Like Ireland, Spain hopes to buy the world supply of electric cars many times over. The Guardian reports that the Spanish scheme is somewhat behind target. One competitor less on the road to electrified transport!
Month: August 2010
There has been some consternation about the announced energy levy. See Times, Examiner, and Independent (in decreasing order of accuracy).
The CER has announced an increase of the PSO levy (currently near zero) to a total of €157 mln a year. This is a levy on a connection, €33/yr for households and €99/yr for small businesses. Large companies pay a levy that depends on the capacity of their connection: €14/kVA/yr. The method of payment and the distribution of costs makes perfect sense if the PSO levy would be for security of supply (in the sense of avoiding black-outs), but that is only €14 of the €157 mln.
These are small amounts, but the costs are unnecessary. About €72 mln will be a subsidy for peat, and about €43 mln will be a subsidy for wind. That is, we subsidise carbon dioxide emissions and subsidise the reduction of carbon dioxide emissions at the same time!
Tuohy et al reckon that 0.9 mln tonnes of carbon dioxide can be avoided if we do away with the peat subsidies, and save €70 mln. On average, that is €78/tCO2, but their estimate of the marginal cost is €19,500/tCO2! Today’s spot price for emission permits is €14/tCO2.
I am not aware of a detailed study of the implications of the REFIT scheme on emissions and costs. REFIT is part subsidy and part price guarantee, so back of the envelop calculations are more likely to confuse than to illuminate. Suffice to say that REFIT subsidises carbon dioxide emission reduction.
The prime instrument for emission reduction is, of course, the EU ETS. I would think that that is enough. I do not understand why we would also subsidise emissions and emission reduction — and we would save €115 mln while simplifying regulations.
Some say that we need REFIT to meet the renewables obligation, but the EU will likely scrap that as some of the big Member States cannot meet theirs. Besides, it has yet to be established that REFIT is an effective and cost-effective way to meet the renewables obligation. Both renewables and peat are said to help with security of supply (in the sense of import dependence), but that is just another word for import substitution, and the available analysis has not gone much beyond hand-waving.
So, for now, I would think we would be better off without (most of) the PSO levy.
The Economist’s bloggers have a piece on China today which is relevant to Ireland. They ask what happens to an economy’s growth rate, in the long run, once it has caught up to the technological frontier. Their answer, correctly, is that “Historically speaking, the answer is clear—growth slows to 2-3% per year.”
This is a point which Cormac Ó Gráda and I made in a textbook chapter on long run Irish growth a decade ago. Very high growth rates characterise economies catching up to the frontier — Western Europe or Japan in the 1950s and 1960s, the Asian Tigers in the 1960s and 1970s, ourselves in the 1990s. Once you have caught up, 2-3% per annum is about as good as it gets. Allowing a bubble to inflate can obscure this reality over the short to medium run, but in the long run you won’t manage to grow more rapidly than the United States has done over the past century or so: to do so is a sign of an economy that is still in some sense backward.
These are relevant considerations when thinking about what sort of growth rates Ireland can reasonably be expected to achieve over the next decade or two.
The President of the High Court, Justice Nicholas Kearns, has established a working group to explore the alternatives to Ireland’s system of lump-sum compensation for accident victims. The group is headed by another judge of the High Court, Justice John Quirke, and has been asked to report by end-year.
The lump-sum system has been modified across the water, where the courts can award recurring payments, in practice index-linked annuities, with or without the agreement of the parties. I argue in the paper below that we should consider following suit in this country.
Teagasc colleagues have produced their mid-year assessment of the likely outturn for output and incomes in Irish agriculture in 2010. The main message is that there is a solid recovery in gross margins in dairy and cereals from the awful year in 2009 and also a positive outlook for sheep (helped by the recent announcement of support under the new Grassland Sheep Scheme), but no change is expected on cattle farms where low or negative profitability will continue. Overall, the Teagasc assessment is that both total agricultural output and incomes should increase by around €300 million this year, which will be an increase of 18% on the operating surplus in agriculture in 2009.