Wednesday, July 18, 2007

What our energy policy should be

There has been a lot of talk about what our energy policy should include. Running themes are global warming, energy security, privatisation of utilities, subsidies and taxes.

- Global Warming: (*disclaimer: Carbon strategy should be about one countries standing and reputation to achieve things cheaply while others spend heaps with nothing to show for it. Therefore other countries (and global) failure is as much a positive as meeting domestic targets*)A dual strategy of long term goals, GHG metering and measuring in the short term. I see no economic harm in signing treaties that are not binding, such as Kyoto. We should also not fear "exporting" our emissions to third world countries. This will help them develop in a market-friendly way, and they may be better able to adjust to sea rises etc. with less fatalities/burdens. (We should be) Reducing subsidies on carbon intensive energy sources but not be tempted to waste money on new subsidies (on solar/wind). Subsidies are way less efficient than direct investments in the carbon market. When the carbon market becomes more trustworthy, this will be the cheapest way to meet targets. Carbon taxes and reducing fossil fuel subsidies will be the cheapest way to reduce emissions in the long term.

- Energy Security: The absolute highest security must surround all fissile materials handled in Australia. The biggest security risk to the world is nuclear blackmail and mega-terrorism. With such a bright future for nuclear, one must not forget its security-risk implications which dwarf its cost per KW as an associated input cost. As far as energy imports go, ethanol from Brazil is preferable to oil from the middle-east, and subsidies should not be used to favour domestic energy sources, but only to favour lower risk sources if at all.

- Privatisation of Utilities: Retail energy supply should definitely be privatised, but associated infrastructure MUST remain Nationalised (NB. price controls on infrastructure access count as near-nationalised). Privatised energy supply is the only way to account for demand/supply unbalances fairly (if this unfairly punishes the poor, the poor should be singled out and helped. No point rewarding the rich with cheaper power just to marginally help the poor)

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