Sunday, December 6, 2009

Why Nuclear in Australia

Why Nuclear in Australia





  • Renewables have under-analysed costs and impacts. They can't do the job of preserving prosperity.
  • Making an up-front payment now, to have cheap reliable energy later is the best way to use the wealth from the mining boom.
    • We need to bring in "stuff" to balance the "stuff" going out. If we don't bring in infrastructure of future value, then the dollar will rise so that we bring in goods of temporary value while simultaneously destroying our exporters and import-alternatives.
  • Nuclear is the future of world energy. Choosing to sit on the sidelines is a route to economic irrelevance.
  • Energy production uses water. Nuclear Power can be sited near the sea, and produce incidental fresh water. Coal Power is sited near the coal mines in good agricultural land. Geothermal, among other enormous difficulties, is sited in a very dry area.
  • Australia will be the safest place for traditional nuclear power. We have the raw materials for even safer next generation reactors.
  • For energy security we need to electrify because we lack oil. This requires a large increase in the amount of electricity. Coal is not an option. CCS is a fantasy.
  • Natural gas should be conserved for higher priority needs including essential fertiliser and in the future as an alternative transport fuel.
  • Natural gas generates 50% less CO2 than coal, but Nuclear generates none. So, for any given CO2 target, Natural Gas power has twice the impact on the continuing use of Coal power, compared to Nuclear.

Monday, November 9, 2009

Gift To The Future

Gift To The Future

We, the people of the 20th Century and the beginning of the 21st are bequeathing our descendants a grim legacy: too many people, many resources running out (crucially and perhaps declining already: oil), and environmental damage (including a significant increase in atmospheric CO2 with unknown consequences that might be very serious).

We would like to fix these problems, but realistically many will get worse rather than better. The loss of resources has many people fearing a significant collapse of our civilization, perhaps in the form of a serious and ever worsening Depression. Rather than just aiming to solve all the problems, we need to also make a gift to the future which will help them cope with the problems that we don't completely solve.

For old folk like me, the Gift to the Future is for our grandchildren and for the preservation of our civilization. For younger readers there is an extra good reason to make a Gift to the Future: You'll be there.

The Plan

The detailed justification is provided in more technical sections below. The plan itself is very simple.

In the energy business, as in many important businesses, we can divide the costs of running a particular bit of that business into the initial up-front costs (mostly construction costs), and then on-going, marginal, costs. In a normal way money is borrowed to cover the initial cost, then revenue is used to cover the resulting interest payments and the ongoing costs. For the business to be profitable, and not go broke, the price has to be high enough to cover both. However the energy business can't typically set its own price, which is dictated by the market: by the amount of demand at each price point, and by the actions of other sellers. For the seller it is better to sell whenever the price at least covers the on-going costs, but normally that will send the seller broke if it doesn't cover interest payments.

It is very difficult for business to build energy infrastructure in the current and near future environment. Interest rates are uncertain, energy prices are uncertain and if the declining production of oil leads to economic decline then demand may be low. Yet failing to build energy infrastructure guarantees economic problems. 

We need to cut this disastrous loop by making the initial up-front cost of new energy infrastructure as a Gift to the Future.

For America this will be a radical proposal, but for most countries it is just a return to normal. Most countries have traditionally run their energy infrastructure as a socialist part of a mixed economy. Energy infrastructure has been built by the central (or regional) governments from tax revenue and national borrowing. The radical aspect of the proposal is to get well ahead of obvious demand growth, to be ready to cover for reduced energy from fossil fuels.

There are however tricky aspects of the plan that are considered in the following technical sections.

The Energy Market

In the natural world, species are never content to enjoy a comfortable existence. If things are comfortable then the population increases until things aren't comfortable any more. Capitalist energy is like that. The most marginal oil producer is walking a fine line and can't afford any increase in costs or decrease in price. Consider an electricity supplier that owns its plant outright and is making a nice profit on the electricity sold over the marginal costs. In those circumstances modern management feels compelled, by threats of takeover, to mortgage the production facility, pay the cash to the owners (and managers) and continue on the edge with revenue having to cover interest as well as on-going costs.

Having the energy industry on a knife edge is worrying. There is no spare capacity at the current price. It is hard to know whether a rise in demand will be met in time by increased production. Indeed it is hard to know whether any significant increase in production is possible for some energy types. Occasionally we get a clue. The 2008 price spike in oil failed to bring significant extra sources on stream. It is very easy for electricity production to not be ready for rising demand, as we've seen in Pakistan, South Africa and many other places down the years.

Government intervention in Energy

Outside of America, government intervention in energy has been common. In European-style mixed economies, electricity and natural gas supply have been seen as natural monopolies and core infrastructure, and so have been commonly run as government services. In recent years governments have sold off energy infrastructure and most places are now in a similar situation to America.

Once infrastructure is in private hands it makes government initiatives tricky. If the government becomes a participant in the market, this is going to damage the private participants. Presumably compensation should be paid. This is particularly the case where the government has recently sold its previous infrastructure.

The straightforward way to proceed with the Gift to the Future is to (re)nationalize the electricity and natural gas industries. Then the addition of substantial non-carbon generating capacity can be done without consideration of the impact on other businesses. When the energy crisis is passed then governments may choose to privatize energy infrastructure again.

The Energy Crisis

The culture and prosperity of the modern world stems from the exploitation of fossil fuels, starting with coal in the Industrial Revolution. There is a limited quantity of these fossil fuels (coal, oil and gas) and naturally we have been using the best quality and most conveniently located first. So increasingly the fossil fuels we use are more expensive to acquire, and deploy. As the cost goes up we see a narrowing range of uses to which fossil energy can be cost-effectively deployed. And as a simple mathematical fact, as you use up a finite resource there must be particular months and years which represent the highest points of production. Whether you perceive this as peak demand or peak production doesn't matter. The world economy has expanded on increasing use of these fuels and must contract as use of these fuels contracts. That's the medium and long term crisis, but there is a more immediate problem.

Liquid fuel is the most convenient form and so oil has been the most important fossil fuel. The experts are unanimous that the days of easy cheap oil are past. Indeed 2005 was a recent peak of production of oil as it came out of the ground, though 2008 was slightly higher when you include liquid hydrocarbons obtained more indirectly. What we did see in 2007-2008 was that a massive run up in the price of oil was not able to induce significant extra production. Subsequent lower prices have seen the postponement of some exploration and development. It is not unlikely that the plateau from 2005-2008 will be the peak of oil production, and the practical impossibility of obtaining higher rates of flow represents a cap on world economic production for as long as so much infrastructure, particularly transport, is oil dependent.

Burning fossil fuels also creates a wide variety of serious pollution. One inevitable part of burning carbon-based fuel is the creation of CO2, and since it is a trace component in the atmosphere we have been able to make a significant change to the amount of CO2 in the air: from 280 to 380 ppm (parts per million). Most scientists think that it would be wise to stop increasing the level of CO2. Consequently significant sections of the populations of Western countries oppose the expansion of the coal power industry. This political fact is another part of the Energy Crisis.

The Electric Society

Non-carbon energy sources only produce electricity. You can do a lot with electricity. You can split out the hydrogen from water: and possibly use hydrogen as a portable fuel. Perhaps more sensibly one can make more manageable fuels like methanol. Or we can do a lot more things electrically: such as battery (plus capacitor) powered vehicles; railway electrification; heat pumps for heating and cooling.

Whether one generates fluid fuels or uses batteries, there is a substantial loss of energy compared to the magic of oil-derived fuel. So it is not going to be good enough to add electricity supply with equivalent energy to current fossil fuel energy. We need to add much more. We need to generate about triple the amount of electricity that we currently do.

It is crucial that we start this massive build up of carbon-free electric generating capacity as fast as we can. We don't have time to spend agonizing over whether the returns will cover the interest payment. If they do, that will be good. If they don't, that will be because the future is in even greater need of our gift.

Nuclear, wind and solar

Nuclear, wind and solar meet the criteria for the Gift to the Future. The majority of the expense is up-front. Once they are built they provide cheap power. Wind and solar have additional deployment costs associated with energy storage (since they are not always available) and an improved electric grid to cope with the level of variability.

The decision of how to implement the Gift to the Future is an engineering decision. Nuclear has to be in the implementation options for the Gift to the Future, because without that option it will be seen by a significant proportion of the population as yet another Green fantasy.

Notes

When individuals save for future problems they might save money. Society as a whole can't do that. Taking money out of the economy would cause deflation and force the central bank to create more money. Similarly if a substantial amount of money were brought back into circulation it would only cause inflation, it wouldn't deliver wealth to the future. Sometimes one country can try to save money in the currency of another, as China has by investing in America, but we can see that that has put them in a difficult position having lost control of the value of their savings.

We also note that the Gift to the Future would discourage private companies and individuals from investing in energy research. This is something that needs to be addressed, guaranteeing inventors that successful research and development will be well rewarded.

Summary

The Gift to the Future cuts through a lot of the argument about predicting the future. It is an insurance policy. You don't have to believe the climate computer models to worry about the significant change in atmospheric CO2 and other gases. You don't have to subscribe to the theory that Peak Oil is here now to believe that we need to prepare for an electricity-based future with energy security.

The worst that can happen is that we are unnecessarily poor now, as we construct more electric power generation than is immediately needed. The decision to be poorer now to save for the future is one that we all make at times in our lives. Society as a whole can't do that through saving money. We need to actually invest in core infrastructure. Energy is the most important infrastructure for our modern society. The Gift to the Future is a gift to ourselves. This is something everyone can understand.


For more information go to www.gifttothefuture.org.

Saturday, October 17, 2009

Carbon politics after the ETS

Carbon politics after the ETS

In all interesting team games the good players are thinking more than one move ahead, and the most interesting team game is politics. Consider the ETS. It is, in principle, a brick wall. We set a cap on our carbon emissions and emitters are forced to trade to stay below that. The assumption is that the magic of the free market will supply the best possible way of staying below the cap with minimal economic pain. 

Does the free market have enough common sense to avoid running full speed into a brick wall? This was amply disproved in 2008 when the economy proved totally unable to prepare for the spike in oil prices which has been predicted for decades. We don't need the magic of the market to work out how to get over the ETS brick wall, because there is only one possible way.

Things that aren't going to work include: the hydrogen economy, carbon capture and storage, solar energy of any sort, covering the landscape with wind farms, building dams, switching agriculture to producing biofuels, geothermal, tidal dams, stopping cows from farting. Many of these involve mankind making a grab for ever more of the limited resources supporting life on Earth. It is a relief that they won't do the job, so that we will be forced to move to the one energy source that nature isn't interested in.

The only thing that will get us over that ETS brick wall without economic disaster is Nuclear Power. Which brings us back to the game of politics. Once Malcolm and the Coalition get the ETS signed up, then they can roll out the Nuclear solution. It will be trivial to use the Senate's powers of enquiry to tear all the alternative options to shreds. They can unwrap a Nuclear policy, complete with a proof that nothing else will do the job. And then suddenly the boot is on the foot. Nuclear Power will tear the ALP and the Greens to shreds, since so many of them think that the truth should never be allowed to get in the way of a good fantasy.

Is anybody in Australian politics thinking more than one move ahead? It is hard to know. You would think that such a plan would make it easy for Malcolm to get Senators to pass the ETS. However he may be wary of discussing it, given that many in his party hate his liberal views, and others are just too talkative to keep quiet about it. I suspect however that is is the clued up ALP that can see this possibility. They'd prefer to have the ETS fail. This avoids the problem. Once again such a cynical intention could not be shared with the rank and file MPs, so we are not likely to ever know. Still it will be interesting to keep this next move in mind while we follow the struggle for an ETS.

Thursday, May 28, 2009

World Saving

World Saving

During the boom, China saved for a rainy day. This now looks wise, but it was only possible because of western countries doing the opposite. We no longer hear Eastern leaders saying that "the West should save, as we do". I guess they've figured out that it is impossible for everyone to save money.

Money is funny stuff. You can't actually move wealth into the future through money. That seems silly, since we do it all the time. However what actually happens is that when you put your $100 in a jar under the bed, then you create a tiny bit of deflation that makes all other dollar holders richer. Then when you take it out and spend it ten years later you cause a tiny bit of inflation that makes all other dollar holders at that time poorer, and that wealth is transferred into your $100 as you spend it. If you doubt this think: is any real wealth lost if the money is accidentally destroyed?

A country can only move wealth into the future through money if it is some external currency. This however puts that country's savings in the hands of that external country, as China has found. And when the amount of money under the bed is in the trillions then the normally prosaic act of getting it out and putting it back in circulation becomes quite tricky. However that may turn out, the relevant point for this discussion is that:
The World as a whole cannot move wealth into the future through money.
And yet there are a number of reasons why the World as a whole should now be doing all it can to prepare for a rainy day. Even though things aren't too flash now, they will get worse on the peak oil down-slope, before we can get the inferior alternative energy sources operational. We need to save.

Saving means doing things now that don't translate into consumption now. This means less consumption now: the very reverse of trying to restart business as usual. 

The simplest thing to do is to stockpile useful stuff that is, or embodies, energy. That's what China is doing now: saving oil and iron ore instead of saving money. But there's another name for that: "hoarding". It is an amazing feat of modern thinking to perceive a simple act of preparing for the future as a negative thing. The explicit value of hoarding oil is that it is much more valuable than the current price: quite valuable enough to justify long term storage costs. The act of hoarding raises the current price. This might annoy current consumers (hence the negative name), but this is something we need to do to sustain the oil industry and postpone a complete collapse of the oil industry and everything else. Of course the cheapest place to store it is to leave it where it is, hence Sarkozy's suggestion of a producer-consumer deal on prices, but this seems likely to be politically impossible.

Another thing to do is to build infrastructure now that will be useful later. There's a lot of infrastructure building going on, but a lot is seriously misguided: like extra freeways. The infrastructure we need is for energy and for electrification of transport. We need to build those things now, even though they aren't justified by current economic conditions. Businesses don't spend money to prevent social collapse: that's the government's job.

Using public transport and occasional taxis is cheaper than owning a car. However, once you have (rightly or wrongly) bought a car, it changes your decision process on transport. You can now undertake trips that wouldn't have been justified previously, based on the marginal cost of using the car. You don't include an allowance for the sunk cost of the car when deciding whether to use it for a particular trip. This brings me to the next point.

Having built our low marginal cost energy plants, and our wonderful double track electrified railway network, then we need to make maximum use of those resources. We need to let the price we charge for them drift low towards the marginal cost (including maintenance), not try valiantly to make enough money to cover our sunk upfront costs. If it was possible to cover those costs as well as the marginal costs then business might have built that infrastructure rather than the government.

So how would we actually do this? The aim is to reduce the amount of consumption for immediate use in order to have money and workers available for the infrastructure costs (and for stockpiling as well). The way to do this would be to follow the model of "War Bonds" during war time, and issue "Energy Crisis Bonds" to soak up money. What such bonds should promise to preserve is their value as a fraction of total national wealth. Since the activities are not designed to be rigorously economically justified, they might reduce total national wealth, and hence the value of the bonds, but people will actually be happy to accept that if it is up front. And indeed we know that national wealth will decline in real terms for quite some time for other reasons. People are actually more interested in keeping their share of the total pie, rather than taking risks to preserve value in absolute terms.

There are other ways of saving:
  • Useful education (small farming?);
  • Relevant research and development (forget going to the moon);
  • Cleaning up environmental problems rather than leaving them to our poorer descendants;
  • Building a low power, mostly text, mostly wireless, free Internet infrastructure for relevant applications (such as education and transport optimization);
  • ...your ideas here...

If the government were to do as I suggest and build energy and transport and provide them cheaply it would undercut businesses trying to deliver these services. Apart from fairness concerns, there have to be serious doubts as to whether governments can make good decisions in these areas. But it seems clear that business perspective is too short term and won't move until too late. The traditional American answer is to provide carrots and sticks for business to move in the directions that government wants. This often seems to combine the worst of both worlds, with poor targetting (e.g. biofuels) and it is very difficult for government to walk the line between too little incentive to do the job and too much granting windfall profits. My feeling is that we need a bit of socialism for a while to have any chance of getting through the Peak Oil downslope to hopefully find the nuclear electricity plus natural gas upslope. Leaving the energy/financial crisis to private enterprise will eventually leave the world's important assets in the hands of a small number of men who are more noted for their ruthlessness than their public spirit.

Even if the details are wrong the fundamental point is right: One of the things we need to be doing is saving and the thing we need to be saving, in various ways, is energy.

Wednesday, May 20, 2009

Free Will

Free Will

Many systems behave with very exact determinism. The circling planets and a sphere rolling down an incline were examples that attracted applied mathematical treatment in the early days of modern science. When it became apparent that humans were systems built from the same stuff as inanimate objects it came to be thought that the behaviour of humans must be exactly determined. If you could know the exact state of the person then that persons responses could be exactly calculated. This was interpreted to mean that people don't have free will.

Then came the quantum revolution. Systems don't have exact state. The state of a system and its evolution are only determined statistically, not exactly. This was seized on by some as restoring free will.. This never made any sense to me.

Instead of mapping out a persons exact future, we can instead only map out the probability of all possible futures. Or if you prefer the multi-worlds interpretation then we can map out all the person's futures and how frequently each occurs. It is a mystery to me why anyone feels that this bestows any more free will than the more exact Newtonian determinism.

The problem of free will comes from the intersection of the ideas of science with the idea of an infinite God. God is envisaged as being able to do infinite amounts of calculation at infinite speeds. If we remove the idea of an infinite God then the problem of free will disappears.

Lets suppose that we wish to solve the problem at the heart of the free will issue. We wish to enter the state of a person into some computing device and extract information about the future behaviour of that person. If a person was as simple as a perfect sphere rolling down an incline then we would expect an easy and definitive result.

One possible way to address the problem is to make an exact copy of the person and follow the behaviour of that copy. Effectively we are using a human as a calculating device giving back information about human behaviour. A key question is: can we do better? Can we build a simpler system which will predict the behaviour of the person. Science now understands the butterfly effect: where in unstable systems small changes to small parts rapidly expand their effect to alter the macro state of the total system. Mathematically we now also understand that most information, such as the information describing the state of a person, is incompressible -- it can't be described by a simpler system.[1]

It thus seems overwhelmingly likely that you can't build a simpler system to determine the evolving state of a person. What this means is that the only effective way to find out what a person will do in a given situation is to put that person in the situation and see what they do. To rephrase that:

Observing what a person does is the only way to find out what that person will do.

To me this expresses the fact that the person has free will. The person's actions are not "determined" in any physically meaningful sense.

There is a problem with this interpretation. It also applies to hurricanes and bacterium. Clearly a hurricane doesn't have free will because it doesn't have will at all. A becterium, like a person, does act purposefully to decrease local entropy. If you don't want to allow that a bacterium has free will then the next step up is to creatures which have specialized cells used for decision processes. It seems unlikely that this is a hard break. Probably as soon as there is some cell differentiation then some cells are more concerned with decision and others less. And from there to people there is no clear cut point where we could reasonably divide those with free will from those without.

Sadly even the break between life and non-life is not that clear cut. Perhaps we are forced to the straight forward view that some things have more will than others. Will is always free will because the extent to which a systems actions are predictable by a simpler system is also the extent to which we would not identify something as really displaying will at all. We thus return happily to the sensible view that prevailed before the imaginary monster of determinism arrived on the scene.

[1] somebody, probably Chaitin, proved "nearly all information is incompressible" or something like that.