A heretical view of energy ‘indulgences’

| December 21, 2020

Pioneering environmentalists such as Paul Ehrlich argued strongly against ‘Technological Optimism’. Broadly speaking, this is the belief that technological improvements will meet unlimited human demand for resources, including energy.

Many environmentalists appear to have embraced technological optimism wholeheartedly, probably in reaction to the slow response of governments to the threat of climate change. ‘Technologically optimistic’ solutions to global warming include battery storage to regulate imagined infinite supplies of wind and solar energy.

The supporting assumptions of technological optimism in relation to batteries are that the world has unlimited supplies of lithium and that the impacts of the associated technology are negligible. Batteries are becoming cheaper and may even pay for themselves in the medium-term but more energy has to be to put into a battery than can be taken out so the assumed overall reduction of related emissions is questionable.

Mining and processing of lithium for battery storage uses very large volumes of water which is sometimes diverted away from local communities. Like other mining operations, lithium extraction may cause health problems, pollution and social disruption.

Government incentives to encourage adoption of energy technology based on ‘optimism’ can be likened to the selling of ‘indulgences’ by the church prior to the reformation. Martin Luther objected, arguing that the sellers of indulgences could not guarantee the purchasers that they would ultimately receive divine forgiveness.

Neither can a secular authority today unreservedly promise those forced to purchase energy ‘indulgences’ for other road transport users that climate change will be mitigated as a result.

Australian governments have decided to introduce a road usage tax for electric and hybrid vehicles to be based on distance travelled. Presumably, the difficulties of collecting the tax at the point of energy delivery were considered insurmountable. But it would not be surprising if the revenue raised by the tax is cancelled out by collection and administration costs.

In any case, all road users should pay their fair share for use of roads, bridges, traffic controls and other infrastructure. Otherwise, why not also exempt the thousands of people connected to a town water supply who also have a small water tank from paying headworks charges such as reservoirs, pipes, pumps etc? Or should anyone travelling on public transport do so for free to offset their contribution to emission reduction?

Distortions created by well-meaning economic engineering can lead to serious unintended socio-economic consequences. For example, less efficient energy users may take advantage of more efficient energy users because the true cost of the energy component of their transport is concealed and therefore appears lower. In other words, some consumers will pay more than they should in one area because others are paying less than a market price in another area.

The renewable energy supply shortfall in all sectors is such that governments cannot promise road usage tax exemptions for electric and hybrid vehicles would significantly mitigate climate change. At present, most of the electricity used to recharge electric and hybrid cars comes from coal-fired power sources. Clearly, the ever-increasing energy demand of road transport in Australia is well beyond the realistic potential of wind and solar sources to supply.

The energy consumed by road transport in Australia is roughly equal to the output of 22 Hazelwood power stations running at 100% capacity 24/7. This is equivalent to the energy output of 5,600 7 Megawatt wind turbines or around 23,000 hectares of solar collectors. For comparison, a proposal to locate one of the world’s largest offshore windfarms near Wilsons Promontory would generate about the same amount of electricity as one Hazelwood-size power station.

It has to be acknowledged that like fossil fuels, the resources needed to collect, process and distribute alternative energy are finite. It would be prudent to allow flexibility for environmentally progressive economic and social change, including transport, that may no longer be discretionary. The possibility of new energy technologies should also be considered before locking future generations into what amounts to variations on past practice.

Policy makers should be wary of setting conditions favourable to the development of a form of economic distortion known as the ‘Tragedy of the Commons’. This is the dilemma of many individuals acting rationally and separately in their own self-interest, knowing that a shared and limited resource will ultimately be depleted against the best interests of all.

If a particular form of energy were to be made attractive by fixing the price or by tax exemption, demand for it would increase along with demand for equipment and infrastructure associated with its use. If, subsequently, supply of that form of energy cannot meet demand, significant economic disruption and loss would be likely to ensue.

The environmental impacts of road transport extend well beyond the atmosphere into the fabric of modern civilization. Reducing our dependence on energy, regardless of the source of generation, obviously requires revolutionary change, especially in urban transport.

People do recognise a need for remedial action and wish to participate. But it is essential to ensure that ‘technological optimism’ is supported by rigorous inquiry and not by the selling of political ‘indulgences’.