Tuesday, December 20, 2022
Climate Lockdowns Coming to a City Near You?
Recently a claim has gone viral about a decision by the Oxfordshire, England county council to divide the city into sectors that can be traversed by walking in 15 minutes or less, and then restrict residents’ travel from one sector to others to no more than 100 days a year—except by special permit available by application and at a price.
The actual facts of the plan are, frankly, difficult to ascertain. The council has placed a formal document about it online. The document is nearly impenetrable. No wonder reports are highly conflicting—and, I’m pleased to say, generally exaggerated.
There are in fact some problems with the plan, but some reports misrepresent it. The website Joannenova.com.au, generally a reliable site about climate-change-related science, ran a piece headlined “Climate lockdowns coming? You will be tracked in your suburb and happy about it.”
WattsUpWithThat.com, another site that runs lots of reliable information about climate science, ran a piece by Eric Worrall quoting Nova’s report at length. Those sources said the plan would “lock residents into one of six zones to ‘save the planet’ from global warming,” adding that this “latest stage in the ‘15 minute city’ agenda” would “place electronic gates on key roads in and out of the city, confining residents to their own neighborhoods.” Residents would “need permission from the Council” for more travel within the city.
Now, there really is such a thing as a “15-minute city” concept. Wikipedia describes it as “a residential urban concept” linked with the “new Urbanism” of the 1980s” aimed at making it so “most daily necessities can be accomplished by either walking or cycling from residents’ homes.
But, is that what’s really up in Oxford, England—home of the venerable Oxford University? No. (As an aside, it’s not coincidental that this arises in a town dominated by a university. Academia tends to be about as far removed from the real world and its practical problems as can be imagined. I speak from experience after 25 years as a student, Kindergarten through Ph.D., and 16 as a professor.)
Okay, as best I can understand it, relying on a fact check by the Associated Press, what Oxford’s council intends to impose, beginning in 2014, is a plan that will limit drivers, between 7 a.m. and 7 p.m., to 100 trips per year through “traffic filters”—not “gates,” electronic or otherwise, but license plate recognition cameras—between their own “15-minute” sectors and neighboring sectors. But the sectors are defined not by 15-minute walking distance (about 6 tenths of a mile to a full mile) but by 15-minute driving distance (about 7.5 miles assuming an average of 30 miles per hour).
By application, drivers will be able to get more trips—at a charge. They can still access any part of the city by car without added charges, or fines, if, instead of going directly from their own sector into another, they can use a different route or first drive out to the “ring road” surrounding the city and then back in via another route—thus taking them out of the most heavily congested areas. They can also go through the “traffic filters” more than their allotted 100 times, though they’ll pay a fine unless they have first filed an application and paid a fee. Further, as one city official put it, contrary to claims that the new plan would confine people to within their sectors, “Everyone can go through all the filters at any time by bus, bike, taxi, scooter or walking”—just not by private car. Oh, and commercial vehicles, vans, motorcycles, disabled drivers, and first responders will be exempt from the rules.
Without excessive length, that’s about as accurate a summary as I can figure for the plan. It isn’t a “lockdown,” and it doesn’t appear to built, explicitly or implicitly, on desires to fight climate change by limiting how much people drive—though it’s likely that such desires lurk in the shadows. Instead, the primary aim seems to be traffic management: giving people incentives not to drive during periods of highest congestion, so those who most need to do so are less hindered, and those who don’t need to have an incentive to enter covered areas in times of less congestion.
That’s no different in principle from what many people already experience in urban areas: HOV (high-occupancy vehicle) lanes and express lanes, some with tolls varying by time of day. In principle, that’s just good economics: prices are higher when products are scarcer and lower when they’re less scarce.
However, such policies inconvenience poorer people more than richer people. Poorer people can’t afford the tolls, or in the Oxford plan’s case, the fees or fines, as well as richer people can. It’s a bit ironic, then, that such a plan would arise in a city, and country, whose political leanings are considerably more socialist/egalitarian than capitalist/meritocratic.
The law of unintended consequences kicks in, too.
Suppose your elderly parent wants to stay in her own home but needs daily assistance with household and hygiene functions. You’re glad to give, but she lives in a different sector. To give her the care she needs every day, you must apply and pay for 265 additional trips per year. What does that do to family ties? It will raise your incentive to hire professional caregivers—care sellers, really—because their vehicles will be defined as “commercial,” but yours won’t. It will be one more pressure on the God-ordained, natural family. Alternatively, you can walk or ride a bike, both requiring more time than driving—and money is time in foldable form. Or, you can take a taxi—which will cost more than driving your own car. Or ride a bus, taking more time but less money.
Oxford’s congestion-reduction plan is not the draconian “climate lockdown” plan some people have claimed it is. By raising the cost of driving at times of highest congestion, it will reduce congestion. In principle, there’s nothing wrong with it. Some people will gain, some will lose. That’s not unusual in civil society. What’s irksome is when the gains and losses are determined not by people’s free choices but by largely unaccountable bureaucrats.
When He started His public ministry, Jesus cited the words of the Hebrew Prophet Isaiah, “The Spirit of the Lord is upon Me, because He has anointed Me to preach the gospel to the poor. He has sent Me to proclaim release to the captives, and recovery of sight to the blind, to set free those who are oppressed, to proclaim the favorable year of the Lord” (Luke 4:18–19). Those words “to proclaim release to the captives” and “to set free those who are oppressed” are relevant here. Christians should seek ways to reduce, not increase, unnecessary restrictions on freedom.
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British steel production halting due to rising energy costs
Steel production has been forced to halt temporarily this week due to the spiralling cost of energy.
UK Steel, the trade body for the sector, warned that production could decline further next year if the government does not extend and improve its support for businesses’ energy costs.
The current Energy Bill Relief Scheme is set to expire in March and an announcement is due in the coming weeks about what will follow.
UK Steel director general Gareth Stace said: “Electricity prices are at 30 times their historical average this week, forcing some steel companies to cease production at key times during the day. This is simply not sustainable for the steel sector. A long-term solution will be found in infrastructure investment and fundamental market reform, but in the interim we need a bridging solution that ensures UK steel producers can make steel at the same cost as their European competitors.”
Steel prices in the UK soared during 2022, beginning at about £350 per tonne and peaking at more than £1,200 in April, prompting warnings from the likes of HS2 about the project risks brought about by material price inflation. The cost of energy inputs during production is one of the main factors determining its sale price.
Stace noted that the German government’s support package for 2023 guarantees wholesale electricity prices at €130/MWh (£113), well below the UK’s current cap of £211/MWh. “The UK government should match this to ensure our industry’s ability to compete,” he said.
“Without the continuation of the [scheme], our estimates show electricity prices being double those of the German industry’s next year, leading to reduced production, shrinking market share and increased imports. Prolonged and frequent halts to production could become the norm, negatively impacting productivity and leading to a decline in steel production in the UK.”
He added that if the scheme is not extended, the UK sector will be “wholly exposed to the ravages of volatile energy markets with predictably grim consequences”.
A UK government spokesperson said it remained committed to delivering a more affordable, secure energy system through its Energy Security Bill, which will implement a long-term plan to grow low carbon and UK-based energy sources.
The spokesperson pointed out that a support package for energy-intensive industries was expanded in April, and its Energy Bill Relief Scheme meant firms were paying less than half the predicted wholesale cost of energy this winter.
They added: “We know this is a difficult time for factories and heavy industry, and we remain firmly on their side.”
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Australia's price cap on natural gas offers a political sugar hit, until reality kicks in
The fact that the government was able to pass its incoherent energy measures last week came as no surprise. After all, they were a response to a demand posed in panic: don’t just stand there, do something. The trouble is that doing something generally makes things worse, particularly down the track.
The legislation also goes to the heart of this Labor government’s approach to policymaking – delivering on promises made to key stakeholders. In this case, one of the most important stakeholders is the Australian Workers Union, whose membership is quite small overall but relatively strong in parts of the manufacturing industry. You may have noticed Dan Walton, national secretary of the AWU, speaking on the issue and demanding lower gas prices as well as a gas reservation scheme.
There are some manufacturing processes that must use gas directly, with no cost-effective alternative technologies currently available. In the case of the larger firms, you would expect them to enter into longer-term contracts with the gas producers at an agreed price. That some of these users have dragged their feet can be explained by an expectation that the government would intervene to get them a better deal. So much for free enterprise.
For smaller users, they can only access their gas supplies via retailers. This is a key point because, notwithstanding the government’s far-ranging anti-market interventions, there are no controls imposed on retailers. It’s entirely possible retailers will see an opportunity to extract higher margins so the net impact of the price caps on gas will be entirely (or more than) offset. Mind you, imposing price caps on retailers runs the risk of sending some of them broke quite quickly.
There are very strong parallels here with the introduction of Wayne Swan’s Resource Super Profits Tax in 2012. During the consultation period – which by the standards of this recent intervention was lengthy – it became clear the Treasury officials designing the new tax didn’t have the faintest clue about the key features of the resources industry. It was truly embarrassing.
Fast-forward and nothing has changed. Officials were unable to answer some key questions about key terms in the proposed legislation, particularly the definition of a new gas field.
The Australian Competition & Consumer Commission has a long history of failing to understand the key features of the gas industry, likening it to some sort of infrastructure model. Having said this, the ACCC supported netback domestic pricing – effectively world parity pricing – until very recently.
The AWU quickly realised price caps and the ongoing “reasonable price provision” would not guarantee supply. Hence the powers in the legislation for the Treasurer to demand the companies supply certain quantities of gas. It’s at this point geological and engineering reality collides with Marxist dreaming.
The sad fact is that the rate at which the Bass Strait reserves are depleting is extremely rapid. To be sure, the Kipper field is a bit of help, but it’s small. On one estimate, there will be a fall of close to a quarter in the reserves in the Bass Strait by the end of next year. By the early 2030s, it will be all gone, although extracting from such small reserves will probably be suspended well before then.
But here’s the problem: there is gas in Queensland and most of this is used for the export market, bringing substantial economic benefits to the country. Note here these Queensland fields would never have been developed had it not been for the exporting opportunity. Many of the export contracts are locked in for years into the future.
But even if the government or the ACCC decides more gas is needed in the south, which it will be, there are capacity constraints on the pipelines that were designed for south-to-north transfers. It is simply not possible to rectify this problem quickly.
Australia's coal and gas exports are expected to face up to a $68 billion hit due to a slowdown in global demand… and reduced supply chain disruptions
One solution always was for LNG to be imported into Victoria or NSW – two sites had been identified – to make good this shortfall, particularly at certain times of the year. The irony is that the government’s measures are likely to kill off this solution as the business cases that would justify the investment are weakened.
Sensing perhaps that the package would still not satisfy the AWU’s demand for lower gas prices and plentiful supply – sadly, Santa doesn’t exist in the real world – Anthony Albanese abruptly raised the issue of a gas reservation policy for the east coast. He spoke favourably about the policy that exists in Western Australia.
What the Prime Minister didn’t mention was the fact that a reservation policy in respect of the Queensland fields was explicitly rejected by Labor when it was last in government. That’s right – it was a Labor government that decided against such a policy. There was a (reasonable) fear it would deter investment.
Most economists don’t have a problem with a reservation policy as long as it is determined before the event, when investors can take into account the policy requirements. But it is a serious problem involving sovereign risk after projects have commenced.
In the case of WA, there are immense reserves of gas and the 15 per cent domestic requirement has never been used in full – until recently, at least. It has enabled the state to have low domestic gas prices and there have been some investments, including current ones, spurred by this. Nonetheless, the WA government has so mismanaged its electricity grid that there are now serious problems. The exit of coal generation has been badly bungled and there is even talk of blackouts. Cheap gas is not a cure-all.
Interestingly, the developer of the Narrabri gas field in NSW, which has been many years in the making, has always offered up the gas for 100 per cent local consumption within the state. This offer has never been accompanied by a willingness on the part of the NSW government to facilitate the completion of this project – indeed, quite the reverse.
The recent energy measures demonstrate clearly the lessons of bad approaches are never fully learnt. We are about to repeat the policy mistakes of the 1970s when price caps seemed like a seductively simple remedy. Ironically, these mistakes were recognised by the Hawke/Keating government. The argument for world parity pricing of our resources was until recently regarded as unchallengeable; this is no longer the case. The politics may work for a while but the economics certainly won’t.
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Jim Hansen and his twin
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