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The Externalities of “Green” Energy

June 30, 2011 Leave a comment

There are clear externalities associated with using oil and other carbon-based sources of energy. So clear, you can take a photo of them:
Steam or Pollution?
But this image, which many people will assume is toxic smoke being released from a refinery or chemical plant, is likely more likely showing a lot of steam being released into the air. Water. Notice it looks like a cloud?

I’m not saying the externalities associated with fossil fuel use aren’t real or serious, just that if you want to do serious analysis of them, you have to 1) understand what the real external costs are, not just assume that because there are external costs, fossil fuels will always do the environment more harm than good [that’s the premise behind “less use is always better”] and 2) understand the externalities of alternatives.

And there are externalities associated with wind, solar, hydro, and nuclear power.

Consider the massive quantities of steel required for wind projects. The production and transportation of steel are both expensive and energy-intensive, and installing a single wind turbine requires about 200 tons of it. Many turbines have capacities of 3 or 4 megawatts, so you can assume that each megawatt of wind capacity requires roughly 50 tons of steel. By contrast, a typical natural gas turbine can produce nearly 43 megawatts while weighing only 9 tons. Thus, each megawatt of capacity requires less than a quarter of a ton of steel.

A modest proposal: stop categorizing certain energy sources as “green.” It misleads people into thinking some forms of energy don’t have negative externalities. They all do.

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Categories: Microeconomics

Car Market Slowing Down in China?

June 29, 2011 Leave a comment

This would be bad news for my friend who’s come to work for the Ford JV in Nanjing.

Handel Jones (the author of Chinamerica: The uneasy partnership that will change the world), thinks he may have found these first signs of slowdown in China’s auto production numbers.

On the other hand, when I saw my Ford friend last week, he sure didn’t seem worried about the future of the car market here. And when it’s your career on the line, you tend to pay attention to trends! I’ll take the insider’s view on this one.

Specific Factors, Trapped

June 25, 2011 Leave a comment

We’ve finished the International Economics class, but this article caught my eye, since it relates to the idea of specific factors:

Across the country, nearly empty toll roads are struggling to turn a profit. Other projects are surviving only with continued public financing, which has been cast into doubt by Europe’s sovereign debt crisis.

And by the way, “surviving only with continued public financing” means the returns to owners of this factor have fallen, so owners of other factors are being required to compensate them.

Categories: Uncategorized

Biggest Bubble Ever?

June 11, 2011 Leave a comment

But is it a bubble if everyone knows?

Categories: Uncategorized