The Cost in Human Energy

The only nit I would pick is on shaking one’s head in amazement at James Hansen. We’re well beyond that. The death toll per penny of carbon tax needs to be calculated and laid at his feet and the rest of the people who advocate such global energy taxes.

Speaking as an old geezer – Thanks!

Having also lived long term in so called third world countries I have realized very clearly, and commented very often on this one thing: If you double the cost of food for a man who spends all of his money on food, he and his family simply get to eat less….
Glaringly obvious, but apparently not significant to some. And we could elaborate on that by discussing energy …
But Willis has already done that above, and done it so much better that my one liners, in his measured, story telling style.

Willis: “But energy price increases such as carbon taxes don’t even have that relief. They hit harder the further you go down the economic ladder, all the way down to rock bottom, hitting the very poorest the hardest of all.”
Let us assume here in the US consumption of gasoline is at approximately 140,000,000,000 gallons per year. The price has gone up substantially since 2008 to the tune of additionally costing the cunsumer approximately $500,000,000,000. That equates to fewer revenue to other non essential items and essential items e.g. food, clothing, etc. The standard of living declines rapidly for the unemployed and those on a fixed income who are driven even further into poverty just by the increase in fuel.
Now we have a marxist government “necessarily” taking the cost of energy up with a policy of putting coal and other inexpensive power generation out of business with no regard to the quality of life for the average American. So the consequence of higher energy costs is higher everything else costs. The entire country is headed toward the likes of Detriot, a waste land of poverty, while Stalinist Obama vacations on your nickle. No sacrifice for him and his DC cronies.

The converse is in developing countries, huge megaprojects aren’t sustainable or needed. The classic example is water. You can drill a well for a few thousand dollars, put a simple (human powered pump, easy to repair), and everyone in the area can get clean water and so waterborne diseases stop. These poor villages could not afford electricity for a penny per kilowatt. Getting them on the economic ladder is an issue that needs addressing, but what is available and affordable in a big city in the USA is not the same thing in the far reaches of the Congo. An advanced, highly networked economy is different from one still near subsistence. So the solutions and fixes, charitable or via trade have to be appropriate. And the free market can most easily address it.
Instead, the only “Aid” we want to provide is to have the country go into debt (issue sovereign bonds) to pay for a billion dollar waterworks built by one of our multinational megacorps that won’t even reach the impoverished areas, but will pay the ruling elite for presiding over the complex machinery. Then when they can’t pay the bonds, we impose “austerity” which means starvation in poor countries. And we send crony bureaucrats to manage things. Our solution to their starving children is to send condoms. Our solution to people dying of infections is to send contraceptives.
The situation in Greece is ironic, but it is also payback.
The beauty of a real market is it will allocate scarce resources. The evil of regulation is that it makes abundant resources artificially scarce, whether through simply taxing them into unaffordability, or creating artificial barriers to entry.

ever heard of solar panels???
you can pick up a 200W solar panel now for about $200, will generate about a 1kWh.
here in Oz 1kWh costs ~30cents – $200/30cents = ~700 days payback time, makes sense to me …
no punt intended ;P
I agree, but the economics are different here. 5 kW peak — note well, peak — costs around $11K installed — the solar cells are a bit more costly retail, and you need inverters and some electrical work done in order to be able to automatically sell daytime surplus back into the grid in lieu of hard storage (installing hard storage — a big pile of batteries — adds substantially to the cost and shortens the lifetime as batteries have to be replaced at least once or twice a decade). Also, electricity is cheaper — even in California — than $0.30 USD/kW-h. A 5 kW peak rooftop would probably be lucky to make an average of 30 kW-h per day, call it $3 (although it might be as high as $4 or $5 or as low as $2) recovered cost. 365 x 3 = $1095/year, and 11000/1095 = 10 years EXCEPT that you have to borrow the money to buy it at (say) 5% annually, compounded monthly. This produces a serious problem, as your “annual profit” has to be reduced by the cost of the borrowed money (this is part of a serious CBA, sorry). So you really only pay off at the rate of $1.50/day the first year — the other $1.50 goes to servicing the debt.
After a bit of fairly serious work with a compound interest calculator with a $90/month fixed payment, it takes roughly 14 years to pay back the loan. Then, of course, it is worth $90/month to you for the next 6 to 11 years to reach the expected 20-25 year lifetime of the hardware, less any maintenance costs along the way.
In Oz, a fair estimate might cut the amortization time in half — or it could stretch it out. I’m assuming very favorable (basically new construction/mortgage) financing, not short term/consumer interest which would cost at least 2-3 points more and drop your paydown period to “forever”, you’d probably barely break even on the cost of the solar collector over its entire lifetime. OTOH, if you have $11K in cash lying around, a return of $1000/year is way better than almost any mundane investment. Indeed, your biggest problem would be finding something to do with the $1000 that would come close to “compounding” the interest, since there AREN’T any other 10%/year investments one can easily make with the money.
The point being that in the US, solar panels “make sense now” only in high-insolation parts of the country (the relatively arid Southwest) where 5 kW peak might generate 4 kW average instead of 3 kW average over a presumed 10 hour day that also have expensive conventional electricity, where the amortization period for a consumer-level investment is dropped under 10 years. It is already a win for commercial generation in these places — they have higher operational overhead but they also get bulk prices and cheaper money even losing half of the return to overhead and maintenance a 5% ROI is pretty attractive, with good prospects for that to go higher.
Where I live, 14 years is still too damn long. If solar panels, inverters, installation drop one more factor of two in price (or anything close to this — say 5 kW for $7000 or $8000) that would drop the amortization to 10 years, followed by a ROI of $1000/year for 10 to 15 years (which means slightly less than this “forever” if one uses some fraction of the income to rollover replace parts as they wear out or fail). At that point installing built in solar electricity is a no-brainer for new construction — it makes the house much more attractive if you can sell it with “free air conditioning for life” as part of the price (this is more or less what one would be buying, and in the southeast that’s a big deal). Retrofitting old construction would also make sense, but of course it does require owners with the means to borrow the money and service the debt (or pop the money out of savings to buy the higher rate of return).
I predict that we’ll easily reach this sort of pricing by the end of the decade. Willis and others disagree, and all we can do is wait and found out. This is one of many reasons I think that even if there is some truth to the CAGW claims — say truth at the level likely to be stated as the AR5 conclusion, roughly 2.5 K warming by the end of the 21st century (some 0.3 to 0.4 of which has already occurred) then sheer economic choices are rather likely to reduce our consumption of carbon based fuels by the middle of the century well below projected worst case rates, and by the end of the century carbon dioxide concentrations could be coming down, not going up, especially if there is (by then) any evidence of true “catastrophic” sustained warming.
In other words, no reason to panic and little reason to dump huge amounts of money into arcane carbon trading schemes that have no effect except to make all of the brokers in the world rich(er) and provide a flexible and potent instrument for laundering money. Good reasons to continue to support research into solar technologies and to help support the market in ways that will eventually lead to economies of scale here.
I’m certain that it is sacrilege to even suggest what I’m about to suggest, but I still think it is worth kicking out onto the table. Electricity is the fundamental resource, the essential driver of civilized economies and standard of living. Everybody hates paying taxes. Fighting wars over scarce energy resources sucks, and the vast wealth associated with the multinationals that provide them creates “shadow governments” with an income greater than that of many small countries and a disproportionate political influence. We could do a lot worse than to create a national solar electrical project and invest (say) $100 billion/year in massive solar construction for the next decade or three, buying a TW or so of capacity every five years at likely scaled costs. Make the joule the fundamental basis of our currency, and use the income from selling joules to fund the government, eventually buying additional capacity strictly out of income and using the surplus to reduce taxes.
By 2050 we might well have eliminated the federal income tax, money could have a solid international foundation for the first time since we went off the precious metal standards, carbon usage would be substantially decreased and possibly even equilibrated. Sure, the government often sucks at running “businesses”, but it could be done by setting up a federal trust or something. The biggest risk is that somebody would come along and invent fusion and obsolete the whole thing, but even that could be managed with a buyout of fusion and indeed would make the whole idea even more stable and productive. The “tax” of buying energy would be perfectly balanced, neither progressive nor regressive. Live off the grid, pay no federal taxes directly, but of course you pay them any time you buy an object manufactured with energy. Live on the grid, the better your lifestyle the more you spend on energy the higher your de facto taxes.
Wait, let me put on my flameproof suit. I’m walking down into my concrete bunker. Putting on my flash goggles. OK, now. Bring it.
😉
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Willis,
Have you considered having the unfit and overweight being required to exercise, and having their stationary bikes wired to a generator? Two problems with one stone.
Of course, we’d have to keep this people under strict control to keep them from overeating or consuming foods not on the First Lady’s approved foods list. Think of all the savings in food and greenhouse emissions.
Of course, if people do succeed in getting fitter and thinner, we won’t have enough obese or overweight people to chain to bicycles. Then it will have to become mandatory for all.

With a rising tide, all boats are lifted equally. With a falling tide, the boats in the shallowest water run aground first.

The cost to really poor people in poor countries for electricity is $50 per kWh if it comes in the form dry cell batteries. It has remained at that level for more than 35 years, I have observed. Batteries are sold for that historical cost.
LazyTeenager says:
>Sounds too simplistic to me….
>2. But in poor countries the wholesale cost is just a small proportion of the total, so any additional due too carbon tax will have little impact.
Lazy, just who is being simplistic??? Good grief it is clear you have never lived in a Third World country!
Electriciy, the magical fruit, the annointed energy carrier, the golden goal of development enthusiasts, the crystal skull of wealth-bringing treasure hunters, is only affordable at the margins in the LDC’s and when the have it, they don’t cook with it (for example). Many off-grid people are dependent on the few with electricity for paid services and any rise in cost disproportionately and negatively affects those clinging to the margins. A carbon tax is insane because nearly all energy used by the poorest 3 billion people on Earth is carbon-based biomass. If anyone thinks biomass will be exempted, read the UNFCCC rules for calculating the sustainablility of the biomass fuel supply.
I agree that solar panels http://click.email.globalspec.com/?qs=fa4fcf0ebfc24ed9abc55feda058db068d2b0b031a83719c635fbeb218901ea3ab24b37ebf115f38 have a strong future as do thermo-electric and thermo-acoustic generators. The poor can actually benefit from greater access to independent power generation. If it were accessible without subsidy, it would bring real benefits because it can reach sustainable expansion. What is wonderful is that LDC’s are developing the capacity to do this without reference to the technology-developed overlord wannabes. The idea that subsidising ‘renewables’ carte blanche until they ‘become sustainable’ is a bucket of puke.