by Jerome a Paris
Tue May 31st, 2011 at 05:38:10 AM EST
Green exports and the global product space: Prospects for EU industrial policy by Mark Huberty, Georg Zachmann (Bruegel)
We test if and where industrial policy to promote ‘green’ industry development can improve competitiveness in export markets. Proponents of ‘green growth’ have argued that domestic promotion of ‘green’ energy will generate improved comparative advantage in export markets for high-technology goods such as wind turbines or solar cells. If this holds depends on if domestic market expansion can, on its own, support firm competitiveness abroad.
We find evidence that industrial policy may work for wind turbines, but we find no evidence that it works for solar cells. Furthermore, domestic renewable energy promotion is more likely to translate into improved international competitiveness if a country already possesses skills, technologies, and industrial sectors closely related to the sector in question. By locating the wind turbine and solar cell sectors in the global product space of traded goods, we are able to show that, net of historical competitiveness and domestic market size, green industrial policy functions best when capitalising on pre-existing industrial capacities, rather than trying to create them.
Power troubles grow darker
Financially crippled coal plants are shutting down their generators, even though the country is facing one of its most severe power shortages ever (...) The deficiency could reach 40 million kilowatts when power consumption reaches its annual peak during the summer (...)
According to the Hong Kong-based Wenweipo newspaper, compared with 2007, the average electricity rate has risen by 15 percent, compared to a 75 percent surge of coal price in the same period. China's five biggest power generation groups had accumulated up to 60 billion yuan ($9.23 billion) in losses in their coal power business since 2008, according to the State Electricity Regulatory Commission (SERC), and the deficit continued to expand in the first four months of this year.
"Many coal plants have shut down their generators because the more they produce, the bigger the losses they will suffer," Li Chaolin, a coal and energy industry analyst at Anbound Group, told the Global Times. "The gap cannot be filled under the current system - on the one hand coal prices are driven up by the market while on the other, the price of electricity is being squeezed by government intervention," he added.
It seems that our current ideology of preferring markets to intervention is only trumped by the imperative to get cheap energy at all (non-monetary) costs, and we end up getting the worst of all worlds, driven by short term political (or even populist) considerations...
See also the current diaries on similar topics:
Merkel's nuclear exit by DoDo
Under the impression of three post-Fukushima regional elections that saw losses for their parties and big gains for the Greens, and undaunted by protests from all of Merkel's fellow G8 leaders, German chancellor Angela Merkel's federal government is moving ahead with its phaseout of the phaseout of the phaseout of nuclear power: over the weekend, after tough negotiations, the leaders of the CDU, CSU and FDP parties reached a framework agreement about shutting down all 17 reactors in Germany by 2022.
The devil is in the details, however. The terms of the nuclear phaseout themselves seem to include a number of back doors allowing for yet another 180-degree-turn in the future. As for replacement capacity, it is unclear what exactly the government wants beyond new power lines, though early signs are that instead of supporting accelerated expansion of renewables, they want to allow existing energy giants to expand coal and gas generation. At the same time, whatever the government intends to do, lately the prospects of coal power aren't all that rosy.
Wimpy Europeans and shale gas by Jerome a Paris
The European Energy Review has an article about Europe's reluctance to embrace shale gas (free subscription probably required) which is more interesting for the number of clichés about Europeans it carries.