Future carbon

So policy should not be prescriptive about technology choices. There are real and imagined problems with any choice of energy source. Frequently the response of society to technical development shows a mismatch between public perceived risk and expert assessment of risk. The choice and promotion of technical solutions is often pitched to public concerns. These concerns are picked up by government and may help shape policy development.

As an example the present subsidies for wind farms are a response to demands for action from Green groups and green politicians. The result is a new rent seeking group. There is little cost benefit analysis to guide policy development. Rather policy is set to subsidise non-competitive technologies that may produce unquantified benefits. A simple comparison with the more conventional alternative of natural gas shows the use of gas to be more cost effective and useful as gas turbine generators produce electricity on demand.

General encouragement of innovation should be the limit of government policy. It is hard enough in business to develop innovations and well beyond the reach of general government.

Policy development should be mindful of these two problems. The primary issue of long-term uncertainty requires a cautious approach so that our economy is not disadvantaged compared to that of other countries.