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Any approach to determining economic policy for climate change should take into account the possibility that the current understanding of the atmosphere may not be translatable into reliable forecasts with a precision that allows the design of an economic response.
Further, any economic forecasts that are used to construct models of future carbon use and carbon dioxide emissions will be unable to deal with technical innovations. Their success cannot be predicted. This impacts on policy in two ways, first the obvious uncertainty in estimating economic development but more immediately the desire of governments to stimulate technical solutions. The need to be seen to be taking action frequently descends to picking winners and creating classes of rent seekers. ...As an example the present subsidies for wind farms are a response to demands for action from Green groups and green politicians. The result is a new rent seeking group. There is little cost benefit analysis to guide policy development. Rather policy is set to subsidise non-competitive technologies that may produce unquantified benefits. A simple comparison with the more conventional alternative of natural gas shows the use of gas to be more cost effective and useful as gas turbine generators produce electricity on demand.
General encouragement of innovation should be the limit of government policy. It is hard enough in business to develop innovations and well beyond the reach of general government.