Monday, March 22, 2010

Money for Energy

Money for Energy

Here's my response to BNC on RAE report:

If we don't expand electricity to adequately cover declining use of fossil fuels, then we will have an energy disaster. To understand what that means you have to look at the key consequence of the Industrial revolution. When energy became cheap then (skill-weighted) labour became the scarce resource and wages rose to give our current prosperity, while energy prices were driven to the floor. Once there is a shortage of energy you go back to (or at least towards) the normal condition of mankind, where wages are driven to the floor because labour is not the scarce resource. Of course once labour costs go down then so do a lot of your costs of building and running energy production. So you get to a balance point, similar to a supply-demand balance point. We don't want to go there, and with nuclear power we don't need to. However it does mean that you can't be simplistic when talking about costs: they will be driven down if they have to be.