Alexandru Luta wrote:
"A lot of this "new" coal capacity is
being built to replace aging capacity."
RK:

Point well taken. The projections are that coal's share of Germany's electricity generation will rise from 42% to well over 50%. Thus, whatever carbon emissions and deaths and illnesses that are now created by use of coal will rise by around 20% (50/42), assuming that these new plants are not any cleaner.

AL:

"The feed-in tariff is ... an
investment support ...Once [the investment] is recouped and the feed-in tariff for a given installation expires, the cost of the electricity from the given installations would be equal maintenance costs. Practically zero. I.e. free."
RK:

Not so.

Biomass requires the ongoing costs of cutting down trees, collecting farm waste, sewages, etc. etc.
transporting it to the site and running the machines that convert it to electric power.

Wind power depends on the lifetime of the turbines, onshore and offshore, and the cost of replacement as they wear out. An ad for "National Wind" which describes itself as America's "Leading Developer of Utility-Scale, Community-Owned Wind Farms" says the lifetime of its turbines are estimated to be 20-30 years. Japan's feed-in-tariff under a law that went into effect on July 1 has a 20-year life for the feed-in-tariff.

AL:

{Regarding high carbon emissions from biomass]

"Biomass _is_ burning wood, dung, wood
chips, waste, etc. Therefore it does emit CO2. However, biomass is renewable because the wood, dung, etc. also came from the atmosphere. The carbon accounting should (normative statement alert!) add up to zero."

RK:

I'm no scientist, but this sounds completely wrong to me. We've taken about 5 billion years to produce an ecosystem where the CO2 pumped into the air by the breathing of animal life is offset sufficiently by the
CO2 withdrawn from the air by plant respiration (and carbon from the soil). The balance of the ecosystem requires that plant life not have net zero emissions, but rather a strongly negative effective on CO2 emissions. Merely cutting down lots of the Amazon rainforest for lumber--let alone burning it--is said to be an important factor in global warming (more below).
Now, if we're going to cut down forests in Germany and elsewhere to burn them, the net effect on carbon emissions will be quite substantial.

AL:

"Given the sentence RK
wrote, i cannot tell what he exactly referred to, but i suspect he gets his information from data about the disastrous carbon accounting of palm oil."

RK:

I made it clear in the post and the citation that I was not talking about palm oil, but good old-fashioned trees and such in Germany. The Natural Resources Defense Council website that I cited yesterday
(http://tinyurl.com/9knt6a4) stated:

. You can plant new trees, but forests aren't
'renewable'. Natural forests, with their complex ecosystems, cannot be regrown like a crop of beans or lettuce. And tree plantations will never provide the clean water, storm buffers, wildlife habitat, and other ecosystem services that natural forests do.
. TREE LOSS is responsible for TWENTY PERCENT of
the carbon pollution produced globally. When biomass is harvested from forests, carbon stored in the soil is released into the atmosphere. This is in addition to the carbon that is emitted when the wood is burned for energy. ...Only biomass that is carefully chosen, grown responsibly, and efficiently converted into energy can reduce carbon and other emissions compared to fossil fuels.
. Like burning coal or anything else, burning
biomass produces harmful air pollution. Burning biomass produces sulfur dioxide, nitrogen oxides, particulate matter, and a variety of toxic substances. These pollutants increase the incidence of asthma, heart disease, lung cancer and other respiratory ailments, and premature death. And whether they come from burning coal or burning forests, these substances pollute the air and harm people's health.

AL:

"If you do the math on those years and those GDP percentages mentioned by RK after this point, you get 1-2.5% GDP a year,"

RK:

The figures put out by the government are Y150 trillion for renewables and assorted energy-saving devices, about 1.5% of GDP per year over 20 years. This assumes that the advertised cost has not been deliberately minimized for political reasons.

Total public works spending in Japan is now 4.6% of GDP, down from a peak of 8.6% in 1994. So, if the goverment paid for it, we'd be talking about an amount equal a third of all current public works spending.
Now, if you wanted to propose this as Keynesian stimulus, I might be inclined to agree, but not for 20 years. Besides, the DPJ and LDP say that they are both dedicated to deficit reduction, hence the bitter fight over the tax hike. Add in the growing costs of more people retiring, the strain on the budget and the pressure for new tax hikes would be huge.

How about private investment? Gross business investment is 13% of GDP (nominal). Most of that goes simply to replace worn-out and/or technologically obsolete buildings and equipment. What enables GDP to grow is the NET investment that adds to the size of the total capital stock. Since 2000, that net investment has averaged 3.4% of GDP. So, we are talking about investments in renewables and conservation alone adding up to almost half of the current level of private investment. This is not being done to add to Japan's energy capacity, but to replace it with a source that is more expensive, more polluting, and adds more to global warming. And this is all proposed in the name of preventing a nuclear disaster whose risk could be minimized, if not eliminated, much more cheaply if Japan's political system could adopt global best practices. (That is, there will be nuclear accidents, but accidents like Chernobyl and Fukushima are preventable, according to the Carnegie report I cited in earlier posts.)

Utlimately, someone has to bear the cost. Given the effort not to disadvantage job-creating firms, I suspect most of the cost will be borne by householders who already pays among the highest electricity rates in the OECD. That leaves them less money to spend on other things. Not so good for consumer demand. To the extent that some of the cost is borne by firms, some of those that are very electricity-intensive will tend to leave Japan.

Moreover, why did Japan create a feed-in-tariff for solar at Y42/khw--twice as high as the FIT in Germany and France? Why did it create an FIT for large wind farms at Y23/kwh--again twice as high as in Germany? Is this a disguised boondoggle?

More than 20,000 people were killed by the tsunami versus perhaps a couple hundred who will die from cancer due to the radiation from Fukushima Dai-Ichi. It turns out that 40% of Japan's coastline was protected by seawalls (http://tinyurl.com/8t89aen).
Unfortuantely, they were not high enough or in enough places to prevent those 20,000 deaths. Yet, I don't hear anyone suggesting that every meter of Japan's coastline be protected with 15-meter high seawalls at Lord-knows-what-cost. Why, then, are we proposing to to the equivalent with renewables? Maybe each windfarm should carry a sign: from the good people who brought you bridges to nowhere.

It may be that, in the end, a risk-averse population traumatized by the Fukushima disaster will choose renewables before those renewables are ready for prime time because they don't believe the government can or will impose the needed safety devices, or they don't believe that safety devices will really work. If so, they should at least know what the real costs are going to be to make an informed choice.

Personally, at present, I'm inclinded to see nuclear as a bridging technology until renewals are ready for prime time. I'm for subsidizing renewables, particularly research to accelerate their commercial feasibility, but the amount of subsidy needs to have some reasonable limit, as does the pacing of their introduction.

Richard Katz
The Oriental Economist Report