Author: Richard Tol

Economist on electric vehicles

The Economist has three pieces on electric cars (1, 2 in print and 3 online), calling it a big gamble for the car industry, questioning the sustainability of the generous subsidies for the well-to-do, and highlighting the limited reduction in carbon dioxide emissions.

Interestingly, Carlos Ghosn, one of the keenest supporters, appears to believe that 1 in 10 of new cars in 2020 will be all-electric. The goal for Ireland goes far beyond that: 1 in 10 cars (new and old) in 2020 should be all-electric.

Flood warnings

I’ve argued that flood warnings help to mitigate flood damage. I’ve also worried that nothing much has changed since last year. One thing did change, though: We’ve signed up to the European flood warning system (see Examiner). Progress! But why weren’t we last year?

Paul Hunt’ submission to An Bord Strip

is here

Paul unsurprisingly focuses on regulation and energy. The piece starts with some common misconceptions about energy prices before arguing the case of vertical disintegration and privatisation.

Downside risks and up

There are two pieces in today’s Irish Times on state guarantees for downside risks. The first is on toll roads: We apparently guaranteed an income stream. The second is about the power network: There is no need to budget properly and hedge your bets, as the cost can always be passed on to the customer. Other examples are the REFIT scheme, which puts a price floor under renewables, and the put-or-pay contract for the Poolbeg incinerator.

Such guarantees reduce the downside risk and hence the cost of capital for the investor. That is fine if the investment is in a public good.

However, the downside risks are transferred to the taxpayer, while the upside risks are enjoyed by the shareholders.

I would therefore introduce a special profit tax, which applies to operations that have a state guarantee against downside risks. In that way, the taxpayer shares in the good times as well as the bad. It would also make companies think twice before demanding a guarantee.

Innovation in branding

One fan of the old Weezer is so upset by the band besmirching their image that he is offering money for them to disband. From the Guardian.

I just ignore Weezer’s later work.