Nuclear backsliders, ‘Catholic indulgences’ and refinery regret

I guess everyone will be writing this week about either the RBNZ and the OCR (now 5.50%) or the recent Government budget, so I won’t.  I’d like to touch on...

I guess everyone will be writing this week about either the RBNZ and the OCR (now 5.50%) or the recent Government budget, so I won’t.  I’d like to touch on a slightly different theme that has been playing on my mind for the past couple of years:  that is, the dangers of blinkered ideology, and the wonderful phenomenon of the “law of unintended consequences”.  Wikipedia defines the “unintended consequences” to mean “…outcomes of a purposeful action that are not intended or foreseen.”  Read on…

It would be fair to say that the 20th century was built on fossil fuels, certainly in the earlier part.  Cheap, dense (think of the work that could be generated by a single container of petrol, versus 10 horses), and easily extracted energy, enabled economic growth to be leveraged via enhanced productivity, as work and transport became cheaper and more efficient.  In the latter stages of the 20th century, some scientists began telling us that excessive use of these fossil fuels was probably contributing towards a potentially catastrophic warming of our world.  These same scientists have of course become more emphatic in to the 21st century…

In the Western world, aggregate fossil fuel usage has flattened-off in recent years.  But it’s now a commonly held viewpoint and even mantra among much of our political class that fossil fuels are inherently bad and dirty and to save the world from overheating production and usage must be immediately curtailed.  The point of this article is not to question scientific viewpoints or rubbish clean energy generation.  It’s to point out hypocrisy, the counterintuitive detrimental effects and “unintended consequences” that come when public policy is not conducted in a thoughtful and analytical way.  Particularly energy policy.  Three clear examples immediately spring to mind.

The first is Germany.  She was understandably an enthusiastic adopter of nuclear power in the decades following the Second World War.  Her nuclear energy infrastructure was world class and provided 40% of the country’s power at peak.  In the 80s and 90s (especially following the Chernobyl accident in the Soviet Union) the German green movement continued and even strengthened its ideological opposition to nuclear energy.  With its ongoing influence in government, the Greens were able to gradually force the shutdown of Germany’s entire nuclear fleet and caused then Chancellor, Angela Merkel, to seize upon the accident at Fukushima back in 2010 in order to do so.  This culminated with the shutdown of Germany’s last operational nuclear plant only a few weeks ago.  In recent years Germany has been able to roll out other renewable energy sources like wind, but at best all this has done is offset the gap caused by the shrinking nuclear generation.  Coal and gas (imported primarily from Russia) share of electricity generation in Germany have remained in excess of 40%, even to this day.

France on the other hand made nuclear the centrepiece of her energy strategy from the 1970s onwards, only needing a small amount of coal, oil and gas generation to bolster the 70% nuclear powered grid – a situation that continues to this day.  Consider the C02 emissions that could have been saved had Germany adopted the French model.  Also consider the impact on the German population and industry, who have at times faced much higher energy costs than would otherwise be the case, and who were forced to resort to burning wood in their chimneys last year to stay warm, as the Russia-Ukraine War saw the flow of gas cut off.

I’ll conclude that point by emphasising the “magic” of nuclear power – a tiny physical amount of a relatively abundant natural resource, can generate vast amounts of electricity with zero C02 emissions.  Maybe not relevant for New Zealand’s situation, but definitely useful for much of the world. The safety concerns cannot be ignored but are shrinking each generation as technology and engineering are improved and really are miniscule today.  So, there can be no doubt that nuclear energy’s ill-considered “image problem”, driven by the Green movement, has severely hampered the world’s ability to curtail greenhouse gas emissions – supposedly their main goal.

The second two examples are closer to home.  The first is the Government’s Emission Trading Scheme, which has had the result of widespread conversion of dairy land to pine plantation.  This conversion has reduced biodiversity (ironically countering another goal of the green movement) and also contributed to the tragic events we recently witnessed in Gisborne and Hawkes Bay with forestry slash causing much chaos after the flooding. To my mind, reliance on credit offsets is all too reminiscent of the medieval Catholic “indulgences”, where you were able to pay money to offset a sin, thereby still ensuring passage to heaven at the appropriate time.  The behavioural effects of this were no doubt even obvious at the time!

Lastly and still most front of mind for me is Marsden Point.  At the time, the closure of this refinery was billed as a great way to reduce NZ’s emissions profile and “decarbonise the economy”.  Those who advocate this solution fail to realise that the refining of raw crude oil is a value-maximising proposition – via the refining process, we manage to squeeze out every last possible use of the raw product, which generates everything from high-grade jet fuel to the thick bitumen we use to make roads, and CO2 for food production processes.  NZ still needs more or less the same quantity of all these products, and we now bring them in via ship from Indonesia and other countries.  We now see the results, with roads falling apart, bad batches of jet fuel causing chaos at airports, and food manufacturers suffering from a shortage of C02.  And all we have achieved is to make our national emissions accounts better at the expense of Indonesia – no emissions reduction whatsoever.  Surely we must now look back with regret and miss the quality, reliable product that Marsden Point was able to produce to keep NZ running.  Bringing it back to today, the situation is especially galling when you consider the Government is now forking out $150m to buy Bluescope Steel a new, lower emission furnace for its plant in Glenbrook!

Regardless of where you live and what your politics, you must agree that we are certainly entitled to more rational decision-making from our Governments – one that avoids the “worst of both worlds” outcomes that we see all too often and the law of unintended consequences being oh-so real.