BRYAN CAPLAN
May 7, 2013
Keynesian Bets: What's Out There
May 6, 2013
Keynesian Bets Bleg
May 6, 2013
The Pyramid of Macroeconomic Insight and Virtue
May 2, 2013
A Natalist Provision
May 1, 2013
I Was a Teenage Misanthrope
DAVID HENDERSON
May 5, 2013
John Thacker on Vaccinations and the Sequester
May 3, 2013
Chef Rudy's Virtues Project
May 2, 2013
My take on Reinhart and Rogoff
May 1, 2013
Medicare Kills a Program
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Isn't that a bit harsh?
There is not a single market price for electricity and sunk capital costs in the fossil fuel market may give the question meaning.
Maybe he ought to have said that "by 2020 a new 1GW power station will be cheaper if it is solar" although even that could be finessed.
Also if the consequences you suggest actually occur could he not claim that solar energy was cheaper?
Assuming you are boht correct about cost curves, obviously no energy policy is necessary.
Interesting issue though.
This is very excessive nitpicking. Surely he is referring to the cost curves, or average production costs, not the marginal cost or, equivalently, the price.
And as long as we are in nitpick mode, electricity is hardly sold in a classic competitive market.
Ironically, if it were, we might see more rapid movement toward solar or other environmentally friendly sources. I would be willing to pay a small premium, say 5-10%, for electricity from a low-pollution source. If enough other people were willing to do the same incentives would encourage the development of new sources.
Alternatively, if the market functioned as it should, assigning the full social cost of producing and burning coal, say, to electricity users, the effect might be the same.
So perhaps it is not only some environmentalists who do not understand economics.
Obviously, an enlightened energy policy of the future will need to subsidize fossil fuel production to save jobs and promote conservation of the sun. At our rate of energy consumption, the sun will run out in a few billion years.
More seriously, and in line with previous comments, the full social cost of solar energy capture and battery storage will need to be factored in by regulators.
-Brad
"More seriously, and in line with previous comments, the full social cost of solar energy capture and battery storage will need to be factored in by regulators."
I agree that they need to factored in. If the market doesn't do it, as it doesn't with fossil fuels, then regulation might be desirable.