The start of a new year is a good time to read a bit of history. The Economist recently published a fascinating piece on Russia’s rail history: “The gauge of history: A train journey north shows how Russia has evolved—and regressed“:

What makes trains weigh so heavily on Russia’s consciousness is the sheer size of the land mass. European railway journeys, with their short distances between stations and the constant sight of human life outside the window, leave little time or space for thought or soul-searching. In Russia, however, train journeys are measured in days and nights rather than hours. It takes six days to travel from Moscow to Vladivostok, a distance of more than 9,000km. All one sees is forest, occasionally interrupted by a clearing or uncultivated fields cloaked, in winter, with snow. You can go for hours, sometimes days, without seeing a settlement or a soul. “In western Europe people die because their space is cramped and suffocating,” Chekhov wrote in a letter. “In Russia they die because the space is an endless expanse.”

Railroads have been used as a metaphor for history in Russia – and many other countries – where they symbolise both modernising progress and the supposedly linear course that history follows:

Russian history was often viewed as a track that was fixed from past to future, says Andrei Zorin, a professor of Russian at Oxford University. This led thinkers over the decades to ponder where the country had taken a wrong turn. Petr Chaadaev, an early-19th-century intellectual, lamented that Russia had made no original contribution to world civilisation because it had erroneously absorbed its Christianity from Constantinople rather than Rome. His “philosophical letter” was printed at the time of the first railway construction. Slavophiles saw the root of all evil in the reforms of Peter the Great, while Westernisers blamed the invasion of Russia by the Tatars and Mongols.

Soviet thinkers, too, were preoccupied with the right and wrong turns of history. “If you get lost on a road, you don’t have to retrace your steps; you can turn off at the next junction and find an alternative route. But if history is a railway line, you have to go all the way back in order to get on the right track,” says Mr Zorin.

Of course, the Economist engages in its fair share of vague historical ponderings in the article…

Speaking of history, one of the most important trends over the last thirty years has been the revival of cities. In a new book, the Dutch economists Henri de Groot, Gerard Marlet, Coen Teulings, and Wouter Vermuelen explore the reasons why. Here’s their summary: “The revival of cities and the urban land premium“:

End of the ‘death of cities’

Forty years ago, a large squatting movement was taking hold of the city centre of Amsterdam. This was not so much an expression of left-wing radicalism, as much as the desolation of the city. After 25 years of population decline, many vacant buildings had no better use. At around the same time, New York’s Times Square hosted mainly sex shops. There simply was no alternative use for the available floor space. It was an era in which people talked about ‘the death of cities’. What use did it have for modern mankind to agglomerate in heavily congested cities, when telephone and fax made long-distance communication so easy as to render physical proximity seemingly irrelevant? These stories are just two examples of a major turn-around in the prospects of cities over the past four decades, so vividly reported in Edward Glaeser’s (2011) ‘Triumph of the City’. Amsterdam’s squatting movement squandered as the demand for housing and office space soared. Times Square has nowadays become the vibrant centre of NYC’s theatre district…

Externalities and rents

Knowledge spill-overs imply that cities are a focal point of location-driven externalities. Land rents are the expression of these externalities. A location’s rent is high not because of the characteristics of the location itself, but because of what happens at locations in their direct proximity. This is a clear example of an externality, the value of your property depends on the actions taking by the owners of neighbouring property. These externalities provide a textbook argument for developing public policy at the level of the city and why a Henry George tax on the value of land is most efficient. In fact, the total land rent differential of a city can be shown to be an excellent instrument for the valuation of externalities generated by a city. They also allow a valuation of the contribution of public transport services. In the Netherlands, we show that these externalities account for approximately 3% of Dutch GDP.

As history has shown (see, for example, what happened to Detroit or the decline in the population of Amsterdam and Rotterdam referred to above), current successes provide no guarantees for the future. This is what Gibrat’s law tells us, growth is independent of current size. Future growth is therefore largely independent of past success. The chances for policymakers that try to row against the tide are small. A successful policy requires to ‘go with the flow’. Large investments in infrastructure in a declining city do not satisfy any real demand but lead to large financial burdens for the local population, making these cities even less attractive. However, policy can make a difference in growing cities. In order to remain on the short list of hot spots, policymakers in these cities have two margins to work on.

  • First, the city has to be attractive for innovative entrepreneurs and enterprises to locate their business.

  • Second, the city has to be an attractive choice for high-educated top talent as a place to live in.

Read the whole article – it’s excellent. I’m going to have a look at the book as soon as Stu sends me the copy he promised. (And I, in turn, will send Stu William Fischel’s new book on the political economy of zoning, Zoning Rules!)

de Groot et al’s analysis of urban economies is a nice complement to an NZ Herald op-ed by economist Kinley Salmon, who argues that the Government’s push for more oil exploration is a short-sighted approach to diversifying the NZ economy:

Worse still, oil is about the least strategic way possible to diversify the economy. Diversification is not a one-shot game – it is a continual process of expanding the array of products an economy produces. It therefore matters whether the initial steps in diversification make further diversification easier or harder.

Some products better enable future diversification than others because learning how to produce these products generates the skills, regulations, inputs and technology needed for many other related products. Just look at the development and subsequent diversification of the New Zealand film and media industry…

And oil? Well it is about as unstrategic a product as possible. By building the capability to produce oil, we do not give ourselves any strategic advantage to diversify further. Instead, we risk getting stuck into yet another product with huge price volatility, record low prices today, and high emissions. Sound familiar?

To take us from the past to the future, here’s Paul Krugman’s Christmas column on “Things to celebrate, like dreams of flying cars” (in the NY Times). Krugman argues that we may be seeing a resurgence in innovation in physical technology, rather than information and communication technology. This has particularly important implications for energy – oil will increasingly have competitors – and, with luck, for halting the worst of climate change:

Progress in rocketry is fun to watch, but the really big news is on energy, a field of truly immense disappointment until recently. For decades, unconventional energy technologies kept falling short of expectations, and it seemed as if nothing could end our dependence on oil and coal — bad news in the short run because of the prominence it gave to the Middle East; worse news in the long run because of global warming.

But now we’re witnessing a revolution on multiple fronts. The biggest effects so far have come from fracking, which has ended fears about peak oil and could, if properly regulated, be some help on climate change: Fracked gas is still fossil fuel, but burning it generates a lot less greenhouse emissions than burning coal. The bigger revolution looking forward, however, is in renewable energy, where costs of wind and especially solar have dropped incredibly fast.

…now we can see the shape of a sustainable, low-emission future quite clearly — basically an electrified economy with, yes, nuclear power playing some role, but sun and wind front and center. Of course, it doesn’t have to happen. But if it doesn’t, the problem will be politics, not technology.

True, I’m still waiting for flying cars, not to mention hyperdrive. But we have made enough progress in the technology of things that saving the world has suddenly become much more plausible. And that’s reason to celebrate.

My only quibble with Krugman’s article is that we’re not talking about saving the world – we’re talking about saving ourselves. As George Carlin said, if we don’t shape up, “the planet isn’t going anywhere, we are! We’re going away… the planet will be here, we’ll be long gone. Just another failed mutation.

And, as he points out, politics, not technology, is likely to be the handbrake on change. For example, we’ve invented electric bikes, so cars aren’t necessary to make many short journeys in hilly New Zealand cities. But we have to be willing to make new technologies useful. In the case of cycling, that means constructing a network of safe, separated cycleways.

As British cycling blog As Easy As Riding A Bike points out, change is hard. Reallocating road space can provoke a backlash from people who believe they have a right to drive on every square metre of the street. But perhaps cycling needs a backlash?

Almost all of what passes for ‘cycling infrastructure’ in Britain has never generated a backlash, for one simple reason. It has never represented a direct challenge to the way our roads and streets are designed to prioritise motor traffic flow, without giving time or space to cycling in a way that might impinge on that prioritisation of motor traffic. That ‘infrastructure’ has never reallocated road space in any meaningful sense.

Screen Shot 2015-11-23 at 11.04.00

The cycle lane in the picture above did not generate any controversy when it was painted, because it gives up at the point when things get a bit difficult…

David Arditti has astutely observed that in these places of competing demand, effective measures to enable cycling should be generating a backlash. If there is no backlash, then whatever it is you are doing is unlikely to make any significant difference. If you are designing a Quietway, for instance, and nobody is moaning about it – that probably means you aren’t doing anything to reduce motor traffic levels on the route so that it is genuinely ‘quiet’, or, alternatively, it means you are sending it on a circuitous and indirect route in order to avoid difficult decisions.

If you are designing a route on a main road and there is no backlash, again, something has probably gone wrong. You aren’t reallocating space and time at junctions; you aren’t moving parking bays where they get in the way of your infrastructure; you aren’t dealing with bus stops; you aren’t repurposing motor traffic lanes for cycle traffic.

Urban planning is another topic that inevitably generates backlash. Any attempt to “upzone” a neighbourhood to enable more people to live there will make some people angry. City Observatory’s Daniel Hertz makes this point eloquently in his article critiquing the notion of a “cross-ideological consensus on zoning”:

Writing in the Washington Post earlier this month, economist Ilya Somin made such a claim. Libertarians, he wrote, have opposed the strict laws that prescribe expensive, exclusionary, low-density homes in most neighborhoods across the country for some time; but now, as noted lefty economist Paul Krugman’s recent column and a speech given by the chair of President Obama’s Council of Economic Advisers show, liberals are joining the zoning reform camp.

Suffice it to say that while we’re happy to see this issue get press in the Post, much of this argument seems misguided. For one, people have been making arguably left-of-center, egalitarian arguments against zoning since at least the 1920s; and the most sustained attack on exclusionary zoning in American history occurred in the 1960s and 70s as an outgrowth of the Civil Rights Movement, hardly a bastion of libertarianism.

More importantly, though, anyone who thinks there is a “consensus” about the damage caused by too-strict zoning ought to attend the next community development meeting in their neighborhood. While there may appear to be a policy consensus among national-level policy wonks, things look very different on the ground, including the ground on which zoning policy is actually made. Arguably, something very close to a consensus has existed on zoning for quite some time—at least since the 1970s—and it’s not that it’s too strict. It’s that it’s doing a great job, and if anything needs to be stricter.

Nor is this really an “ideological” issue. Rather, it’s a financial one: homeowners dominate local development politics in large part because their homes make up such a large proportion of their total wealth that any decline in property values could devastate them. (Or, conversely, cut into huge capital gains, if they are lucky enough to own property in, say, San Francisco’s Mission neighborhood.) As a result, they’re extremely wary of any change to their surroundings that might reduce their property values—and zoning gives them the legal ability to stop those changes.

So even to the extent that there’s a consensus about the damage of zoning among policy wonks, part of that consensus is also that zoning is incredibly difficult to change, because the interest local homeowners have in preserving it is so powerful.

Zoning reform is politically challenging but let’s be clear: the stakes are high. Allowing people to build more housing in desirable areas will reduce housing costs and (indirectly) raise incomes by enabling increased agglomeration economies. In Vox, Matt Yglesias documents how this can be done: “Seattle shows San Francisco and New York how to fix the housing crisis“:

Seattle and the San Francisco Bay Area have a lot in common — coastal locations, high-tech economies, and relatively high wages. But as California’s Legislative Analysis Office wrote in a recent report, it’s much easier to get permission to build new houses in the Seattle area. Consequently, the Seattle area’s housing stock has grown twice as quickly as the Bay Area’s. The CLAO writes that in recent years, Seattle’s total number of housing units “grew at an average annual rate of 1.4 percent per year while San Francisco and San Jose’s housing stock grew by only 0.7 percent per year.” The main reason for this is that Washington state centralizing more planning functions at the state level, which gives hyperlocalized Not in My Backyard sentiments less when determining what people are going to be allowed to build.

So what happened? While prices in the Bay Area have been skyrocketing, some Seattle landlords have actually seen the rents they can charge start to fall. Mark Stiles of the Puget Sound Business Journal writes that landlords are finding the trend “alarming” — though if you’re a tenant in Seattle you probably feel differently…

Here’s a final chart of the week, also from City Observatory’s Daniel Hertz. As it shows, construction of lowrise apartment buildings has fallen off a cliff in the last three decades – a victim of changes to zoning codes to discourage multifamily developments. Could the future be different?

Share this

33 comments

  1. ‘You can go for hours, sometimes days, without seeing a settlement or a soul’

    Obviously written by someone who has never been on ‘The Roosiya’

  2. Not disagreeing with the main point, but the picture of the on-street cycle lane suggests that it ends only because there’s an off-street cycleway to the left? Poorly marked for cyclists, but note the curb cut and the tactile tiles warning pedestrians. More thought went into this than the blogger acknowledges.

    1. Good catch. However, it’s not clear where the off-street path goes – a bit hard to tell without knowing its location. I see you’ve left a comment on their blog asking about that…

  3. George Carlin was a genius. For years I have stolen his line. “Think how stupid the average person is, but remember half of them are even more stupid than that.”

  4. Speaking of oil exploration in New Zealand, I enjoyed the closing of this piece: https://www.project-syndicate.org/commentary/marginal-pricing-end-of-western-oil-producers-by-anatole-kaletsky-2015-12

    ‘As technology continues to improve and environmental restrictions tighten, it seems inevitable that much of the world’s proven oil reserves will be left where they are, like most of the world’s coal. Sheikh Zaki Yamani, the longtime Saudi oil minister, knew this back in the 1980s. “The Stone Age did not end,” he warned his compatriots, “because the cavemen ran out of stone.”’

  5. New Zealand has enough consented but not built renewable power generation to transition to an entire fleet of electric vehicles for private transport use http://www.stuff.co.nz/business/71317040/Mighty-River-Power-boss-Fraser-Whineray-says-more-could-be-done-to-seize-electric-car-opportunity

    I don’t think this capacity includes replacing heavy diesel vehicles for freight, construction, farming…. but in any case it would be a massive change.

    1. Interesting article. I wasn’t aware how much renewable capacity is sitting there in consent phase.

      One under-sold advantage of a significant EV fleet is that it gives you a place to store the extra energy produced at peak times by wind farms and solar cells. After all, private vehicles are parked around 90% of the time – plug them in to a smart grid and they can charge themselves at a low cost when the wind is blowing. They could even return energy to the grid at other times.

      It won’t happen without a bit of policy support, but the technological bones of the system currently exist.

      1. Yes; distributed storage, electrified transport is a great balance to renewables, especially night time wind generation. And the clear way forward to speed up the shift is to price carbon and other emissions properly. Our government signed in Paris, it has to now deliver and the two immediate opportunities are in Transport and Energy, and, as you say they are tied together. But we mustn’t forget urban form either; more compact is the answer. We must stop subsidising dispersal, and accelerate the delivery of electric Rapid Transit Networks in our cities, for this reason alone.

      2. Peter i should add [see below] the reason for the huge number of consented but dangling renewable projects is that the opportunities are huge but demand is not there… LEDs, insulation, other efficiencies, distributed solar replacing demand, and heavy industry both increasing efficiency or being replaced by service industry, and the big daddy of them all is the impending end of Tiwai Pt; its likely near term departure is hanging like a sword of Damocles over the whole sector. No government, especially one that has just flogged off a big chunk of the generators to its people wants to preside over that departure… hence the subsidies. Also hence the activism of people like MRP CEO to try to find a new market for their electrons…. Transportation!

        Time for the gov to get off the fence and help a whole lot of problems at once; a proper Carbon tax or price would be a good start, as would clear policy to improve and electrify PT in cities and rail freight at pace….

    2. Mighty a River are making plans to develop a fast charge network apparently. I assume in conjunction with the government but no announcement was made at the end of the year as was indicated.

  6. NZ does not have the capacity to transform our road transport fleet to EV. We currently can only generate 80% electricity from renewables and that is with very few EV’s on our roads.
    Fossil fuels will continue to be the prime source of energy for cars and trucks in anyone’s lifetime that is reading this blog. Sure, gasoline and diesel may be replaced by LNG but with all this cheap oil, there will be no electric revolution.

    1. Absolute nonsense; NZ has huge further renewable capacity, Both Otahuhu and Huntly Thermal plants are closing because renewables are pricing FF electricity generation out. And this is with historically low coal and gas prices. The last 10% may hang on longer because they are co-gen plants at dairy factories, This hardly matters, all growth in generation will be geo, wind, and solar all of which are cost completive in NZ without any subsidy or even carbon tax. And then there is the huge output overhang of the 13% that the out-of-date Tiwai Point smelter consumes, only struggling on with taxpayer subsidies and due to close any year now. Additionally efficiency and steadily increasing distributed generation [roof-top solar] is keeping demand flat.

      Also ‘only 80%’ haha, most of the world would do anything for that proportion of renewable generation, only bettered by a few even smaller countries like Iceland and Coata Rica.

      The truth is NZ power companies desperately need a new need market on the scale of 100% electric transport; public and private. Listen to what the CEO of MRP says:

      ‘New Zealand is the only country that could power all its cars using renewable electricity but isn’t making the switch to electric vehicles fast enough, a power company boss says.’
      http://www.stuff.co.nz/business/71317040/Mighty-River-Power-boss-Fraser-Whineray-says-more-could-be-done-to-seize-electric-car-opportunity

      Huntly: ‘Genesis Energy says it will close down its last two coal-fired boilers at the Huntly Power Station’
      http://www.radionz.co.nz/news/regional/280628/huntly's-last-coal-boilers-to-close

      Otahuhu: ‘Power supplier Contact Energy will close a gas power station in Auckland next month in favour of renewable forms of electricity, and may shed 26 jobs.’
      http://www.3news.co.nz/nznews/contact-energy-closes-otahuhu-power-station-2015081710#axzz3w8Rg6bVm

    2. Other countries might produce cheap oil and gas, but New Zealand doesn’t. Instead, we have a bunch of cheap renewable electricity generation options. I am generally conservative about the *pace* at which we transition our fleet to EVs – more due to the slow pace at which the car fleet turns over than pessimism about the technology – but I think EVs will be an increasing part of the mix.

      There’s this little thing called “comparative advantage” that you might want to read about.

      1. Both the gov and MRP are too focussed on private transport electrification, in my view, a great deal can be done with a near term focus on electrifying PT in cities and rail freight, and Carbon pricing/tax is the way to make those opportunities more apparent, for both sectors, and as a source of funding for the PT infra.

    3. Fossil fuels ain’t that cheap – powering a car off electricity is a whole lot cheaper (and if you had cheap solar panels on your roof it would be cheaper still).

      A huge percentage of journeys are under 30km each way, these can easily be made with a fairly small and inexpensive battery in addition to a petrol engine for longer trips. I think that will be the ‘default’ configuration of new cars sold in say 5 or 10 years time.

      NZ has lots of ‘off peak’ renewable electricity going to ‘waste’ at the likes of Tiwai Point, I imagine everyone could charge their car at night without any new renewable capacity required if these places were forced to pay a market price (and close down)

    4. Polar I dont know how you can be so sure making predictions like that. Sometimes big changes do actually happen. When the steam engine was invented they tried it in trans-Atlantic ships and it was hopeless – it used too much fuel, was inefficient and totally unreliable so they stuck with sail. But river companies saw the advantages as they couldn’t sail upstream if the wind was wrong, so they developed the engines and improved them until eventually they had the technology they needed. And then best of all they then put to sea and thrashed the oceanic companies.

      1. Steamboats run by good people like my true hero Cornelius Vanderbilt who defied NY law and defeated the Fuller’s sorry the Ogden Monopoly 😀

  7. Have you considered the huge increase in demand that a 100% EV ground transport fleet would create? There is no way NZ could meet that demand through renewables. The only way such a ground shift to EV can work in NZ or anywhere in the world is through Nuclear powergen.
    The opinion of the boss of a small NZ electricity company is laughable. A; What would he know about global energy trends and B; He sells electricity, of course he talks that market up. Ignoring the huge carbon footprint of EV manufacture and how expensive they are to buy and maintain (new battery every 6 years) there is currently not anywhere near enough manufacturing capacity to produce the batteries that would be required to switch the NZ ground transport fleet to EV. Worse still for the believers in the EV revolution is the worlds Lithium reserves, estimated to be only 13.5 million MT. Clearly the boss of a tiny electricity company doesnt know this or has not thought it through, but if there was the global shift to EV that you are all hoping for, we would have 17 years of Lithium production before we ran out. That is of course assuming we never used lithium for anything but car batteries. Peak Lithium is reached a lot earlier than Peak Oil. Now imagine this against a market of cheap fossil fuels and cheaper production methods for tight oils. The foreseeable future remains oil. The post oil future for ground transport will be hydrogen because unlike fossil fuel and lithium, we have plenty of it. It will also be hydrogen because that is what the oil companies want and they have a lot more R&D money than Teslar and (scoff) Mighty River.

    1. Back of the envelope (so necessarily wrong) calculation: since there were 12,690million VKT in Auckland last year (see post earlier this year) and a bit less than 12,938 GWh (inc losses) of electricity consumed in Auckland last year, then with rough fuel economy of at most 35 kWh/hundred miles(ex losses) then if all cars in Auckland converted to EVs overnight there would be about 3 GWh (inc losses) of additional demand per year; this is essentially nothing, and would cost around $600k-$700k total at market electricity prices (btw losses refers to the fact that about 4.9% of elec transmitted across the Vector network goes to waste, corresponding to a loss factor of 1.052 which applies to low voltage connections).

      Even though this is wrong because EVs will not convert 100% of energy put in to km travelled it shows that EVs across Auckland would still consume less power than a few large factories. Moreover, as above, most of this demand would be at night when national demand is low anyway.

      You’ve outlined that other costs might kill this (I don’t know enough about batteries to really comment), but the effect on electricity demand would be completely insignificant. Mercury takes on new 3 gig customers every week so I doubt that’s the CEO’s motivation for talking about this.

    2. “Worse still for the believers in the EV revolution is the worlds Lithium reserves, estimated to be only 13.5 million MT”

      Estimated by whom? You? Here’s a credible reference that indicates reserves of 40 million tons:

      http://minerals.usgs.gov/minerals/pubs/commodity/lithium/mcs-2015-lithi.pdf

      A Nissan Leaf battery requires 4 kg of lithium. I’m sure you can manage a simple calculation.

      “new battery every 6 years”

      Still banging on with this nonsense? Are you going to trot out manufacturers warranty periods to support this claim?

      “The post oil future for ground transport will be hydrogen because unlike fossil fuel and lithium, we have plenty of it.”

      Using hydrogen as energy storage is dead in the water. The efficiency is woeful…but you have been told this before. It may be what the oil companies want but most of us don’t give a shit what they want.

    3. All these “predictions” about EV’s were made similarly about solar energy, too. Particularly photo-voltaics (PVs). Like:
      Not enough demand for it
      Can’t compete with existing technologies without a massive subsidy
      Where will all the raw materials to make them [the panels) come from.
      The PV manufacturing and electricity capture processes are now as efficient at it will ever be, so they’ll never get cheaper than they are now.
      What happens when the sun goes down or behind a cloud?
      Not enough land available to put them on
      You can’t put them in deserts because you need lots of water to clean the dust of the panels to keep them working
      They can only output DC and the world needs AC power
      Invertors to make the DC into AC costs way more than the panels do and loses too much energy in the conversion.

      The list goes on, and on, and on.
      Almost all of these are now dead issues, having been solved by technology advances.

      I doubt there are too many people left on the planet who think PV and Wind power have no place in the worlds energy supplies.

      As for EV lithium and battery supply side when EV’s ramp up – yep Telsa knows all this, thats why they’re building their own battery factory in the US right now and why it will use US/North American sourced raw materials.
      Once thats fully operational then they will be making more Lithium technology-based batteries for EV’s and Powerwalls than the rest of the market combined. Their success of the Model-X and the Model 3 depend on that plant.
      Longer term Tesla won’t be known as “the car company”, it will be an energy management company. They might have been bought out by the likes of GE in the process, but their efforts will be recognised.

      None of this should be news to you.
      in any case, this whole area is bigger than any one company, so whether Tesla makes it or not, EVs will have a big part to play in FF alternatives to transport.
      Its true that mass adoption of EV trucks and buses would do a lot more for the planet than if everyone Ubered or drove EVs.

      But you have to start somewhere. Sometimes you need a pioneering space program in order to get the spin offs like Teflon frying pans after all.

  8. Gabe, I would suggest that a 100% transformation of the ground transport fleet would require a much larger increase in electricity powergen than you are projecting. I would expect a nationwide increase in electric demand of around 30-35% would be required. Given NZ are only making 79% of its electricity through renewables then how exactly are we going to increase non fossil powergen by about 50-55%? And where would be the financial incentive given that fossil fuels are getting cheaper?

    1. Sure – again for rough purposes: if EVs convert only 30% of electricity put in to VKT out then that’s 10GWh, and if people drive twice as much after fuel costs evaporate (won’t happen because driving is congestion-responsive per all the stuff around induced demand) that’s still only 20GWh – no idea where 30-35% of national demand comes from. Even if that large an increase were necessary, remember that 17% of national demand might become available at the beginning of 2018 and there’s a heap of consented generation which hasn’t needed to get off the ground.

  9. Since, right now, FF electricity generation is no longer cost competetive with renewables despite record low input prices AND sunk cost in plant and grid, no new FF generation will be built again in this country outside of some very unusual circumstances. Only a delusional fool unwilling to face the facts of the present let alone the obvious demands of the future could conclude otherwise. Particularly the near term likelihood that the costs of polluting will actually have to be covered by polluters in this sector.

    Furthermore making electricity from combustion is extremely inefficient, so much heat loss, but passive capture produces ongoing dividends after one time long lasting capex spend. Particularly value able in low interest rate environment. This is the ongoing energy transition that is clearly observable globally. It is a multi decade task as there is so much sunk cost in the old tech; NZ lucky to be so far ahead of the curve.

  10. Also FF combustion is a mature tech, refinements will continue but the basic physical parameters are well proscribed, coming innovation is in electricity capture, storage, and efficiency. We are using more and more electrical devices but consuming fewer and fewer electrons to do so, and finding more sources to capture them from. For the generators it’s a race against new efficiencies and home generation, so the transportation sector is their best (only? Big server bank in Dunedin as a market for post Tiwai supply?) hope for growth.

    1. *** This comment has been edited for violating our user guidelines ***

      The US military, along with its NATO allies are still buying loads of oil, I know this first hand as I provide some of it. The future though is in Hydrogen.

      1. Hydrogen is simply a fuel, an inefficient one to make, and tricky to store and distribute. The means of propulsion in a hydrogen car are electric motors. So you are saying that electric drive is the future but with an expensive and wasteful in-between technology storing a volatile gas, oh and one mostly sourced from FF, instead of batteries. Perhaps you ought try thinking a little harder about that, while drinking some more polar beers.

        Those who think hydrogen is better that batteries as storage for electric vehicles are simply those who think its similarity to petrol is an advantage. Which is to say people who don’t understand how change happens, and are almost all in the liquid fuel or conventional car supply chain. This is thinking suffering from path dependency. Here is a telegraph article that aims for balance, hydrogen is a little cul-de-sac on the road to battery EVs:

        http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/11966944/Hydrogen-or-electric-which-will-drive-petrol-cars-off-the-road.html

      2. Dear Polar Beers

        You have consistently been arguing from authority and denigrating Patrick’s perspectives on this thread. You probably think that this is a good way to win an argument, but it’s not.

        While we won’t know who’s right for a while, I find Patrick’s style of argument more persuasive for two reasons:

        1. You rely a lot on your supposed expertise in the industry, but we don’t know who you are. You could just as easily be a petrol station attendant as an oil trader. Arguing from authority under a pseudonym is not persuasive.

        2. Patrick consistently provides references to other sources (mainly news articles) to support his arguments. Citing sources gives credibility to his points.

  11. Usually, military technology leads civilian technology (microwaves, superchargers, fuel injection, GPS etc.)

    I’m curious why very few military vehicles use electric motors – is there some flaw we don’t know about? Diesel and gas turbine dominate the high end.

Leave a Reply