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Want to see the back of fossil fuels? Calm down, hippies. CAPITALISM has an answer

Make it cheaper and they will BUY

By Tim Worstall, 1 Oct 2014

Worstall on Wednesday It's a distinctly lonely intellectual position to have — agreeing with the IPCC that climate change is a problem, one we're causing, and something that we might want to do something about but thinking that we've probably already done what we needed to do.

The extent of the Arctic ice cap during the last ice age

I'm no expert on energy... but I do know my way around an economics paper

Lonely as it may be, that's where I am. And I am here simply because I've bothered to go and read a lot of the stuff on the subject.

I have to look up the difference between a Watt and a Joule, so there's no point in asking me to look at energy budgets and the like. I'm entirely happy to accept what the IPCC says. Even if it's lying about everything, it's still going to be the basis for public policy. And as such, it's worth thinking about what the best policies would be.

However, I do know my way through an economic report, and have read the ones upon which the IPCC's work is based (namely the Stern Review). I also know why Bill Nordhaus thinks Stern is a Silly Boy and why Richard Tol (who has been part of those IPCC reports) is positively sulphurous on the subject of Stern.

The outcome of knowing all of this is that moving away from fossil fuels gets rid of the problem. No, we don't have to stop economic growth; no, we don't have to give in to the Forward to the Middle Ages fantasists at Greenpeace; and no, it's not a fundamental reconstruction of capitalism, or globalisation, that's required (indeed, those IPCC models show that globalisation itself reduces climate change and capitalism is entirely consistent with beating it).

It really is just that move away from fossil fuels to some other (less polluting) form of energy production that is all that is necessary. Furthermore, the best (and most efficient) way of encouraging this is a carbon tax, as we lose less of everything else by doing it this way.

Now that I've solved the problem in one paragraph we can get off to the pub. Nope. Simply defining the problem doesn't help implement the solution. What we want is some form of energy generation, capture and/or storage that allows us to continue along on our merry way without using those pesky, dirty fossil fuels.

And there's a rather large industry devoted to discovering exactly that. While various people claim some sort of success, no one is (as yet) claiming that they've managed it in the one way that an economist would agree is actually the solution.

That "one way" should be cheaper than fossil fuels. You'll have seen claims being made recently (from Stern again, among others) that beating climate change will actually incur NO NET costs. But that's true in only one specific scenario: by adding the benefits of poor people not choking to death on coal smoke as more expensive solar cells are used.

Want to see the back of fossil fuels? CAPITALISM has the answer

The idea of non-fossil fuel energy costing users less money to use is what gets the economists' hearts racing, as once (if ever) that is true then everyone will quite naturally move to adopt that new and non-polluting system, and the coal plants and oil rigs will crumble away into dust. Hurrah! We're done!

However, here's the thing: I do think we've already put in motion a course of action that is going to lead to that cheaper (and cleaner) energy. I'm not saying there's a magic box buried away somewhere, full of answers, but rather, that research and development is all moving in the right direction for us to be able to have non-carbon-producing energy systems within the time limits required (no, not the ones Greenpeace and the like are babbling about — we've a few decades yet).

A little technical snippet that encourages me in that view. It came from new research on printing your solid oxide fuel cells on a $100 ink jet printer. Not only is this of course cheap in capital, it also economises on the very expensive scandium that makes the most efficient type of these cells. So much so that my back-of-a-envelope calculations gives me a raw materials cost of $120 for making a 5kW stack suitable for a household.

And such a cell stack is very efficient: used as a combined heat and power unit you should get 80 per cent efficiency with hydrogen as the fuel.

Yes, I know, hydrogen is difficult to get, which is why I'd like to make a second point. By combining a pair of solar cells made with a mineral called perovskite and low cost electrodes, scientists have obtained a 12.3 per cent conversion efficiency from solar energy to hydrogen, a record using earth-abundant materials as opposed to rare metals.

However, we need to add a clarification. While there is a mineral of the same name, Perovskite is really a structure of matter, or a lattice of atoms if you prefer. The point is the materials to make it are cheap, very cheap. And if we've a cheap method of making hydrogen and a cheap method of making efficient fuel cells, well, haven't we just discovered the technology to make that economist's eyes light up, one that's going to be cheap enough that people will quite naturally adopt it over time, and thus our entire problem goes away?

OK, sure, this only solves the domestic and heating market problem. Moreover, I'm not suggesting in any way at all that it's going to be the two specific advances mentioned that solve that problem. But as a rough guide, a UK yearly household gas and 'leccy bill is some £1,400. So, if anyone comes along with a piece of kit that works for 10 years and costs, say, £5,000, then people will buy and install it.

I would say that, given there are other such technologies constantly coming out of the labs and research institutes these days, we're getting close to this being technologically and economically possible.

Given that you can, just about, run an internal combustion engine on H2, then cheap H2 production solves that transport problem too.

All of this is, of course, the “technology will save us” argument. But it's also an argument that the profit motive will save us. People have been screaming about energy Armageddon for long enough that engineers and financiers are now out there in pursuit of the cash to be made from a solution to the problem.

This does tickle me rather, namely that the fossil fuel-free world the hippies have been demanding is going to be delivered to them (and the rest of us) by capitalism. ®

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