Tuesday, December 29, 2015

Electricity and Ethics and Europe

When I was a young auditor I was on an airplane heading out to a utility client in Iowa. I sat next to a woman and her grade school aged child. I was making small talk with them and the kid asked me what I did. I said I worked with the electric utility. And he said
Are you the guy who comes over and turns off the power?
The child's mom was embarrassed and the conversation was muted after that but I never forgot that exchange - the reality that, for the poor, electricity was a bill that had to be paid, and frequently it came ahead of other key necessities which then was brutally enforced by pulling the plug. Electricity is a big bill for the poor.

This discussion is completely relevant to what is occurring in Europe today, as these countries move to wind and solar renewable energy instead of economically efficient coal, natural gas and nuclear power. This great article from Forbes summarizes the current debacle:
To illustrate, Denmark and Germany are the proud wind capitals of Europe, but they also have the highest home electricity prices on Earth, 42 and 40 cents per kWh, respectively, against just 12.5 cents in the U.S.... Undeniably non-sensically, Germany has been paying over $26 billion per year for electricity that has a wholesale market value of just $5 billion
This sort of mass economic distortion (possibly suicide) has a real, human toll:
higher cost electricity (and energy) is horrible for our health. That’s because, since electricity is so indispensable, meaning that it “cannot not be used,” higher cost power drastically erodes our disposable income, which is the very basis of our health - while also disproportionately hurting the poor most. As a percentage of income, poor families pay 5-9 times more for electricity than rich families do. Predictably silently, higher cost electricity in Europe is killing tens of thousands of people a year, ”Excess Winter Deaths,” where older residents on fixed budgets in particular are forced to turn their heat down to avoid overly expensive utility bills. For example, there were 44,000 Excess Winter Deaths in England and Wales in 2014-2015
It is amazing that while Europe is able to penalize the poor and elderly on fixed income in the name of clean energy, their same economic champions, the car companies, ran elaborate schemes to defeat emissions limits on diesel cars in a massive scandal that we've all heard about. The cost of remediation and penalties will be in the billions.

Finally, in perhaps the bitterest pill, moving to expensive and unreliable energy sources means that the reliable blood-money energy available from Putin and Russia becomes even more important to maintaining their grid. While Western Europe has been making a (relatively feeble) effort to punish Putin for his atrocities in the skies and in Ukraine, they ignore the obvious morality issues linked to filling his coffers so that he can buy weapons and pay his soldiers that are used for repression and dictatorship in the east. It is amazing that there will be sit-ins for climate change and animal rights but the rights of Ukrainians and fellow European citizens apparently count for nothing if it enables their energy fantasies to be supported.

The Europeans are breathtaking in their ability to unilaterally punish the poor and the elderly and increase their blood money payments to Putin while cheating on emissions testing and pursuing their odd goals of "clean" power. These issues apparently do not keep them up at night despite their real-world effects.

Cross posted at Chicago Boyz

1 comment:

Anonymous said...

I might add there are also "excess deaths" resulting from summer heat waves because those environmentally conscious Euros don't do/can't afford air conditioning. While I don't think it was your intent, this was a great rebuke to our fellow Americans who cite Europe as the exemplar for public policy pursuits. I know...they recycle, use wind power and have great highways; efficient public transit; picturesque town squares and universal healthcare. I say dig deeper and also talk about the impact of confiscatory income taxes, a 20% sales tax, $5 a gallon gas, declining birth rates, and the willing surrender of national sovereignty to faceless men in Brussels. It all looks great from the outside, but after spending 8 years in Europe I was struck but their collective ethical blind spot regarding: the ripple effects from state-promoted environmentalism, ethnic cleansing in the Balkans, out of control euthanasia, and peace-uber-alles approach to Putin. Maybe, just maybe, their political class's tepid response to the disorder and mayhem that will result from the latest migrant wave will cause the citizenry to question the wisdom of their all-powerful-and-benevolent state institutions.

Cheeze Kopf