“The nature of the short-term operation of an electricity system is more like that of a machine than a market.”
A paper published by Joseph Cullen in the American Economic Journal: Economic Policy (November 2013), “Measuring the Environmental Benefits of Wind-Generated Electricity” [1] is important in two regards. First, using Texas data, it shows that even with notable emissions savings attributed to wind, the highly subsidized cost of wind is exceeded only by high estimates of the social costs of pollution.
Secondly and perhaps more importantly, his paper provides an opportunity to illustrate where wind-performance analyses fall short. This is the subject of this two-part post today and tomorrow, and is independent of the issue of carbon dioxide social benefits versus social costs.
Professor Cullen first determines how much electricity production of other generator types is offset by the presence of wind plants in the grid using a reduced form econometric model based on “…observed behavior and current market conditions.”…
Continue Reading[Ed. note: Julian Simon, born February 12, 1932, died four days before his 66th birthday. He would have been 82 years old today. MasterResource takes its name from Simon’s term for energy, and we publish on his oeuvre from time to time.]
Thirty-three years after its publication by Princeton University Press, The Ultimate Resource remains insightful and timely—if not timeless. Simon’s Ultimate Resource 2, published in 1996, greatly expanded upon the original, but the major themes were not changed due to the solid worldview that Simon had developed in the 1970s.]
Energy: The Master Resource
“Energy is the master resource, because energy enables us to convert one material into another. As natural scientists continue to learn more about the transformation of materials from one form to another with the aid of energy, energy will be even more important.”…
Continue ReadingCap-and-trade, carbon taxation, net social cost for carbon: all assume that increasing emissions of carbon dioxide (CO2) and other greenhouse gases by mankind have injurious effects that are not accounted for in private activity. But the politically incorrect is intellectually correct: CO2 emissions make life better – even possible – for people, the economy, and the ecosphere.
Cost/Benefit Analysis
Weighing risks, costs and benefits is fundamental to life. We do it every day – when walking, driving, showering, heating our homes, and using stairs, ladders and tools; and when balancing the cost of new payments versus the benefits of a better home or car. The alternative is hunkering down in a bedroom or cave – until a lightning bolt, tornado, hurricane or armed burglar disturbs our false sense of security.
That is why government agencies are required to assess the benefits and costs of proposed regulations.…
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