A closer estimate on nuclear energy cost options

I stumbled across a tool from the Bulletin of the Atomic Scientist, which purports to calculate the full cycle cost of nuclear energy. While it has its limitations, I think does highlight a few interesting points.

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Figure 1: The Bulletin of Atomic Scientist (BoAS) costs, baseline & adjusted with various options compared to DoE estimates for renewables & fossil fuels

Firstly, the baseline cost they suggest for nuclear power works out at about a LCOE of $ 84.4 per MWh (the site quotes in cents per kWh, however, I’m converting to $/MWh because its what we usually use when quoting LCOE’s). This is a bit less than the DOE’s estimate of $95/MWh for nuclear. The DOE also quotes costs of $74/MWh for wind, $125/MWh for solar. By 2022 they expect costs in the range of $96/MWh for nuclear, $74/MWh for solar, $56/MWh for wind, with gas and coal between $54/MWh and $196/MWh depending on future prices and whether or not we are sequestering the carbon. Recall we are talking in terms of LCOE so this accounts for the intermittent nature of some renewables.

So first off this would suggest that nuclear might be competitive with coal, if there’s efforts to force CCS on the industry (i.e. no Trump, no climate change denial) and if fossil fuel prices go up. But that’s lot of if’s. It also suggests that nuclear isn’t competitive against renewables, and even if it is, that window is about to close. Indeed, we can use the Bulletin tool to get a better estimate on its current price, given that the cost of the Hinkley C project is known….well it will probably go up, but we at least have some ball park figure. The latest estimate for its overnight cost is £22.3 billion, which is $28.7 bn so that’s $8,696 per installed kWe, and its going to take 10 years and we assume 40% efficiency. So running that through our model gives a figure of $134/MWh, or about £104.6/MWh. You will immediately notice that this is well above the strike price of £92.5/MWh, suggesting that Hinkley C is going to lose money with every kWh it generates.

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Figure 2: UK new nuclear costs (E/MWh) compared to various renewable energy options [Source: The energy transition.de, 2015]

And by comparison at a recent strike price auction agreed to a price of £57.7 per MWh (approximately $76/MWh) for offshore wind. One of the arguments in favour of Hinkley C was that the high costs of off shore wind, even though many experts warned the government at the time that this would likely be wiped out by future advances in offshore wind technology (which was at a very early stage of development when Hinkley C was first proposed, the widely held assumption is that the price of offshore wind would fall rapidly, as indeed it has).

So okay, we’ve proved Hinkley C is a crap sandwich, well I think we all knew that one already. What I think is interesting about this tool is what happens when you start playing with the settings. For example, if we increase the efficiency of our nuclear reactor from the baseline of 33% (again industry standard for new build reactors would be closer to 40% these days) to 55% (the best you could possibly hope to get with a Brayton cycle) you only cut the cost of electricity by 2%. This confirms a point I made some time ago, there is no point spending a lot of money on some super expensive Brayton cycle kit, greatly increasing the construction costs only to make a tiny improvement in the plant’s electricity output.

However, if we decrease the capacity factor of our plant, from a baseline of 90% to say 70%, the price goes up by 25%. Pull it down to 60% the price goes up to +50% of the baseline price and at a capacity factor of 50% we are paying 74% more for our electricity. Its is often argued that nuclear can operate without any form of backup, but this ignores how grids work. But everything needs back up not least because demand is not constant all of the time. In the absence of storage, there will be times when some plants will see their capacity fall significantly. Load following power plants will typically operate at between 70-50% capacity factor, while peaking power plants can be less than 50%. At such cost levels it would simply be more economic to build energy storage than add more nuclear plants…so why not just do the same thing with renewables and save some money?

The model doesn’t appear to consider the costs of decommissioning or the clean up costs of fixed infrastructure related to the nuclear fuel cycle, which is something of an oversight. Keep in mind those costs aren’t small, its currently costing more to decommission some nuclear plants than it cost to build them. Including the costs of decommissioning Selafield the UK’s current bill is about £117 billion. That said, it is difficult to quantify this down to the level of an individual plant or MWh.

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Figure 3: UK Nuclear decommissioning costs breakdown

What they are able to do is estimate the spent fuel storage costs. Doubling the cost of that (as high as it will go) only increases the cost per MWh by 2%. Now okay, as noted there’s a whole raft of things we are leaving out. But even so, it does suggest that its not a linear relationship between clean up costs and electricity costs. There is a fixed cost we are stuck with regardless (i.e. even if we abandoned nuclear energy tomorrow, much of that bill would still have to be paid) and some small amount for every reactor year beyond that.

However, and here’s where it gets interesting, if we switch from the once thro fuel cycle to the fast reactor based full recycle option, the baseline price jumps by 64% to a whopping $139/MWh. And again, this baseline model, isn’t really accurate. For example, it assumes a capacity factor for the fast reactor of 90%, something that no FBR has ever achieved (most struggle to exceed 40%, the best is closer to 60%). Putting in more accurate values for both the LWR and FBR costs and performance, we get a price of $264/MWh.

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Figure 4: Estimated fuel inventories for different nuclear energy options, MOX reprocessing or fast reactor reprocessing means a modest reduction in HLW in exchange for a significant increase in LLW [UCUSA, 2014]

This confirms one of the arguments I’ve long made, fast reactors make no sense, unless you are allergic to money! They’ll end up greatly increasing the costs of nuclear electricity to well past the point where anyone would be willing to pay for it. Yes once-thro does mean throwing away most of the fissile material, but the cost of recovering that material is simply too high. This was essentially the conclusion of both the 2011 MIT report into the nuclear fuel cycle and the Harvard study of 2003. The only situation where either report thought fast reactors (or Thorium) would make the slightest sense would be if renewable costs failed to drop as predicted, energy costs skyrocketed and the cost of uranium soared. None of those have happened, in fact the opposite has happened in all three cases.

Finally, the baseline Bulletin model suggests that using the MOX recycle route will cost $227.5/MWh, although its closer to $254/MWh (£196/MWh) for my “adjusted” model. Some nuclear advocates see MOX recycling as a happy compromise. Yes, we know the fast reactor route isn’t really viable on a technical level, but we can at least get some reuse out the fuel rods via the MOX route and save some money in the process. Well this model suggest no, that’s not the case. Indeed, it suggests that for the UK we’ll be paying more than double the strike price for every kWh of Hinkley’s electricity. And when I say “we” keep in mind that at least half of those costs are being met by the taxpayer not EDF. Indeed, given that the strike price amounts to a subsidy rate of 68% per kWh (paid for by UK bill payers), the actual cost to EDF will be closer to 15% of the cost per MWh of Hinkley….and that still might be enough to break them!

So this model seems to confirm what I’ve heard from one or two in the nuclear industry, who see MOX as the hill on which the nuclear industry is going to die on. As they see it, if and when the dead certificate for nuclear power is written, we won’t be listing “Greenpeace” or “Hinkley” as the cause of death, no it will be “suicide by MOX”. Most of the spiralling costs we associate with nuclear are often those associated with MOX reprocessing (if you think Hinkley is bad, look up the fiasco of Throp or Rokkasho sometime!). Most of the recent accidents have been related to MOX reprocessing and most of the main flash points with protestors are MOX fuel shipments. In short MOX fuel reprocessing is a supersized crap sandwich with a side salad of BS. If the nuclear industry is to have any future this madness has to stop and MOX plants need to close and let us never talk of it again.

So all in all, what this model does show is that the nuclear industry does have some problems. But some of the proposed solutions doing the rounds e.g. making plants more efficient, building them quicker or smaller, FBR’s, MOX or alternative fuel cycles, they don’t make a lot of sense as regards the economics of nuclear energy. In many cases these would actually increase the cost of nuclear energy not reduce it. As I’ve pointed out before, the business model of the industry, that of large LWR’s with once thro fuel processing, might not look great, but there is a reason why the industry has stuck with it since the 70’s. And that because the alternatives are so much worse.

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Tories favour diesel farms over wind farms

Reblogging this from my energy blog….

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There are no sliver bullet solutions to the UK’s current energy problems. Wind power can certainly help, its led to big drops in the UK’s carbon footprint already, but only as part of a balanced energy diet within a grander overall energy strategy. However the Tories are hostile to wind power, preferring instead foreign owned nuclear and fracking, even thought neither is in a position to deliver any significant quantities of energy for some time to come.

This raises the risk of black outs if something isn’t done to plug the gap. So what is the Tory solution to this looming energy gap? Well instead of wind farms they favour diesel farms, clusters of diesel generators in fields up and down the country, subsidised by taxpayers I might add. If you ever want an illustration of everything that’s wrong with UK energy policy this is it, where to start with this one.

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Well for starters, diesel generators, while cheap to install are expensive to run. That’s why they are only ever used for generating electricity where there’s no other alternative (e.g. off grid power generation or backup generators). And with oil prices now on the way back up, those costs will start rising. They aren’t very efficient either. Yes a diesel engine in a car is more efficient than a petrol engine. But for power generation CCGT or IGCC plants have significantly greater efficiency. Potentially up to 55% efficient v’s at best 35% for diesel (and more typically 30% once the BoP is accounted for).

This also means that diesel generators are far more polluting, both in terms of carbon emissions and in terms of all the other gunk that comes out a fossil fuel plant. It beggars belief that someone can object to a wind turbine, yet look the other way to a bunch of these noisy beasts belching out carcinogenic fumes morning, noon and night. And again, if you are a UK resident, your paying for em. Carbon capture and storage is also a lot harder to implement with diesel farms than with the aforementioned gas cycle plants. So we lose that option too.

The irony is that I’ve long favoured the idea of distributed power generation, over centralised power stations. However, my preference is for CHP systems. They can run on a variety of fuels, including biomass or hydrogen (as a long term replacement for natural gas). And as we make use of the heat to meet winter heating demand (which represents a greater proportion of the UK’s energy demand than electricity remember), they are much more energy efficient, up to 85% efficiency is possible (so even running on fossil fuels, they’re 2.5 times better than diesel farms and nearly twice as efficient as a gas turbine plant).

So it would be all too easy to alter this policy slightly and achieve a similar result, just one that promotes renewable energy, cuts emissions, lower energy costs and helps keep homes warm in winter. So why is the government opting for diesel farms over CHP? Because CHP plant would be based in cities were the plebs live. You think home county toffs what money spent on keeping the great unwashed warm in winter! When instead they can earn a nice pot of cash putting a few diesels in some idle corner of their estate. Furthermore CHP might actually work (up to 40% of some European countries installed capacity is CHP), hence they’re will be no need for fracked gas or new nuclear plants. They are picking the worst possible energy option not despite it being so awful, but because it is so awful.

Any semblance of sensible energy policy has long been abandoned by the Tories. I think the UK’s post-brexit motto has to be go sell crazy some place else, we’re all stocked up here!

Non Rio news

Brexit guarantee

Reacting to the wide scale dismay over possible funding cuts, the UK government has committed about £6 billion a year to guarantee post-EU funding in areas such as farming and scientific research. But critics argue it doesn’t go far enough. Indeed, I would argue its very worrying as it suggests the government simply does not get the message.

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The UK receives billions in research funding from the EU

Take research funding. A clause in the government guarantee implies it only applies to research funding contracts signed before the autumn statement comes out. Given that many of those grants went in the bin on the 24th of June it is highly unlikely they could be resurrected between now and then. That’s not how academia works.

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For UK farmers subsidies are their main source of income

I’ve been quite busy the last week with resit exam marking, I’ve got viva resits coming up and the start of term. It would be mid-October before I or anyone else in academia could get around a table. And it would then take a few weeks or months for the EU to then okay everything. Keep in mind most of the EU research at risk involves collaborative research projects, across multiple states, so even with Brexit it will involve the EU. And typically the EU will only provide a portion of the funds, we then source the rest from private industry. Naturally the private sector, worried about the economic impact of Brexit might still say no.

And what about freedom of movement? A leave supporting MP only recently realised Brexit might leave EU citizens in limbo, nah you think! If I need to recruit a PhD student or a Research Assistant with a specific and narrow set of skills, its questionable if I can do that if I’m only restricted to the UK. Any doubt about my ability to recruit and the other partners (public and private) in the EU will still be asking me to take my name off the application. The fact that the government doesn’t realise any of this just shows you how out of touch they are.

More importantly this announcement more or less confirms what I’d warned before the referendum. That you can forget about that £350 million a month. The UK will still need to pay the EU for access to the single market. Keep in mind Norway pays something like 90% per capita of what they UK pays, we’ll suffer the drop in tax revenue that comes with leaving the EU (due to reduced trade) and we have to come up with several billion more a year extra too.

In short the UK is already worse off and we’ve not even got to the tricky parts of the negotiations yet (where we have to agree to call Cheddar “reconstituted lard” and English wine as “Du Vin Roast beef”).

China warns the UK over Hinkley C

The Chinese have issued a strongly worded warning to the UK over the threat to the Hinkley C deal. As always, this goes way beyond a simple nuclear power plant. It shows what sort of pressures the UK will face post-Brexit.

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China unveil’s its prototype reactor at Hinkley point

Leave campaigners, will argue that they can get a trade deal quicker off other countries than the EU can, which often takes years or decades to negotiate a deal. This is true, in much the same way I could buy a car tomorrow in ten minutes flat….if I didn’t mind going to a dodgy Arthur Daley type and taking whatever cut and shut banger he offered! Getting a good deal means haggling and much arm twisting. The EU can do this because they are one of the world’s largest collective economy’s. The UK can’t because the Chinese (or US) will have the UK over a barrel. Its their way or the highway.

Hence, I suspect Hinkley C will still go ahead, regardless. Its an offer the British can’t refuse.

Leave turf war

Speaking of international trade, there’s a bit of a turf war going on between Boris Johnson and Liam Fox. Both argue that they are entitled to negotiate future international trade agreements. I’m wondering if Theresa May has, rather ghoulishly, taken a leaf out of Hitler’s book. In that he would often put people he didn’t like in departments with overlapping responsibilities and then sit back and watch them squabble.

In short one has to wonder if a number of the Brexiter’s are being set up to fail. Hence when the article 50 business is kicked into the long grass and ignored until after the next election, nobody can complain, and its the Brexit camp who will get the blame.

Norwegian…based in Ireland?

I travelled to Scandinavia over the summer. One thing that I found surprising to learn that the budget airline Norwegian is flagged in Ireland. Why? Well simple, because Ireland is in the EU. Norwegian has big plans to expand across the Atlantic and they know how protective the US is of its businesses (land of the free…but only if you contribute to my congressional campaign!).

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Norwegian Airlines…..flagged in Ireland

Indeed the Americans have raised concerns about how European budget airlines operate. Its also alleged that Norwegian plan on using air crews hired in from Asia for its Transatlantic operations. While I would tend to agree, budget airlines are pushing things a bit too far, but this is clearly a case of the pot calling the kettle black. American airlines have become notorious for squeezing the margins and pushing their pilots way too hard. There have in fact been several air crashes in the US that are blamed on pilot fatique.

So the reality is, all of this is just excuses, because the Americans realise that Norwegian is the thin end of the wedge. What they really fear is Ryanair bringing its not inconsiderable network and low cost model across the Atlantic (they have plans to do so, although they are currently on hold) and driving their airlines out of business. Who knows, if Michael O’Leary has his way, American cabin crew might have to stop being so rude and bossy to passengers!

But obviously the point is that if Norwegian wasn’t based in the EU, the Americans would have just told them to hit the road. But because they are based in an EU country, they have to at least negotiate. This explains the dilemma faced by Easyjet. Its probable that Ryanair will follow Norwegian and expand into the US market. Easyjet will face the choice of being a short haul British based company (hoping that any restrictions on migrant and travel doesn’t mean a dwindling market share). Or leave the UK, likely register in Ireland themselves, and become an international airline.

Yes, Ireland a nation of 4.5 million could well have more airlines in a few years time than the UK a nation 11 times larger! All thanks to Brexit.

When the generations fall out

An interesting article I came across regarding baby boomers, from another blogger. They enjoy a remarkably good deal. Many managed to buy a large house before such things became expensive, they’ve retired on a final salary pension in their 60’s, when most younger generations (or the generation before them) retired on a less generous settlement later….if at all! And a triple lock on their pensions, plus the ring fencing of certain elements of the NHS budget means they’ve been spared the harsh austerity the rest of society has had to endure.

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And to cap it all we have the Brexit vote, where baby boomers overwhelmingly voted to leave, a final two fingered salute to succeeding generations. Indeed, its worth noting that baby boomers are also the worst generation for environmental damage and the most likely generation to be climate change deniers…..and likely to be Trump voters.

In short, there’s a very serious risk of the generations falling out. Many of those flocking to labour and Corybn are young (and angry) millennials. While its unlikely they will win this time around, as the baby boomers die off, its inevitable that the younger generations will gain control and suffice to say there will be a day of reckoning.

Recall, as I pointed out in a prior article Brexit does complicate matters as far as national debt. Any default or “haircut” on national debts will hit pensioners, baby boomers in particular very hard. Many could see their income wiped out. The chances that the millennials will see their incomes squeezed yet further to pay off these debts (run up paying for baby boomers cosy life style and a failure of past governments to tax baby boomers more while they were working), after this generational betrayal, its slim to none.

Italian banks

And speaking of which, the trigger event for a sequence of sovereign debt defaults could be about to strike. There’s been further concerns expressed about the health of Italian banks. Italy is at risk of economic turmoil if a referendum goes against the government.

Now any Brexiters who feel smug and say this is why we need to get out of the EU, well no. The entire global economy is interconnected. If Italian banks go down and risk bringing down Italy, the impact will be felt worldwide. And its pensions and savers in the UK who will have to take a hit.

Ultimately, the world’s governments will face a difficult choice, bailout Italy (not an easy thing), or risk a contagion of debt spreading through the whole economy. A default of Italy would of course leave investors worrying about who is next and whether “safe as the bank of England” is really that safe. Which could make things very difficult for governments dependant on credit (such as the UK).

First contact?

Another interesting story revolves around a mystery object exo-planet hunters have discovered. They’ve concluded there’s something odd about a star some 1,000 light years from Earth. Some are arguing that it could be signs of an alien mega structure known as a Dyson’s Swarm. While unlikely, the very fact its being seriously considered is of interest (no scientists wants to be a member of the “I saw a flare” club, so they won’t announce this unless they’ve evidence to back that up). Its good to know there might be intelligent life in the universe…because there’s bugger all down her on Earth!

Trump’s minions

How can you not mention Trump, he’s like a sort of virus. However its more his minions that I want to talk about. Being a spokesman for the cult of Trump has got to be a pretty awful job (worth seeing Trevor Noah’s take on this here). Your boss says the most insane batshit crazy stuff, you have to try and row back on it, no he didn’t say that…..okay he did (after being confronted with a video of him saying it), but that’s not what he was trying to say….Only, for Trump to come out and reverse course again two minutes later. Its likely he’s killed the career of Rudy Giuliani, Chris Christie and Newt Gingrich.

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However, another tactic of Trump’s minions is to try and out Trump Trump. Take his chief Spokesperson Katrina Pierson. She’s an ex-Tea party candidate who proved to be a little too crazy even for the tea party (she’s wears a necklace….made from bullets!). She’s regularly gone beyond Trump in craziness, recently blaming the US invasion of Afghanistan on Obama (leaving TV journalists speechless). When the insanity of what she was suggesting was pointed out, she tried to blame her microphone (an excuse both she and Trump have used in the past…perhaps we should start a kickstarter fund for her and Trump to buy a hearing aid?).

And Trump has recently announced changes to his campaign team. His campaign chief Paul Manafort, under pressure over payments to him linked to Putin, has been pushed aside. Instead Trump’s brought in the boss of Breitbart (a man referred too as “the most dangerous political operator in America”) and allegedly also ex-Fox News chief Roger Ailes. Which incidentally does raise some awkward questions as to what was going on over at Fox News during that whole Trump v’s Megyn Kelly saga (keeping in mind, Ailes was Meygn’s boss).

One has to worry what sort of fruitcake’s Trump will dig up to form his cabinet, in the increasingly unlikely event of him being elected. Its no wonder some are arguing that Trump doesn’t actually want to be president, he only did it to further his TV career and is now deliberately sabotaging his own campaign.

Let me draw you a picture

One of the problems with climate change deniers is that they will waffle along, making spurious contrarian claims at such a rate one can’t debunk them all, or quote misleading information (often doctored or deliberately misinterpreted). In a recent debate in Australia Brian Cox managed to outwit climate denier and member of the neo-fascist “One Nation”, Malcolm Roberts, by bringing along a graph of the data that he claimed didn’t exist.

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Naturally this led Mr denier to claim the data, collected by NASA, was “doctored”, leading Brian Cox to question Roberts whether he also believed NASA hadn’t landed on the moon. While this might seem a bit of an unfair jibe, but as I’ve pointed out before the idea that dozens of agencies around the world, universities, NASA, ESA, the Met Office, the Tyndall centre, Scripp’s institute, the US military, etc. could all independently conduct studies (often relying on different data sets gathered in different ways) and reach the same conclusion. This leaves one only one of two alternatives, a) the evidence supporting climate change is rock solid, or b) all of these agencies worldwide are engaged in one massive global conspiracy, that makes faking the moon landing seem simple. So if you believe the climate data is doctored, then it is legitimate to question whether said individual is a tinfoil hat wearing conspiracy theorist.

Also deniers need to realise that they’ve been “found out”. The website “Skepticalscience.com” now has an easy to browse list of many prominent climate contrarians, listing their favoured climate myth and the information to debunk them. They also have a complete list of all climate denier myths along with the counter arguments, filed at a range of different levels (e.g. a simple quick explanation, or the hard scientific one). So in truth all you need to do to combat a climate denier these days is have a smart phone or I-pad and this website open on it.

The future of work

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Many from working class areas of Britain voted for Brexit because they fear their jobs are under threat from migrants. Similarly support for Trump has been growing in parts of the US rust belt. And there’s a major divide, both sides of the Atlantic, when it comes to education. If you have a college degree, you are very unlikely to be a Trump supporter and less likely to have voted leave.

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Now it has to be said that the argument that migrants are taking jobs isn’t backed up by the facts. A strong leave vote was seen in the parts of the UK with the lowest number of migrants, while places like London with very high rates of migrant tended to vote for remain. Similarly, major US cities, where migrants tend to concentrated tend not to be the places where there is strong support for Trump. So either these migrants are holding down three of four jobs (and presumably being rapist, drug dealers and claiming benefits in whatever limited free time this busy schedule allows them), or the risk they pose is being vastly overestimated.

When I hear the story about how, oh I can’t get a job because the company down the road just hired a load of Poles/Mexicans who will work 60 hours a week for 3 bucks an hour, my response is A) don’t you think you should report that to the proper authorities? because its kind of illegal! B) leaving the EU ain’t going to help, you do realise Switzerland and Norway have more migrants per capita than the UK? C) In a globalised world, restricting the movement of labour will result in jobs moving overseas, so its foreigners staying at home and taking your job we need to worry about (far more jobs have moved overseas than have been taken by foreigners moving here) and D) do you have these guys number? cos I’ve got this bit of decking…..

But there’s an elephant in the room here that I think both sides of the debate are missing – automation and technology. In short, even if it were true that you’re in competition with Poles or Mexicans working for £3 a hour (which you aren’t, its just a neo-fascist myth), how do you expect to keep your job when you are competing against a machine that will do the job 24/7 for nothing?

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Like the frog in the saucepan, technology has crept up on us and we’ve not noticed. And yes it is changing the workplace as we know it . Think about it, when was the last time you rented a video? I’m guessing you get your video fixes from youtube or netflix these days? In fact when was the last time you saw a video store? Are there any young people reading this who need me to explain what a video store is? How about booking a holiday or flight in a travel agent? And I mean in an actual office, not online? Same with car insurance or other financial products. What about paying your taxes online? don’t tell me you actually take a day off work so you can go down the tax office and do in manually (obviously you’ve way too much free time!).

Online shopping is now much more common. And in shops these days various tasks are becoming more and more automated. We have those self service checkouts. Its conceivable in the not too distant future that shelves could be stacked by machine (we have machines that can do that already) or even provide customer service (yep, they’ve prototype machines that can do that).

Automated cars are now being developed and while I reckon it will be some time before they become a day to day reality (not because the machine’s aren’t smart enough, but because they have to share the road with dumb humans). But they are probably going to happen eventually, which will have numerous implications…. and meaning a whole host of jobs disappearing or changing radically. And there are similar plans to automate entire ships, cargo planes or trains.

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Could the Johnny cabs of Total Recall become a thing of the future?

In short technology has changed the world of work and it will continue to do so. There will still be jobs available, but many traditional jobs will disappear, and the skill set you need to get those jobs still available (or the new jobs created by technology) will continue to rise. This is the problem facing certain segments of society. As they see it, the bar keeps going up, they can’t get over it anymore, so they have it in their heads that we can somehow lower the bar again and keep everything the same, but we can’t, not without reversing many recent technological trends and isolating ourselves from the globalised world.

In manufacturing engineering for example, we are well ahead of the curve. There’s still plenty of people working in UK factories and the UK still makes lots of stuff. Prior to the Brexit vote the UK was on course exceed its 1970’s peak in car production by the 2020’s, even though the work force is a fraction of what it used to be (i.e. automation has made a smaller workforce more productive). However, nobody gets a job these days in a factory without some sort of qualification. The days when, like in Bruce Springsteen’s “the river”  (or Jimmy Nail’s “big river) , your dad could have a word with the guys down at the plant and you could walk straight into a unionised job for life are long gone.

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Many traditional jobs will increasingly disappear in future

And my prediction is that this will now roll out across the entire economy. The blunt message I’d give to people is that if you don’t have some sort of third level qualification (a degree or professional qualification of some kind) you will probably struggle to remain employed in future. So for those who voted Brexit, or are thinking of voting Trump, I’d say leave migrants alone, they are not the main threat to your employment, you need to get educated.

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And to be honest, you won’t want to be employed in future if you don’t have a qualification. What few unskilled jobs that remain will be increasingly the really crappy jobs that nobody wants, with the highest levels of job insecurity and the worst pay. The sort of jobs which will only be taken by students (who will take anything while they pay their way through college), recently arrive migrants (who just want some cash while they settle in), or those suitably desperate who can’t find anything else. Indeed, the employees of Sports Direct will argue this is already reality for them. You could argue that quite a number of those who voted Brexit (or Trump) are the canaries in the coal mine, as they are already seeing these effects.

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Feel worthless at work sometimes? Others have it worse

However, their actions are likely to prove counter productive. Restricting migration does not mean locals will find it easier to get work. What’s likely to happen is employers will just move jobs overseas, or you’ve just given them a very strong financial incentive to find a way of developing a machine to do those jobs instead.

So clearly such a future of work means some profound changes for society. Obviously the costs of third level education means its beyond the reach of many. Hence why I think of all the proposals from Bernie Sanders that Hillary needs to endorse, its reducing college tuition costs. Yes, I realise that won’t be cheap (i.e. can she afford it and still reduce the deficit?), but I suspect it will be a necessity in future, if a massive level of social stratification is to be avoided.

And in the UK far from putting up fees, we need to start cutting them. Is it any coincidence that in countries like Germany where higher education is free, there is less unemployment and less people whinging about migrants?

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And this is not just for the benefit of those who don’t have a degree yet. Even those of us who have one will likely need to return to university to learn new skills from time to time. A recent trend in academia has been a move towards what are called massive online learning courses. And these are mostly aimed at post-grads (rather than undergrads) looking to learn a new skill. I won’t be surprised if a few years from now, the main job of universities is supporting courses like this, rather than teaching degrees to undergrads in RL.

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The future of work will likely be a future where we need to accept the fact that change is good, its normal. We need to be intellectually curious and willing to learn new things and try out new ideas. Of course if you’re a conservative voter, changes are you’re not intellectually curious and you don’t want things to change. You are also more likely to reject ideas like global warming and evolution. The roller coaster of technology is going too fast, they want it to stop so they can get off.

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In the future all of us will need to re-train and change careers from time to time

But getting off the roller coaster would mean giving up what we have. Given that I can’t see us banning the use of the internet for commercial purposes (I mean how would you even police that!) or introducing soviet style jobs for the boys policies (you join one queue and then another), I don’t see how these future trends can be halted. Technology has created many problems for our society (e.g. global warming) and often as not, the solution to these problems is more technology (e.g. renewables, electric cars). So the “getting off the roller coaster” option that conservatives are aiming for would come with a price and I don’t think they understand that this price is probably more than they are willing to accept (you’d have to live sustainably without fossil fuels or renewables…. so basically become Amish!).

Another question we have to ask is whether full employment is a realistic goal for future society. Our entire economic system assumes that anyone who can work will work, but that may not be true in future, there might not be enough jobs to go around in the future.

Now in theory this shouldn’t be an issue. Technology merely means making a smaller pool of workers more productive. In Germany and Scandinavia, yes the manufacturing sectors are smaller than they were a few decades ago. But they avoided the wholesale decimation of working class areas seen in the US or UK, with some districts being reduced to little more than welfare colonies. This I would argue is because the bulk of these job losses were due to miss guided neo-liberal economic policies in the US and the UK. Reversing these policies would seem a sensible solution, although voting for Trump or Brexit amounts to asking for a double helping of more of the same.

So in theory, full employment is still a possibility. But we need to remember that more productivity often means more energy and resource consumption. Now with good recycling policies and a 100% renewable energy grid this shouldn’t be a problem, but we don’t have that yet. So its possible that full employment will not be possible in future (at least for some period of time). Which means some profound changes to society. Given that already the number of workers is falling in Western states thanks to an ageing population, this means even less and less people having to pay more and more of a nation’s taxes to fund the welfare for those who aren’t working.

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Migrants are increasingly needed to help fund retirement for an ageing population

And incidentally curbing migration, which means less young people coming into the workforce and paying taxes to fund the pensions and healthcare of retirees, is likely to prove entirely counter-productive. It could well be a recipe for national bankruptcy.

My view is that we may need to change how the entire tax system works. This is one of the reasons I’ve long favoured a system of carbon taxes, or taxes on things that are generally bad for society (e.g. high VAT on alcohol or fatty foods), a Tobin tax (i.e. a tax on financial transactions) and of course higher rates of corporation tax. In all cases, the goal here is to spread the tax net away from simply funding everything off of income taxes and pushing those rates up every time the state coffers run bare. Which of course tends to provoke much whinging from the fewer and fewer workers stuck paying incoming tax.

And as for distributing welfare, well one alternative to the current system is that of a basic national income paid out to everyone. This would be enough to fund housing and keep people out of poverty. You want more money, you want the luxuries, get a job and work for it. No more whining about lazy people on benefits, everyone is on benefits, indeed presumably this system would come with the clause that such payment would be withdrawn if anyone commits anti-social behaviour (e.g. petty crime, dodging taxes via your offshore account, the usual!). Just this year the Swiss at a referendum on implementing this. Now while it was rejected, I think this was because many didn’t understand the underlying issues. So I won’t be surprised if such ideas don’t catch on in future.

So in essence our society is at a crossroads. I’d argue that we are at the end of a 2nd gilded age. Like the first gilded age, this was a time when neo-liberal capitalists ran wild, we all had a big party and nobody complained a lot because everyone was doing rather well out of it (as this moment of Zen from the film Margin Call summarises). But now, like in the 1920’s we’re stuck with the hangover. And like society in the 1920’s we face a choice.

On the one hand we can opt for a new deal of continuing down the path of social and technology progress. And let’s face it, progress is good. The factories of past era’s, yes there was full employment, but they were awful places to work. Repetitive backbreaking labour while being exposed to extremes of heat, noise, toxic chemicals and rotating machinery. Many had to retire from such jobs in their 50’s because their job ruined their health. Technology means that cars and other products these days are safer, more reliable (used to be the best way to make money from TV’s was selling warranties to fix them), more energy efficient and more user friendly. I mean is anyone reading this seriously suggesting that they hate Microsoft/Apple/Google so much that you want your old Commodore 64 back?

Or, as some societies did in the 1920’s and 30’s, we may end up taking the regressive path of fascism, blaming foreigners and other convenient scapegoats for all of our ills, restricting trade, reversing past policies, going backwards and focusing inward….until said leaders realise they need a war to prevent national bankruptcy and likely end up starting world war 3 in the process!

The economic impact of Brexit…..the story so far

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The Brexit brigade are still trying to delude themselves that everything is hunky dory. However, the reality is that it has dented growth and there are growing signs of an economic slowdown, if not a recession.

Easyjet are blaming Brexit for a fall in profits . And Ryanair, whose also felt the pinch, is now planning to cut back on flights to the UK and move some of its hubs out of he country. Meanwhile the Polish airline Wizz Air plan to roll back from a planned expansion of services operating out of Britain (damn foreigners staying at home and giving jobs to Polish in Warsaw instead!). Meanwhile a travel agent, which collapsed over the last month (leaving a number of tourists stranded and others out of pocket), has blamed Brexit and the drop in value of the pound for pushing the company over the edge.

A weak pound is also expected to push up petrol prices (and thus pretty much everything else gets more expensive), make holidays more expensive, mortgage costs may well rise and pensions will be worth a lot less. Indeed, I won’t advise retiring anytime soon, as annuities are taking a hammering. And spare a thought for pensioners living overseas. Quite apart from Theresa May’s plan to basically use them as pawns in her negotiations with Brussels, a weak pound is making living abroad suddenly very expensive.

A weak pound, does help exporters, such as the UK’s car industry. However, they will be anxious about the possible long term impacts on trade. If the EU brings in any kind of tarrif on them, that’s pretty much their business model gone. Also the manufacturing of most goods these days takes place over multiple countries, many of the parts on UK cars are imported from the continent (so Brexit just made those parts more expensive). So any sort of a trade barrier at Dover, will make it awfully tempting to simply move production to the other side of the channel.

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Already Renault is contemplating a rise in car prices sold in the UK, while the word round the camp fire is that there’s at least “a 75% chance” of lay off’s in Japanese owned UK based car companies.

Academia enters recession

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In my line of work we are starting to see the effects, as this article discusses academics report that they are now being frozen out of EU grant funding applications. Funding opportunities are drying up and layoffs are now probably inevitable. And note it will generally be the non-academic support staff who will get the chop. Many leading academics are already contemplating moving to other EU countries. And recall, as I pointed out in a prior post, if an academic walks, the grant money follows him, as its always attached to the academic, not the university. In my own uni we’ve already lost two professors. Now in truth they were thinking of retiring anyway, but clearly Brexit has pushed that decision forward as they no doubt realise that they will struggle to get funding in future.

And its not just academics that suffer. As I’ve pointed out before, clustered around the UK’s universities are many small high tech firms who rely on this research funding and collaboration through the EU to establish themselves and develop new products. A number of them are already starting to scout out locations in the EU in which to move too. Its ironic given how many complain about immigration that one of the effects of Brexit could be Britain’s best and brightest moving abroad to set up companies overseas and create jobs for people outside of the UK. In short, the UK could very well be in the process of of burning an entire generation of entrepreneurs and innovators.

And already we have the Tories subsidy cuts to renewables to contend with. This is believed to have cost at least 12,000 jobs over the last year, with no doubt more redundancies in the pipeline.

The impact on the construction industry

Meanwhile house prices are now expected to level off, perhaps even drop. Already there’s been a slight drop this month in some London districts. And this is not good news for first time buyers, as the likely trigger event for this is a reluctance of banks to lend money, particularly to first time buyers. By contrast, foreign investors will now find it easier to buy property in the UK,given the weak pound (damn foreigners coming over here and investing their money in the country!).

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This of course means that those in the construction industry are probably the most vulnerable to the immediate effects of Brexit. I’ve heard tales of emergency board meetings at many leading construction firms with said firms deciding to now cancel certain projects now deemed too risky, a hiring freeze in the short term and an orderly downsizing with lay-off’s longer term.

Indeed, already some senior members of staff are loosing their jobs. One funny story I heard, a newly hired exec got the sack days after Brexit, as it meant the cancellation of projects he was supposed to be in charge of. Apparently he voted leave, so he literally voted to be sacked. The only thing he’s “taking control” of is his application down at the jobs centre. I’d laugh, only I’m aware of how many others in the industry have also lost their jobs, or are about too.

Trouble at the border

And of course custom delays in France which is causing traffic chaos in Southern England gives us a taster for how nasty things could get post-Brexit.

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Basically if the French at any point decide to get arsy because they feel the UK with a weak pound is undercutting their economy, all they need to do so restrict traffic at Calais, which is easily achieved under the guise of anti-terrorism checks or customs checks that they are just very slow to carry out, quickly causing traffic to grind to a halt. In the mean time they simply wave trucks going the other way straight through.

They won’t have to do that very often to quickly make it all but impossible for British companies to export to the continent. And keep in mind this was a quite normal thing back in the bad old days prior to the EU. Any time people went to France (or visa versa) they’d be asked by relatives and friends to get this and that for them. My own memories of family holidays was of us driving back in a car loaded down with hidden contraband. Is this really an improvement?

Over a barrel

All in all you’d have to be incredibly naïve to believe that Brexit isn’t going to have any impact of future trade. And keep in mind that the UK now needs to not just negotiate with the EU, but with the other major trading blocks as well. Many expect the Chinese will do rather well out of this , as they will essentially have the UK over a barrel.

The US too has previously warned of the UK “going to the back of the queue”. While its not clear if they will follow through with this, but certainly if the UK wants a deal quickly they will have to concede a lot. The US is locked in a serious of talks with the EU over the controversial TTIP’s trade deal, something Brexit might well have now derailed. Needless to say, while the EU can haggle, or even walk away from such a deal, the UK can’t. For the UK it will be take it or leave it when it comes to TTIP.

Like a Victorian workhouse

One of the areas where we could see some major changes post-Brexit is when it comes to workers rights, as it is widely expected that the Tories will now use this as an opportunity to gut the protections UK workers have long enjoyed. So I hope every doesn’t mind working on weekends or Christmas, an end to overtime, not to mention it being made easier for bosses to fire workers with little or no notice.

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And we have a taster for what’s in store given recent reports from Sports Direct. Its boss Mike scrooge Mac Ashley is accused of running a Victorian style workhouse. With workers being paid below the minimum wage, arbitrary punishments for minor infractions, female staff being solicited for sexual favours, children being forced to go to school ill because parents could not take a day off work. We even have one story of a mother giving birth in the toilet at work (and I hope she clocked off for that that one!).

Well you have to give him credit for being ahead of the curve here. As this is likely to be the model upon which many UK firms are run post-Brexit.

Saving face

We were promised by Theresa May that she’d get some concession on immigration as part of Brexit negotiations. However, it is privately accepted that this will be impossible. So officials in Whitehall and Brussels are looking at ways of trying to make it look like she’s gotten something, when in fact she hasn’t.

One proposal is to dust off the very “emergency brake” measures Cameron managed to get. Of course as I pointed out this was mere window dressing. It would only restrict migrant benefits, which is less of a concern to those who are coming over to work and then plan to go home (which of course applies to the vast majority of them). Government in some parts of the EU will be less than keen on this (in effect they are being asked to subsidise the UK welfare state by their citizens paying taxes towards it but not claim any benefits), which means they will either veto such a proposal or insist on some sort of sharing of NI contributions (i.e. some portion of their citizens NI contributions will be passed on to their home state if they leave or return from the UK and start to claim benefits). Existing arrangement along these lines already exist between the UK and Ireland.

So its likely to be just window dressing, that doesn’t actually change anything (other than draining the government’s coffers), but hopefully it will take the Brexit bigot brigade sometime to work that one out.

Easter news roundup

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The quiet civility of American democracy

Tripping up Trump

A meeting last week was convened by senior GOP members to figure out how to deal with Trump. Unfortunately the conclusion seems to be to support an existing third party candidate or (more likely) endorse Hilary.

One of the proposals floated at this meeting was to have some suitable Republican to run against Trump as a third party candidate  . He won’t have to go through the nomination process as in theory any American can stand for election to be president….even Canadians can apply. However in practical terms, such a move will now be very difficult, if not impossible, to pull off.

To get a candidate on the ballot papers in all 50 states there are local laws that must be met. And many of those laws were enacted by Republican states precisely to stop some third party breaking the GOP monopoly. In the state of Texas for example they will need a petition filled in with 80,000 signatures, from people who did not vote in the primaries. And they’ll need that paperwork sorted by May 9th, six weeks from now. In Florida they’ll need a whopping 119,316 signatures. The trouble is we probably won’t know whether or not Trump will get the nomination until June when California votes. By then it will be too late to do anything, although equally it will be too late for Trump to run as an independent if he is denied the nomination at the convention.

This creates something of a dilemma for the GOP. They can simply muddle along, hope for Trump to be denied the nomination and then go along with him if he succeeds. However, this would likely be catastrophic for the senate and representatives votes. The democrats would get to tar them with the same racist baloney Trump has been spouting and many anti-Trump Republicans would stay at home, leading to decimation on election day.

By backing a third party, while they will all but guarantee Hilary’s victory in the Presidential election, they will give themselves some chance of holding onto control of the senate and congress. But like I said, this is a window of opportunity that’s closing fast. Endorsing Hilary will stop her painting them as Trump’s goon’s, but its not clear whether that will be more effective in getting the vote out for the senate and house seats.

To my mind the solution lies in the hands of party supporters. If you agree that Trump, or for that matter Cruz (whose just as bad as Trump), is not an acceptable candidate and you can’t vote for Hilary, then vote for a third party. There’s plenty of options in this regard already without the GOP having to put up a third party candidate. The Libertarian Party for example (not that I support them, I’d likely vote Green, or vote for Hilary to stop some wingnut becoming president). Indeed this would have the positive effect of helping to break this corrosive and dangerous political duopoly that has wrecked American democracy.

Not so British

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Word is that British Home Stores (BHS) are in trouble. The media spent the week lamenting this fall of a high street icon. I saw, good riddance to them. They are owned by Phil Greed Green, a tax dodger who lives in Monaco to avoid paying tax here, then has the nerve to call his stores “British”. I’ve never shopped in these stores for exactly this reason. Perhaps if he started paying some tax in the country the company might not be in such trouble.

Banks warn about Brexit risks

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UBS fears that Brexit could hammer the value of the pound, with serious consequences to anyone on a fixed income

The EU referendum hots up yet again. The vote racist leave campaign published a list of 250 businessmen who supported Brexit….trouble is someone’s been checking up on them and already found a few who seem to have been randomly stuck on the list without their permission. Then again, its also emerged that the vote leave campaign have been hiring EU migrants to run their call centres….I’m sorry I think my irony meter just exploded there!

Meanwhile the bank of England has warned of the risks to the UK economy if the country votes to leave, warning it might spark another credit crunch. And this is backed up by those in the banking industry themselves, 2/3’s of whom have warned of financial insecurity if the UK votes to leave the UK.

I’m actually suitably concerned myself that I’m thinking of pushing some of my savings into my Irish euro bank account where they’ll be safe, until after the referendum. But of course, I have the luxury of being able to do that. And the rich with their offshore accounts are probably already well ahead of us on that front (why else do you think Sterling is falling?). They will ride out the storm. Indeed some might well profit handsomely from it…at the expense of the poor saps who can’t move their money around, largely because they are living in it.

Its the very people who are more likely to vote for Brexit, pensioners and baby boomers who are most likely to get screwed over. As I’ve said before, if anyone is tempted to vote leave might I suggest that you buy a tin of cat food and taste it. If you don’t think you could live through retirement eating it in a stone cold house with no pension, then you really don’t want to vote leave.

Music for a jilted generation

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Joseph Stiglitz has an interesting article out in the Guardian in which he talks about the reasons for millennial anger of the economic and social divide that now splits Western society.

In essence, the baby boomer generation had it pretty good, most are better off now than when they started out as adults. They are retiring on a final salary scheme, debt free with not only the mortgage paid off, but the house worth many times more than they paid for it. Some are on paper millionaires from the value of their property portfolio alone. And while the Tories have axed everything not bolted to the floor, going after tax credits and other payments that benefit young working families, anything that benefits pensioners (regardless of their income) has been left largely untouched.

By contrast generation Y and millennial’s face a lifetime of job insecurity, with less a matter of what career they would like to choose but what kind of job they can get and still pay off their student loan. As for saving for a mortgage or a pension LOL! They’re only hope is that the baby boomers die off before spending too much of it and they can claim the inheritance (reminds me, I need to get my dad to take up smoking again!).

Generation X’ers like me meanwhile are somewhere in the middle. We have some debts, but nothing like those of millennials, we also suffer from job insecurity (no job for life anymore), but usually have a few more years experience to help give us some control over our careers. And most of us have some savings or have some chance of affording a house, even though it will probably mean spending a considerable part of our salary for it. Pension? That’s something we’ll need to work on!

So the end result is this massive divide between two generations. We can see it in politics with the older generation more likely to favour Brexit or vote for Trump (because they basically don’t care anymore), with the younger generations (who realise what a raw deal they’ve gotten) favouring more left wing candidates such as Jeremy Corbyn or Bernie Sanders.

We can see this too with issues such as climate change. Older people are more likely to be climate change deniers, even among those who are more left wing. While young people tend to be more willing to see some measures taken against it, even those who are fairly right wing. Presumably because they know they will have to live with the consequences of climate change, while the old fogies don’t care and worry about anything that might impact on their precious pension and fixed income.

Such a generational split is very worrying for society. Not least because it will likely be resolved by enough of the older generation dying off, eventually swinging the political compass the other way. While it may seem unlikely that a politician like Sanders or Corbyn might win power now in Britain, vote to leave the UK (or vote for Trump), give it a few years of economic disaster….a couple of cold winters with no heat (due to blackouts), with a resulting change in electoral demographics, and it doesn’t then seem that unlikely.

What happened to my Dad?

And of interest to the above is this trailer to a new movie “The Brainwashing of My Dad ” which charts the rise and the effects of the gradual shift to the right of the US media….or as the Daily Show’s Trevor Noah puts it how the f**k did we get here?

In other words the Republicans have been spinning the BS for so long its taken on human form, grown a wig and taken to the campaign trail. Same as here in the UK Farage and UKIP are the natural end state of several decades of Daily Mail tabloid bigotry.

Zika U-turn

The Catholic church has long promoted the idea that contraception doesn’t work, oh condom’s will explode every tenth time they are used and increase the likelihood of STD’s. However the Zika virus and its horrible impact on babies has prompted a rethink. Now the church supports contraception…but what about all the baloney they’ve been selling for the last few decades? Do they admit that was now all lies? And once this Zika virus goes away will they be promoting the same anti-family planning BS again, business as usual?

America’s dumbest presidents

Another item of interest is this ranking of US presidents, listing the 25 smartest….and the 25 dumbest…I’ll let you guess which end of the list G. W. Bush is on (4th from bottom) and which end Obama is on.

Hinkley C – pi$$ or get off the pot!

The Bataan death march that is Hinkley C continues without breaking step. The head of EDF energy has refused to give a date at which the plant will be built. Meanwhile the company is in a legal fight with Greenpeace to keep certain documents secret that could reveal the true costs of Hinkley C and that may well prove the company has known it was a $hit sandwich from day one.

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The Hinkley plant has its own Edstone of sorts!

And leaked documents of a different type reveal that a number of EDF’s senior engineers want the project delayed as they fear recent design flaws highlighted in other projects might mean the plant needs to be redesigned first. They are urging a delay.

So we now have the company’s own unions (whose chief just sent an e-mail around saying he will vote against Hinkley C in any board meeting), engineers, the former chief financial officer and quite a few shareholders all urging the plant to be abandoned or delayed.

Normally for a project to become this much of a white elephant it has to be part way through construction, too far in for it to be stopped. Yet the single minded obsession of those behind it means that it will be pushed through regardless. About the only positive is that it will be such a soul destroying process, generating such negative publicity that it will all but guarantee few additional reactors will be built, in the UK or beyond.

And hence the current trend of nuclear reactors being turned off quicker than they can be replaced will continue.

Weekend News Roundup

A budget Enron would be proud of

Osborne has been accused of using accounting tricks to hide a £56 billion hole in his budget. Falling growth and the risk of Brexit over the referendum have all pushed down the economy and this will soon have a knock on effect on tax receipts. Yes, he brought in new taxes, but he’ll have to charge a heck of a lot for sugary drinks to fill a hole this big. Even the Office for Budget responsibility (which he set up) are sceptical, while the IFS has warned of a risk of wages falling and that Osborne is “running out of wriggle room” in terms of his ability to meet his own economic targets.

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As with previous budgets the poorest people in the UK are the worst affected

Furthermore, it is claimed that the numbers in this budget don’t add up and don’t match Osborne’s previous claims. Its considered unlikely he can meet his own fiscal rules, he will not get rid of the deficit, nor run a surplus at any point in the future and will likely have to borrow much of this missing £56 billion. In short, we are seeing the very same thing as seen in other countries who went down the austerity route, stunted growth leading to falling tax receipts. He’s just been a bit better at hiding things.

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And again we see the same game, tax cuts to the wealthy (moving the thresholds for the top rate of tax), while cutting disability allowances, or an across the board cut of £3.5 billion (where that’s going to come from nobody knows, my guess is they’re going to be lifting floor boards and selling off the lead in the roof’s of government buildings). Like I said, Enron would be proud.

The reality of course, is that this austerity was never about getting rid of the deficit, nobody has borrowed more than Osborne, yes he has now borrowed more in a 5 years than the Blair/Brown government did in 13 years. It was always just an excuse through which the Tories could gut public services that their wealthy paymasters didn’t use. While at the same time providing them with tax cuts and the opportunity to buy up public services (such as the NHS) and milk them dry, much like Thatcher did with things like the Railways and power companies.

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Hinkley C, going full circle

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Speaking of which, there was both positive and negative news this week regarding Hinkley C. On the one hand, a letter to staff seemed to indicate that its likely to go ahead, despite recent set backs (resignations of senior EDF staff, a halving of the share price, questions about the financial survival of EDF if they proceed). However it also indicated that this is now dependant on French government support. As the chairman of the House of Common’s energy committee pointed out, these latest developments raise serious doubts about the project’s viability. Largely because, as of now, almost every promise we were made about Hinkley C has been broken.

Let us rewind the clock. Originally proposed back under the Blair years (yes, that long ago!) the nuclear industry claimed that Hinkley C would be cheap, competitive, could be built in just 46 months and the nuclear industry actually didn’t want any subsidies. They just wanted the Greenpeace brigade off their back. And indeed a number of very naïve people, such as Monbiot or a number of other pro-nuclear environmentalists, did indeed lobby on this project’s behalf. The government passed various bits of legislation to ease the process of planning and streamline the building of the plant.

Unfortunately, what nobody picked up on was the fact that the nuclear lobbyists blinked three times or rolled up a trouser leg every time they said they didn’t need a subsidy. This was a coded message to indicate that actually they did need one, they just didn’t want to admit it. Eventually, after various abortive attempts (notably trying to turn Green Investment bank into a pro-nuclear slush fund) the previous coalition government worked this one out. And they offered a subsidy at a rate nearly three times higher than what’s on offer for solar (per kWh) and five times the wind power subsidy rate. But we were assured this didn’t matter as nuclear power is a “special” form of power and it would mean no government capital would be put at risk…….

…Only when EDF tried to raise that capital, the markets laughed them out of the room. They were simply unwilling to invest in such a high risk project, particularly as nobody could give them a firm estimate of how much the damn thing was going to cost (its drifted from £6 billion under Blair to £18 billion today and I’d guess more like £20-25 billion myself when its actually finished). Seed money from the state or a state guarantee was needed. And so they got both, the Chinese state nuclear energy company agreed to put up a third of the cash in return for the UK government agreeing to be the guarantor.

From the beginning environmentalists were assured that it wasn’t a case of choosing nuclear or renewables, we could have both. However its clear from recent subsidy cuts that this was a lie. Renewables are being killed off to make room for Hinkley C, as its business model can’t compete with Renewables. Both CCS and coal have also been killed off as alternatives. Yet still the financial industry is not willing to commit to the project. So in desperation EDF have now turned to the French taxpayers to fit the bill.

Getting the French and Chinese taxpayers to do this whole “socialism” thing for us might seem like a good idea, if you’re a Tory and its against your religion of Thatcherism. But its actually a terrible deal for the UK. Recall the UK taxpayer will be liable if the project now falls apart. And the Chinese and French get to charge three times the market cost of electricity for the next 40 years. This is the point the HoC energy committee is making. Even if you are one of the few who thinks this project is a good idea, we’d get far better value for money just buying out 100% of the project and building it as a national infrastructure project.

And least we forget the UK needs at least five Hinkley C’s just to replace its historical maximum nuclear output of 16 GW’s. The follow on plants are unlikely to arrive any time soon, certainly not before the remaining 8 GW’s retires. And with renewables knocked out of the box, its likely to mean a new round of gas fired plants being built, which does not bode well for commitments to cutting green house gas emissions.

In short every promise made by Hinkley C’s supporters, be they Monbiot, Mc Kay, the DECC, the Royal Society, etc. has been broken. By contrast the views put forward by the naysayers, be they the banks, Prof. Steve Thomas, the WNISR authors, the New Economics Foundation or indeed myself, have been proven correct. As I’ve said before, Hinkley is shaping up to be the hill on which the nuclear industry might well die on.

Clarkson backs the EU

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Jeremy Clarkson surprised many over the last week by coming out in favour of the UK staying in the EU. Yes, the man who likes to mock the French and German’s relentlessly wants the UK to remain part of the EU….presumably so that he can continue to mock them and make jokes about Agincourt.

Indeed, he actually argued far beyond simply staying in calling for a United States of Europe, much to the horror of many of his petrol head fans I suspect. However, I would take this as admission from Clarkson that most of his show is just an act. And in essence he’s saying a joke’s a joke, but its not funny any more when people’s job’s are on the line.

And of course leaving the EU will have an impact on employment, and what’s left of the UK car industry will take a hammering. Many of the UK’s car companies are foreign owned. Parts are brought in from factories all over Europe (indeed much of the UK car industry is parts for export to Europe) and assembled in the UK (or elsewhere). Something like 75% of UK made cars are built LHD for export. Inevitably post-Brexit, it will be all too tempting to shorten supply lines and move production to the continent.

And of course, its questionable whether his Amazon gambit will work with a reduced audience. And increasingly it looks like a vote for Brexit is a vote for Scottish independence and a vote for Boris “bike” Johnson as PM. Needless to say, Clarkson probably has visions of the M6 being turned into a bikeway! So his position is entirely understandable.

Neo-serfdom

Should you wonder just how crazy, fanatical and heartless the Brexit camp are here’s an example. Brexit will cause all sorts of economic problems, particularly if any form of restrictions to free movement of workers is introduced. While there are unemployment black spots in Britain, generally in ex-industrial areas (devastated by Thatcher) or ex-sea side resort towns (losing out to cheap package deals). But overall there are labour shortages for things like skilled apprentices or farm workers.

A vote to leave the EU will devastate farming, with some farmers claiming they’d be forced to leave crops rot in the field. The Brexit camp solution, oh we’ll get pensioners to go out and pick the crops. Why they’ll need the work and money so badly (given that without the tax receipts from EU citizens its doubtful the UK can pay pensions any more) they can even be paid less than minimum wage. Its the sort of story you read and hope its April fools day!

What this shows is how those behind Brexit are not the champions of British freedom they claim to be. In truth they are the wealthy, the corrupt and the despotic who want to turn the clock back to a time when there was an upper class and everyone else, when the serf’s knew their place.

Indeed case in point, the recent EU agreement with Turkey to stem the flow of migrants. This has been criticised by human rights group for fundamentally altering the status of refugee’s. On the plus side, it should counter the claims that the EU means more migrants coming into the UK. But what is the headline in the Daily stormtrooper Express, they filter down everything said over the last week to one sound-bite by Donald Tusk which they then take way out of context and spin it too suggest that somehow an agreement which sends back refugees will amount to an open door to them, WTF!

What this shows is that Cameron should never have called this referendum. It will not be fought on the issues. It is being fought on whatever outrageous lies and scaremongering that the fascist inclined tabloids can concoct.

Exploitation, Exploitation

A funny spoof from the Guardian website, which mocks the TV show location, location, location. It charts the all too common decisions faced by young millennials trying to find a flat in London. Consider that in London now, you’ll be paying about 3 times the cost per square metre for a house than in the rest of the country….and that’s in a rough area or out in Luton! In the centre of town £100 wouldn’t buy you enough space the size of an oyster card.

paddington

A “compact and cosy” “loft conversion” in London

And as few can afford the hefty deposit that comes with buying in the capital, many are forced into renting, even when they can easily afford mortgage payments. Rents are now so high some are charging £74 a week for essentially a broom cupboard (many spend about £1,000+ a month, often +60% of take home pay on their rent). Ultimately I reckon rent controls are badly needed in London.

To the tower with him

The manager of slave driving sweatshop the firm Sports Direct, conman businessman Mike Ashley has been ordered to appear before MP’s to explain himself. He’s been threatened with imprisonment within the Tower if he doesn’t comply. Apparently there is a rule within Parliament (which is technically a palace of the Queen) that do allow those who are found to be in contempt of Parliament to be imprisoned within Big Ben…although not on the clock face one assumes!

White House security doing its job

Gerry Adams was incensed at being refused entry to the White House on St Patrick’s day. Ya, what where the security guards thinking! Why would you refuse to let in a known bomb maker and IRA commander, currently under investigation over several “disappeared” people.

On the plus side, if Trump was at the event it could be a very easy way of solving lots of problems. Although Obama might have to explain why a small mount has suddenly appeared in the rose garden.

IDS Quits

And last but by no means least, the quitting of the work and pensions secretary Ian Duncan Smith, as I was typing this up last night. He is making clear that his reasons for quitting are the failure of Osborne to suspend cuts to disability benefits.

Apparently he had been lobbying for cuts to benefits given to better off pensioners as an alternative to kicking people out of wheelchairs (personally, I’d rather cut neither, but I appreciate the point he was making that we should be cutting funding from those who can afford it, not those who can least afford it but are politically expendable).

Of course one has to wonder if friction over Europe and the referendum was also to blame. Certainly, the Tory party is increasingly at war with itself.

Irony still not understood

The UK’s energy secretary Amber Rudd is showing signs that she possesses a superpower – a complete immunity to understanding the concepts of irony or hypocrisy.

AMBER RUDD ARRIVES FOR CABINET TODAY. PICTURE JEREMY SELWYN 09/06/2015

She has been complaining that councils are taking too long to make decisions on Fracking, suggesting that they are just delaying the inevitable and should just hurry up and make a decision within 16 weeks, threatening that the government will take the power to decide off councils who are seen to be dithering.

Of course this all but betrays the fact that the government’s plan is to railroad over local opposition to fracking and drive applications through, even when there’s a clear majority of locals against it. This is in stark contrast to their policy on wind energy where they are trying to halt onshore wind on the off chance it might spoil the view from ones hunting estate/golf course.

And councils will point out that the reason why its taking them so long is that they are presented with a room full of evidence that they then have to shift through. And with government austerity they can’t pay for the staff to process such applications any quicker. So if Amber Rudd wants things moved along, how about wandering down to number 11 and asking Osborne to pay for some extra staff for councils?

Also there’s a more worrying message. I would argue that fracking has gotten a bad name for itself because the Bush Adm. promotion of it created a massively under-regulated industry. It became a wild west and inevitably you ended up with some jack-asses who didn’t know what they were doing making a mess. If fracking was better regulated, this won’t be a problem, or so I am told by those in academic circles who are promoting it.

I recall a situation in Ireland where a major chemicals company moved into the area around my home town of Cork. The first thing they did before so much as turning a sod, was conducting an intensive environmental audit of the whole area. This was so that they knew everything in the environment (natural and unnatural) as well as every source of existing pollution. That way if anyone from the Irish environment agency, or some ambulance chasing lawyer, came along and accused them of putting this or that into the local ground water. They would have the evidence to prove, nope not us, that’s likely the fertiliser plant down the road.

You would think the fracking company’s would do the same and that the government would support such a policy. A careful environmental audit prior to any fracking, a few trial operations under intense environmental scrutiny, which would then serve to determine best practice for future operations, as well as establish what the actual environmental impact of fracking is likely to be. Instead Amber Rudd seems to favour the wild west approach that’s got fracking such a bad name state side.

And there is also further hypocrisy. The justification for cutting subsidies for renewables (or Green crap” as Cameron put it) has supposedly been to cut back on bills. This is despite the fact that renewable and energy efficiency subsidies cost about 6% of the average UK bill, about £50-75 per household per year. In the worse case scenario (had we stuck to the energy plans of past governments), this subsidy could have potentially doubled over the next decade. By contrast, the IMF have a report out that estimates that subsidies towards fossil fuels costs the UK about $635 per person (about £400, i.e. at least 4 times more than any subsidy to renewables would ever cost us!).

The reality is that the government does not give a damn about climate change, value for money for householders, nor do they care whether the lights go out. They are merely promoting the energy options that will most benefit certain vested interests in the nuclear and fossil fuels industry….which incidentally also includes one of Rudd’s own advisers I might add. What is more worrying is that much of the Tories anti-renewable agenda is simply ideological. An ideology which is putting the UK out of step with all but a handful of other loony right wing governments, and risking the country’s long term energy future.

Tories cuts to renewable subsidies – a new age of stupid

The Tories have followed through with their election threat to cut wind farm subsidies. However they have also proceeded to cut numerous other subsidies, including those given to solar energy and biomass as well as the Green deal (grants for improved insulation). The Green investment bank, one of the few progressive moves that came out of the previous lib dem/Tory government is also to be “part privatised”….which sounds suspiciously like “allowed to go bankrupt” (the only type of bank the Tories would let go to the wall!). All in all it looks like the UK’s energy policy is about to be plunged into a “dark age”.

The (pro-nuclear) environment secretary Ashley Rudd also misses the irony of the fact that she is throwing a massive subsidy the way of nuclear energy, to the tune of 68% of the cost of every watt of electricity they sell. Yet wind farms are also excluded from this “contracts for difference” nuclear slush fund subsidy scheme, despite offering better value for money. And this is on top of the fact that the UK DECC already spends 40% of its budget servicing nuclear waste, the costs of solar energy subsidies are but 6% of the total costs associated with energy subsidies.

All of this would be just plain bad news, if it weren’t for the fact that industry (and not just the renewables industry) are warning, that these measures send out a “chilling” message to business, something that will inevitably lead to job losses, if not a complete halt to work in terms of adding new power capacity. Just as we go into a winter with just 1.2% of spare capacity. It hardly seems to me a winning strategy to halt the production of the the very energy source that’s growing, while coal stations are shutting down, as they cannot compete with wind power and hydro.

And yet, as I’ve previously mentioned, while the Tories are quite keen to block wind farm applications, they also plan to remove any right of residences to object to fracking under their own homes, while throwing yet more subsidies the way of the fossil fuel industry. Something that is sure to put the UK at loggerheads with the rest of the EU, Obama (and inevitably Hilary, who appears to be trying to make climate change an election issue next year) and the Pope (of course Cameron and Osborne aren’t Catholic, so the Pope’s message was kind of lost on a pair of followers of Cthulhu ;D ).

Perhaps the worst of all of the cuts however, are those to the Green deal and the scrapping of building codes for low carbon homes. As I’ve previously mentioned on my energy blog the bulk of the UK’s energy consumption is spend heating and cooling homes, particularly the heating load over the winter months. This accounts for between 36-42% of the UK’s energy consumption and carbon emissions (depending on how you count it). By contrast, electricity is but 20% of the UK final energy consumption (a good portion of which is of course consumed heating and cooling buildings) while vehicles consume 25%.

So the easiest, simplest, cheapest and most painless way to cut carbon emissions, while in the long term cutting energy bills and improving the nation’s energy security, is to improve energy efficiency standards. Furthermore, I would argue that it is heating, not electricity, that is the energy source we need to protect. Give most people on a cold winter’s night the choice between losing electricity or losing heating and most will chose to do without electricity (trust me I’ve had many a cold bothy night and I know which of those two I’d choose!). Going without electricity isn’t fun, its inconvenient, but at least nobody’s going to die. Which is exactly what will happen to the UK with the loss of heating, we’re talking about grannies freezing to death and that sort of thing.

So there is ultimately no logic to this other than the more obvious fact that this Tory policy is driven purely by ideology. The same ideology that drives the right wing in the US Tea Party to deny climate change and oppose gay marriage. A belief that if you bury your head in the sand the lion will go away. That the solution to a look out screaming “iceberg” is to not have any look outs and blind the helmsmen. We are truly in the age of stupid.

Let me get this straight

So the government wants to end subsidies to wind farms. This is despite the fact, as I’ve pointed out on my energy blog, that onshore wind represents the cheapest form of low carbon energy available. It also means ignoring the fact that the historical subsidies paid out to fossil fuels and nuclear have exceeded those paid out to renewables, by some significant margin.

Yet at the same time the government is willing to throw yet more subsidies at the fossil fuel lobby in an effort to promote fracking. And while they are promising to extend the rights to allow the landed gentry to object to wind farms within visual range of homes, they are going to remove people’s rights to object to fracking. Even if a company wants to frack underneath homes, they won’t having to apply for planning permission.

It has been suggested that being near a wind farm might impact on property prices by an average of 2-5%, or perhaps even 12% in the worse case scenario. Although another study suggests no significant correlation (my take on this is it probably depends, if there’s lots of property available, a buyers market, house prices might be effected as buyers are more choosy, but if the reverse is the case, as it often is in the UK, there’s no effect). However if someone fracks under your home, forget about selling it…..ever! Already some near fracking operations are complaining of this very thing.

And there is significant doubt as to whether the shale gas reserves of the UK are even economically viable, particularly given events in the US, where shale gas operators are loosing their shirts. Already its speculated that US shale gas output might well peak by the end of decade. The Tories are in effect committing the UK to an energy policy in the form of a new dash for gas, but in the blind.

And of course we are supposed to be taking action on climate change. This amounts to a complete U-turn on last 25 years of UK energy policy, one which was launched with little warning, which will probably send the signal (as I speculated in a prior post) to the power industry to halt all investment in energy….keeping in mind that all the fracking in the world will be little use without power plants to burn it in. What the energy industry needs is not some get rich quick scheme, but a long term energy plan for them to work around. These proposals offer no such promises.