to be sceptical about man made climate change

[Brioche201]

.. to a layperson like myself the evidence does not seem robust (record antarctic ice caps) .Even if it were true 'the climate' is such a complicated thing affected by thousands of factors.Is it likely that changing just one or 2 of the factors that are within out control would make a difference (or even that the difference would be in the right direction)
Do you still believe in man made climate change or think it is mainly rooted in politics?

There is a huge amount of economic modelling for various temperature rise scenarios.

Given the scientific consensus on the science - not 'settled', but high levels of likelihood - it would be prudent for any government to build likely future costs into their modelling of any energy mix. Thus new nuclear includes the full cost of decommissioning and waste processing and storage. Only new fossil fuels do not have their full costs currently reflected in the price.

And even if one were not to accept the potential climate change impacts, the health impacts of poor air quality are well observed and are established - and not built in to fossil fuel prices, yet funded by the taxpayer.

You want to impose such a high cost now that renewables replace all hydrocarbon as quick as possible.

Do I? Evidence, please.

... And discounting future cash flows (or costs) to present value is about valuation for when you are buying/selling an asset or debt. It has nothing to do with determining what those cash flows (or costs) should be in the first place.

In this context, you could use it to determine if one investment over many years (nuclear power plant, incentives, etc) is more expensive than another, for example.

Poor show, Maidofstars - surely you realise it contains carbon dioxide??
The bubbles worked really well to get the crap out

(Of course, we're all ignoring the fact that there are small subsidies available to FF plant currently in the UK, because they're aimed at maintaining current levels of acceptable energy security rather than future acceptable levels of climate security. Because we're very good at short-termism - sort ourselves out for now, and screw future generations.)

Cote - I astonished by what you just said given you worked as a City analyst. You just ignored alll the basic rules of discounting:

Does the timescale matter that much?

Discount rates have to do with expectations of future interest rates, not probabilities! "

Those two statemenst are completely wrong. Completely and absolutely goes against all the rules of Finance 1.01 taught in every Finance course in every business school. Get yourself a copy of Principles of Corporate Finance by Brealey, Myers & Allen (11th edition) the leading text used in those lecture courses.

The longer the discount period the smaller the present value of any future impact. The risk free discount rate is known (i.e 3 month Treasury bills rate) and then we need to add a risk premium to that rate to account for uncertainty (risk). It has nothing to do with future interest rate expectations.

The presnet value cost of abatement now (e.g by subsididing renewables) should not exceed the present value of the future costs of climate change. If it does don't do it. Wait until the cost of renewables falls or we have more certainty about impact and timescale of future climate change.

Your assertion that timescale and uncertainty have no impact on our decisions today tips economIcs on its head. In the end private individuals and firms will have to invest in the solutions and they will certainly apply a risk adjusted cashflow analysis. You dont thnk that matters and you invest in renewables? Of course you do" You woudlnt invest in a risky project for 10 years and not expect a decent return over those ten years.

Misti - I have no ideology in this area. I am quite happy to support any renewable technology and in less developed countries, where there is no existing transmission grid, with widely distributed village populations in equatorial regions small solar and wind power is an extremely good technology. Biomass can work well if there is a local source of waste biomass (eg sugar cane).

As said, I am not to tell you what my qualifications as I will out myself but I have a natural science, mathematical modelling and energy background. I do not work for any company, lobby group and nor am I funded by anyone.

I just want a rational discussion about future costs and benefits appropriately discounted for uncertainty (risk).

The way that climate change lobbyists talk about it today is akin to a religion or political movement. It strikes me a deeply anti capitalist, anti market and anti freedom of choice. Most people in the climate change lobby are not scientists. They have traduced the science to fit their own socialist political objectives and mindset which is to gain control over the economy. Its about rolling back the market and reintroducing Govt control over economic decisions.

Ego - its fine to invest in basic research in universities as I said.

However, not to pick and choose the technology outcome you want a priori.

All research in all types of energy technology should be funded. Making fossil fuel technology better is another way of reducing carbon emissions. That is not acceptable though to the renewable lobby. Only renewable research should be funded according to them.

However, it is the subsidy to bribe investors to build wind turbines and other renewables is what I most strongly object to. That is the money that investors require to account for the fact the fact it is uneconomic and does not provide a return commensurate with the risk. They wouldn't invest otherwise (not even Cote would).

The market should not step back when it comes to actually building the infrastructure. Investment should only be in that which makes economic sense.

Jassey - if you are referring to Capacity payments I do not agree with those either. Indeed they were only introduced because wind subsidies increased wind turbine penetration to the extent that it threatens security. We now have to pay old CCGT to stay on the system to back up the wind turbines.

Madness!

Ego - where Govt takes over, or funds any kind of business activity that would not otherwise happen in a market economy - that is socialism.

Communism is where the state (represented by Govt) owns the means of production to direct the amount and type of production.

Fascism is where the state (represented by Govt) co-opts private business to direct the amount and type of production.

That is what the climate change lobby want - to direct the amount and type of production of energy. It is socialism.

Ego - it is the response to climate change that ignores economics. That is what I object to.

The presnet value cost of abatement now (e.g by subsididing renewables) should not exceed the present value of the future costs of climate change. If it does don't do it. Wait until the cost of renewables falls or we have more certainty about impact and timescale of future climate change

Which based on most modelling, we have - particularly on the CBA.

Let's look at it this way. You're a politician. Your advisers say to you: '97% of scientists say this volcano is going to erupt in 50 years. If we do nothing, the impact oThey say there is a 95% chance we can stop the worst of the eruption with volcano-plugging technology. It's more expensive than doing nothing, but cheaper than the economic impact of the volcano. It turns out that cigarettes have somehow been contributing to the volcano problem, so we'll need to phase those out by subsidising e-cigs. We can further reduce economic and human damage by building lava barriers to protect from the part of the eruption that still happens. So there will be up front costs, but we will save over the coming century - both by avoiding the worst effects of the volcano, and by phasing out cigarettes which are harmful anyway.

You: 'I heard that a scientist saying that the volcano probably won't erupt. He's quite well known, surely he must know what he's talking about or he wouldn't be commenting about it?'

Advisers: 'No, not really, his qualifications are in a different field, and he runs a business that will have to close to make way for the lava shields.

You: 'What about this lobby group, which is run by one of my former colleagues?'

Advisers: 'It turns out they are funded by the tobacco lobby.'

The question for the political leaders is whether to listen to the vast numbers of scientists who say there is a high likelihood of the event, and the economists who say dealing with it is affordable? Or do you bank on the 3% who disagree and the 5% chance it might just happen anyway?

Jassey* - your example is fine. Its what I am talking about. We just disagree on the expected impact and expected timescale of climate change and the the degree of uncertainty about the modelling.

The announcement that 'the science is settled' was a deliberate ploy by the climate lobby to stop the debate by declaring its a certainty.

The 97% of scientists that get funding agree. The problem is no scientist who disagrees gets funding. That's what declaring 'the science as settled' does. Its stops the scientific debate and that was a deliberate intention. It happened during the Blair Govt. The Stern report was published shortly after with a discount rate which was lower than the risk free interest rate at the time.

Jassey - if you are referring to Capacity payments I do not agree with those either. Indeed they were only introduced because wind subsidies increased wind turbine penetration to the extent that it threatens security. We now have to pay old CCGT to stay on the system to back up the wind turbines

I think we'll have to agree to disagree on what caused the current margins. It's just as easy to argue (and better evidenced) that faffing and indecision over new nuclear, and a laissez-faire approach to the market was a huge contributing factor.

Instead, relying on market forces gave us an upswing in coal fired generation as a result of US shale gas. Hurrah for the market! Our air quality is ever so grateful.

It turns out the market didn't sort it out (plenty of gas was consented but not built) so we've got the capacity market to keep the lights on at what is considered an acceptable level of reliability.

Two more things - any evidence for the motive you said I have, and would you mind awfully spelling my username correctly?

Jassey* - your example is fine. Its what I am talking about. We just disagree on the expected impact and expected timescale of climate change and the the degree of uncertainty about the modelling.

Yes, I like to look at all the sources of evidence and consider the balance of probabilities.

The 97% of scientists that get funding agree. The problem is no scientist who disagrees gets funding.That's what declaring 'the science as settled' does.

Gosh, isn't it a pity that the fossil fuel lobby isn't pouring millions into this field and funding sceptic scientists. Oh, hang on...

Its stops the scientific debate and that was a deliberate intention. It happened during the Blair Govt.

Oh dear, really? You think all climate change modelling is UK-centric?

IPCC5 (with the 95% figure) was under the Coalition...

Saying 'climate science is settled' is daft as there is a huge amount of research ongoing into future impacts. However, saying that 'the evidence shows that climate change is happening now and we are the primary cause' is about as settled as science tends to get.

Jassy - the faffing about with renewables caused the faffing about over nuclear. Everybody was waiting to see which way policy would go under Labour. They constantly ducked the nuclear/renewable question for purely political reasons and constantly interfered in the electricity market.

The influx of subsidised wind power then undercut the market for marginal CCGT that only need to run very occasionally but in periods of very high prices to cover their costs.

Subsidies to wind power and other renewables basically caused uncertainty that cased firms to stop investing in CCGT capacity and consider shutting down the old marginal CCGT capacity they had in operation.

Old CCGT needs price spikes and a minimum number of running hours in the Balancing mechanism to make it worthwhile to stay on the system. The wind power increased uncertainty but cut the number of times that old CCGT ran and hence it shut down. Problem is we cant be certain wind turbines will run when we need them most - which as I say way back up the thread is in the next 30 days at ACS Winter peak load.

Ah, good, we agree it was a hell of a lot more complex than 'wind turbines'. Jolly good, why did you suggest otherwise in the first place?

Jassy - I mention wind in the main because most of the UK renewable response has been in the wind sector. I live in the UK but have of course studied other renewable technologies in other countries.

Ego - fossil fuels will not run out overnight. Not even you think that. If they do gradually become relatively more scarce then their price will rise to reflect that. It is that price rise that will trigger investment in alternatives, very possibly renewables which by the time we need them will have fallen in price and also new technologies will be available we do not yet know about. Battery technology will no doubt be much better then also.

Just to set your mind at rest. Mankind has never depleted any energy resource. The first resource (i.e. wood) became relatively expensive and a new resource was exploited to power our industrial revolution (i.e. coal). as a result.

The same will happen again once the right level of price signal is reached. The transition from coal/oil to natural gas has only just got underway. It will take hold and the world energy system will become largely gas based in the next 100 years. If then gas becomes hard to find or demand is far outstripping supply no doubt renewables will come forward to meet demand for energy.

Really, trust me on this there is nothing wrong with renewables. Just too expensive right now. At $20 oil prices which I fully expect to see in the next 2 years they are even more uneconomic. On the other hand at $200 oil prices renewables begin to make sense in certain applications. Unless of course we go back to burning those trillions of tonnes of globally available unmined coal we will have left in the ground.

Ego,

'Like I said upthread, scientific reality is above politics and economics.'

You keep talking about scientific reality but modelling large complex systems is a very inexact science and I doubt anyone on this thread really understands it to any great depth (including you).

So, it comes down to risk and reward, like most decisions. The question is how much to invest and in what renewables (or to forget renewables and focus on nuclear).

I don't think anyone would advocate 100% fossil fuel generation but that we should have a stable mix which optimises pollution, global warming and REASONABLE cost.

There is a lot of posturing about being on the 'right side of history' but this is merely clicktivism. You are more than welcome to make a voluntary tax contribution or to give as much of your money as you feel is right for renewables research. Most people who witter on about future generations do neither of the above but feel a virtuous glow by writing fine words.