this; the world (developed, developing and undeveloped) needs to secure sustainable, scalable and affordable energy. These need to be achieved in such a way that there is no further damage to our environment and that available resources are not depleted before they are replaced.
The “problems” are that whilst we have the engineering skills to evaluate and implement a raft of possible alternative and transitional technologies, the world has gone in “analysis paralysis” due to vested interests pulling policy and debate in opposite directions and proposing a confusing range of non-validated and often emotive solutions.
The “decision analysis” examines options. For example, what are the potential technologies, when will they be available, how long will they be available for, what can each contribute in percentage terms and what are the true “amortized” costs of each and by direct comparison with each other?
The first three stages are inputs to the next logical step which is “potential problem or opportunity analysis”. Risks, cost benefits, implementation timeframes, validation against goals (situation), competitors (such as China) and opportunities (such as green jobs, industrial and economic advantages) and finally, planning and action. This is where the content of your article steps in, right at the end of the process.
We have masses of information available; articles like yours and the internet ensure that we are more informed now than ever before. The problem is that “information” is not something we can execute or implement, that takes knowledge
Posted by spindoc, Thursday, 18 February 2010 12:01:19 PM
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Some good work has been done in Europe (See on what the maximum, practicable contribution might eventually be from all possible alternative energy sources, which for the UK is 20.7%. Australia might be able to improve on this and generate more green jobs as a bonus.
The problem is that we just don’t know because our government has so far not addressed the first three vital stages, and therefore cannot produce the risk/cost benefit analysis or a viable plan.
If we had, in the public domain, all the required information related to every possible green energy option, we would be able to determine the precise mix of alternative energy available, which best suits Australia, how much each would contribute, how much each would cost, when each could be made available, what jobs would be created, how we might gain competitive advantage against key competitors. More important than anything else, this would give us the basis for a plan that will break the nexus of indecision and confusion by enabling actions to be put in place.
At the moment we are in “information overload”, this is confusing, divisive and emotive. Each vested interest has either political, economic, emotive preferences or objections to the wide range of available technologies. It serves no purpose to prefer for instance, “clean coal”, when we need to be informed as to when it will be invented, available, its contribution and at what cost? It seems to me, at this stage, that “clean coal” is a contradiction in terms?
If we want industry and commerce to invest and compete in such technologies, they will need not only all the data suggested so that they can plan, they will also need policy certainty before they risk stakeholder interests.
Or we can keep using public money to chase populist tokenism until it’s too late or the money runs out
Posted by spindoc, Thursday, 18 February 2010 12:02:33 PM
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The word limit on articles and the number of references are inhibiting factors.

Another is my hope the articles will motivate contributors to utilize their own resources and initiative to check the claims and broaden their knowledge of the matter at hand in so doing.

With your background in analysis, you will be fully aware that most results are rarely based on assumptions from single sources such as media or government statements, books etc (reference). Sound analysis however is usually the result of due diligence in sourcing and assessing reliability and relevance of multiple inputs that when combined produce a realistic end result. Referencing that alone would turn articles into reference libraries.

There is always a case for return on investment, but that has to be balanced against the national interest in addressing the loss of jobs, skills and downstream benefits due to off-shore manufacturing to increase corporate bottom lines.

Australia is a resource export reliant economy and the need to offset imports with more exports plays a critical role in future planning and balance of payments.

The problem with off-shoring potential strategic industries from a country of only 22 million, is that the anticipated green jobs will increasingly relate to installation and maintenance rather than increasing the multiplier of research and development.

Multiplier analysis is a very useful tool, but only when all potential inputs are addressed and assessed. Omissions lead to erroneous results.

While you refer to PVs, have you been following progress and projected solar energy pricing of the Desertec Industrial Initiative and involvement of the MENA countries?

Posted by Arthur T, Thursday, 18 February 2010 1:40:45 PM
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